Interim Results

Island Oil and Gas PLC
19 April 2006



19 April 2006


                              ISLAND OIL & GAS PLC


            INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006


Island Oil & Gas plc ('Island' or the 'Company'), the technology-led exploration
and production company, today announces its interim results for the six months
ended 31 January 2006.


FINANCIAL HIGHLIGHTS:


    * Increased turnover of Stg£476,000 from gas sales

    * Reduced loss before tax of Stg£33,000 (six months ended 31 January
      2005: loss before tax Stg£545,000)

    * Retained cash balances of Stg£13.6million

    * Loss per share 0.13pence Stg (six months ended 31 January 2005: loss
      per share 2.18pence Stg).


HIGHLIGHTS


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


  * October 2005 - Island successfully concluded a rig contract with Petrolia
    Drilling Limited for its 2006 three-well drilling programme which commences
    in April 2006.


  * December 2005 - Island successfully raised Stg£8.31 million by way of a
    private placing, with a further Stg£4.15million receivable if all warrants
    associated with the placing are exercised.

*  January 2006 - Island announced important Board changes allowing
   the Company to fully capitalise upon the skills and experience of the Island
   team, and ending temporary arrangements put in place at the time of the
   Company's listing in 2004.


Post interim period:


  * February 2006 - the Irish Authorities granted extensions to Licensing
    Options 03/5 (the Seven Heads Oil Option) and 03/6 (the Roscarberry
    Licensing Option), both in the Celtic Sea.

  * March 2006 - Island announced that it had made an application for
    six blocks in the Slyne-Erris-Donegal Bid Round.  The blocks applied for are
    in the Southern Slyne Basin and Donegal Basin in the important Atlantic 
    Margin.


  * April 2006 - Island announced that it has executed a further drilling
    contract with Petrolia Drilling Limited for the provision of the Petrolia
    rig for its planned 150 day drilling programme in 2007.


It is expected that Interim Results will be posted to shareholders within the
next 14 days.


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


 'The period under review has seen us create significant opportunities for
enhancing shareholder value by making considerable progress in the expansion of
our project portfolio, whilst also preparing for our 2006 drilling programme and
for further exploration and appraisal drilling planned for 2007.


'We intend to start 2006 three-well programme with two wells in the Celtic Sea
on a Sub-Area of the Seven Heads Petroleum Lease and at the Old Head
of Kinsale, followed by a well on the Inishbeg Prospect in the Donegal Basin.
The commencement of drilling on all three prospects is subject to the usual 
regulatory consents and approvals.

'We have also, in a tight rig market, successfully secured the Petrolia rig for
our proposed 2007 drilling programme.  This gives us an opportunity to evaluate
our existing, and future, prospects along the Atlantic Margin, follow-up any
2006 exploration success, and potentially develop an international spread of
projects.  We remain excited by the Company's portfolio and prospects.'


Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting

Tel: [phone]


                              
                              Island Oil & Gas plc

                          ('Island' or the 'Company')


                                INTERIM RESULTS


                              CHAIRMANS STATEMENT


Introduction


The six months ended 31 January 2006, to which these interim accounts relate,
and through to the present time has been an extremely busy period as the Company
gears up for a three-well drilling programme, starting in the second quarter of
this year.  Wells are planned at the Sub-Area of Seven Heads and the Old Head of
Kinsale in the Celtic Sea, as well as the Inishbeg prospect in our Donegal Basin
Frontier Exploration Licence, subject to the usual regulatory consents and
approvals.  In addition to preparations for an active 2006 exploration
programme, we have also been continuing the expansion of our project portfolio
and developing our 2007 exploration plans.

In our results for the year ended 31 July 2005 published in late January 2006,
we reported a number of post balance sheet events, including the award in August
2005 of Frontier Exploration Licence 3/05 (the 'Killala Licence'); the
successful execution of a rig contract in October 2005 for our 2006 three-well
drilling programme, and the successful conclusion of a private placing in
December 2005.  We also announced the restructuring of our Board, including the
appointment of our Finance Director, Terry Jones.  Subsequent to the six months
ended 31 January 2006, we announced the conclusion in February 2006 of a
Sub-Area Equity Interest Assignment Agreement for the Seven Heads Petroleum
Lease with Marathon International Petroleum Hibernia Limited, and our Licence
application in March 2006 for six blocks in the recent Slyne-Erris-Donegal Bid
Round.


