Gas Discovery, Celtic Sea

Island Oil and Gas PLC
01 August 2006


1 August 2006


                ISLAND OIL & GAS PLC ANNOUNCES SIGNIFICANT  GAS
            DISCOVERY AT OLD HEAD OF KINSALE FIELD, OFFSHORE IRELAND


Island Oil & Gas plc ('Island' or the 'Company') today announces that, following
the completion of logging and sampling operations, exploration well 49/23-1 (the
'Well'), at the Old Head of Kinsale in the Celtic Sea, has successfully
encountered a Lower Cretaceous reservoir sequence with a gross 100 foot gas
column, determined from pressure data.

Initial indications are that the gas extends over an area in excess of 22 sq.
km. and that potential volumes of gas in place in the structure are likely to be
in the range of at least 90 to 120 bcf.  The gas discovery is located only 25
km. from Marathon's production facilities at the Kinsale field ('the Kinsale
Alpha Production Platform'), greatly enhancing the economics of the discovery.

Based on these encouraging results, Island has taken the decision to suspend the
Well with the intention of returning in 2007 to re-enter the Well and carry out
an extended gas well test.   This will allow the Company to determine well
deliverability and maximum drainage area prior to the preparation and submission
of any Plan of Development.  In the interim period, work will continue to
determine the technical and commercial feasibility of a potential subsea
tie-back to the Kinsale Alpha Production Platform.  These arrangements are
subject to the consents and approvals of the Petroleum Affairs Division of the
Department of Communications, Marine and Natural Resources.

Well 49/23-1, which was spudded on 12 July 2006 in a water depth of 296 feet,
was drilled to its planned total depth of 4,133 feet TVD ss in just 16 days. The
Well is operated by Island (with 100% equity interest) and was drilled using the
semi-submersible drilling unit, Petrolia, owned and operated by Petrolia
Drilling Limited under contract to Island.  The Petrolia rig will move shortly
to the Donegal Basin where it will drill the Lundin-operated well 13/12-1 on the
Inishbeg Prospect in which Island has a 31% equity interest.

Commenting on the well results, Paul Griffiths, Chief Executive of Island
stated:

'Following the successful testing of the Seven Heads West well 48/23-3, the
Company has now made the first new gas find in the Celtic Sea since 1990.  The
Company is naturally very pleased that its strategy of securing prospective
Licence interests with potential reserves close to existing infrastructure has
been rewarded with two successful back-to-back gas wells. The success of this
strategy demonstrates our ability to generate higher returns for the Company
given the relatively lower cost of commercialising Celtic Sea discoveries
adjacent to existing facilities.'


Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting
Tel: [phone]


Notes to Editors:

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.

'Cretaceous' is a geological strata formed during the period from 66 million to
140 million years before the present


Further information on Island, and previous press releases, 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