Island Oil Spuds Seven Heads Well

Island Oil & Gas has spudded well 48/23-3 at Seven Heads West in the Celtic Sea offshore Ireland. The well is the first in its planned 2006 and 2007 drilling programs.

Well 48/23-3 is designed to appraise a possible extension of the Upper Wealden gas sands that are producing gas in the 48/24-6 production well immediately to the east. The well, which is in a water depth of 329 feet, will be drilled to a planned total depth of 3,200 feet TVD ss.

Island concluded a Sub-Area Equity Interest Assignment Agreement for the Seven Heads West area with Marathon International Petroleum Hibernia Limited, through its wholly-owned subsidiary Marathon Seven Heads Limited (formerly Ramco Celtic Sea Ltd) in February 2006. Under the Agreement, Island will fund 100% of the cost of the current well, including testing, in return for increasing its equity interest in the Seven Heads West, Sub-Area, from 12.5% to 55.75%. Island will operate the well during the drilling period but operatorship will revert back to Marathon once the drilling of the well has been completed.

Well 48/23-3 is being drilled using the semisub, Petrolia, owned and operated by Petrolia Drilling Limited, under contract to Island. Subject to regulatory consents and approvals, Island intends to move the rig after the completion of the 48/23-3 well to the nearby Old Head of Kinsale prospect, to drill 49/23-1, the second well of its 2006 three-well program. The rig then moves on to the Donegal Basin for its planned third well, which will be operated by Lundin.

Commenting on the commencement of the 2006 drilling program, Paul Griffiths, Island's Chief Executive, said:

"The commencement of drilling operations at Seven Heads West marks a significant milestone in the development of Island Oil & Gas plc as it seeks to establish its credentials as a competent operator capable of managing and delivering an ambitious drilling program over the next two years in Irish waters and, potentially overseas. Our decision to enter into long-term drilling contracts for 2006 and 2007 is paying dividends as rigs are currently becoming increasingly difficult to source. We anticipate that our ability to operate together with the availability of a rig in 2007 will open up a number of new and potentially exciting opportunities for the Company in the near future."

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