Recommended Acquisition of Is

RNS Number : 6481H

San Leon Energy PLC

25 February 2010

 



Part 1

Not for release, publication or distribution, in whole or in part, in, into or from the United States or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction

25 February 2010

Recommended Acquisition of Island Oil & Gas plc by San Leon Energy plc

to be effected by means of a Scheme of Arrangement

The Boards of Island Oil & Gas plc ("Island") and San Leon Energy plc ("San Leon") are pleased to announce that they have reached agreement on the terms of a recommended share for share acquisition ("Acquisition"). The Acquisition is for the entire issued and to be issued share capital of Island and will be implemented by San Leon by means of a scheme of arrangement, as detailed under Section 201 of the Companies Act, 1963.

The key terms of the Acquisition include:

·           the Acquisition will be effected by a scheme of arrangement between Island and Island Shareholders which will result in the acquisition by San Leon of the entire issued and to be issued ordinary share capital of Island;

·           Island Shareholders will be entitled to receive 1 New San Leon Share for every 2.3 Island Shares they hold. Fractions of New San Leon Shares will not be issued to Island Shareholders and any fractional entitlement to New San Leon Shares will be rounded down to the nearest whole number;

·           the Acquisition values the entire issued share capital of Island at £13.74 million (10.11 pence per Island Share), based on the Closing Price of a San Leon Share of 23.25 pence on 24 February 2010, being the last Business Day prior to the date of this announcement;

·           the Acquisition represents a premium of approximately 65.0 per cent. to the Closing Price of 6.125 pence per Island Share on 24 February 2010, being the last Business Day prior to the date of this announcement, and a premium of 32.6 per cent. to the Closing Price of 7.625 pence per Island Share price on 14 October 2009, being the last Business Day prior to the commencement of the Offer Period;

·           the Island Directors, who have been so advised by Davy Corporate Finance, consider the terms of the Acquisition and the Scheme to be fair and reasonable and unanimously recommend that Island Shareholders vote in favour of the Acquisition at the Court Meeting and the Extraordinary General Meeting.  In providing its advice to the Island Board, Davy Corporate Finance has taken into account the commercial assessments of the Island Directors;

·           San Leon has received irrevocable undertakings from the Island Directors and their related parties, who are together interested in a total of 12,619,940 Island Shares, representing approximately 9.28 per cent. of the existing issued share capital of Island, to vote (or procure the vote of) such Island Shares in favour of the Acquisition and the Scheme at the Court Meeting and the Extraordinary General Meeting. All such irrevocable undertakings will remain binding even if a higher competing offer is made for Island;

·           San Leon has also received irrevocable undertakings from certain other Island Shareholders, in respect of a total of 40,250,000 Island Shares, representing approximately 29.61 per cent. of the existing issued share capital of Island, to vote (or procure the vote of) their Island Shares in favour of the Acquisition and the Scheme at the Court Meeting and the Extraordinary General Meeting;

·           San Leon or parties acting in concert with San Leon own 21,000 Island Shares, representing approximately 0.02 per cent. of the existing issued share capital of Island; and

·           accordingly, San Leon and parties acting in concert with San Leon own or have received irrevocable undertakings in respect of, in aggregate, 52,890,940 Island Shares, representing, in aggregate, approximately 38.91 per cent. of Island's existing issued share capital to vote (or procure the vote of) such Island Shares in favour of the Acquisition and the Scheme at the Scheme Meeting and the Extraordinary General Meeting.

Commenting on the Acquisition, Oisín Fanning, the Chairman of San Leon, said:

"San Leon's acquisition of Island will create the leading Irish-based oil and gas exploration and development business.  The unparalleled strategic fit of the two companies' complementary assets and resources is particularly compelling.  San Leon looks forward to growing the combined businesses for the benefit of its stakeholders."

Bryan Benitz, the Chairman of Island, said:

"Unlocking the full potential value of Island's diverse and attractive portfolio of assets is more likely to be realised as a result of this acquisition. The agreement between San Leon and PGS Ventures provides the financial ability to progress the evaluation of Island's substantial portfolio of Atlantic Margin licences and accelerate the monetisation thereof. In addition the Enlarged Group's greater scale and assets should be a more attractive proposition for investors. The Island Board is thus of the view that the best way forward in generating future value for Island Shareholders would be to pool our interests with San Leon."

This summary should be read in conjunction with, and is subject to, the full text of this announcement and the Appendices to this announcement. The Scheme will be subject to the conditions and further terms set out in Appendix I to this announcement and to the further terms to be set out in the Scheme Document. Terms used in this summary shall have the same meaning given to them in the full announcement. All times referred to are London times unless otherwise stated.

The full terms and conditions of the Acquisition and the Scheme will be set out in the Scheme Document. In deciding whether or not to vote in favour of the Resolutions, Island Shareholders must rely solely on the terms and conditions of the Acquisition and the Scheme and the information contained, and the procedures described, in the Scheme Document and the Forms of Proxy. Island Shareholders are advised to read carefully the Scheme Document and the Forms of Proxy once these have been despatched. The Scheme Document will contain a section on risk factors and Island Shareholders are encouraged to read this section carefully. It is anticipated that the Scheme Document and the Forms of Proxy will be despatched to Island Shareholders as soon as practicable but in any event within 28 days of the date of this announcement.

Enquiries

San Leon Energy plc Oisín Fanning, Chairman Philip Thompson, Chief Executive Officer	[phone]
Island Oil & Gas plc Bryan Benitz, Chairman Paul Griffiths, Director	[phone]
Arbuthnot Securities (Financial adviser to San Leon) Nick Tulloch / Alasdair Younie / Andrew Fairclough	[phone]
Davy Corporate Finance (Financial adviser to Island) Ivan Murphy / Anthony Farrell	[phone]
College Hill Nick Elwes	[phone]

Davy Corporate Finance, which is authorised and regulated in Ireland by the Financial Regulator, is acting for Island and no one else in relation to the Acquisition and will not be responsible to anyone other than Island for providing the protections afforded to clients of Davy Corporate Finance nor for providing advice in relation to the Acquisition or any other matter referred to herein.

Arbuthnot Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority is acting exclusively for San Leon and is acting for no one else in connection with the Acquisition and will not be responsible to anyone other than San Leon for providing the protections afforded to clients of Arbuthnot Securities Limited or for providing advice in relation to the Acquisition or any other matter referred to herein.

This announcement is not intended to, and does not, constitute an offer or an invitation to purchase or subscribe for any securities or the solicitation of an offer to purchase any securities, pursuant to the Acquisition or otherwise. Any response in relation to the Acquisition should be made only on the basis of the information in the Scheme Document or any document by which the Acquisition and Scheme are made. Shareholders are advised to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.

The distribution of this announcement in jurisdictions in or into certain jurisdictions may be restricted by the laws of those jurisdictions. Accordingly, copies of this announcement and all other documents relating to the Acquisition and/or the Scheme are not being, and must not be, released, published, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction. Persons receiving such documents (including, without limitation, nominees, trustees and custodians) should observe these restrictions. Failure to do so may constitute a violation of the securities laws of any such jurisdiction.

Any response in relation to the Acquisition should be made only on the basis of the information contained in the Scheme Document or any document by which the Acquisition and the Scheme are made. This announcement is made pursuant to Rule 2.5 of the Irish Takeover Rules.

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of Island and San Leon and certain plans and objectives of the boards of directors of Island and San Leon.  These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.  Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning.  By their nature, forward-looking statements involve risks and uncertainties that could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements.  Many of these risks and uncertainties relate to factors that are beyond Island's and San Leon's abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements.  Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this announcement.  Island and San Leon assume no obligation and do not intend to update or correct these forward-looking statements, except as required pursuant to applicable law.

Any person, who is a holder of one per cent. or more of Island Shares may have disclosure obligations under Rule 8.3 of the Irish Takeover Rules, effective from the date of the commencement of the Offer Period.

The Island Directors accept responsibility for the information contained in this announcement, except for the information for which responsibility is taken by the San Leon Directors. To the best of the knowledge and belief of the Island Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The San Leon Directors accept responsibility for the information contained in this announcement relating to San Leon, the directors of San Leon, related trusts and any persons connected with them. To the best of the knowledge and belief of the San Leon Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Davy Corporate Finance has given and has not withdrawn its written consent to the issue of this announcement with the inclusion of references to its name in the form and context in which they appear.

Arbuthnot Securities Limited has given and has not withdrawn its written consent to the issue of this announcement with the inclusion of references to its name in the form and context in which they appear.

Part 2

Not for release, publication or distribution, in whole or in part, in, into or from the United States or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction

Recommended Acquisition of Island Oil & Gas plc by San Leon Energy plc

to be effected by means of a Scheme of Arrangement

1. Introduction

The Boards of Island Oil & Gas plc ("Island") and San Leon Energy plc ("San Leon") are pleased to announce that they have reached agreement on the terms of a recommended share for share acquisition ("Acquisition") to be implemented by San Leon to acquire the entire issued and to be issued share capital of Island by means of a scheme of arrangement under Section 201 of the Companies Act, 1963.

