Interim Results

Island Oil and Gas PLC
09 March 2007


9 March 2007




                              ISLAND OIL & GAS PLC

            INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007


Island Oil & Gas plc ('Island' or the 'Company'), today announces its interim
results for the six months ended 31 January 2007. The results are announced
against the backdrop of an extremely active period of domestic and international
portfolio expansion, successful strategic industry alliances and the Company's
continued recognition as a successful operator offshore Ireland.

FINANCIAL HIGHLIGHTS

•Increased turnover of Stg£1.2 million from gas sales (six months
ended 31 January 2006 Stg£0.5 million)

•Gross profit of Stg£0.8 million (six months ended 31 January 2006
Stg£0.1 million)

•Operating loss (including Stg£5.5 million write-off following the
plugging and abandonment of the Inishbeg exploration well in August 2006) of
Stg£5.39 million, (six months ended 31 January 2006 Stg£0.22million)

•Retained cash balances of Stg£2.4million (retained cash balance as
at 31 January 2006 Stg£13.6million)

•October 2006 - Island appointed UK Broker, Bridgewell, to work
alongside the Company's Irish Broker, Davy, to diversify Island's shareholder
profile in the UK

•December 2006 - Island announced the successful agreement of a
Stg£7.5 million short term loan facility through RMB Resources, the resources
merchant banking business of Rand Merchant Bank, part of the First Rand Group of
South Africa

OPERATIONAL HIGHLIGHTS

Island now operates seven out of its eleven domestic and international
licences.
   
•August 2006 - Island confirmed that the Old Head of Kinsale well marked a
significant gas discovery for the Company, and the first new gas discovery
in the Celtic Sea for 16 years.

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

•September 2006 - Island announced the provision of a drilling slot to
Providence Resources plc ('Providence') for the Petrolia Rig in 2007, and a
common strategy study between Island and Providence on the potential 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 in both 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. This option has been extended to 30 June 2007,
subject  to certain terms and conditions.  Island also announced that it was in
the  process of increasing its interest in Frontier Exploration Licence 1/04 to
61.5% through the acquisition of a 21.5% interest from X-ipec Limited

•October 2006 - Island announced the appointment of Carl Kindinger as
non-Executive Director responsible for overseeing the Company's financial
management.

•November 2006 - Island announced the award of its first international
acreage; an interest in the Q13 Production Licence, offshore the Netherlands. 
Following the Dutch Government's decision to take up its 40% equity entitlement,
Island now holds a 60% interest in this licence.

•November 2006 - Production from the Seven Heads gas field, in which Island
holds a 12.5% stake, increased to 20 mmscf per day. 

•December 2006 -Island announced details of its planned 2007 drilling
programme, to include appraisal drilling in the Old Head of Kinsale and the
Schull gas accumulations, along with its planned Atlantic Margin farmout 
programme.

•December 2006 - Island announces the further expansion of its international 
portfolio with the award of an exclusive 12 month Reconnaissance Licence in 
Morocco, through which the Company is fully carried.

It is expected that the Interim Report will be posted to shareholders by the end
of this month.


Commenting upon the Company's performance, Paul Griffiths, Chief Executive of
Island, stated:

'The period under review has seen Island expand and progress its extensive Irish
and International project portfolio. The Company has added to its acreage in the
highly prospective Atlantic Margin, whilst also delivering upon a stated
intention to add an international element to the portfolio through the
acquisition of projects in the Netherlands and a fully carried interest in
Morocco. During the interim period, we confirmed that our focus was to bring
forward the value of our extensive portfolio by farming down our interests in
projects and seeking strategic industry alliances which will allow us to
progress a timeline of project development. We have had great interest from the
industry, given that we have built an attractive and diverse portfolio of
near-development oil and gas projects, and believe that decreasing our financial
exposure and finding partners willing to progress these projects quickly towards
commerciality will build shareholder value.'

Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting

Tel: [phone]


                              Island Oil & Gas plc

                          ('Island' or the 'Company')

                                INTERIM RESULTS

                              CHAIRMAN'S STATEMENT

Introduction

The six months ended 31 January 2007 has been a period of intense activity for
Island which has seen the Company significantly expand its asset portfolio
within Ireland and internationally.

