Final Results

Island Oil and Gas PLC
11 October 2006

11 October 2006

                              ISLAND OIL & GAS PLC

              PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JULY 2006


Island Oil & Gas plc ('Island' or the 'Company'), today announces its
preliminary results for the year ended 31 July 2006. The year under review has
seen the Company's transition into an accomplished operator offshore Ireland
with two successful Celtic Sea gas wells during the year, at Seven Heads West
and at the Old Head of Kinsale.


FINANCIAL HIGHLIGHTS:

  * Increased turnover of Stg£1.151 million principally from gas sales (year
    ended 31 July 2005: Stg£484,000).
  * Loss before tax of Stg£411,000 as expected, given the Company's high level
    of activity (year ended 31 July 2005: loss before tax Stg£127,000).
  * Loss per share Stg£0.0074 (year ended 31 July 2005: Stg£0.0042).


OPERATIONAL HIGHLIGHTS:

  * August 2005 - Island was awarded a 100% interest in the 'Killala Licence'
    in the strategically important Northeast Rockall Basin, adding further
    acreage to its Atlantic Margin portfolio.

  * October 2005 - Island successfully concluded a rig contract with Petrolia
    Drilling Limited for its semi-submersible drilling unit ('Petrolia Rig') for
    its 2006 drilling programme, which has now been completed resulting in two
    successful gas wells from Seven Heads West and the Old Head of Kinsale, both
    operated by Island.

  * December 2005 - Island successfully raised Stg£8.31 million by way of a
    private placing (the 'placing'). In May 2006, the Company announced that all
    warrants associated with the placing had been exercised, raising a further
    Stg£4.156 million.

  * February 2006 - the Minister for Communications, Marine and Natural
    Resources granted extensions to Licensing Options 03/5 (the Seven Heads Oil
    Option) and 03/6 (the Roscarberry Licensing Option), both in the Celtic
    Sea.

  * April 2006 - Island announced the execution of a further drilling contract
    with Petrolia Drilling Limited for the provision of the Petrolia Rig for its
    drilling programme in 2007.

  * May 2006 - Island announced that Platinum Petroleum Limited ('Platinum'),
    an international energy investment group, had agreed a major strategic
    investment in the Company. Island also entered into a Memorandum of
    Understanding with Platinum granting Island an opportunity to participate in
    international exploration and production opportunities.

  * June 2006 - Island announced a successful gas test from its first ever
    well as an independent Irish operator, Well 48/23-3, at the Seven Heads West
    Sub Area in the Celtic Sea. Upon completion of drilling and testing, Island
    also satisfied the terms of a Sub-Area Equity Interest Assignment Agreement
    with Marathon International Petroleum Hibernia Limited ('Marathon'), thus
    increasing its equity interest from 12.5% to 55.75%.

  * July 2006 - Island announced that the Old Head of Kinsale 49/23-1 well,
    the second in the 2006 drilling programme, encountered a gross gas column of
    100 feet in Lower Cretaceous reservoirs. The well was suspended for further
    evaluation. Gas in place was announced in August 2006 as being in the range
    90 to 120 bcf.

Post Year-End:

  * August 2006 - The Company was awarded two new Frontier Exploration
    Licences ('FEL') in the Slyne-Erris-Donegal Bid Round which closed in March
    2006. FEL 3/06, the Inishowen Licence in the Rockall Basin, and FEL 4/06,
    the Inishmore Licence in the Southern Slyne Trough strengthen Island's
    position in the important Atlantic Margin, offshore Ireland.

  * September 2006 - Island announced the provision of a 2007 drilling slot to
    Providence Resources plc ('Providence') for the Petrolia Rig in 2007, and a
    common strategy report between Island and Providence on the joint
    development of the companies' Celtic Sea oil assets, based on a shared
    floating production facility.

  * October 2006 - Island announced that it had entered into a Cooperation
    Agreement with EnCore Oil plc ('EnCore') covering the future development by
    both companies of their respective portfolios of exploration and
    near-development interests both in Ireland and the UK. EnCore was also
    granted an exclusive option by Island to acquire up to a 20% working
    interest in the Island-operated Frontier Exploration Licence 1/04 on the
    Atlantic Margin, offshore the west of Ireland in the Porcupine Basin.

Also in October, Island announced the appointment of Carl Kindinger as
Non-executive Director, bringing a wealth of both industry and financial
experience.

Island's Annual Report will be posted during December 2006. The Report will be
sent to all shareholders whose names appear on the register at the date of
posting.

