Extension of Loan Facility for Island Oil & Gas

p>Island Oil & Gas plc has reached an agreement with RMB Resources to extend the existing Stg Pounds 12 million loan facility, which was repayable at any time up to Dec. 31, 2007, through to March 31, 2008.

Island has commenced a competitive tendering process with a number of selected financial institutions to secure the appropriate level of funding required to progress the development of its near-term production portfolio and facilitate future working capital requirements. A further announcement will be made when the new arrangements are in place.

Island has also agreed with RMB that the 5,759,631 three year warrants held by an affiliate of RMB, equivalent to 5.2% of the company's current issued share capital, will now be cancelled in return for the issue to RMB of 1,000,000 fully paid up ordinary shares in Island, representing 0.887% of the increased share capital. The company has applied for these new ordinary shares to be admitted to trading on the AIM market of the London Stock Exchange and it is expected that these new ordinary shares will be admitted to trading on Wednesday, Jan. 2, 2008. The new ordinary shares will rank pari passu with the existing ordinary shares of the Company and will increase the number of shares in issue to 112,706,990.