2. The Acquisition

Under the terms of the Acquisition, which is subject to the Conditions and further terms set out in Appendix I to this announcement, Scheme Shareholders will be entitled to receive, in respect of all their Scheme Shares:

1 New San Leon Share for every 2.3 Scheme Shares

Fractions of New San Leon Shares will not be allotted or issued pursuant to the Scheme and, accordingly, each Scheme Shareholder's aggregate entitlement to New San Leon Shares will be rounded down to the nearest whole number of New San Leon Shares.

The Acquisition values the entire issued and to be issued share capital of Island at approximately £13.74 million. These terms represent:

·        a premium of 32.6 per cent. to the Closing Price of an Island Share on 14 October 2009, being the last Business Day prior to the commencement of the Offer Period;

·        a premium of 65.0 per cent. to the Closing Price of an Island Share on 24 February 2010, being the last Business Day prior to the date of this announcement; and

·        a premium of 7.3 per cent. to the average daily Closing Price of an Island Share during the 6 month period prior to the commencement of the Offer Period.

Upon the Scheme becoming Effective:

·        the Scheme Shares will be cancelled and in their place new ordinary shares in the capital of Island will be issued to San Leon;

·        Island will become a private limited company and a wholly-owned subsidiary of San Leon; and

·        Scheme Shareholders will receive 1 New San Leon Share for every 2.3 Scheme Shares, subject to rounding down of fractional entitlements to Island Shares as described above. The New San Leon Shares will be issued within 14 days of the Effective Date. The New San Leon Shares will be issued credited as fully paid, and will, in all other respects, rank pari passu with the San Leon Shares in issue including the right to receive dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date.

3. Recommendation of the Acquisition

The Island Directors, who have been so advised by Davy Corporate Finance, consider the terms of the Acquisition and the Scheme to be fair and reasonable so far as the Island Shareholders are concerned. In providing its advice to the Island Directors, Davy Corporate Finance has taken into account the commercial assessments of the Island Directors.

Accordingly, the Island Board unanimously recommends that Island Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the Resolutions to be proposed at the Extraordinary General Meeting, as the Island Directors and their related parties have irrevocably undertaken to do in respect of all their beneficial and other interests in Island Shares amounting to, in aggregate, 12,619,940 Island Shares, representing approximately 9.28 per cent. of Island's issued share capital on close of business on 24 February 2010 (being the last practicable date prior to this announcement).

4. Background to and Reasons for the Recommendation

On 15 October 2009, San Leon announced that it had made a proposal to Island for the combination of the two companies with a view to building a strong Irish-based oil and gas exploration and development business. The Island Board considered the approach and formed the view that it was credible and, in order to fulfil its fiduciary duties to Island Shareholders, the Island Board allowed San Leon to undertake financial and legal due diligence in order to facilitate the formulation of an offer for Island.

Island has faced significant difficulties in raising finance to fund working capital and to pay its share of the development of its licence interests given current stock market and general financial conditions. As previously announced, Island attempted to complete two fundraisings in July 2009 and August 2009 which were not fully supported by existing shareholders resulting in Celtex and Longreach, companies which are related parties of Paul Griffiths (Director of Island) and Bryan Benitz (Chairman of Island) respectively, having to provide stop gap funding by way of short term loans. The Island Directors believe this is not a sustainable basis for financing overheads related to its status as an approved operator of a large number of licences nor for exploration expenditure going forward. Nevertheless, the Island Board continue to believe that Island has a good portfolio of licences that have the potential to deliver value to shareholders in the longer term. However, Island's constrained financial position has created difficulties in progressing the development of its assets including attracting external parties to participate in the licences.

The Island Directors believe that there is a strategic fit between San Leon and Island, and that the Acquisition represents an opportunity to provide the resources to develop the assets of Island to their full potential. San Leon already has extensive knowledge of certain of Island's assets, namely its two Moroccan onshore assets (the Tarfaya area and Zag basin), its recently acquired Moroccan offshore assets at Sidi Moussa and Foum Draa and the Netherlands offshore Amstel Field in which each of San Leon and Island has a royalty interest. San Leon also has a good working knowledge of a majority of Island's assets located in the Celtic Sea and the Atlantic Margin. The San Leon Directors intend to undertake a strategic review of Island's Albanian assets following completion of the Acquisition.

The Island Directors believe that the Acquisition should provide Island Shareholders with an opportunity to share in the value upside in the Enlarged Group's prospects including:

·        the potential to develop Island's Celtic Sea assets. The San Leon Directors believe that as offshore gas production from the Kinsale field in the Celtic Sea declines, the opportunities presented by surrounding fields such as Island's Old Head of Kinsale (Part Block 49/23) and Schull Field (Block 57/2) as they come on stream will become increasingly viable. The Enlarged Group's greater financial, technical and operational resources should allow the Enlarged Group to retain and develop these fields and create potentially valuable opportunities for a future Celtic Sea gas storage business;

·        an opportunity to apply the skills of San Leon's management team to Island's assets and to realise efficiencies. San Leon has an experienced management team with extensive exploration and development capabilities which could be applied to Island's assets;

·        an extension of San Leon's seismic programme facility to Island's prospects. San Leon has entered into an agreement with PGS, a subsidiary of the Petroleum Geo-Services ASA Group, whereby PGS will fund by way of a subscription for equity in San Leon at least 40 per cent. of the costs of its seismic programme. Island's Directors believe that the extension of its seismic programme facility to Island's Irish Atlantic Margin interests should realise savings and accelerate the development of those assets; and

·        a combination of the two companies' Moroccan assets should offer enhanced returns. A combination of the two companies would result in the Enlarged Group holding a 70 per cent. gross interest, before the participation of ONHYM (the Moroccan Government-owned entity), in the onshore Zag and Tarfaya interests in Morocco. Philip Thompson, the Chief Executive of San Leon, is very familiar with both assets in Morocco having devoted a substantial amount of his professional life since 1999 engaged in offshore and onshore hydrocarbon exploration projects in Morocco. San Leon believes that the combined holding by San Leon and Island of the Moroccan Zag and Tarfaya assets should allow it to secure enhanced returns.

5. Irrevocable Undertakings

The Acquisition and implementation of the Scheme are conditional, inter alia, on the requisite majority of Scheme Shareholders approving the Scheme at the Scheme Meeting and the requisite majority of Scheme Shareholders passing the Resolutions at the Extraordinary General Meeting.

San Leon has received irrevocable undertakings from each of the Island Directors and certain of their related parties, who are together interested in a total of 12,619,940 Island Shares, representing approximately 9.28 per cent. of Island's issued share capital on close of business on 24 February 2010 (being the last practicable date prior to this announcement), to vote (or procure the vote of) such Island Shares in favour of the Scheme and the Acquisition at the Court Meeting and the Extraordinary General Meeting, respectively. All such irrevocable undertakings will remain binding even if a higher competing offer is made for Island.

San Leon or parties acting in concert with San Leon own 21,000 Island Shares, representing approximately 0.02 per cent. of the existing issued share capital of Island.

San Leon has also received irrevocable undertakings from certain other Island Shareholders.

·        San Leon has received an irrevocable undertaking from Platinum Petroleum Limited ("Platinum"), which is interested in a total of 25,000,000 Island Shares, representing approximately 18.39 per cent. of the existing issued share capital of Island on close of business on 24 February 2010 (being the last practicable date prior to this announcement), to vote (or procure the vote of) such Island Shares in favour of the Scheme and the Acquisition at the Court Meeting and the Extraordinary General Meeting, respectively. The irrevocable undertaking will cease to be binding if an offer or proposed offer (a "30 per cent. Higher Competing Offer") is made by someone other than San Leon for the entire issued share capital of Island, the making of which is not or has ceased to be subject to any pre-condition, and which represents an improvement of 30 per cent. or more on the value of the Acquisition and San Leon has not made or announced a firm intention to make a revised offer on terms substantially equal to or better than those available under the 30 per cent. Higher Competing Offer by the date 5 business days prior to the closing date of the 30 per cent. Higher Competing Offer.

·        San Leon has received an irrevocable undertaking from Gartmore Investment Management Limited ("Gartmore"), to accept or procure acceptance of the Acquisition in respect of, in aggregate, 15,250,000 Island Shares representing approximately 11.22 per cent. of Island's issued share capital on close of business on 24 February 2010 (being the last practicable date prior to this announcement). The Gartmore irrevocable undertaking will cease to be binding if an offer or proposed offer (a "10 per cent. Higher Competing Offer") is made by someone other than San Leon for the entire issued share capital of Island, the making of which is not or has ceased to be subject to any pre-condition, and which represents an improvement of 10 per cent. or more on the value of the Offer and San Leon has not made or announced a firm intention to make a revised offer on terms substantially equal to or better than those available under the 10 per cent. Higher Competing Offer by the date 5 business days prior to the closing date of the 10 per cent. Higher Competing Offer.

Accordingly, San Leon and parties acting in concert with San Leon own or have received irrevocable undertakings in respect of, in aggregate, 52,890,940 Island Shares, representing, in aggregate, approximately 38.91 per cent. of Island's existing issued share capital on close of business on 24 February 2010 (being the last practicable date prior to this announcement) to vote (or procure the vote of) such Island Shares in favour of the Acquisition and the Scheme at the Court Meeting and the Extraordinary General Meeting.

