Island Oil & Gas Awarded Permit in Morocco's Tarfaya Basin

Island Oil & Gas says its wholly owned subsidiary Island International Exploration Morocco. ("IIEM") has signed with the Office National des Hydrocarbures et des Mines ("ONHYM") a Petroleum Agreement relating to seven Exploration Permits in the Tarfaya Basin onshore Morocco.

The Tarfaya Permit is valid for up to eight years. The work program that has been committed to during the initial two years and six months phase of the Permit comprises seismic reprocessing and acquisition and geochemical modeling. A drill or drop decision will be made at the end of the initial phase of the Permit The joint venture partners in the Tarfaya Permit are IIEM (40%), the designated operator, Long reach Oil and Gas Ventures Limited (30%) and San Leon (Morocco) Limited (30%).

Morocco has an attractive fiscal regime relative to other North African oil and gas producing countries - State Participation upon production of up to 25%; 10% royalty on production (first 300,000 tons of production exempt) and 5% royalty on gas production (first 300 million cubic meters exempt); and 35% corporation tax (only payable after a 10 year holiday on production).