2007 Drilling Programme

Island Oil and Gas PLC
12 December 2006


12 December 2006


                   ISLAND OIL & GAS PLC ANNOUNCES DETAILS OF

 2007 DRILLING PROGRAMME AND ATLANTIC MARGIN FARMOUT STRATEGY, OFFSHORE IRELAND

Further to a successful 2006 drilling programme offshore Ireland, Island Oil &
Gas plc (LSE:IOG), ('Island' or the 'Company') today announces details of its
proposed 2007 drilling programme. The programme, for which Island has already
secured a rig, will focus primarily upon pre-development drilling in the Old
Head of Kinsale gas field. The option will also exist for the Company to drill a
well in the Schull Licence to further evaluate the gas potential in and around
the Schull gas field. In addition, Island has established a farmout programme
for various near-development and exploration projects on the Atlantic Margin,
which would allow the Company to progress a rolling programme of potential oil
and gas developments over the next two to five years.

HIGHLIGHTS:

•Pre-development drilling and testing in 2007 at Old Head of Kinsale
 gas field where Island made a successful gas discovery during 2006

•Option maintained to drill to evaluate gas potential in and around
 the Island-operated Schull gas field dependent upon duration of drilling and
 testing operations at Old Head of Kinsale

•Drilling activity expected to commence Second Quarter 2007

•Atlantic Margin farmout process of multi-tcf gas prospects ongoing

•Connemara oil field near-development studies reaching advanced stage

•Common strategy report for the joint development of Island and
 Providence Resources plc ('Providence') Celtic Sea oil assets, including the
 Seven Heads Oil Option

•International expansion initiated with the award of Dutch Q13 Production 
 Licence to Island as an approved operator

Celtic Sea

During 2006, Island made a landmark gas discovery with its operated exploration
well 49/23-1 at the Old Head of Kinsale Prospect, to the southeast of the
Kinsale Field; the first new gas discovery in the Celtic Sea for 16 years. The
Company also had a successful gas well at Seven Heads West. The Old Head of
Kinsale well encountered a Lower Cretaceous reservoir sequence with a gross 100
foot gas column, and with initial indications showing that the gas extends over
an area of up to 22 sq km. The potential volumes of gas in place are currently
the subject of a review by an independent third party Competent Persons' Report.
The gas discovery is located only 25 km from Marathon's production facilities at
the Kinsale field, greatly enhancing the economics, and work is ongoing to
determine the technical and commercial feasibility of a potential subsea
tie-back to the Kinsale Alpha Production Platform. Based on the encouraging well
results, Island suspended the 49/23-1 well as a potential gas producer, pending
further evaluation of the gas discovery in 2007. Drilling activity at the Old
Head of Kinsale is currently anticipated to begin in the Second Quarter of 2007
following mobilisation of the Petrolia rig from the UK North Sea to Ireland.

Following operations at the Old Head of Kinsale, the Petrolia rig will either
stay in place there for further pre-development drilling, or will move to the
nearby Schull Licence, where Island has the option to drill and operate a well
in 2007. The Schull well is planned with a view to developing the gas potential
of the area through the Seven Heads/Kinsale infrastructure. The Schull gas field
was first discovered by the Total operated well 57/2-2 in 1987 at a time of
lower gas prices and no available access to gas infrastructure. It lies
approximately 43 km to the southwest of the Seven Heads gas field and the
associated infrastructure linking Seven Heads to the Kinsale Alpha platform. The
area contains three potential gas structures: the Schull Gas Field; and the
Schull Central and Schull North prospects. Island has completed a programme of
seismic reprocessing and reservoir distribution studies that has significantly
upgraded the gas potential of the area.