6. Working Capital Facility Agreement

On 23 December 2009, Island announced that San Leon had agreed to make a loan facility available to Island in the amount of EUR500,000 (the "Working Capital Facility Agreement"), the purpose of which was to provide working capital to Island pending the conclusion of the Acquisition. The loan consists of two tranches, an initial tranche of up to EUR300,000 followed by a second tranche of up to EUR200,000, and bears interest at 3 per cent. over EURIBOR per annum and under the terms of the Working Capital Facility Agreement is repayable no later than 31 March 2010. Following the announcement on 23 December 2009, the date on which the Working Capital Facility will become repayable has been amended as described below.

The loan advanced under the Working Capital Facility Agreement is secured by Island granting a charge in favour of San Leon over all of the shares owned by Island in Island (Seven Heads) Limited a wholly owned Irish incorporated subsidiary of Island. The main asset of Island (Seven Heads) Limited is a 12.5 per cent. interest in the Celtic Sea based Seven Heads gas-producing field.

Amounts drawn down under the Working Capital Facility Agreement are immediately repayable on the occurrence of certain events of default, including the material breach by Island of any of its obligations under the Working Capital Facility Agreement and failing to remedy such breach within seven days.

On 29 January 2010, the Island Board announced that the provision in the Working Capital Facility Agreement allowing San Leon to call for repayment of the loan and interest in the event that an announcement is not made pursuant to Rule 2.5 of the Irish Takeover Rules ("2.5 Announcement") in relation to the Acquisition on or prior to 31 January 2010 had been extended until 10 February 2010. 

On 11 February 2010, the Island Board announced that the Working Capital Facility Agreement had been amended to provide that the loan and accrued interest would be repayable on 26 February 2010 if San Leon and Island had not made a 2.5 Announcement in relation to the Acquisition.

With effect from the date of issuance of this announcement, it is intended to amend the terms of the Working Capital Facility Agreement to provide that the final date for the repayment of all amounts arising pursuant to the Working Capital Facility Agreement would be extended until the Effective Date. Such monies as are necessary to discharge the liabilities of the Island Group during such period shall be made available by San Leon under the Working Capital Facility Agreement.

7. Information on Island

Island is an independent Irish oil and gas exploration and production company. Founded in 2003, Island has interests in nine Irish offshore licences, including a producing gas field. It also holds interests in projects in offshore Albania, onshore Morocco and has an overriding royalty interest in the Amstel offshore field development in The Netherlands and continues to investigate selected opportunities internationally. Island is incorporated in Ireland and has been quoted on AIM since 2004.

On 7 August 2009, Island announced a placing of 15,248,350 new Ordinary Shares to raise £762,417 to fund working capital. In addition Celtex and Longreach, companies which are related parties of the Island directors, Paul Griffiths and Bryan Benitz, respectively, agreed to provide loans of US$833,334 to Island to cover certain bank guarantees and secure Island's position in the Sidi Moussa and Foum Draa exploration licences in Morocco.

On 14 August 2009, Island announced that Bryan Benitz had agreed to provide a further loan of £300,000 to Island for working capital purposes to allow the Celtic Sea assets disposal to be concluded and Longreach advanced a further US$150,000 to cover a bank guarantee given to the government of the kingdom of Morocco in relation to the Zag exploration licence.

On 28 October 2009, Island announced that it had suspended all discussions with interested parties regarding the monetization of its Celtic Sea assets pending the outcome of its discussions with San Leon.

On 24 November 2009, Island announced, that following on from a review of its financial position, a further retrenchment of Island's cost base including a company wide redundancy programme. Island recorded an operating loss before taxation and finance income and finance expense of approximately £43.9 million for the financial year ended 31 July 2009.

8. Information on San Leon

The San Leon Group is an international group of companies focused on the exploration and production of oil and gas projects in North America, Morocco and Europe. San Leon is incorporated in Ireland and has been quoted on AIM since September 2008.

Under a royalty agreement, San Leon is entitled to a royalty from a production licence with contingent resources in the Dutch North Sea through its wholly owned subsidiary, San Leon (Netherlands) Limited. In addition, through its subsidiary San Leon (Morocco) Limited, San Leon operates an onshore reconnaissance licence and is also a partner in an exploration licence. San Leon (USA) Limited is also conducting a drilling campaign in Nebraska in the United States. San Leon has also acquired exclusive interests in Italy, in the Po Valley and off the coast of Sicily. In addition and as a result of the acquisition of Gold Point Energy, San Leon has assets in Poland.

San Leon aims to maintain a balanced portfolio, from the low risk production in the USA to the high reward exploration licences of Morocco. In the short term, San Leon intends to concentrate on delivering oil and gas production through its US assets in the Denver Basin and then accelerate its objectives to explore the larger prospects.

The Directors of San Leon believe that the key strengths of the business include: its portfolio of oil and gas exploration assets in Morocco, Europe and the USA; a prospective resource volume of up to one billion barrels of oil; the Tarfaya non-conventional oil shale opportunity; the benefit of a royalty agreement in The Netherlands; proactive and operational progress in the exploration of its assets; its negotiations for new licences and additional exploration areas; and a strong management team that has technical, exploration and commercial expertise.

On 18 September 2009, San Leon announced the placing of 41,866,666 shares at 15 pence per share to raise approximately £6.3 million from a number of institutional and other investors. At the same time as the placing, and in addition to the funds raised from institutional and other investors, San Leon entered into a seismic services agreement with PGS. The funds raised from investors, together with the seismic services agreement, provides San Leon with the capital and support to carry out San Leon's exploration and development programme across its portfolio of projects in Morocco, Poland, Italy and the USA.

On 23 December 2009, San Leon announced that its wholly owned Polish subsidiary Oculis Investments Sp. Z.o.o. ("Oculis") had been awarded the Gdansk W Concession in Poland for oil and gas reconnaissance and exploration and the mining usufruct agreement.  San Leon has a 100 per cent. interest in the concession. The Directors of San Leon believe this award gives San Leon access to a highly prospective area for significant gas production in Poland from the Palaeozoic shales.  This is also an area of active licensing by many of the US and international majors.

On 7 January 2010, San Leon announced that it had entered into a joint venture with Al Meinaa Oil Services Limited ("Al Meinaa") for the reciprocal referral and joint evaluation of oil and gas projects in the Republic of Iraq.

9. The Acquisition and the Scheme

The Acquisition will be affected by means of a scheme of arrangement, subject to the approval of the Island Shareholders and the Court, under Section 201 of the Act. Under the Scheme (which will be subject to the terms and conditions set out in Appendix I to this announcement and which will also be set out in the Scheme Document), all the existing Island Shares will be cancelled pursuant to Section 72 and 74 of the Act, with the exception of seven Island Shares held by seven nominees. Island will then issue New Island Shares to San Leon in place of the existing Island Shares cancelled pursuant to the Scheme and San Leon will issue the New San Leon Shares to the former holders of the Island Shares cancelled pursuant to the Scheme. As a result of these arrangements, all of Island's issued share capital will be owned by San Leon on the Effective Date.

To become effective the Scheme requires, amongst other things, the approval at the Court Meeting of a majority in number of Island Shareholders, present and voting either in person or by proxy, representing three fourths (75 per cent.) or more in value of the Island Shares held by such holders, as well as the approval by Island Shareholders of resolutions relating to the implementation of the Scheme at the Extraordinary General Meeting to be held directly after the Court Meeting.

Assuming the necessary approvals from the Island Shareholders have been obtained and all conditions have been satisfied or (where applicable) waived, the Scheme will become effective upon the delivery to the Registrar of Companies of a copy of the Court Order of the Court sanctioning the Scheme together with the minute required by Section 75 of the Act confirming the capital reduction and registration of the Court Order and minute by the Registrar of Companies.

The Acquisition is conditional upon the Scheme becoming effective. The conditions to the Acquisition and the Scheme are set out in full in Appendix 1 of this announcement. The implementation of the Scheme is conditional, amongst other things, upon:

(a)       the Scheme becoming effective by not later than the Long Stop Date or such later date as Island and San Leon may, with the consent of the Panel, agree and the Court may allow, failing which the Scheme will lapse;

(b)       the approval of the Scheme by a majority in number representing three fourths or more in value of the holders of Island Shares present and voting either in person or by proxy, at the Court Meeting or at any adjournment of such meeting;

(c)       the passing of such resolutions in connection with and/or as required to approve or implement the Scheme at the Extraordinary General Meeting;

(d)       the sanction of the Scheme and confirmation of the Reduction of Capital involved therein by the Court and the delivery of an office copy of the Reduction Court Order and the minute required by Section 75 of the Act to the Registrar of Companies and the registration of the Reduction Court Order by the Registrar of Companies; and

(e)       the conditions that are not otherwise identified above being satisfied or waived on or before the Effective Date.

The Scheme Document, containing further information relating to the implementation of the Scheme, the full terms and conditions of the Scheme and the notices of the Court Meeting to be convened by direction of the Court and the separate Extraordinary General Meeting required to approve the Scheme will be posted as soon as reasonably practicable and in any event within 28 days of the date of this announcement to Island Shareholders, and for information only, to holders of Island Share Options. The Scheme Document will also include details of the expected timetable for implementation of the Scheme and will specify the actions to be taken by Island Shareholders. It is expected that the Acquisition and Scheme will become effective prior to 31 May 2010.

Upon the Scheme becoming effective, it will be binding on all Island Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Extraordinary General Meeting.

10. Island Share Option Scheme

A formal document containing the Share Option Notification will be dispatched to the holders of the Island Share Options on, or shortly after, the date of the Scheme Document.