Commenting upon the results, Paul Griffiths, Island's Chief Executive, said:

'Over the past year, Island has established itself as an accomplished operator
and has drilled two successful gas wells. The Company, in a competitive market,
also secured rig contracts for both 2006 and 2007, allowing us to move ahead
with the appraisal and development of our portfolio, and has added some very
attractive exploration acreage.'

Enquiries:

Lisa J Newman
Newman Consulting

Tel: [phone]


                              ISLAND OIL & GAS PLC

              PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JULY 2006


                              CHAIRMAN'S STATEMENT

The past year has seen a major transformation in Island Oil & Gas plc ('Island'
or the 'Company') from an oil and gas exploration company with a number of
interests offshore Ireland, to a successful operator with two Celtic Sea gas
wells in 2006, an expanded portfolio of licence interests, and an active
exploration and near-production drilling programme going forward in 2007. This
transformation has been based firstly on the success of our stated strategy of
implementing and executing a sustained 2006 drilling campaign, and secondly on
executing a further contract for the provision of the Petrolia Rig in 2007.

During the year, the Company executed an agreement with Platinum Petroleum
Limited ('Platinum'), an international energy investment group and a major
shareholder in Island, whereby we will gain access to international
opportunities, in addition to those being pursued by the Company, necessary for
the future expansion of our portfolio.

The year under review commenced with the expansion of the Company's Atlantic
Margin portfolio with the award in August 2005 of Frontier Exploration Licence 3
/05 (FEL 3/05) in the Northeast Rockall Basin. Island and Shell E & P Ireland
were the two successful applicants in the Northeast Rockall Licensing Round. FEL
3/05 contains the Killala Prospect which lies some 35 kilometres north of the
Corrib gas field and in the same basin as Shell's Dooish hydrocarbon discovery.
This was a timely and significant addition to our exploration portfolio and one
that established Island as an important stakeholder on the Atlantic Margin
fairway, west of Ireland. Subsequently, ExxonMobil farmed into an existing
licence in the Porcupine Basin, thereby establishing the Atlantic Margin as a 
focus of renewed interest for multi-national oil companies.

In February 2006 we concluded a Sub-Area Equity Interest Assignment Agreement
with our strategic partner in the Celtic Sea, Marathon International Petroleum
Hibernia Limited ('Marathon'), through which Island would increase its interest
to 55.75% in an unappraised part of the Seven Heads gas field by drilling and
paying for the cost of an appraisal well (the West Seven Heads Sub-structure).
In the same month Island also extended Licensing Options 03/5 (Seven Heads Oil)
and 03/6 (Roscarberry) until 31 December 2006 pending the results of our 2006
drilling programme.

During March 2006, Island undertook to further establish its position in the
Atlantic Margin through its application to the Department of Communications,
Marine and Natural Resources for six blocks in the Slyne-Erris-Donegal Bid
Round.  Shortly after the financial year end, in August 2006, the Company was
awarded FEL 4/06 in the Southern Slyne Trough. Island, as operator, and Lundin
Petroleum AB will each hold a 50% interest in the newly named Inishmore Licence,
which increases its stake in prospects analogous to the proven Corrib gas play.
The Company was also awarded FEL 3/06 in the South Donegal Basin. Island, as
operator, and Lundin Petroleum AB will each hold a 40% interest, and Endeavour
Energy UK Limited a 20% interest in the newly named Inishowen Licence, which
allows the Company to evaluate an underexplored frontier exploration basin
potentially prospective for Triassic gas plays.

In April 2006, Island set itself apart in a competitive market by not only
securing a contract for the Petrolia Rig for its 2006 drilling programme, but
also executing a further contract with Petrolia Drilling Limited for the same
rig for its 2007 drilling programme.

In May 2006, Island announced that Platinum had agreed a strategic investment in
Island of up to Stg£10 million by way of two convertible loans. Both these loans
were subsequently drawn down in full and converted by 8 August 2006. Platinum
can invest up to an additional Stg£11 million in Island by way of exercising up
to 10 million warrants at Stg£1.10 per share at any time in the 12 month period
ending 9 June 2007. We also entered into a Memorandum of Understanding with
Platinum which gives us the opportunity to further our longer term ambitions to
increase our international acreage portfolio through opportunities generated and
presented by Platinum.

A landmark achievement for the Company was our success in the Celtic Sea, with
our first well as operator, well 48/23-3. The well tested gas at a combined rate
of 13.2 mmscf per day. The well was suspended as a potential gas producer
pending a further detailed assessment. Our success was recognised by a
statement from Noel Dempsey, T.D., Minister for Communications, Marine and
Natural Resources, congratulating Island upon the success of the well and
Island's technical competence as an independent operator, in Ireland.

