Completion of Placing

Island Oil and Gas PLC 21 May 2007 21 May 2007 ISLAND OIL & GAS PLC COMPLETION OF EQUITY PLACING Further to the announcement made by Island Oil & Gas plc ('Island' or the 'Company') on 17 May 2007 regarding an equity placing, Island today announces that it has completed a placing to raise approximately Stg£13.7 million, before expenses, through the issue of 35,253,365 new ordinary shares of €0.01 each at a price of Stg£0.39 per share ('the Placing'). The Placing which was arranged by Davy and Bridgewell, was supported by a number of existing and new institutional and private investors, including RMB Resources with whom the company has entered into discussions for the purpose of restructuring its current Stg£7.5 million short term debt facility into a larger secured medium term debt facility. In addition to the Placing, 8,813,340 warrants have been issued to the new shareholders, on the basis of 1 warrant for every 4 Placing Shares, at an exercise price of £0.45 per Ordinary Share ('New Warrants'). These New Warrants will expire on 16 July 2007. The funds will be used by Island to support its drilling and contingent testing programme. This commenced on 16 May 2007 with the spudding of gas appraisal well 49/23-2 at the Old Head of Kinsale gas field, in the Celtic Sea offshore Ireland, which will be followed immediately afterwards by gas appraisal well 57/ 2-3 at the nearby Schull gas field, subject to approval of the Irish Minister for Communications, Marine and Natural Resources. Application has been made to the London Stock Exchange for the 35,253,365 new Ordinary Shares to be admitted to trading on AIM. Dealing is expected to commence in these shares on 25 May 2007. These new shares will rank pari passu in all respects with the existing issued share capital. Following admission of the Placing Shares, there will be 110,394,365 Ordinary Shares in issue. Enquiries: Lisa J Newman Newman Consulting Tel: +44 (0)1252 878682 Paul Griffiths Chief Executive Island Oil & Gas plc Tel: +353 1 631 3755 Anthony Farrell Davy Tel: + 353 1 679 6363 Andrew Matharu Bridgewell Limited Tel: + 44 (0) 207 003 3105 Notes to Editors: About Island Island was founded in 2003 and listed on AIM in December 2004 (LSE:IOG). The Company has interests in eleven Irish offshore licences, as well as licences in the Netherlands and Morocco. Island is involved in an exploration and appraisal programme which in 2006 saw successful Celtic Sea gas wells at the Old Head of Kinsale and the Seven Heads Sub-Area. The Company has again secured the Petrolia rig for its 2007 Celtic Sea drilling programme. This commenced in the second quarter of 2007 with an appraisal well at the Old Head of Kinsale gas field, which is to be followed by an appraisal well at the Schull gas field. Further information on Island can be found on the Company's website at http://www.islandoilandgas.com. This information is provided by RNS The company news service from the London Stock Exchange

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