11. Implementation Agreement, Non-Solicitation and Expenses Reimbursement Agreement and Releases of Directors' interests and loans

(a)     Implementation Agreement

Under the Implementation Agreement dated 25 February 2010, Island and San Leon have agreed the terms on which they will co-operate with regard to the implementation of the Acquisition and the Scheme.

Island and San Leon have undertaken to each other to procure the implementation of the Scheme and the completion of the Acquisition as outlined in this announcement, the Scheme Document and the Implementation Agreement unless the Implementation Agreement is terminated in accordance with its terms. As soon as practicable after the date of the Implementation Agreement, each of the parties must take or cause to be taken such steps as are within its power and necessary or required and provide each other with such other assistance as may reasonably be required to implement the Scheme and the Acquisition, including the following:

(a)            Island will promptly and using all reasonable endeavours make all necessary applications to the Court in connection with the implementation of the Scheme including appropriate proceedings requesting the Court to order that the Court meetings be convened as soon as possible following the publication of this announcement and will do so in a manner so as to ensure that the hearing of such proceedings occurs as soon as practicable following the posting of the Scheme Document;

(b)            Island and San Leon will to the extent required by the Takeover Rules obtain the consent and sanction of the Panel in relation to agreements or arrangements entered into in connection with the Acquisition and/or the Scheme as soon as possible following the issue of this announcement;

(c)            Island and San Leon will promptly notify each other in writing of the receipt of any notice or other communication from any third party alleging that the consent of the third party is and may be required to implement the Scheme or to complete any of the transactions contemplated by the Implementation Agreement and/or any material third party claims, legal actions, court proceedings, governmental regulatory or other court investigations or enquiries of which they may become aware or affecting Island;

(d)            Island and San Leon will cooperate with each other and use their respective reasonable endeavours in order to ensure that the Effective Date occurs on or before 31 July 2010.

Island has also agreed, prior to the Court Meeting, to keep San Leon informed on a daily basis of the number of proxy votes received in respect of the resolutions to be proposed to the Court Meeting and/or EGM.

The Implementation Agreement will terminate on the earliest to occur of any of the following events:

(a)        any of the resolutions to be proposed at the EGM or the Court Meeting not being passed at the EGM or the Court Meeting;

(b)        the Court declines or refuses to sanction the Scheme, unless both San Leon and Island agree that the decision of the Court shall be appealed and, if so appealed, a final non-appealable order, decree, judgment or ruling has been issued;

(c)        any Condition of the Scheme, unless waived by San Leon, becoming incapable of being satisfied;

(d)        the Scheme not becoming effective by 31 July 2010; or

(e)        the Scheme lapses or is withdrawn.

(b)     Non-Solicitation and Expenses Reimbursement Agreement

Island and San Leon have entered into the Non-Solicitation and Expenses Reimbursement Agreement. Under this agreement, Island has agreed to pay to San Leon an amount equal to all specific quantifiable and documented third party costs and expenses directly incurred in connection with the Acquisition, including but not limited to exploratory work carried out in contemplation of and in connection with the Acquisition, legal, financial and commercial due diligence, arranging financing and engaging advisers to assist in the process provided that the gross amount payable to San Leon (inclusive of irrecoverable VAT only) (the "Expenses Payments") pursuant to this agreement shall not, in any event, exceed such sum as is equal to 1 per cent. of the aggregate value of the number of the Island Shares which are the subject of the Acquisition multiplied by the Scheme Price:

The obligation of Island to make the Expenses Payments shall apply only if, following the making of this announcement:

(i)          the Island Board withdraws or adversely modifies its recommendation of the Scheme or recommends (or indicates or announces an intention to recommend) any Competing Offer, or any one or more of the Island Directors withdraws or adversely modifies his recommendation of the Scheme or recommends (or indicates or announces an intention to recommend) any Competing Offer; or

(ii)         Island withdraws the Scheme or materially alters any term of the Scheme or takes or omits to take any action in breach of the Implementation Agreement the result of which is to prevent Island Shareholders from voting at any meetings to approve the Scheme; or

(iii)        if the Scheme subsequently lapses or is withdrawn or does not become effective and, prior to this occurring, a Third Party Announcement is made and the Competing Offer referred to in that Third Party Announcement subsequently becomes effective or unconditional within twelve months of the date of the Third Party Announcement; or

(iv)        Island or any of the Island Directors breach their respective obligations under the non-solicitation provisions of the Non-Solicitation and Expenses Reimbursement Agreement and the Scheme lapses or is withdrawn.

For the purposes of the Non-Solicitation and Expenses Reimbursement Agreement, a "Competing Offer" means any takeover offer by a party other than San Leon, but not a scheme of arrangement of Island under Section 201 of the Act or capital reduction under section 72 of the Act and a "Third Party Announcement" means an announcement (whether by Island or any other person other than San Leon) of a Competing Offer or that any third party is considering, or has approached or will approach Island or is in talks with Island that may or may not lead to, a Competing Offer.

Davy Corporate Finance, the independent financial adviser to the Island Directors, has confirmed in writing to the Panel that, in the opinion of the Island Directors and Davy Corporate Finance the Non-Solicitation and Expenses Reimbursement Agreement is in the best interests of Island Shareholders.

(c)     Releases of Directors interests and Loans

Longreach Loan

On 25 February 2010 Longreach entered into a deed of release with Island International Exploration BV ("IIEBV"), a company incorporated in the Netherlands and a subsidiary of Island, and Island.  Pursuant to the deed of release Longreach agreed to waive certain rights and interests arising under the loan agreement dated 7 August 2009 (the "Longreach Loan Agreement") between Longreach, IIEBV and Island as follows. 

On the date of the release and for the duration of the period ending on the earlier of (i) the lapse or withdrawal of the Scheme and (ii) the time when the Longreach Relevant Shares (as set out below) are issued and allotted to Longreach, Longreach shall irrevocably and unconditionally waive any right or entitlement arising pursuant to the Longreach Loan Agreement to demand repayment of any amount outstanding under the Longreach Loan Agreement including the Loan (as defined therein) in the amount of US$208,334 and any fees together with all interest.

Following the approval of the Scheme by the Court and immediately prior to the Effective Date all amounts arising and owed to Longreach pursuant to the Longreach Loan Agreement shall notwithstanding anything contained in the Longreach Loan Agreement be irrevocably and unconditionally waived and released by Longreach in consideration of Longreach being issued and allotted such number of ordinary shares in Island (the "Longreach Relevant Shares") credited as fully paid up prior to the Effective Date as would equal the amount as at the date of allotment due and owed by IIEBV pursuant to the Longreach Loan Agreement at the spot rate exchange rate for USD into Sterling (as quoted by the Financial Times (UK edition) at the closing price which is two days prior to the date on which the Longreach Relevant Shares are issued and allotted to Longreach) divided by the volume weighted average of the closing price of Island's shares on AIM for the twenty trading days, two days prior to the date on which the Longreach Relevant Shares are issued and allotted to the Lender.

Upon the issue and allotment of the Longreach Relevant Shares, Longreach will irrevocably and unconditionally release and waive certain rights and interests arising under the Longreach Loan Agreement including (i) the guarantee given by Island in relation to the liability of IIEBV in respect of the Longreach Loan Agreement, (ii) all interests or security created in the net 42.5% interest in each of the Sidi Moussa and the Foum Draa licences in Morocco held in trust by IIEBV for Longreach but without prejudice to the right of Longreach to have assigned to it a gross 10% (ten per cent) participating interest share being a net 7.5% (seven point five per cent) interest (to include the participation by Office National des Hydrocarbures et des Mines in Morocco) in each of the Sidi Moussa and the Foum Draa licences and (iii) any royalty in relation to the Zag reconnaissance licence and the Tarfaya exploration licence in Morocco as referred to in the Longreach Loan Agreement. In addition, upon the issue and allotment of the Longreach Relevant Shares Longreach will irrevocably and unconditionally waive any right or interest granted to it pursuant to the Celtex Loan Agreement (as referred to below).

Bryan Benitz Loan

On 25 February 2010 Bryan Benitz ("BB"), Longreach, The Gascoigne Trust ("Gascoigne")(collectively referred to as the "Lenders") entered into a deed of release with Island and Island (Seven Heads) Limited, Island Expro Limited, Island Assets Porcupine Limited, Island Rockall JV Limited, Island Oil and Gas B.V. and IIEBV each being a subsidiary of Island (the "Guarantors").  Pursuant to the deed of release the Lenders agreed to waive any rights and interests arising under the loan agreement dated 13 August 2009 (the "Benitz Loan Agreement") between the Lenders, Island and the Guarantors as follows. 

On the date of the release and for the duration of the period ending on the earlier of (i) the lapse or withdrawal of the Scheme and (ii) the time when the Benitz Relevant Shares (as set out below) are issued and allotted to the Lenders, the Lenders shall irrevocably and unconditionally waive any right or entitlement:

(a)         including without limitation arising pursuant to the Benitz Loan Agreement to demand repayment of any outstanding amount under the Benitz Loan Agreement including the Sterling Loan (as defined therein), the Dollar Loan (as defined therein), interest and/or fees; and

(b)        to create, enforce or cause to crystallise any security created or arising pursuant to any security over the assets of the Island Group including the charge on shares dated 29 October 2009 granted by Island in favour of the Lenders in relation to the shares in Island (Seven Heads) Limited (the "Charge on Shares") and/or any security created, arising or required to be created pursuant to the Benitz Loan Agreement. 