Island announced in July 2006 that the Old Head of Kinsale 49/23-1 well had
encountered a gross gas column of 100 feet in Lower Cretaceous reservoirs. The
well was suspended for further evaluation. Gas in place was announced as being
in the range 90 to 120 bcf. This marked the first successful gas exploration
well in the Celtic Sea for 16 years. The results validated Island's stated low
risk strategy of exploring for and appraising gas prospects around existing
infrastructure which, if successful, could fast track subsea tie-backs aimed at
generating early cash flow. This success has been achieved by
lowering technical risk through a significant improvement in seismic data
quality following reprocessing and a better understanding of reservoir risk. The
2007 work programme will focus on the further appraisal and development of our
gas assets.

Post financial year end, in August 2006, Island announced that the Inishbeg
exploration well in the Donegal Basin had been plugged and abandoned. Although
this was disappointing, the South Donegal Basin still remains largely
unexplored, and the acreage that the Company was awarded in the
Slyne-Erris-Donegal Licensing Round remains prospective for Triassic gas.

During the year, the full benefit of the acquisition in 2005 of a 12.5%
participating interest in the Seven Heads gas field and a 12.5% debt-free
interest in the Seven Heads infrastructure was realised with a significant
increase in gas sales. Revenues for Q4 2006 and full year 2007 are set to
increase further as Seven Heads goes to compression, which will allow an
increase in the production rate to at least 12 mmscf per day.

Outside Ireland, we still await the result of our application for an offshore
exploration permit, the Arcachon Permit, in the Aquitaine Basin in southwest
France. The Company is also pursuing near-production projects in the Netherlands
and hopes to make an announcement shortly.

The Company continues to actively recruit more personnel as our exploration and
administration requirements increase, following the successful 2006 drilling
campaign and ongoing plans for the development of our portfolio.

FINANCIAL REVIEW

The funds required to implement and execute the 2006 drilling programme were
raised in two tranches in 2005 and 2006 respectively. December 2005 saw Island
successfully complete a private placing at Stg£0.70 per share, raising Stg£8.31
million to partly fund the 2006 drilling programme. Warrants attached to the
issue of these shares were fully taken up by May 2006 raising a further
Stg£4.156 million in drilling funds.

May 2006 saw Island's major shareholder, Platinum, conclude an agreement with
the Company whereby it could make a strategic investment of up to Stg£10 million
in Island by way of two convertible loans. Both these loans were subsequently
drawn down in full and converted by 8 August 2006. Platinum can invest up to an
additional Stg£11 million in Island by way of exercising up to 10 million
warrants at Stg£1.10 per share, at any time in the 12 month period ending 9 June
2007. These placings both expanded our shareholder base and strengthened the
strategic investment made by Platinum in Island.

The Group recorded a loss on ordinary activities before tax of Stg£411,000,
compared to Stg£127,000 in the year ended 31 July 2005. Gross revenue from our
interest in the Seven Heads gas field resulted in improved turnover of Stg£1.151
million compared to Stg£0.484 million in the previous year, reflecting increased
production together with higher realised gas prices due to winter profiling.
Administration costs for the year were Stg£1.267 million compared to Stg£0.728
million in the previous year. This increase reflects the Company's growth during
the period, which saw the establishment of a Dublin Headquarters and related
management systems.

Cash balances at the year end amounted to Stg£6.071 million. These balances take
no account of the cash received as a result of the second convertible loan being
executed in August amounting to Stg£5.5 million, which occurred after year end. 
A further Stg£2 million was received in October 2006 as part of the exclusive 
option granted to EnCore.

BOARD CHANGES

Post financial year end, Jack McKinney stepped down from an active role in the
Company, where he held positions as Commercial Director and Acting Finance
Director. The Board would like to thank Jack for his significant contribution in
the establishment and early growth of the Company.

In October 2006, the Company appointed Carl Kindinger as a Non-executive
Director to oversee the financial management of the Company including the
further development of the Company's portfolio of oil and gas assets. Carl has
considerable experience in financial planning, project cost control, feasibility
studies, cross border mergers and acquisitions and international tax planning.
He has successfully raised project-related finance and working capital from
international banks, and has initiated a number of IPO's.

During the year Terry Jones resigned as Finance Director.

Karl Prenderville, former Finance Director of Enterprise Energy Ireland Ltd, has
been appointed consultant Financial & Commercial Manager. Karl has worked in the
oil industry for over 25 years in the UK, Indonesia, Cambodia, Vietnam &
Seychelles. He brings valuable experience from working on the Camar Oil Field
development in Indonesia and the Corrib Gas development in Ireland, both for
Enterprise Oil. His experience further strengthens Island's financial team.

