Island's Schull Find Larger Than Expected

Island Oil & Gas says its gas appraisal well 57/2-3 on exploration license 5/05 in the Schull Gas Field located in the Celtic Sea offshore Ireland has successfully tested dry gas at a rate of 21 million standard cubic feet per day through a 72/64" restricted choke size, with absolute open flow potential of 40 mmscfpd. The gas was produced from Upper Wealden reservoirs between 2,332 feet Measured Depth and 2,599 feet MD below the rotary table.

The well encountered a gross gas column of 292 feet, significantly greater than that prognosed pre-drilling. The Reservoir encountered 84 feet high to prognosis. Additional, previously untested, reservoirs discovered by the Schull well provide follow-up potential in offset structures on the Schull License. These positive drilling results could upgrade the Schull Gas Field to a potential standalone development.

The 57/2-3 well is being suspended as a potential gas producer.

Island is now commissioning a commercial and engineering study to determine the optimum development scenario for the Schull, Old Head and West Seven Heads gas fields. It is currently anticipated that this study will include the potential for using at least one of the gas fields as a gas storage facility to allow for an increase in winter gas production at a time when gas prices are traditionally higher. Another option being evaluated is the use of one of the gas fields as a potential, short-term, national strategic gas reserve. The options being investigated are designed to maximize the value of the potential gas reserves and of the additional infrastructure that would be required to develop the gas fields. These options are subject to the consents and approvals of the Department of Communications, Marine and Natural Resources, in accordance with the normal procedures required.

The Petrolia semisub will now be handed over to Providence Resources.

Island has a 62.5% interest in the Schull Field, where it is partnered by Valhalla Oil and Gas Limited with a 25% interest and EnCore Oil plc with a 12.5% interest.

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

"We are delighted with the positive drilling results from Schull which have added a new dimension to the Celtic Sea gas play in an area that had previously remained under-explored. Our 2006 and 2007 drilling programmes have delivered four successful gas wells which now form the basis for growing our Celtic Sea gas business. "

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