Following the approval of the Scheme by the Court and immediately prior to the Effective Date all amounts arising and owed to the Lenders pursuant to the Benitz Loan Agreement shall be irrevocably and unconditionally waived and released by the Lenders in consideration of each of the Lenders each being issued and allotted such number of ordinary shares in Island credited as fully paid up (the "Benitz Relevant Shares") as would equal the amount as at the date of allotment owed and outstanding by Island to each Lender pursuant to the Benitz Loan Agreement (including interest accrued and/or fees thereon) at the spot rate exchange rate for USD into Sterling (as quoted by the Financial Times (UK edition) at the closing price which is two days prior to the date on which the Benitz Relevant Shares are issued and allotted to each Lender) divided by the volume weighted average of the closing price of Island's shares on AIM for the twenty trading days, two days prior to the date on which the Benitz Relevant Shares are issued and allotted to each Lender.

Upon the issue and allotment of the Benitz Relevant Shares to the Lenders, the Lenders will irrevocably and unconditionally release and waive all other rights and interests arising under the Benitz Loan Agreement including without limitation the guarantee given by the Guarantors in relation to the liability of Island in respect of the Benitz Loan Agreement and all warranties, indemnities and undertakings on which the Lenders would be entitled to rely under the Benitz Loan Agreement. In addition, upon the issue and allotment of the Benitz Relevant Shares to the Lenders, the Lenders will enter into a release in relation to the Charge on Shares.

Celtex Loan

On 25 February 2010 Celtex entered into a deed of release with IIEBV, Longreach and Island.  Pursuant to the deed of release Celtex agreed to waive all rights and interests arising under the loan agreement dated 7 August 2009 (the "Celtex Loan Agreement") between Celtex, IIEBV, Longreach and Island as follows. 

On the date of the release and for the duration of the period ending on the earlier of (i) the lapse or withdrawal of the Scheme and (ii) the time when the Celtex Relevant Shares (see below) are issued and allotted to Celtex, Celtex irrevocably and unconditionally waived any right or entitlement arising pursuant to the Celtex Loan Agreement to demand repayment of any amount outstanding under the Celtex Loan Agreement including the Loan in the amount of US$371,322 on 24 February 2010, an arrangement fee of US$31,250 together with all interest.   

Following the approval of the Scheme by the Court and immediately prior to the Effective Date all amounts arising and owed to Celtex pursuant to the Celtex Loan Agreement shall notwithstanding anything contained in the Celtex Loan Agreement be irrevocably and unconditionally waived and released by Celtex in consideration of Celtex being issued and allotted such number of ordinary shares in Island credited as fully paid up prior to the Effective Date (the "Celtex Relevant Shares") as would equal the amount as at the date of allotment due and owed by IIEBV (including interest accrued and/or fees thereon) at the spot rate exchange rate for USD into Sterling (as quoted by the Financial Times (UK edition) at the closing price which is two days prior to the date on which the Celtex Relevant Shares are issued and allotted to Celtex) divided by the volume weighted average of the closing price of Island's shares on AIM for the twenty trading days, two days prior to the date on which the Celtex Relevant Shares are issued and allotted to Celtex.

Upon the issue and allotment of the Celtex Relevant Shares to Celtex, Celtex will irrevocably and unconditionally release and waive all other rights and interests arising under the Celtex Loan Agreement including without limitation the guarantee given by Island in relation to the liability of IIEBV in respect of the Celtex Loan Agreement, all interests or security created in the Sidi Moussa and the Foum Draa licences in Morocco and any interest, equity, trust or claim in relation to the Tarfaya exploration licence in Morocco. In addition, upon the issue and allotment of the Celtex Relevant Shares to Celtex, Celtex will irrevocably and unconditionally waive any right or interest granted to it pursuant to the Longreach Loan Agreement.

Carl Kindinger and Adrian Doull, who are the Island Directors, other than Paul Griffiths and Brian Benitz, having consulted with their nominated adviser, Davy, consider the terms of the deeds of release to be fair and reasonable insofar as the Island Shareholders are concerned.

12. Management of Island

The Island Directors intend to resign from the board of Island immediately following the Acquisition becoming unconditional in all respects. Island has no employees.

13. Disclosure of interests in Island

As at 24 February 2010, the last Business Day prior to the date of this announcement, Philip Thompson, a director of San Leon, owned or controlled 21,000 Island Shares.

As at 24 February 2010, the last Business Day prior to the date of this announcement, save as described in this announcement in relation to Philip Thompson, none of San Leon (nor any of the other San Leon Directors), nor, so far as San Leon is aware, any person acting in concert with San Leon, owns or controls any Island Shares or any securities convertible or exchangeable into Island Shares (including pursuant to any long economic exposure, whether conditional or absolute, to changes in the prices of securities) or any rights to subscribe for or purchase the same, or holds any options (including traded options) in respect of, or has any option to acquire, any Island Shares or has entered into any derivatives referenced to Island Shares ("Relevant Island Securities") which remain outstanding, nor does any such person hold any short positions in relation to Relevant Island Securities (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery, nor has any such person borrowed or lent any Relevant Island Securities nor does any such person have any arrangement in relation to Relevant Island Securities. An "arrangement" includes any indemnity or option arrangement, and any agreement or understanding, formal or informal, of whatever nature, relating to Relevant Island Securities which may be an inducement to deal or refrain from dealing in such securities.

14. Cancellation of admission to trading of Island's Shares on AIM and re-registration of Island

It is intended that, prior to and subject to the Scheme becoming effective, and subject to any applicable requirements of the London Stock Exchange, application will be made by Island for cancellation of the admission to trading of Island Shares on AIM with effect from the Effective Date. The last day of dealing in Island Shares on AIM will be the last Business Day prior to the Effective Date. No transfers of Island Shares will be registered after that date.

On the Effective Date, share certificates in respect of Island Shares will cease to be valid and should, if so requested by Island, be sent to Island for cancellation. In addition, entitlements to Island Shares held within the CREST system will be cancelled on the Effective Date.

15. Admission to trading of, and dealings in, New San Leon Shares on AIM

Prior to the Scheme becoming Effective, application will be made by San Leon for the New San Leon Shares to be admitted to trading on AIM.

16. General

The full terms and conditions of the Acquisition and the Scheme will be set out in the Scheme Document.  In deciding whether or not to vote in favour of the Resolutions, Island Shareholders must rely solely on the terms and conditions of the Acquisition and the Scheme and the information contained, and the procedures described, in the Scheme Document and the Forms of Proxy. Island Shareholders are advised to read carefully the Scheme Document and the Forms of Proxy once these have been despatched. It is anticipated that the Scheme Document will be despatched to Island Shareholders as soon as practicable but in any event within 28 days of the date of this announcement.

The Acquisition and the Scheme will be governed by Irish law and will be subject to the applicable requirements of the Irish Takeover Rules, the Panel and the London Stock Exchange.

Appendix I to this announcement contains the Conditions to and certain further terms of the Acquisition and the Scheme.  Appendix II contains further details of the bases and sources of the financial information set out in this announcement and Appendix III contains definitions of certain expressions used in this announcement. All times referred to are London times unless otherwise stated.

APPENDIX I

Conditions to and certain further terms of the Acquisition

The Acquisition and the Scheme comply with the Takeover Rules and, where relevant, the AIM Rules and are subject to the terms and conditions set out in this announcement. The Acquisition and Scheme are governed by the laws of Ireland and are subject to the exclusive jurisdiction of the courts of Ireland which exclusivity shall not limit the right to seek provisional and protective relief in the courts of another State during or after any substantive proceedings have been instituted in Ireland nor shall it limit the right to bring enforcement proceedings in another State on foot of an Irish judgment.

1.   The Acquisition is conditional upon the Scheme becoming effective and unconditional by not later than the Long Stop Date (or such later date as San Leon and Island may, with (if required) the consent of the Panel, agree and the Court may allow). The Scheme is conditional upon: 

(a)  the approval of the Scheme by a majority in numbers representing three fourths or more in value of the holders of Island Shares at the Voting Record Time present and voting either in person or by proxy at the Court Meeting (or at any adjournment of such meeting);

(b)  such resolutions in connection with and / or as are required to approve or implement the Scheme and set out in the notice convening the EGM being duly passed by the requisite majority at the EGM (or at any adjournment of such meeting);

(c)  the sanction (with or without modification) of the Scheme pursuant to Section 201 of the Act and the confirmation of the Reduction of Capital involved therein by the Court; and

(d)  office copies of the Court Order and the minute required by Section 75 of the Act in respect of the reduction referred to in paragraph 1(c), being delivered for registration to the Registrar of Companies and registration of the Court Order and minute confirming the Reduction of Capital involved in the Scheme by the Registrar of Companies.

