Island Oil & Gas Completes Share Issue

Island Oil and Gas has successfully completed a placing to raise approximately Stg£8.3 million, inclusive of expenses, through the issue of 11,874,000 new Ordinary Shares of €0.01 each at a price of Stg£0.70 per share. The placing, which was arranged by Davy, was supported by a number of existing and new institutional and private investors.

In addition to the placing shares, 5,937,000 warrants have been issued to the new shareholders, on the basis of one warrant for every two new shares subscribed for, at an exercise price of Stg£0.70 per share. These warrants may be exercised up to the later of either April 21, 2006 or 10 days after the spudding of the first well in Island's 2006 drilling program. If all the warrants are exercised, a further £4.15 million approximately will be raised for the Company.

The funds raised will support Island's planned three well drilling program offshore Ireland in 2006 for which the semisubmersible rig Petrolia has already been contracted, as previously announced.

Further details of the drilling program will be announced in due course.

Application will be made to the London Stock Exchange for up to 11,874,000 Ordinary Shares to be admitted to trading on AIM. Dealing is expected to commence in these shares on December 12, 2005. These new shares have been allotted and will rank pari passu in all respects with the 47.33 million existing issued Ordinary Shares.