EXTENSION OF LOAN FACILITY

Island Oil and Gas PLC
21 December 2007

21 December 2007



                         ISLAND OIL & GAS PLC ANNOUNCES

                           EXTENSION OF LOAN FACILITY



Island Oil & Gas plc (LSE:IOG) ('Island' or the 'Company'), is pleased to
announce that agreement has been reached with RMB Resources (RMB) to extend the
existing Stg£12 million loan facility, which was repayable at any time up to 31
December 2007, through to  31 March 2008.



Island has commenced a competitive tendering process with a number of selected
financial institutions to secure the appropriate level of funding required to
progress the development of its near-term production portfolio and facilitate
future working capital requirements. A further announcement will be made when
the new arrangements are in place.



Island has also agreed with RMB that the 5,759,631 three year warrants held by
an affiliate of RMB, equivalent to 5.2% of the Company's current issued share
capital, will now be cancelled in return for the issue to RMB of 1,000,000 fully
paid up ordinary shares in Island, representing 0.887% of the increased share
capital.   The Company has applied for these new ordinary shares to be admitted
to trading on the AIM market of the London Stock Exchange and it is expected
that these new ordinary shares will be admitted to trading on Wednesday 2
January 2008.  The new ordinary shares will rank pari passu with the existing
ordinary shares of the Company and will increase the number of shares in issue
to 112,706,990.



Enquiries:



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



Angela Brown Clark

Finance Manager

Island Oil & Gas PLC
Tel: [phone]




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