PCI.L Regulatory News (PCI)

22 Aug 2006 11:00

Island Oil and Gas PLC22 August 2006 PRESS RELEASE 22 August 2006 ISLAND OIL & GAS COMMENCES DRILLING AT INISHBEG, OFFSHORE IRELAND Island Oil & Gas plc ("Island" or the "Company") today announces that LundinPetroleum AB ("Lundin"), has spudded well 13/12-1 (the "well") on the InishbegProspect in Frontier Exploration Licence 1/05 ("FEL 1/05") in the Donegal Basin,on the Atlantic margin offshore Ireland. The well is being drilled using thePetrolia rig (the "rig"), owned and operated by Petrolia Drilling Limited. The well, which is operated by Lundin, is the third well this year in Island's2006 and 2007 drilling programme, which has to date produced two successful gaswells in the Celtic Sea. Well 13/12-1, located approximately 75 km. off the coast of Donegal and 55km.east of the Dooish discovery well, was spudded on 22 August 2006 in a waterdepth of 319 feet, and is the first well to test the hydrocarbon potential of the South Donegal Basin. Results from the well are expected to make a significant contribution to the evaluation of the prospectivity of the remainderof the basin, which covers an undrilled area of at least 2,500 sq. km. Island is the largest equity holder in FEL 1/05 with a 31% interest. Lundin isthe operator with a 30% interest. The other partners in FEL 1/05 are LansdowneOil & Gas (19.25%), Petroceltic International (16.25%) and Sunningdale DonegalBasin Ltd (3.50%). Enquiries: Lisa J Newman MCIPR MIRS Newman Consulting Tel: +44 (0)1252 878682 Notes to editors: Island was founded in 2003 and listed on AIM in December 2004. The Company hasinterests in nine Irish offshore licences, (four as operator and two astechnical manager). The Company is involved in an active exploration andappraisal programme with three wells planned in 2006, two of which have beensuccessful gas discoveries. The Company has also secured the Petrolia rig forits planned 2007 drilling programme. Island farmed in to FEL 1/05 in January 2005. Under the terms of thatagreement, Island then acquired a 26% interest in return for which it will carry40% of the dry hole costs of Inishbeg for Lansdowne and Sunningdale. In the event of a successful well and subject to partner approval,Island will also carry Lansdowne and Sunningdale's part of the testing costs onthe same basis. Island is fully funded to meet such a commitment. Islandincreased its interest tin FEL 1/05 to 31% when it subsequently exercised anoption to acquire an additional 5% groundfloor participating interest fromLundin. Further information on Island can be found on the Company's website at http://www.islandoilandgas.com This information is provided by RNS The company news service from the London Stock Exchange