Re: Agreement

Island Oil and Gas PLC
07 February 2006


                                      

7 February, 2006


 ISLAND CONCLUDES SEVEN HEADS SUB-AREA EQUITY INTEREST ASSIGNMENT AGREEMENT AND
               ANNOUNCES DRILLING PLANS FOR THE SEVEN HEADS FIELD

Island Oil and Gas plc, ('Island'), the independent oil and gas exploration and
production company, today announces that, through its wholly owned subsidiary
Island (Seven Heads) Limited, it has concluded a Sub-Area Equity Interest
Assignment Agreement (the 'Agreement') for the Seven Heads Petroleum Lease,
subject to the approval and consent of the Minister, with Marathon International
Petroleum Hibernia Limited, through its wholly owned subsidiary Ramco Celtic Sea
Limited ('RCSL'). Under the terms of this Agreement, Island will drill a well,
as part of its three-well drilling programme, in April 2006 using the Petrolia
drilling rig to test the possible extension of the Seven Heads gas field in an
area immediately to the west of the 48/24-6 production well, which to date has
encountered some of the best producing gas sands in the Seven Heads gas field.


Island will fund 100% of the cost of the well, including testing, in return for
increasing its equity interest in all of the unappraised part of the Seven Heads
Petroleum Lease (the 'Sub-Area') west of a defined partition line (See map at
http://www.islandoilandgas.com/default.asp?docId=12481) close to the 48/24-6
production well. Island's equity interest in the Sub-Area will increase from
12.5% to 55.75% following the drilling of the well as a result of earning half
of RCSL's current interest in the Sub-Area. RCSL shall have the option at any
time up to four weeks before the spud date of the well, which, subject to
regulatory consents and approvals, is currently anticipated to be on or about
1st April 2006, of increasing its equity interest in the Sub-Area to a maximum
of 50% by paying 13.5% of the cost of drilling and testing the well to earn an
additional 6.75% interest.

Island will operate the well during the drilling period but operatorship will
revert back to RCSL once the drilling programme has been completed.


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

'We are delighted to be working together with Marathon in Seven Heads. Marathon
has an unrivalled history of experience and expertise in producing gas from the
Celtic Sea. Island provides complementary technical skills in that it has over
the past two years made significant progress towards developing and maturing
ready for drilling its portfolio of exploration and appraisal projects in this
area. We believe that this will help us to forge a positive and creative working
relationship with Marathon going forward. An example of this is the way the
companies have cooperated to move quickly to begin to evaluate the potential
upside in the Seven Heads gas field by executing an agreement that will
facilitate new drilling on Seven Heads utilizing, subject to regulatory consents
and approvals, the Petrolia drilling rig, which is currently under contract to
Island '.

Enquiries:

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

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



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