FINANCIAL RESULTS


The Group recorded a loss on ordinary activities before tax of Stg£33,000 for
the half year period.

In December 2005, Island successfully raised Stg£8.31 million by way of a
private placing at 70 pence per share, with a further Stg£4.15 million
receivable in April 2006 if all the 5,937,000 warrants associated with the
placing are exercised.  We are pleased to report that as of 7 April 2006,
2,354,230 warrants have been exercised, representing 39.65% of the warrants
issued, and raising a further Stg£1.65 million for the Company at this early
stage in the exercise process.

At the end of the reporting period, cash balances amounted to some Stg£13.6
million.  These balances take no account of the cash received as a result of the
warrants exercised, as detailed above, as these were exercised after the period
for which the accounts were prepared.

The financial results for the half year have been prepared following the
accounting policies set out in the Company's 2005 Annual Report and these have
been applied on a consistent basis.



Gas Production Revenue


Island became a gas producer with effect from 1 October 2004 as a result of the
acquisition of a 12.5% participating interest in the Seven Heads Petroleum
Lease.  At the time of our Annual General Meeting held in March 2006, we were
pleased to report that we had received in total some Stg£1.2 million in gas
sales receipts from Seven Heads up to the end of February 2006. Gas sales
revenues through to the end of March 2006 now total Stg£1.5 million.  Of this
figure, Stg£476,000 is reflected in the results for this half year and compares
with some Stg£484,000 for the 10 month period from 1 October 2004  to 31 July
2005 as reported in our 2005 Annual Report. Under the production regime
introduced by the new Operator, production from the field was increased from 4
mmscfd to 10 mmscfd from 1 February this year as part of a winter profiling
strategy.


Portfolio Expansion


In August 2005, Island was awarded the 'Killala Licence' in the strategically
important Northeast Rockall Basin, adding further acreage in the Atlantic
Margin. The Company has a 100% interest and operatorship in this 15 year
Frontier Exploration Licence, which is located approximately 70 kilometres off
the west coast of Ireland and approximately 35 kilometres north of the Corrib
gas field. The Licence contains one very significant exploration prospect
covering an area of up to 80 square kilometres, together with a number of other
prospects and leads.  The Northeast Rockall Basin had historically been
neglected but has recently received extensive attention as exploration companies
reconsider the potential of this area in the light of oil and gas prices
prevailing at present, and now being forecast for the future.

In February 2006, the Irish Authorities granted extensions to two of Island's
Celtic Sea Licensing Options: Licensing Option 03/5 (the Seven Heads Oil Option)
and Licensing Option 03/6 (the Roscarberry Licensing Option), until 31 December
2006.  Island has a 12.5% participating interest in the Seven Heads Oil Option.
A decision on future exploration activity will be taken during this year, and
through an Option Agreement executed with Ramco Oil and Gas Limited in April
2004, Island can acquire a further 44.4% equity interest in the Seven Heads Oil
Licensing Option by committing to and funding 74% of an appraisal well to test
the oil-bearing Lower Wealden reservoirs in the Seven Heads structure.

The Roscarberry Licensing Option is located immediately to the north of Seven
Heads.  Island has a 22% participating interest in the Option which includes the
Roscarberry Prospect.  Island, alongside its partners, has completed a work
programme designed to mature for drilling this Prospect, a potentially
significant Greensand gas structure, in advance of a decision on future
exploration activity to be taken this year.  Any future gas production could
potentially be tied back to the Seven Heads infrastructure.

In March 2006, the Company announced that an application was made to the
Petroleum Affairs Division of the Department of Communications, Marine and
Natural Resources for six blocks in the Slyne-Erris-Donegal Bid Round, which
closed on 15 March 2006.  The areas applied for are in the Southern Slyne Basin,
where a large structural lead prospective for Triassic gas was identified, and
in the Donegal Basin, where a series of potential Triassic structures were
mapped on trend with the Inishbeg Prospect, which will be drilled by Island and
its partners later this year. These structures are potentially prospective for
both oil and gas.  The Atlantic margin is seen by the Company as a strategically
important area for the future discovery of the large quantities of indigenous
gas necessary to reduce Ireland's long term dependence on gas imported from the
United Kingdom.


