IGas Trading Statement

Island Gas Resources PLC
12 March 2008



12 March 08



                            ISLAND GAS RESOURCES PLC

                           ('IGas' or 'the Company')


                               Trading Statement



The Board of IGas, which has the potential to be a significant onshore UK gas
producer, is pleased to provide the following trading update following its
admission to AIM on 31 December 2007.


Advancement of stated objectives


The Company has made good progress against its immediate objectives as stated in
the admission document of 27 November 2007, as outlined below.


1.Commencing gas sales from coal bed methane ('CBM') production by end 2008:

IGas has, through its operator Nexen Exploration (UK) Limited ('Nexen'),
successfully drilled a 2000 ft (610 metre) lateral leg on its Doe Green site
(PEDL 145) in Cheshire. Production testing has shown good quality gas flowing
continuously to surface and the permeability of the coal has been demonstrated.
IGas expects to commence gas sales from this site before the end of Q4 2008;


2.Securing routes to market:

IGas has secured an electricity grid connection agreement of one megawatt at its
Doe Green site. The Company has also agreed heads of terms to supply gas
directly to a prospective customer from a site in Staffordshire;


3.Continue to gather data and production experience to enable a
proportion of GIIP to be classified as 'recoverable resource':

IGas expects to select a reserve auditor shortly who will assist in the
verification process;


4.Fulfill all well obligations on licences to secure ownership into a
second term:

Well plans and land access are now in place for all sites to secure ownership of
licences into their second terms. IGas has obtained planning permission for at
least one well site from each County Council having jurisdiction over its
acreage;


5.Apply for further acreage together with partner Nexen:

IGas and Nexen have applied for additional acreage in the 13th onshore oil and
gas licensing round. Applications were submitted to the Department for Business
Enterprise and Regulatory Reform ('BERR') in early February. Under the 13th
licensing round, most onshore acreage that is not already licensed, within
certain boundaries, is available. 



Other achievements


In addition IGas has:


   •Obtained encouraging results from the well at Mostyn Quay at Point of Ayr
    in Flintshire, Wales (PEDL 107), which are now undergoing detailed analysis.
    Drilling of the well began in early December 2007 following the granting of
    planning permission. The well logged and cored the coal sequence and
    obtained data related to gas content and the permeability of the coals. This
    well satisfied the drill or drop obligation on PEDL 107;


   •Received an extension of 10 months from BERR for its acreage in
    Swallowcroft in Western Staffordshire (PEDL 115) and for its acreage at
    Speke near Liverpool (PEDL 116); and


   • Gained all relevant permissions for drilling an appraisal well at
    Foxhills Farm near Halewood (PEDL 116) and expects to begin drilling
    operations on this well shortly.



Activity for 2008


IGas anticipates undertaking the following activity during 2008:


1H 2008 (Remaining period)

   • As indicated above, the Company expects to drill an appraisal well at
     Foxhills Farm near Halewood on PEDL 116; and
   • Continue production testing at its Doe Green site in PEDL 145.


2H 2008

   • Drill an appraisal well in the Swallowcroft area on PEDL 115;
   • Drill a further appraisal well in the Swallowcroft area on acreage in
     PEDL 78;
   • Consider the potential for a production well in the Swallowcroft area;
   • Obtain a response from BERR regarding IGas' application for acreage in
     the 13th on-shore licensing round;
   • Apply for a Field Development Plan for the northern section of PEDL 145
    (Four Oaks); and
   • Utilise its electricity grid connection agreement for the Doe Green site
     to commence gas sales.


Following this trading statement, IGas intends to provide an update of progress
on a quarterly basis.


IGas' CEO Andrew Austin said: 'I am pleased to report the progress the Company
is making in developing its operations across the country. IGas is on track to
deliver its immediate objectives as set out at the time of our admission to AIM.
We continue to demonstrate the viability of producing onshore gas from coal bed
methane in the UK, and its increasingly attractive potential to become an
important new source of energy.'



For further information contact:


Gavin Anderson & Company                                     [phone]
Ken Cronin
Kate Hill
Anthony Hughes


Libertas Capital Corporate Finance                           [phone]
Jakob Kinde
Stephen Pickup


Island Gas                                                   [phone]
Andrew Austin
Chief executive Officer



Notes to editors


Island Gas Resources


Founded in 2003, IGas' subsidiary, Island Gas Limited, was set up to produce 
and market the methane gas which is found in seams of coal. The coal seam both
generates and traps the gas, which can be extracted by drilling horizontally
into the seam and collected for use as fuel. Coal Bed Methane is exactly the
same as other forms of natural gas, and is used to provide both industrial and
domestic power and has the potential to be an important new source of energy 
for the UK. The CBM industry in the UK is in its infancy, but with the 
continuing decline in natural gas from the North Sea, it is likely to become an
increasingly attractive alternative potential source of gas. CBM has become a
significant source of gas both in North America and Australia over a relatively
short period of time during which both have seen an almost exponential growth in
CBM production.

IGas currently has ownership interests of between 20 and 50 per cent in eight 
Petroleum and Exploration Development Licences (PEDLs) in the UK, wholly owns 
two methane drainage licences (MDLs) and has a 50 per cent interest in three 
offshore blocks under one seaward petroleum production licence (SPPL).

These licences cover a gross area of approximately 1,000 sq km.  IGas' share 
of Gas Initially In Place (GIIP) is estimated to be in the order of 893 billion 
cubic feet (bcf) at a mid-case estimate, and could range between 395 bcf and 
3,436 bcf respectively.





Coal Bed Methane


   •CBM is the natural gas found in most coal deposits.
   •It is used as a fuel in exactly the same way as conventional gas.
   •Coal seams can hold large quantities of gas (six to seven times more than
    the equivalent volume of rock in a conventional gas reservoir).
   •Gas is stored within the molecular structure of the coal, on the surface
    and in natural fractures (cleats).  Typically water pressure keeps the gas
    trapped.
   •When the water pressure is released, the gas flows through the fractures
    into a well bore where it can be collected.
   •CBM is produced by drilling a well which contacts the coal seams. Once
    water is pumped out, the pressure is lowered and gas migrates through the
    coal, up the well bore to surface.




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