2.   San Leon and Island have agreed that, subject to paragraph 3 of this Appendix I, the Acquisition is also conditional upon the following matters having been satisfied or waived on or before the sanction of the Scheme by the Court pursuant to Section 201 of the Act:

(a)   to the extent that Part 3 of the Irish Competition Act, 2002 is applicable, the Irish Competition Authority (the "Authority") having determined, pursuant to Section 21(2)(a) or 22(3)(a) of that Act, that the Acquisition may be put into effect or, the Authority having made a determination pursuant to Section 22(3)(c) of that Act on conditions acceptable to San Leon, acting reasonably, in relation to the Acquisition, or Section 19(1)(c) or (d) of that Act being applicable, whichever is the first to occur;

(b)   no Irish, or foreign, federal, state or local governmental commission, board, body, bureau, or other regulatory authority or agency, including courts and other judicial bodies, any competition, anti-trust or supervisory body or other governmental, trade or regulatory agency or body, securities exchange or any self-regulatory body or authority, including any instrumentality or entity designed to act for or on behalf of any of the foregoing, in each case, in any jurisdiction (each a "Governmental Authority") having instituted or implemented any action, proceeding, investigation, enquiry, reference or suit or having made, enforced, enacted, issued or deemed applicable to the Acquisition any statute, regulation or order or having withheld any consent which would or would reasonably be expected to:

(i)      make the Scheme or its implementation, or the acquisition or proposed acquisition by San Leon of any shares in, or control of, Island, or any of the assets of Island, void, illegal or unenforceable under the laws of any jurisdiction or otherwise, directly or indirectly, restrain, revoke, prohibit, restrict or materially delay the same or impose additional or different conditions or obligations with respect thereto;

(ii)     result in a material delay in the ability of San Leon, or render San Leon unable, to acquire some or all of the Island Shares or result in or effect any divestiture by the Wider San Leon Group or the Island Group of all or part of their respective businesses, properties or assets,, or restrict ownership or operation of, any business, property or assets, or impose any limitations on their ability to conduct all or part of their respective businesses;

(iii)     impose any limitation on or result in a material delay in the ability of San Leon to acquire, or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares, Island Shares, (or the equivalent) in, or to exercise voting or management control over, Island or any Subsidiary or subsidiary undertaking of Island or on the ability of any member of the Island Group to hold or exercise effectively, directly or indirectly, rights of ownership of shares (or the equivalent) in, or to exercise rights of voting or management control over, any member of the Island Group;

(iv)    except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole, require any member of the San Leon Group or any member of the Island Group to acquire or offer to acquire any shares or other securities (or the equivalent) in, or any interest in any asset owned by, any member of the Island Group owned by any third party;

(v)     except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole, impose any limitation on the ability of any member of the Island Group to integrate or co-ordinate its business, or any part of it, with the businesses of any member of the San Leon Group;

(vi)    except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole, result in any member of the Island Group ceasing to be able to carry on business in any jurisdiction in which it currently does;

(vii)    except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole, cause any member of the Island Group to cease to be entitled to any authorisation, order, recognition, grant, consent, clearance, confirmation, licence, permission or approval used by it in the carrying on of its business in any jurisdiction; or

(viii)   except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole, otherwise adversely affect the business, profits, assets, liabilities, financial or commercial position of any member of the Island Group;

for the purposes of this Appendix I, the effects referred to in the foregoing paragraphs (i) through (viii) are referred to as a "Restraint".

(c)     having obtained (i) from any Governmental Authority any Clearances required to be obtained or made by the Island Group or San Leon in connection with the Acquisition (except, in each case, for any Clearances or additional instrument that does not impose a Restraint on Island or San Leon), and (ii) any third party Clearances required to be obtained to effect the Acquisition or the Scheme (except where the consequence thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole), it being understood that neither Island nor San Leon shall be required to make any material payments, other than filing or other fees payable to a Governmental Authority for seeking the relevant Clearances, all such Clearances remaining in full force and effect, there being no notified intention to revoke or vary or not to renew the same at the time at which the Acquisition becomes otherwise unconditional;

(d)     all applicable waiting periods and any other time periods during which any Governmental Authority could, in respect of the Acquisition or the acquisition or proposed acquisition of any shares or other securities (or the equivalent) in, or control of, Island or any member of the Island Group by San Leon, institute or implement any legal action, proceeding or suit under the laws of any jurisdiction which would be reasonably expected to have a material adverse effect (in value terms or otherwise) in the context of the Island Group taken as a whole), having expired, lapsed or been terminated;

 (e)    save as Provided, there being no provision of any arrangement, agreement, licence, permit, franchise, facility, lease or other instrument to which any member of the Island Group is a party or by or to which any such member or any of its respective assets may be bound, entitled or be subject and which, in consequence of the Acquisition or the acquisition or proposed acquisition by San Leon of any shares or other securities (or the equivalent) in or control of Island or any member of the Island Group or because of a change of control or management of Island or otherwise, would or would be reasonably expected to result (except where, in any of the following cases, the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as whole) in:

(i)      any monies borrowed by, or any indebtedness or liability (actual or contingent) of, or any grant available to any member of the Island Group becoming, or becoming capable of being declared, repayable immediately or prior to their or its stated maturity;

(ii)     the creation or enforcement of any mortgage, charge or other security interest wherever existing or having arisen over the whole or any part of the business, property or assets of any member of the Island Group or any such mortgage, charge or other security interest becoming enforceable;

(iii)     any such arrangement, agreement, licence, permit, franchise, facility, lease or other instrument or the rights, liabilities, obligations or interests of any member of the Island Group thereunder, or the business of any such members with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated or adversely modified or any adverse action being taken or any obligation or liability arising thereunder;

(iv)    any assets or interests of, or any asset the use of which is enjoyed by, any member of the Island Group being or falling to be disposed of or charged, or ceasing to be available to any member of the Island Group or any right arising under which any such asset or interest would be required to be disposed of or charged or would cease to be available to any member of the Island Group otherwise than in the ordinary course of business;

(v)     any member of the Island Group ceasing to be able to carry on business, being prohibited from carrying on business or being subject to a restriction imposing a non-compete, exclusivity or similar restrictive covenant on the Island Group, in each case, in any jurisdiction;

(vi)    the value of, or financial or commercial position of any member of the Island Group being prejudiced or adversely affected; or

(vii)    the creation of any liability or liabilities (actual or contingent) by any member of the Island Group;

         unless, if any such provision exists, such provision shall have been waived, modified or amended on terms satisfactory to San Leon;

(f)    save as publicly announced by Island (by the delivery of an announcement to the London Stock Exchange) since 31 July 2009 at any time up to 25 February 2010 (being the date of this announcement) or otherwise publicly disclosed in the interim results of Island for the six month period ended 31 July 2009, the Island Group has conducted its business in the ordinary course consistent with past practice in all material respects and in compliance in all material respects with all applicable laws and regulations and using reasonable endeavours to preserve substantially intact its business organisation and goodwill and keeping available the services of its directors and preserving the relationships with those Persons having business dealings with the Island Group, and no member of the Island Group having since 31 July 2009 (except as expressly required by the Acquisition, or to the extent San Leon shall consent in writing):

(i)      amended its memorandum or articles of association;

(ii)     (A) except pursuant to the exercise of the Island Share Options granted prior to the date of this announcement and Provided, issued or agreed to issue any shares, or any rights or securities convertible or exchangeable into, or granted the right to call for the issue of, any shares, effected any share split, share combination, reverse share split, share dividend, recapitalisation, altered the rights attaching to any shares, or effected any reduction, repayment or cancellation of share capital or share premium or capitalised any reserves or redeemed or bought-back any shares or other similar transaction, and (B) granted, conferred or awarded any option, right, warrant, deferred stock unit, conversion right or other right not existing on the date of this announcement to acquire any of its shares (whether or not pursuant to the Island Share Option Scheme);

(iii)     save as Provided (A) increased any compensation payable to an employee or entered into any severance agreement, (B) granted any bonuses, (C) adopted any new employee benefit plan (including any share option, share benefit or share purchase plan) or pension scheme or amended any existing employee benefit plan or pension scheme (including, without prejudice to the generality of the foregoing, changing the entitlements to benefits under a pension scheme, or the benefits that accrue under a pension scheme, or the amounts payable thereunder, or the basis of calculation of such amounts, or the basis on which any pension scheme is funded), except for changes which are less favourable to participants in such plans or are required to implement the Acquisition, (D) commenced or terminated the employment of any employee or proposed employee whose annual remuneration exceeds EUR70,000, or (E) entered into or amend or otherwise modify any agreement or arrangement with Persons that are Affiliates or are officers or directors of Island;

(iv)    (A) declared, set aside or paid any dividend or make any other distribution or payment (whether in cash, stock or other property) with respect to any Island Shares or allowed any member of the Island Group to pay or make any such dividend, distribution or payment (other than dividends or distributions from a wholly owned member of the Island Group to another member of the Island Group or to Island), or (B) directly or indirectly redeemed, purchased or otherwise acquired any of Island's Shares or any equity interest of any of Island Subsidiaries, other than in connection with (1) the acquisition of Island Shares from holders of Island Share Options in full or partial payment of the exercise price payable by such holders upon exercise of Island Share Options outstanding as of the date of this announcement, and (2) tax withholdings upon the exercise of Island Share Options;

(v)     save as Provided merged with, entered into a consolidation with, entered into a scheme of arrangement with or acquired an interest in any Person or acquired a substantial portion of the assets or business of any Person or any division or line of business thereof, or otherwise acquired any assets other than in the ordinary course of business consistent with past practice, or entered into any agreement or arrangement for any of the above;

