Island Sells Subsidary to Delta Hydrocarbons for $35M

Island Oil & Gas PLC has completed the sale of its wholly owned subsidiary, Island Netherlands BV (INBV), to Delta Hydrocarbons B.V. following the announcement of a signed Term Sheet on 12 May 2008. As a result of Completion the Company has received an initial payment of US$ 35,000,000 from Delta, representing the US$ 25,000,000 purchase price and a US$ 10,000,000 advance against the 2.5% Overriding Royalty Interest payable to Island on the commencement of production from the Amstel oil field.

The funds will be used to further advance the Company's portfolio of assets and opportunities and to reduce corporate debt.