The Company will seek to appoint additional executive and Non-executive
Directors to support its increasing level of activity.

OUTLOOK

The year under review has seen Island successfully pursue our stated strategy of
implementing and executing a multi-well drilling programme. This has resulted in
Island establishing itself as an accomplished operator, having drilled two
successful gas wells. The Company has already secured a rig contract for 2007 to
continue this appraisal and development programme. This also allows Island to
control the growth of its business by seeking out strategic alliances from a
position of strength.

Island has a balanced portfolio of low risk, near-production assets (the Celtic
Sea gas assets and Connemara oil field) and higher risk exploration acreage with
exposure to large prospects (Slyne and Rockall) on the Atlantic Margin. The
Company is making good progress in its re-evaluation of the Connemara oil field
as a potential near-production candidate for 2008/2009. The work completed to
date has generated significant interest, which is substantiated by the exclusive
farm-in option already granted to EnCore Oil. Similarly, we anticipate strong
interest from potential farminees having established a portfolio of high-impact
exploration prospects along the Atlantic Margin.

The strength of gas prices during the year has increased our
production revenue from the Seven Heads gas field and demonstrates the potential
value of the Celtic Sea infrastructure.

Island is well positioned to attract investment for its near-production projects
in the Celtic Sea, on the Atlantic Margin and, potentially, in the Netherlands.
We will seek finance through joint venture partnerships and the investment
community.

Establishing Island as a leading operator offshore Ireland and having drilled
the first gas discovery in the Celtic Sea for 16 years, is an outstanding
achievement.

Finally, we would like to thank our shareholders as we look forward to your
continuing support in the development of your Company.



CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 July 2006

                                       Year ended           Year ended
                                          31 July              31 July
                                             2006                 2005
                                         Stg£'000             Stg£'000


Turnover                                    1,151                  484
Cost of sales                                (712)                (263)
                                       ----------          -----------
                                       
Gross profit                                  439                  221

Profit on sale of interest 
in licence and sale of financial asset         -                   104
Administration expenses                    (1,267)                (728)
                                       ----------          -----------
                                       

Operating loss - continuing operations       (828)                (403)
Interest receivable and similar income        446                  276
Unwinding of discount on 
decommissioning provision                     (29)                   -
                                       ----------          -----------
                                        

Loss on ordinary activities before taxation  (411)                (127)
Taxation on loss on ordinary activities        (8)                 (21)
                                       ----------          -----------
                                        
            

Loss for the financial year                   (419)               (148)

Earnings per share (Stg£)                  (0.0074)            (0.0042)
                                       ===========         ===========


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 July 2006

                                         Year ended         Year ended
                                            31 July            31 July
                                               2006               2005
                                           Stg£'000           Stg£'000


Loss for financial year                        (419)              (148)
Unrealised profit on disposal of 
intangible asset                                  -                  47
                                         ----------         -----------

Total recognised gains and losses f
or the financial year                          (419)               (101)
                                         ==========         ===========


CONSOLIDATED BALANCE SHEET
At 31 July 2006

                                               2006                2005
                                           Stg£'000            Stg£'000


Fixed assets
Tangible assets                                2,147              2,617
Intangible assets                             30,950              3,309
                                         -----------         ----------

                                              33,097              5,926

Current assets
Debtors                                        9,893                245
Cash at bank and in hand                       6,071              8,366
                                         -----------         ----------

                                              15,964              8,611


Creditors: amounts falling due within 
one year                                     (13,311)              (205)
                                         -----------        -----------

Net current assets                             2,653              8,406

Total assets less current liabilities         35,750             14,332
Provision for liabilities and charges           (646)              (617)
                                         -----------        -----------

Net assets                                    35,104             13,715
                                         ===========        ===========

Capital and reserves
Called up share capital                          478                326
Share premium                                 29,712             13,556
Shares to be issued                            5,500                 -
Unrealised reserve                                47                 47
Profit and loss account                         (633)              (214)
                                         -----------        -----------

Shareholders' funds                           35,104             13,715
                                         ===========        ===========


CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 July 2006

                                           Year ended         Year ended
                                              31 July            31 July
                                                 2006               2005
                                             Stg£'000           Stg£'000


Net cash (outflow) from operating activities     (569)              (416)

Returns on investments and servicing of finance    446               276

Corporation tax                                      7               (27)

Capital expenditure and financial investment   (18,486)             (343)

Acquisition of subsidiary undertakings               -               200
                                           -----------       -----------


Net cash outflow before financing              (18,602)             (310)

Financing                                       16,307             7,702
                                           -----------       -----------

(Decrease)/increase in cash for the year        (2,295)            7,392
                                           ===========       ===========






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