Cooperation Agreement

Island Oil and Gas PLC
09 October 2006


9 October 2006


         ISLAND OIL & GAS ENTERS COOPERATION AGREEMENT WITH ENCORE OIL
                            ON PORTFOLIO DEVELOPMENT

Island Oil & Gas plc ('Island') today announces that it has entered into a
Cooperation Agreement (the 'Agreement') with EnCore Oil plc ('EnCore') covering
the future development by both companies of their respective portfolios of
exploration and near- development interests both in Ireland and the UK. As part
of the Agreement, EnCore has also been granted an exclusive option (the
'option') by Island to acquire up to a 20% working interest in the
Island-operated Frontier Exploration Licence 1/04 ('FEL 1/04') on the Atlantic
margin 150 km offshore the west of Ireland in the Porcupine Basin.

FEL 1/04, which covers Block 26/28 and Part-blocks 26/27, 35/2 & 35/3, contains
the Connemara oil field and several undrilled exploration prospects. Under the
Agreement, EnCore has paid an initial deposit of Stg £2 million to secure
exclusive options to acquire up to a 20% interest in FEL 1/04. The first option
to acquire a 10% interest in FEL 1/04 is exercisable up until 30 November 2006,
with a second option, to acquire a further 10% interest, exercisable by 10
January 2007. Any assignment of interest in FEL 1/04 will of course be subject
to the consents and approvals of the Minister for Communications, Marine and
Natural Resources ('Minister').

Separately Island also announces today that it has reached agreement with its
joint venture partners in FEL 1/04, Valhalla Oil and Gas Limited ('Valhalla')
and X-Ipec Limited ('X-Ipec'), to acquire X-Ipec's entire 35% interest also in
FEL 1/04 ,pro-rata with Valhalla (21.5% to Island and 13.5% to Valhalla),
subject to the consents and approvals of the Minister. Completion of the
transaction will increase Island's interest in FEL 1/04 to 61.5% prior to the
exercise of the EnCore option.

The undeveloped Connemara oil field was discovered by BP in 1979 following the
drilling and testing of the 26/28-1 well, which flowed at a rate of 5,589 bopd
from Jurassic reservoirs. In 1997, at a time of low oil price, Statoil attempted
to appraise and develop the field by drilling two horizontal wells. Based on the
analysis of the results of these wells Statoil relinquished the licence in 1999.
Statoil's estimate of oil in place at that time was 220 million barrels. Island
has completed a programme of 2D and 3D seismic reprocessing which has led both
to a significant improvement in seismic imaging of the principle oil-bearing
reservoirs in the field and to a better definition of faulting. This has
identified areas of the field that are less faulted than the areas tested by
previous wells. In addition Island has completed a new reservoir study that
indicates that several of the principal oil-bearing sands are potentially more
continuous than had formerly been interpreted. Based on these new insights there
is a strong possibility that the previous horizontal appraisal wells in the
field missed some of the key oil-bearing sands encountered in the original
discovery well 26/28-1.

Paul Griffiths, Chief Executive of Island, commented:

'We are delighted to announce the Cooperation Agreement with EnCore which, when
combined with the steps that we have announced today to increase our equity
position in FEL 1/04, allow us to accelerate our evaluation and potential
commercialisation of our exploration and near development assets along the
Atlantic margin. We look forward to developing an ongoing business relationship
with EnCore and believe that the synergies between the companies can accelerate
the growth and development of our respective portfolios.'

Alan Booth, CEO of EnCore, said:

'We are particularly pleased about this opportunity to work closely with Island.
With this relationship, we believe we will be in a position to advance our
respective portfolios through joint evaluations and where appropriate, to share
resources on exploration and near term development interests in the E&P sector.'


Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting

Tel: [phone]


Notes to Editors:

About Island


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 two as
technical manager).   The Company is involved in an active exploration and
appraisal programme with three wells drilled in 2006, two of which were
successful gas discoveries.  The Company has also secured the Petrolia rig for
its planned 2007 drilling programme.

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

About EnCore

EnCore Oil plc is a UK focused exploration and production company listed on the
Alternative Investment Market (AIM) on the London Stock Exchange. EnCore's
strategy is to create shareholder value through the successful exploration and
appraisal of prospects and discoveries, and the development of those assets
through to commercial sanction or beyond.

Further information on EnCore can be found on the Company's website at
www.encoreoil.co.uk.





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