Fugro Report Confirms Commercial Viability of Several Offshore Projects

Island Oil & Gas says that Fugro Robertson has recently updated its independent assessment of the Company's near-development oil and gas projects offshore Ireland and the Netherlands. This takes account of the successful appraisal wells in the Old Head and Schull gas fields earlier this year and significant progress in outlining a potential development plan for the Connemara oil field. It also reflects an increase in the Amstel oil field development costs related to the highly competitive market conditions created by very strong growth in oil and gas prices during 2007. This assessment constitutes a Competent Person's Report (the "CPR Report") under the AIM Rules.

Highlights of the CPR Report are:

Contingent P50 Resources of 25.6 MMboe for Old Head of Kinsale and Schull gas fields and the Amstel and Connemara oil fields, representing a 46% increase in P50 Contingent Resources relative to the corresponding Fugro Robertson Report announced in March 2007. This reflects the fact that Connemara has now been included as a Contingent Resource by Fugro Robertson and includes Islands revised lower equity share in the Licenses (except Schull) following its successful farmout program.

Old Head of Kinsale gas field (Island interest 65%) - On a P50 basis, gross gas in place of 41.3 Bscf for the Field; gross gas recoverable of 28.9 Bscf for the Field; net contingent resources of 2.6 MMboe. On a P10 basis, gross gas in place of 92 Bscf for the Field; gross gas recoverable of 64.4 Bscf for the Field; net contingent resources of 5.8 MMboe. Internal Rate of Returns of 25% and 39% respectively for the P50 and P10 resources using a Base Case Pricing Scenario.

Schull gas field (Island interest 62.5%) - On a P50 basis, gross gas in place of 42.6 Bscf; gross gas recoverable of 27.7 Bscf; net contingent resources of 2.9 MMboe. On a P10 basis, gross gas in place of 51.1 Bscf; gross gas recoverable of 33.2 Bscf; net contingent resources of 3.5 MMboe. Internal Rate of Returns of 19% and 29% respectively for the P50 and P10 resources using a Base Case Pricing Scenario.

Amstel oil field (Island interest 50%) - On a P50 basis, gross oil recoverable of 10.9 MMbo for the field; net contingent resources of 5.5 MMboe. On a P10 basis, gross oil recoverable of 16.4 MMbo; net contingent resources of 8.2 MMboe. Internal Rate of Returns of 44% and 116% respectively for the P50 and P10 resources using a Base Case Pricing Scenario.

Connemara oil field (Island interest 51.5%) - On a P50 basis, gross oil and gas recoverable of 26.5 MMbo and 10.6 Bscf respectively; net contingent resources of 14.6 MMboe. On a P10 basis, gross oil and gas recoverable of 40 MMbo and 16 Bscf respectively; net contingent resources of 22 MMboe.

Island drilled two successful appraisal wells in the Old Head of Kinsale and Schull gas fields offshore Ireland during 2007, which realized the Company's pre-drilling objective of establishing commercial flow rates from these fields.

The P50 Contingent Resources assigned by the Fugro Robertson Report to the Schull and Old Head gas fields confirms the commercial viability of developing the fields and those potentially attractive rates of return can be achieved from these planned developments using a base case scenario for gas prices. On this basis Island has entered into negotiations with lenders with regard to raising project finance for the development of these fields. Island is also in active discussions with a number of industry parties with respect to selling equity in the fields to potentially fund any equity component of a project finance package.

Island has commenced substantive preliminary discussions with Marathon, the owners of the Kinsale and Seven Heads gas gathering facilities in the Celtic Sea, regarding the engineering solutions required for the Old Head of Kinsale and Schull fields to be tied back subsea to these facilities and is negotiating commercial terms for these access rights. Both Island and Marathon are acutely aware of the need to secure access to new indigenous gas resources to maximize the use of the valuable infrastructure represented by the Kinsale and Seven Heads facilities.

The P10 Contingent Resource estimates for the Old Head of Kinsale and Schull gas fields demonstrate the significant potential upside in the fields based on larger Contingent Resources and a higher future gas price that reflects the current upward market trend in oil and gas prices.

The P50 Contingent Resources presented for the Amstel oil field in the Netherlands underpin the value of this project to Island, particularly given that the base case price scenario for oil used in the economic modeling by Fugro Robertson is significantly less than present day oil prices. Island is in substantive negotiations with a number of lenders with regard to raising project finance for the development of the Amstel oil field. As in the case of the Old Head and Schull Celtic Sea gas developments, The Company's high equity stake in the Amstel oil field development has allowed Island to enter into substantive discussions with several industry parties with respect to selling equity in the field to potentially eliminate any requirement to raise equity finance as a component of any project finance package and to facilitate potential access to the nearby Rijn Platform as a potential evacuation route for Amstel oil.

Fugro Robertson used the guidelines of Chapter 19 of the Listing Rules of the London Stock Exchange as a guide for the reporting standard. The Fugro Robertson Report does not currently address Island's exploration portfolio of prospects around the Schull gas field; on the highly prospective Atlantic Margin, where Island has already executed agreements that have allowed OMV and Bluewater to participate in a potential 2009 drilling program, subject to securing additional partners; and in Southern Morocco; nor does it address the Company's inherited gas/condensate discovery in Albania or the potential value of the Company's potential acquisition of producing and revenue generating assets in Moldova.

Fugro Robertson has commenced work on a second Report to include the above portfolio and Island will make a further announcement once this Report is completed.

Paul Griffiths, Chief Executive of Island Oil & Gas plc, commented:

"The Fugro Robertson Report supports Island's view of the potential commercial viability of our most advanced near-term oil and gas development projects in Ireland and the Netherlands and is a key contributor to our ongoing commercial discussions with banks and potential industry partners to secure the finance required to develop the oil and gas fields in a timely manner so as to take maximum advantage of the recent increase in oil and gas prices. Notwithstanding this the Company is committed to accelerating activity in our portfolio of exploration prospects on the Atlantic Margin off the west coast of Ireland where the value of our extensive license holding may potentially increase, should there be success in any of the four wells being drilled by other operators next year in the area. Recent transactions with OMV and the Bluewater Group demonstrate the attractiveness of the portfolio and substantiate Island's strategy of promoting activity on our licenses in this potentially significant hydrocarbon province".

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