(vi)    other than in the ordinary course of business consistent with past practice, sold, leased, licensed, pledged, transferred, or otherwise disposed of or encumbered any properties or assets of Island or of any member of the Island Group (including any accounts, leases, contracts or intellectual property or any assets or the stock of any member of the Island Group);

(vii)    save as Provided (A) entered into any material joint venture or profit sharing agreement or (B) except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole), entered into or varied any contract, transaction, arrangement or commitment or announced its intention to enter into or vary any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or would be materially restrictive on the business of any member of the Island Group;

(viii)   (A) created, incurred or suffered to exist any indebtedness for borrowed money except (1) such indebtedness which existed as of 31 July 2009 as reflected on the balance sheet included in Island's results for the year ended 31 July 2009 or (2) any indebtedness owed to Island by any of the direct or indirect wholly owned members of the Island Group, (B) guaranteed the indebtedness of another Person, or (C) issued, sold or amended any debt securities or warrants or other rights to acquire any debt securities of Island or any of its subsidiaries, or guaranteed any debt securities of another Person;

(ix)    made any change to its methods, principles or practices of accounting currently in effect, except (A) as required by generally accepted accounting principles, (B) as required by a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organisation), or (C) as required by a change in applicable law;

(x)     made or changed any tax election, settled or compromised any tax claim or amended any tax return;

(xi)    save as Provided, opened or expanded any facility or office;

(xii)    settled or compromised any litigation or other disputes (whether or not commenced prior to the date of this announcement) other than settlements or compromises for litigation or other disputes where the settlement imposes no material (in this context, material shall mean material to either Island or San Leon) obligation.

(xiii)   save as Provided, authorised, recommended, proposed or announced an intention to adopt a plan of complete or partial liquidation or dissolution of Island or any of its Subsidiaries;

(xiv)   other than in the ordinary course of business incur any administration and exploration expenditure in excess of EUR50,000 per month;

(xv)   other than in the ordinary course of business, modified, amended or terminated any material contract or agreement to which Island or any of its subsidiaries is a party, or knowingly waived, released or assigned any material rights or claims (including any write-off or other compromise of any accounts receivable of Island or any of its subsidiaries); or

(xvi)   authorised any of, or committed or agreed, in writing or otherwise, to take any of the foregoing actions, or otherwise agree to take any action inconsistent with any of the foregoing paragraphs (f)(i) to (xv);

(g)   save as Provided and/or save as publicly disclosed by Island by the delivery of an announcement to the London Stock Exchange at any time up to 25 February 2010 (being the date of this announcement):

(i)      there not having arisen any adverse change or adverse deterioration in the business, assets, financial or commercial position or profits of Island or any member of the Island Group (save to an extent which would not have a material adverse effect (in value terms or otherwise) in the context of the Island Group taken as a whole);

(ii)     no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Island Group is or would reasonably be expected to become a party (whether as plaintiff or defendant or otherwise) and no investigation by any Governmental Authority against or in respect of any member of the Island Group having been instituted or remaining outstanding by, against or in respect of any member of the Island Group (save where the consequences of such litigation, arbitration proceedings, prosecution or other legal proceedings or investigation are not or would not have a material adverse effect (in value terms or otherwise) in the context of the Island Group taken as a whole) and no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Island Group or the Wider San Leon Group is a party having been instituted by a third party (other than a Governmental Authority) which makes the Acquisition or its implementation, or the acquisition or proposed acquisition by San Leon of any shares in, or any of the material assets (which for this purpose means any intellectual property, or any assets that are material, in value terms or otherwise, in the context of the Island Group taken as a whole) of, Island or control of, Island, void, illegal or unenforceable under the laws of any jurisdiction or otherwise, directly or indirectly, restrains, revokes, prohibits, restricts or materially delays the same or imposes additional or different conditions or obligations with respect thereto; and

(iii)     no contingent or other liability existing or having arisen which would reasonably be expected to affect adversely any member of the Island Group (save where such liability is not or would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole);

(h)   save as Provided and/or save as publicly disclosed by Island by the delivery of an announcement to the London Stock Exchange at any time up to 25 February 2010 (being the date of this announcement) San Leon not having discovered:

(i)      that any financial, business or other information concerning the Island Group which has been Provided is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make the material information contained therein not misleading, (save where the consequences of which would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole); or

(ii)     that any member of the Island Group is subject to any liability (actual or contingent) which is material (in value terms or otherwise) in the context of the Island Group taken as a whole;

(iii)     in relation to any release, emission, discharge, disposal or other fact or circumstance which has caused or might impair the environment or harm human health, that any past or present member of the Island Group has acted in material violation of any laws, statutes, regulations, notices or other legal or regulatory requirements of any Governmental Authority (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Island Group, taken as a whole);

(iv)    that there is, or is likely to be, any liability, whether actual or contingent, to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the Island Group or any other property or any controlled waters under any environmental legislation, regulation, notice, circular, order or other lawful requirement of any relevant Authority (whether by formal notice or order or not) or Governmental Authority or otherwise (save where such liability is not or would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole); and

(v)     the circumstances which exist which are likely to result in any actual or contingent liability to any member of the Island Group under any applicable legislation referred to in sub-paragraph (iv) above to improve or modify existing or install new plant, machinery or equipment or to carry out any changes in the process currently carried out (save where such liability is not or would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole).

(i)    save as Provided, no member of the Island Group being in default under the terms or conditions of any facility or agreement or arrangement for the provision of loans, credit or drawdown facilities, or of any security, surety or guarantee in respect of any facility or agreement or arrangement for the provision of loans, credit or drawdown facilities to any member of the Island Group (save where such default is not or would not be material (in value terms or otherwise) in the context of the Island Group taken as a whole);

(j)    for the purposes of the conditions set out above:

(i)      "Island Group" means Island and its subsidiaries and subsidiary undertakings;

(ii)     "parent undertaking", "subsidiary undertaking", "subsidiary", "associated undertaking" and "undertaking" have the meanings given by the European Communities (Companies: Group Accounts) Regulations, 1992;

(iii)    "Provided" means provided pursuant to the letter of information from Island to San Leon dated on or about the date of this announcement;

(iv)    "San Leon Group" means San Leon, and its parent undertaking and its subsidiaries and subsidiary undertakings and any other subsidiary or subsidiary undertaking of its parent undertaking;

(v)     "substantial interest" means an interest in 20 per cent. or more of the voting equity capital of an undertaking; and

(vi)    "Wider San Leon Group" means the San Leon Group, its associated undertakings and any entities in which any member of the San Leon Group holds a substantial interest.

3.     Subject to the requirements of the Panel, San Leon reserves the right (but shall be under no obligation) to waive, in whole or in part, all or any of the Conditions other than 1 (a), (b), (c) and (d) and 2 (a) above;

4.     The Acquisition will lapse unless all of the conditions set out above have been fulfilled or (if capable of waiver) waived or, where appropriate, have been determined by San Leon in its discretion to be or to remain satisfied on the Effective Date.

(a)     If San Leon is required to make an offer for Island Shares under the provisions of Rule 9 of the Takeover Rules, San Leon may make such alterations to any of the above conditions as are necessary to comply with the provisions of that rule.

(b)     San Leon reserves the right to affect the Acquisition by way of a takeover offer. In such event, such offer will be implemented on the same terms (subject to appropriate amendments, including without limitation) an acceptance condition set at 80 per cent. of the Island Shares affected other than Island Shares already in the beneficial ownership of San Leon within the meaning of Section 204 of the Act (but capable of waiver on a basis consistent with Rule 10 of the Takeover Rules), so far as applicable, as those which would apply to the Scheme.

APPENDIX II

Sources of information and bases of calculations

1.       Unless otherwise stated:

(a)      financial information relating to Island has been extracted or provided without material adjustment from the audited annual report and accounts for Island for the three years ended 31 July 2007, 31 July 2008 and 31 July 2009; and

(b)     financial information relating to San Leon has been extracted or provided without material adjustment from the audited annual report and accounts for San Leon for the three years ended 31 December 2006, 31 December 2007 and 31 December 2008.

2.       As at the close of business on 24 February 2010 (being the latest practicable date prior to this announcement), Island had in issue 135,926,678 Ordinary Shares. There are 7,571,000 share options that have been granted by Island that are presently outstanding, with an exercise price per share option ranging from 10.5p to 41.25p.

3.       As at the close of business on 24 February 2010 (being the latest practicable date prior to this announcement), San Leon had in issue 322,207,293 San Leon Shares.

4.       The Acquisition values each Island Share at 10.11 pence per share and the existing issued share capital of Island at approximately £13.74 million.

5.       The consideration pursuant to the Acquisition is calculated:

(a)     by reference to a price of 23.25 pence per San Leon Share (the Closing Price of a San Leon Share on 24 February 2010, being the latest practicable date prior to this announcement); and

(b)     on the basis of 135,926,678 Island Shares in issue in the share capital of Island (at the close of business on 24 February 2010, being the latest practicable date prior to this announcement).

6.       Unless otherwise stated, all prices quoted for San Leon Shares or Island Shares are Closing Prices and are derived from the AIM Appendix to the Daily Official List of the London Stock Exchange.