Our successful 2006 drilling campaign in the Celtic Sea has significantly
advanced our near term development strategy. Securing the Petrolia Rig for a two
well drilling programme in 2007 has further progressed the development of these
assets. We also added to our Irish portfolio by acquiring two exploration
licences in the highly prospective Atlantic Margin.

The Company also delivered upon its stated intention of adding a valuable
international element to its portfolio with the award of a production licence in
the Netherlands and a fully carried exploration licence interest in Morocco. It
is of strategic significance that the Company was accepted as an approved
operator of a field development in the Netherlands, supported by its operating
track record. We are the first company of our size to have achieved such status
in the Dutch North Sea sector.

At our Annual General Meeting in January 2007, we communicated our strategy of
accelerating the key development projects through alliances with industry
partners. This should allow us to reduce capital costs and bring forward
cashflow. Examples of this can be seen in our Cooperation Agreement with EnCore
Oil plc ('EnCore') and our agreement with Providence Resources plc
('Providence') to initiate a common strategy report for the joint development of
the companies Celtic Sea oil assets.

The Company continues to actively pursue significant farmout transactions that
will demonstrate our ability to successfully deliver our strategy of developing
key industry alliances based on the strength and integrity of our most advanced
near-development oil and gas projects.

The Board was further strengthened with the appointment of Carl Kindinger as a
Non-executive Director in October 2006. We secured a Stg£7.5 million loan
facility through RMB Resources, in December 2006, with whom we intend to build a
key financial relationship for the further development of our portfolio. We
believe the Company has further enhanced its capability to deliver and maintain
shareholder value in the foreseeable future through building strategic
relationships with oil industry partners and financial institutions.


FINANCIAL RESULTS

The Company recorded a loss before taxation of Stg£5,344,000 for the half year
period compared to Stg£33,000 in the previous comparable period. As advised in
the 2006 Annual Report provision of Stg£5,500,000 was required following the
plugging and abandonment of the Inishbeg exploration well in August 2006. The
Company's loss reflects full provision for that write-off.

Gross revenue from our interest in the Seven Heads Gas Field resulted in
improved turnover of Stg£1,182,000 compared to Stg£476,000 in the previous
comparable period, largely reflecting increased production due to winter
profiling.

Cost of sales for the half year were Stg£0.38m in line with costs incurred in
the same period last year. Administration costs for the half year were Stg£0.7
million compared to Stg£0.3million in the previous comparable period. This
reflects the Company's growth during the period and the obligations connected to
its operatorship of an offshore drilling programme.

In December 2006, we announced that Island secured a Stg£7.5 million short term
loan facility ('facility') through RMB Resources. The facility is repayable, at
Island's option, at any time up to 31 December 2007, and is intended to be used
primarily to further the Company's appraisal and near-term development
activities during 2007, including our planned Celtic Sea wells. As part of the
agreement, Island agreed to grant RMB Resources warrants to purchase new
ordinary shares in Island at a subscription price of Stg£0.7813 per ordinary
share, subject to certain conditions. The number of warrants to be issued is
linked to the repayment date of the loan. An initial 1,439,908 warrants were
granted on signature of the Facility Agreement and a further 1,919,877 and
2,399,846 warrants may be granted on 30 June 2007 and 31 December 2007
respectively, if Island elects to maintain the facility as at these dates. All
warrants expire on the third anniversary of their date of issue.

Cash balances at the year ended amounted to Stg£2.4 million. It is anticipated
that farmout and asset sale transactions will result in cash payments to the
Company.

Following the provision of a drilling slot to Providence for the Petrolia Rig in
2007, Providence paid Stg£0.7million to the company being its share of the
Stg£2million deposit paid to Petrolia in 2006 to secure the Petrolia Rig. The
Stg£2million deposit will be repaid during the 2007 drilling programme.

The Company has adopted FRS 20 'Share-based payment' from 1 August 2006. The
fair value of share options granted to directors is recognised in the financial
statements as a cost of share awards. This accounting standard replaces UITF
Abstract 17 'Employee share schemes'.

The financial results for the half year have been prepared following the
accounting policies set out in the Company's 2006 Annual Report and these have
been applied on a consistent basis.


Gas Production Revenue

Gas sales revenues for the interim period now total Stg£1,182,000 compared with
Stg£476,000 for the same comparable period in 2006. This reflects increased
production from the Seven Heads gas field which produced at rates ranging from
12 - 20 mmscf per day since production restarted in October 2006. It is expected
production rates will be maintained at 12 mmscf per day until the end of
September 2007.

