Island Forms JV with Valiexchimp

Island Oil & Gas has agreed terms and administrative procedures with Valiexchimp S.L.R. for the setting up of a Joint Venture Company ("JVC"), 50% owned by Island and 50% owned by Valiexchimp, to acquire specific upstream and downstream oil and gas assets, currently owned and operated by Valiexchimp, in the Republic of Moldova. Valiexchimp's assets are presently being re-structured to facilitate the completion of this transaction in a timely manner.

In addition Island is also evaluating additional opportunities arising from its Memorandum of Understanding with Valiexchimp in relation to exploration and exploitation of gas and oil resources on other ex-Soviet republics. Island will report further progress on the completion of this transaction in due course.