Albania Farmout

Island Oil and Gas PLC
17 December 2007



17 December 2007


ISLAND OIL & GAS PLC ACQUIRES AN ADDITIONAL EQUITY INTEREST IN THE DURRESI BLOCK
     OFFSHORE ALBANIA AND AGREES FARMOUT TERMS WITH BEACH PETROLEUM LIMITED


Island Oil & Gas plc, (LSE:IOG) ('Island' or the 'Company'), today announces
that its wholly owned subsidiary Island International Exploration BV ('IIEBV')
has acquired the remaining 50% equity interest in the Durresi Block offshore
Albania from Lundin Albania BV and that this transfer of interest has now been
formally approved by the National Agency of Natural Resources in the Republic of
Albania ('AKBN'). IIEBV has, in addition, agreed farm out terms with Australian
company Beach Petroleum Limited ('Beach')


The farm out terms with Beach involve Beach (or a Beach nominated subsidiary
company) acquiring a 25% equity interest in the Durresi Block for back costs.
Island has granted Beach an option to increase its equity to 45% by contributing
55% of the dry hole cost of one well at a location to be mutually agreed between
the Operator (IIEBV) and Beach. The completion of the farm in transaction is
subject to Beach Board approval and the formal written consent of the AKBN. On
receipt of both of the above approvals, a Petroleum Complementary Agreement will
be negotiated with the AKBN to formally confirm IIE and Beach as parties to the
Durresi Block Licence. The Petroleum Complementary Agreement will then be
subject to the formal written consent of the AKBN on behalf of the Albanian
Council of Ministers.


The Durresi Block covers an area of 4,200 square kilometres along the Adriatic
coast of Albania. It contains the unappraised A4-1X gas/condensate discovery
drilled by Chevron and Agip in 1993 at a time of lower oil and gas prices.
Several undrilled oil and gas prospects and leads exist in the Durresi Block
along the northern edge of the Apulia Platform. This trend is currently the
focus of renewed exploration and licence activity in the adjacent Italian
offshore.


Paul Griffiths, Chief Executive of Island commented:

'Island has strengthened its position offshore Albania in an area that is
attracting renewed industry interest. We are particularly pleased to have agreed
farmout terms with Beach Petroleum Limited who we believe will be an ideal
partner for Island to accelerate exploration activity in this region'


Hector Gordon, Chief Operating Officer of Beach, added:

'We are delighted to be joining Island in the Durresi Block in an exciting oil
and gas province. We consider that subsequent exploration at the Block, which
will target deeper water prospects, will have the potential to yield reserves in
excess of 100 million barrels of oil equivalent, net to Beach, on the basis of
the current 25% interest.'

Enquiries:


Paul Griffiths
Chief Executive
Island Oil & Gas PLC
Tel: [phone]


Karl Prenderville
Commercial Director
Island Oil & Gas PLC
Tel: [phone]


Lisa J N Pope MCIPR MIRS
Newman Consulting
Tel: [phone]



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