Farmout Agreement

Island Oil and Gas PLC
06 March 2008

ISLAND OIL & GAS PLC

('Island' or the 'Company')


Farmout Agreement

     •  Supernova Ireland Resources B.V. to increase stake in farm into Frontier
        Exploration Licence 1/04 by 10%, Atlantic Margin, offshore Ireland

     •  Agreed cash payment to Island of £2.25m

     •  Island remains designated operator of the License



Island Oil & Gas plc (LSE:IOG), today announces that Supernova Ireland Resources
B.V. ('Supernova'), a member of the Bluewater Group ('Bluewater') of the
Netherlands, has executed a second option to farm in for an additional 10%
equity in Frontier Exploration Licence 1/04 (the 'Licence') in the Porcupine
Basin in the prospective Atlantic Margin off the west coast of Ireland in return
for a cash only consideration of Stg£2.25m.



The Licence includes the Connemara oil field and several significant exploration
prospects. Supernova has exercised its exclusive option to farm in for 10%
equity in the Island operated Licence, thereby reducing the Company's net equity
interest from 51.5% to 41.5%.



Paul Griffiths, Chief Executive of Island commented:



'This deal is very much in line with our main strategy of effective risk
management by farming down our equity stakes in long term strategic projects,
and bringing in major industry players to provide support for what is a
technically complex project.



The Atlantic Margin projects provide an attractive exploration upside to our
wider international portfolio and we remain entirely committed to the project.
The £2.5m payment will give us greater flexibility in assessing our wide range
of oil and gas projects'


                                                                    6 March 2008


Further information:

Island Oil & Gas plc
Paul Griffiths
Karl Prenderville                                  Tel: [phone]
www.islandoilandgas.com

Davy (NOMAD and broker)
Anthony Farrell                                    Tel: [phone]

Landsbanki (UK broker)
Simon Robinson                                     Tel: [phone]

College Hill (Financial PR)
Paddy Blewer                                       Tel: [phone]
Nick Elwes





Notes to Editors:



Island was founded in 2003 and listed on AIM in December 2004 (LSE:IOG).  The
Company has interests in eleven Irish offshore licences in both the Celtic Sea
and Atlantic Margin. In addition, it is developing a wider portfolio, with
potentially valuable licences in the Netherlands, Albania and Morocco. Island is
involved in an exploration and appraisal programme which in 2006 and 2007 saw
successful Celtic Sea gas wells at the Old Head of Kinsale, Schull and Seven
Heads Sub-Area.






                      This information is provided by RNS
            The company news service from the London Stock Exchange