The 2007 drilling programme is subject to the normal consents and approvals of
the Minister for Communications, Marine and Natural Resources


Atlantic Margin

On the Atlantic Margin the Company continues to progress the farmout of its
multi-tcf gas prospects in the Donegal, Slyne and Rockall Basins. The area is
seen by Island as being highly prospective for Triassic gas analogous to that
trapped in the Corrib gas field. The Company is receiving an increased level of
interest in its portfolio of gas prospects given their materiality and, in the
instance of the Killala Licence, due to their proximity to the development of
the Corrib gas-gathering infrastructure and the proposed LNG facility at
Shannon. In addition, the existence of spare capacity in the gas interconnectors
between Ireland and the United Kingdom already provides the route necessary to
establish a potential gas export market for Atlantic Margin gas.

Significant interest from the industry, as evidenced in part by the announcement
of the Cooperation Agreement with EnCore Oil, has also been received by the
Company in respect of its potential Connemara oil field development. Reservoir
engineering and facilities studies are progressing to determine the optimum
technical and commercial criteria necessary to proceed to the submission of a
plan of development for the field and the Company expects to announce further
details in the first quarter of 2007. Possible synergies with any future
development of Celtic Sea oil assets are also being evaluated based on the
common strategy arising from the announcement in September 2006 by Island and
Providence of an agreement to work together to develop a common strategy report
for the joint development of the companies Celtic Sea oil assets based on a
shared floating production facility. The assets to be included in this study
incorporate each company's Celtic Sea oil assets, including the Seven Heads Oil
Option, which covers the oil-bearing Middle and Lower Wealden reservoirs in the
Seven Heads structure. The study will also include the reservoir engineering
study produced by Island for a pilot development project based on a short life
production profile for the Seven Heads Oil Option of 9,000 bopd.


International

Island recently established a strategic position in the Netherlands through the
award of the Q13 Production Licence covering the undeveloped Amstel oil field
and thus achieving another landmark in becoming the first company of our size to
be approved as an operator of a field development project in the Netherlands.
Reservoir engineering and facilities studies have commenced with Dutch
Contractors with a view to completing a series of potential field development
scenarios that will form the technical and commercial basis for seeking a
jack-up rig to commence development drilling, which currently is anticipated to
be in 2008, subject to rig availability.


Commenting on the Drilling Program, Paul Griffiths, Chief Executive of Island
stated:

'Following our successful drilling program in 2006, the Company has undergone a
period of intense technical and commercial activity necessary to prepare its key
near-development projects for financing. The Company is now embarking on an
important stage in its development as it seeks to increase its ability to
generate future production revenues from its undeveloped oil and gas fields.
Simultaneously we are seeking to unlock value in our portfolio of material gas
prospects on the Atlantic Margin through farmout to multi-national corporations
capable of investing the funds required to evaluate prospects in this high
potential drilling environment'.

Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting

Tel: [phone]


Notes to Editors:

Island was founded in 2003 and listed on AIM in December 2004.  The Company has
interests in eleven Irish offshore licences, (six as operator) and the Q13
Production Licence offshore Netherlands.   The Company is involved in an active
exploration and appraisal programme with two successful gas discoveries in 2006,
and has secured the Petrolia rig for its planned 2007 drilling programme.

Island's interests in the projects mentioned in this announcement are:


•Seven Heads Oil Option - Island 12.5% participating interest.
 Through an Option Agreement executed with Ramco Oil and Gas Limited in April
 2004, Island can acquire a further 44.4% equity interest in the Seven Heads Oil
 Licensing Option by committing to and funding 74% of an appraisal well to test
 the oil-bearing Middle and Lower Wealden reservoirs in the Seven Heads
 structure.

•Old Head of Kinsale - Island 100% interest

•Schull Licence - Island 55% interest


This drilling update has been reviewed and approved by Paul Griffiths, Chief
Executive of Island.  Paul Griffiths is a geology graduate of the Royal School
of Mines, Imperial College London, and is a member of the Petroleum Exploration
Society of Great Britain. He has 30 years experience in the oil and gas
exploration sector and is a qualified person as defined in the guidance note for
Mining Oil & Gas Companies, March 2006 of the London Stock Exchange.


Further information on Island can be found on the Compamy's website at http://
www.islandoilandgas.com




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