Estimated gross remaining reserves from 1 January 2007 are 7.8 bcf or 0.975 bcf
net to Island, according to Marathon's latest estimates.


Portfolio Expansion

During the interim period, Island has successfully expanded its project
portfolio both domestically and internationally. The Company was awarded two new
licences along the Atlantic Margin, 'Inishmore' in the Slyne Trough and
'Inishowen' in the Donegal Basin. One significant gas prospect has already been
identified in the Slyne Licence 4/06.

Island was granted operatorship and currently holds a 60% share in the Amstel
Oil Field in the Netherlands, making it the first company of its size to be
named as an 'approved operator' of a field development in the Dutch North Sea.
The Company was also awarded a fully-carried interest in a 12 month
Reconnaissance Licence in Morocco.


Celtic Sea Assets

The focus of the 2007 drilling programme will be a pre-development well at the
Old Head of Kinsale gas field, which is expected to commence early in the second
quarter. A fast track development with two producing wells tied back 25 km. to
the Kinsale platform facilities is planned, pending a successful test on this
gas field and approval of a Plan of Development by the Irish regulatory
authorities.

Following this, the Petrolia rig will move to the nearby Schull Licence, where
Island will drill an appraisal well to evaluate the 57/2-2 discovery made in
1987 by Total.

We are currently in negotiations with several parties who are interested in
participating in the Old Head and Schull projects.


Atlantic Margin

In the Rockall Basin, the Company continues to evaluate the potential multi TCF
'Killala' prospect and a farmout programme has now commenced. A 3D seismic
survey will be conducted in 2008. Plans have been put in place to fast-track the
technical evaluation of this potentially large gas structure, analogous to the
Corrib gas field, given the possibility of a deepwater rig being mobilized to
Ireland in 2008 to drill elsewhere on the Atlantic Margin.

Reservoir engineering studies are continuing on the Connemara Oil Field to
optimise a potential development strategy and potential recoverable reserves.
Exploratory discussions have begun with potential suppliers of floating
production facilities interested in earning equity in any future field
development plan, subject to a satisfactory outcome of the current reservoir
engineering and commercial studies. Two potentially significant exploration
leads have also been identified which could further attract joint venture
partners and an appraisal and exploration drilling programme.

Evaluation work is underway on the two new Island-operated Licences in Slyne
Trough and Donegal with a large gas prospect already identified in the Slyne
Licence ('Inishmore'). Although the Inishbeg exploration well in the South
Donegal Basin was plugged and abandoned as a dry hole in 2006, results from the
well supported the Company's decision to acquire the Inishowen Licence in this
under-explored, shallow water basin with potential for Triassic oil and gas
structures.


International Portfolio

In November 2006 Island was awarded operatorship and 100% of the Amstel
Production Licence. Subsequently the Dutch Government has taken up its 40% full
paying equity entitlement. We are currently evaluating development options for
this oil field with estimated recoverable reserves of approximately 10 million
barrels.

In December 2006, the Company was awarded a fully carried 20% equity in the Zag
Basin Licence in Morocco. This is a continuation of the Palaeozoic oil and gas
basins of Libya and Algeria and the area under licence to Island is
approximately a third the size of Ireland.

Island is actively pursuing further exploration and development opportunities in
the Netherlands and in other countries where our proven record as an operator
can be strategically utilised.


Industry Alliances and Strategic Alliances

The Company continues to build strategic alliances as demonstrated by our
Cooperation Agreement with EnCore, rig sharing arrangement with Providence for
the Petrolia Rig, and financial relationship with RMB Resources.

It is the objective of the Company to progress a farmout schedule for its
various domestic and international near-development and exploration and
appraisal projects on the Atlantic Margin, which should allow the Company to
establish a rolling programme of potential oil and gas developments over the
next two to five years. This is to exploit prevailing market sentiment where oil
companies and financial institutions are seeking opportunities to joint venture
in the development of near-proven assets capable of generating early cash flow.