2006 Drilling Programme


In October 2005, Island successfully executed a rig contract with Petrolia
Drilling Limited for the 'Petrolia' rig for the planned 2006 drilling programme,
which will commence during the second quarter of 2006.  This was a real
achievement in what is a highly competitive market for offshore drilling rigs.
Following the conclusion in February 2006 of a Sub-Area Equity Interest
Assignment Agreement (the 'Agreement') for the Seven Heads Petroleum Lease with
Marathon International Petroleum Hibernia Limited, through its wholly-owned
subsidiary Marathon Seven Heads Limited (formerly Ramco Celtic Sea Ltd), the
first well of the 2006 drilling programme will be drilled to test a possible
extension of the Seven Heads gas field.

This first well will be located in an area immediately to the west of the 48/
24-6 production well, which has to date encountered some of the best producing
sands in the Seven Heads gas field.  Island will fund 100% of the cost of the
well, including testing, in return for increasing its equity interest in all of
the un-appraised parts of the Seven Heads Petroleum Lease west of a defined
partition line.  Island's equity interest in the Sub-Area will increase from
12.5% to 55.75%.  Island will operate the well during the drilling period but
operatorship will revert back to Marathon once the drilling programme has been
completed.

It is intended that the second and third wells of the programme will 
respectively be on the Old Head of Kinsale Prospect in the Celtic Sea, and on 
the Inishbeg Prospect in the Donegal Basin, subject to government and partner
approvals.  The Old Head of Kinsale lies immediately to the southeast of the
Kinsale field.  Island plans to drill a well on the Old Head of Kinsale
structure immediately after the Seven Heads well.  Thereafter in the Atlantic
Margin, the Company will be involved with a 31% equity interest in a well being
drilled on the Inishbeg Prospect in Frontier Exploration Licence 1/05 in the
Donegal Basin with Lundin as Operator. The Inishbeg Prospect is in shallow water
and in the event of a commercial discovery this could be linked to existing
onshore pipeline facilities to supply the Irish market and with the potential to
develop an export market through the existing gas interconnectors which already
link Ireland to the UK and beyond.


2007 Drilling Programme

In recent days, Island executed a further drilling contract with Petrolia
Drilling Limited for the provision of the semi-submersible drilling unit
'Petrolia' in 2007. The contract is for a 150 day drilling programme.   It is
currently anticipated that the 2007 drilling programme will be primarily focused
along the Atlantic Margin off the west coast of Ireland, subject to the
necessary regulatory consents being granted, but further details of the
programme will be announced during the coming months. The remainder of the
programme remains flexible in order to allow for possible appraisal drilling
based on a potentially successful outcome to the 2006 drilling campaign.  In
addition, Island is reviewing the opportunity to progress potential new
international ventures in Northwest Europe and North Africa which are currently
being evaluated.

Further details in relation to the 2007 drilling programme will be announced in
the coming months.


BOARD

We announced, in January 2006, important changes to the Island Board.  The Board
changes were enacted in order to allow the Company to fully capitalise upon the
skills and experience of the Island team during an important time in the
Company's development.  These changes included the appointment of Terry Jones as
Finance Director. In addition, Island's Acting Finance Director, Jack McKinney,
replaced Phil Beck as Commercial Director whilst Phil moved to take up the role
of New Ventures Director. These changes ended the temporary arrangements put in
place on listing the Company in 2004.  The Company has also expanded its
operational and support team and has opened a new registered office in the
centre of Dublin with further facilities set up in Aberdeen and Cork to support
our drilling operations.


OUTLOOK & PROSPECTS:

With an active drilling programme about to commence and further exploration
drilling contemplated in 2007, we believe that Island is creating a significant
opportunity for enhancing shareholder value.

