Connemara Farm In

Island Oil and Gas PLC
03 January 2008


 
3 January 2008


  ISLAND OIL & GAS PLC ANNOUNCES COMPLETION OF SHARE PURCHASE AND EXERCISE OF
          CONNEMARA OPTION AGREEMENT WITH SUPERNOVA IRELAND RESOURCES


Island Oil & Gas plc (LSE:IOG) ('Island' or the 'Company'), today announces that
it has completed the Agreement, first announced on 17 July 2007, with Supernova
Ireland Resources B.V. ('Supernova'), a member of the Bluewater Group
('Bluewater') of the Netherlands, covering Frontier Exploration Licence 1/04
(the 'Licence') located in the Porcupine Basin in the prospective Atlantic
Margin off the west coast of Ireland. The Licence includes the Connemara oil
field and several significant exploration prospects. Supernova has exercised its
exclusive option to farm in for 10% equity in the Island operated Licence,
thereby reducing the Company's net equity interest from 61.5% to 51.5%.


Supernova has purchased 3,750,000 ordinary shares in Island for Stg£0.60 per
share in a private placing (total value Stg£2.25m), representing 3.22% of the
increased issued share capital.   The Company has applied for these new shares
to be admitted to trading on the AIM market of the London Stock Exchange and it
is expected that trading will commence on 4 January 2008.  The new ordinary
shares will rank pari passu with the existing issued ordinary shares of the
Company and will increase the number of shares in issue to 116,456,990.


Island is also pleased to announce that Horizon Energy Partners BV ('Horizon')
has completed a Reservoir Engineering Report for the Connemara Field. Island and
its joint venture partners, Valhalla Oil and Gas Limited and Supernova, are
currently reviewing the results of this study. One option under consideration is
for a pilot field development to target two specific areas of the Connemara
field: 26/28-2-East, which is unappraised, and the 26/28-A1 area, which was
intersected by Statoil's 26/28-A1 horizontal well but which failed to penetrate
the primary reservoir objective. Horizon has indicated that these two areas
contain 63.6 mm barrels of oil in place relative to a mid-Case estimate of 134.9
mm barrels for the entire field. The optimum pilot development scenario requires
a single dual lateral production well to target both areas and a water injector
for the 26/28-2-East area to potentially boost oil recoveries. The simulated
base case production profile potentially recovers 5.59 mm barrels of oil over
two years based on an annual production rate of 10,100 bopd in Year 1 declining
to 5,200 bopd in Year 2. The pilot development project may provide valuable
information on the performance of the reservoirs and the effectiveness of water
injection over time which can then be used to recalibrate, if necessary, the
geological model for the Connemara Field to assist with planning a full-field
development programme.


Supernova retains a second option to farm in for an additional 10% equity in the
Licence in return for a cash only consideration of a further Stg£2.25m,
exercisable up to 31 March 2008.


Supernova, Valhalla and Island will work closely on progressing development
options for the Connemara Field and in accelerating farmout activity in respect
of the joint venture's Atlantic Margin portfolio of exploration prospects.

Island, as Operator with a 50% equity interest, and Supernova have also applied
for prospective blocks in the South Porcupine Licensing Round, the closing date
for the receipt of applications being 18th December 2007. Island expects to be
informed early in 2008 as to whether or not it has been successful in being
granted any or all of the blocks that it has applied for.

Commenting on the completion of the Agreement with Supernova, Paul Griffiths,
Chief Executive of Island, said:

'Island has broadened and strengthened its shareholder base with the addition of
the Bluewater Group as a substantial shareholder in Island. As a specialist in
the operation of Floating Production Systems, Bluewater is an ideal partner in
the Porcupine Basin and advances one of Island's objectives of being the first
company to develop and produce indigenous Irish oil resources.'



This announcement 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.


Enquiries:

Paul Griffiths
Chief Executive
Island Oil & Gas plc
Tel: [phone]

Karl Prenderville
Commercial Director
Island Oil & Gas PLC
Tel: [phone]

Notes to Editors:

Island was founded in 2003 and listed on AIM in December 2004 (LSE:IOG).  The
Company has interests in eleven Irish offshore licences, as well as licences in
the Netherlands, Albania and Morocco. Island is involved in an exploration and
appraisal programme which in 2006 and 2007 saw successful Celtic Sea gas wells
at the Old Head of Kinsale, Schull and Seven Heads Sub-Area.

Bluewater has built a technological lead specializing in lease and operation of
tanker-based Production and Storage (FPSO/FSO) systems, and has become a leading
provider of advanced Single Point Mooring (SPM) systems. Bluewater operates
worldwide with offices in The Netherlands, United Kingdom, United States,
Nigeria, Angola, South Africa, Malaysia and China.






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