APPENDIX III

Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:

"Acquisition"	the recommended acquisition of Island by San Leon by means of the Scheme as set out in the Scheme Document
the "Act"	the Companies Act 1963
"Admission"	admission to trading on AIM in accordance with the AIM Rules or, if Island and San Leon so determine and subject to the consent of the Panel, the London Stock Exchange agreeing to admit such shares to trading on AIM subject only to (i) the allotment of such shares and/or (ii) the Scheme becoming Effective
"Affiliate"	with respect to any Person, any other Person controlling, controlled by or under common control with such Person. As used in this definition "control" (including with its correlative meanings, "controlled by" and "under common control with") means the possession, directly or indirectly, of power to direct or cause the direction of the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise
"AIM"	the AIM market operated by the London Stock Exchange
"AIM Rules"	the AIM Rules for Companies published by the London Stock Exchange
"Arbuthnot Securities"	Arbuthnot Securities Limited, financial advisers to San Leon
"Business Day"	any day, other than a Saturday or Sunday, on which clearing banks are normally open for business in Dublin
"Celtex"	Celtex Exploration Services Limited
"Clearances"	all consents, clearances, licences, permissions, waivers, approvals, authorizations or orders that need to be obtained, all applications and filings that need to be made and all waiting periods that may need to have expired, from or under the laws, regulations or practices applied by any Governmental Authority in connection with the implementation of the  Scheme and/or the Acquisition and, in each case, that constitute conditions; and any reference to conditions having been "satisfied" shall be construed as meaning that the foregoing have been obtained, or where appropriate, made or expired in accordance with the relevant condition
"Closing Price"	the closing price of an Island Share or a San Leon Share (as the context requires) as derived from the AIM Appendix to the Daily Official List
"Conditions"	the conditions to the implementation of the Acquisition (including the Scheme) set out in Appendix I to this announcement and "Condition" means any one of them
"Court"	the High Court of Ireland
"Court Hearing"	the hearing or hearings by the Court of the petition to sanction the Scheme, confirm the associated reduction of capital of Island and grant the Court Order
"Court Meeting"	the meeting or meetings of the Island Shareholders (and any adjournment thereof) convened by the order of the Court pursuant to section 201 of the Act to consider and, if thought fit, approve the Scheme (with or without amendment)
"Court Order" or "Court Orders"	the order or orders of the Court sanctioning the Scheme under Section 201 of the Act and confirming the reduction of share capital which forms part of it under Sections 72 and 74 of the Act
"Daily Official List"	the daily official list of the London Stock Exchange
"Davy Corporate Finance"	Davy Corporate Finance, a wholly owned subsidiary of J&E Davy, trading as Davy, financial advisers to Island
"Designated Shares"	one Island Share to be held by San Leon and six other Island Shares to be held on trust for San Leon
"Effective Date"	the date on which the Scheme becomes effective in accordance with its terms
"Enlarged Group"	the San Leon Group, including the Island Group, following the Effective Date
"Extraordinary General Meeting" or "EGM"	the extraordinary general meeting of the Island Shareholders to be convened in connection with the Scheme expected to be held on the same day as the Court Meeting (and any adjournment thereof)
"Financial Regulator"	the Irish Financial Services Regulatory Authority
"Financial Services Authority"	the Financial Services Authority of the United Kingdom
"Forms of Proxy"	as the context requires, the relevant form of proxy for use at the Court Meeting or at the Extraordinary General Meeting, which will accompany the Scheme Document
"FSMA"	the Financial Services and Markets Act 2000
"Holder"	a registered holder of shares, including any person(s) entitled by transmission
"Implementation Agreement"	the agreement dated 25 February 2010, entered into by Island and San Leon in relation to the implementation of the Scheme
"Ireland" or "Republic of Ireland"	Ireland excluding Northern Ireland and the word Irish shall be construed accordingly
"Island" or "Company"	Island Oil & Gas plc, a public limited company incorporated in Ireland with registered number 366122
"Island Board"	the board of Island Directors
"Island Directors"	the directors of Island and any one of them as the context may require
"Island Group"	Island and its subsidiaries and subsidiary undertakings from time to time, or any of them, as the context requires
"Island Shareholders"	holders of Island Shares
"Island Shares" or "Ordinary Shares"	ordinary shares of EUR0.01 each in the capital of Island
"Island Share Options"	options to subscribe for Island Shares pursuant to the Island Share Option Scheme
"Island Share Option Scheme"	the share option scheme titled The Island Oil & Gas plc 2007 Share Option Scheme
"London Stock Exchange"	London Stock Exchange plc
"Long Stop Date"	31 July 2010
"Longreach"	Longreach Oil and Gas Ventures Limited
"Meetings"	the Court Meeting and the EGM
"New Island Shares"	the ordinary shares of EUR0.01 each in the capital of Island to be created and issued fully paid to San Leon pursuant to the Scheme
"New San Leon Shares"	the San Leon Shares proposed to be issued credited as fully paid to the Scheme Shareholders pursuant to the Scheme and ranking pari passu with the San Leon Shares in issue at the time the New San Leon Shares are issued pursuant to the Acquisition, save as set out in this announcement
"Non-Solicitation and Expenses Reimbursement Agreement"	the non-solicitation and expenses reimbursement agreement between San Leon and Island
"Offer"	the proposed acquisition by San Leon of the entire issued and to be issued share capital of Island
"Offer Period"	the period commencing on 15 October 2009 and ending on the earlier of the date on which the Scheme lapses or is approved by Scheme Shareholders
"ONHYM"	Office National de Hydocarbures et de Mines, the Moroccon agency in charge of exploration
"Overseas Shareholders"	shareholders resident in, or citizens of, jurisdictions outside Ireland and the United Kingdom
"Panel" or "Takeover Panel"	the Irish Takeover Panel
"Person"	any individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other legal entity, or any governmental agency or political subdivision thereof
"PGS"	PGS Ventures AS
"Reduction of Capital"	in connection with the Scheme the proposed reduction of capital under Sections 72 and 74 of the Act
"Reduction Court Hearing"	the hearing by the Court of the application to confirm the Reduction of Capital
"Reduction Court Order"	the order of the Court confirming the Capital Reduction
"Registrars"	Computershare Investor Services (Ireland) Limited
"Registrar of Companies"	the Registrar of Companies in Dublin, Ireland
"Relevant Securities"	has the meaning assigned by Rule 8.9 of the Takeover Rules
"Resolutions"	the resolutions to be proposed at the Meetings
"Restricted Jurisdiction"	any jurisdiction in respect of which it would be unlawful for this announcement to be released, published or distributed, in whole or in part, in, into or from, including for the avoidance of doubt, Australia, Canada, Japan, the Republic of South Africa or the United States
"San Leon"	San Leon Energy plc, a public limited company incorporated in Ireland with registered number 237825
"San Leon Board"	the board of San Leon Directors
"San Leon Directors"	the directors of San Leon and any one of them as the context may  require
"San Leon Group"	San Leon and its subsidiaries and subsidiary undertakings from time to time, or any of them, as the context requires
"San Leon Shares"	ordinary shares of EUR0.05 each in the capital of San Leon
"San Leon Shareholders"	holders of San Leon Shares
"Scheme" or "Scheme of Arrangement"	the proposed scheme of arrangement under Section 201 of the Act and the capital reduction under Sections 72 and 74 of the Act with or subject to any modifications, additions or conditions approved or imposed by the Court and agreed by Island and San Leon
"Scheme Court Hearing"	the hearing by the Court of the claim form to sanction the Scheme
"Scheme Court Order"	the order of the Court sanctioning the Scheme
"Scheme Document"	the formal document to be sent to Island Shareholders which will contain the full terms and conditions of the Scheme
"Scheme Price"	the price per Island Share pursuant to the terms and conditions of the Scheme (including any revision thereof made in accordance with the Implementation Agreement)
"Scheme Record Time"	6.00 p.m. on the last Business Day before the Effective Date;
"Scheme Shareholders"	the holders of Scheme Shares
"Scheme Shares"	the Island Shares: (i) in issue at the date of the Scheme Document; (ii) issued after the date of the Scheme Document but before the Voting Record Time; and (iii) issued at or after the Voting Record Time and before the Scheme Record Time on terms that the original or any subsequent Holders shall be, or shall have agreed in writing by such time to be, bound by the Scheme but excluding the Designated Shares
"Share Option Notification"	the notification to be circulated to the holders of Island Share Options
"Sterling"	the lawful currency of the United Kingdom
"Takeover Rules" or "Irish Takeover Rules"	the Irish Takeover Panel Act, 1997, Takeover Rules, 2007 and 2008, and Substantial Acquisition Rules, 2007
"United Kingdom" or "UK"	United Kingdom of Great Britain and Northern Ireland
"United States" or "US"	the United States of America (including the states of the United States and the District of Columbia), its possessions and territories and all other areas subject to its jurisdiction
"USD"	the lawful currency of the United States
"US Securities Act"	the United States Securities Act of 1933, and the rules and regulations promulgated thereunder
"Voting Record Time"	the time and date specified in the Scheme Document for determining the entitlement of Scheme Shareholders to vote at, respectively, the Court Meeting and the Extraordinary General Meeting

All amounts contained within this announcement referred to by '€' and 'c' refer to the Euro and cent.

Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof.

Words importing the singular shall include the plural and vice versa and words importing the masculine gender shall include the feminine or neutral gender.

All amounts contained within this announcement referred to by '£' and 'pence' refer to pounds Sterling and pence Sterling.

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