OUTLOOK & PROSPECTS

Island has another extensive Celtic Sea drilling programme for 2007 and is
already looking at rig options for 2008, both in Ireland and the Netherlands. We
also have some very attractive exploration acreage in the Atlantic Margin which
is generating considerable industry interest. We have a well balanced portfolio
of near-development, appraisal and exploration assets and will continue to seek
out new international opportunities. Internationally, our growing reputation as
an independent operator can be used to create a significant uplift in the value
of the assets acquired for our shareholders through taking an asset stranded by
the lack of an approved operator and taking over its development. This strategy
was successfully executed with the award of the Amstel Production Licence in the
Netherlands. Island differs from many of its competitors in that it has a
portfolio of near-development oil and gas projects that it operates and
controls, and the strategic industry and banking alliances in place necessary to
develop these assets into production revenues.

I look forward to reporting more progress on the successful delivery of our
strategy to you in the near future.

Bryan Benitz
Chairman
8 March 2007


Island Oil & Gas plc
Consolidated profit and loss account
Interim to 31 January 2007
(unaudited)

                                            6 Months     6 Months     Year
                                            ended 31     ended 31     ended 31
                                            Jan 2007     Jan 2006     July 2006
                                            Stg£'000     Stg£'000*    Stg£'000*


Turnover                                       1,182        476          1,151
Cost of sales                                   (376)      (374)          (712)
                                               ------     ------         ------

Gross profit                                     806        102            439

Administration expenses                         (696)      (319)        (1,040)
Cost of share awards                               -          -            (70)
Costs associated with uncommercial projects   (5,500)         -           (227)
                                              -------       ----        -------

Operating loss - continuing activites         (5,390)      (217)          (898)
Interest receivable and similar income            61        199            446
Unwinding of discount on decommissioning 
provision                                        (15)       (15)           (29)
                                                 -----     ------        -------
Loss on ordinary activities before taxation   (5,344)       (33)          (481)

Taxation on loss on ordinary activities            -        (35)            (8)

Loss for the financial period/year            (5,344)       (68)          (489)
                                              =======       ====         ======

Loss per share (Stg£)                        (0.0713)   (0.0013)       (0.0086)
                                             ========   ========       ========


*As restated for FRS20 'Share-based payment'


Island Oil & Gas plc
Consolidated balance sheet
at 31 January 2007
(unaudited)

                                            31 Jan       31 Jan       31 July
                                            2007         2006         2006
                                            Stg£'000     Stg£'000*    Stg£'000*

Fixed assets
Tangible assets                               1,943         2,335        2,147
Intangible assets                            35,390         6,830       30,950
                                             -------        ------      ------

                                             37,333         9,165       33,097

Current assets
Bank and cash                                 2,367        13,556        6,071
Debtors                                       1,842           394        9,893
                                             -------         ------      -----

                                              4,209        13,950       15,964

Creditors: amounts falling due within 
one year                                    (10,862)         (941)     (13,311)
                                            --------         -----     --------


Net current (liabilities)/assets             (6,653)       13,009        2,653
                                            --------       -------       -----


Total assets less current liabilities        30,680        22,174       35,750
Provision for liabilities and charges          (661)         (631)        (646)
                                             -------       -------      -------

Net assets                                   30,019        21,543       35,104
                                            =======        =======      ======

Capital and reserves
Called up share capital                         515           406          478
Share premium                                35,175        21,372       29,712
Unrealised reserve                               47            47           47
Share option reserve                            340           270          340
Share warrants reserve                          259             -            -
Shares to be issued                               -             -        5,500
Profit and loss account                      (6,317)         (552)        (973)
                                            --------        ------       ------


Shareholders' funds                          30,019        21,543       35,104
                                            ========      ========      =======

*As restated for FRS20 'Share-based payment'


Island Oil & Gas plc
Consolidated cash flow statement
Interim to 31 January 2007
(unaudited)

                                           6 Months      6 Months    Year
                                           ended 31      ended 31    ended 31
                                           Jan 2007      Jan 2006    July 2006
                                           Stg£'000      Stg£'000    Stg£'000

Net cash inflow/(outflow)
from operating activities                     2,683           564        (569)

Returns on investments and servicing of finance  61           199         446

Corporation tax                                  11            (2)          7

Capital expenditure and financial investment(18,759)       (3,465)    (18,486)
                                            ---------      -------    --------

Net cash (outflow) before financing         (16,004)       (2,704)    (18,602)

Financing activities                         12,300         7,894      16,307
                                            --------       -------     ------

(Decrease)/increase in cash for the 
period/year                                 (3,704)         5,190      (2,295)
                                           =========        ======     ========







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