We will shortly be commencing our three-well 2006 drilling programme with two
wells in the Celtic Sea and a well on the Inishbeg Prospect in the Donegal
Basin.  In addition, the Company has successfully secured the Petrolia rig for
our proposed 2007 drilling programme.  The 2007 drilling programme provides
Island with an opportunity to evaluate its existing and potential future
prospects along the Atlantic Margin offshore Ireland, and follow-up on any 2006
exploration success and, importantly, to potentially develop an international
spread of exploration and appraisal projects. Rig availability, in a tight
market, gives us significant leverage to use to attract new potential partners
to our extensive portfolio of mature exploration projects at a time when
quality, high risk/high reward exploration targets are in short supply and rig
availability is limited.



Island Oil & Gas plc
Consolidated profit and loss account
Interim to 31 January 2006
unaudited)

                                             6 Months     6 Months     Year
                                             ended 31     ended 31     ended 31
                                             Jan 2006     Jan 2005     July 2005
                                             Stg£'000     Stg£'000     Stg£'000


Turnover                                      476           -            484

Cost of sales                                (389)          -           (263)
                                             ------        -----        ------
                                    
Gross profit                                   87           -            221

Profit on sale of interest in
licence and sale of financial asset             -          104           104
Other expenses                                  -         (194)            -
Administration expenses                      (319)        (533)         (728)
                                             ------       ------        ------


Operating loss - continuing operations       (232)        (623)         (403)
Interest receivable and similar income        199           78           276
                                              -----        -----        -----


Loss on ordinary activities before taxation   (33)        (545)         (127)
Taxation on loss on ordinary activities       (35)         (12)          (21)
                                             -------      ------       ------


Loss for the financial period/year            (68)        (557)         (148)
Profit and loss account at beginning of 
period/year                                  (214)         (66)          (66)
Foreign exchange movement on reserves           -           (2)            -
                                             ------       ------         ----


Profit and loss account at end of 
period/year                                  (282)        (625)         (214)
                                             ======       =======       ======


Loss per share (pence)                      (0.13)        (2.18)        (0.42)
                                            ========      ======       ========
                                           

        

Island Oil & Gas plc
Consolidated balance sheet
at 31 January 2006
(unaudited)

                                            31 Jan         31 Jan     31 July
                                            2006           2005       2005
                                            Stg£'000       Stg£'000   Stg£'000
    
Fixed assets
Tangible assets                             2,335             -       2,617
Intangible assets                           6,830          2,836      3,309
                                           ---------       -------    ------

                                            9,165          2,836      5,926


Current assets
Bank and cash                              13,556          8,472      8,366
Debtors                                       394             62        245
                                           -------         ------     ------

                                           13,950          8,534      8,611


Creditors: amounts falling due within 
one year                                     (941)          (303)      (205)
                                          --------      -----------   -------


Net current assets                         13,009          8,231      8,406
                                          --------       ---------    ------


Total assets less current liabilities      22,174         11,067     14,332
Provision for liabilities and charges        (631)             -       (617)
                                         ----------       --------   -------

Net assets                                 21,543         11,067     13,715
                                         ==========      =========   =======


Capital and reserves
Called up share capital                       406            298        326
Share premium                              21,372         11,394     13,556
Unrealised reserve                             47              -         47
Profit and loss account                      (282)          (625)      (214)
                                           --------       ---------   -------


Shareholders' funds                        21,543         11,067     13,715
                                         =========       ==========  =======



Island Oil & Gas plc
Consolidated cash flow statement
Interim to 31 January 2006
(unaudited)

                                        6 Months         6 Months     Year
                                        ended 31         ended 31     ended 31
                                        Jan 2006         Jan 2005     July 2005
                                        Stg£'000         Stg£'000     Stg£'000


Net cash inflow/(outflow)
from operating activities                    564             (557)        (416)

Returns on investments and servicing of 
finance                                      199               41          276

Corporation tax                               (2)             (10)         (27)

Capital expenditure and financial 
investment                                (3,465)             122         (343)

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

Net cash (outflow) before financing       (2,704)            (204)        (310)

Financing                                  7,894            7,702        7,702
                                          ---------        --------     -------

Increase in cash for the period/year       5,190            7,498        7,392
                                          =========        ========     =======

Reconciliation of net cash flow
to movement in net cash
Increase in cash during the period/year    5,190            7,498        7,392
Net cash at start of period/year           8,366              974          974
                                          --------          --------     ------

Net cash at end of period/year            13,556            8,472        8,366
                                         =========         =========    =======





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