The company, which is quoted on London's Alternative Investment Market (AIM), said a range of institutional and private investors had stumped up £8.3m (€12.3m) in return for new shares. Some investors have also agreed to provide a further e6m early next year if certain conditions are met.
Island chief executive Paul Griffiths said the fundraising round was a major vote of confidence in the company's prospects. The firm will use the money to drill two wells at the Kinsale and nearby Seven Heads fields and also has plans to drill in the Donegal Basin to the north-west of the country.
Mr Griffiths said he was "very, very confident" about the first phase of the project but that the two later stages were likely to be more complex. "Drilling is on course to commence in April," he said.
Mr Griffiths also said the speed with which the company had managed to raise the funding from investors showed that they shared his confidence. Island's major shareholders include management, Platinum Petroleum and investment specialist Gartmore.
The company, which was set up in 2003 and which is valued at around €59m, has contracted a semi-submersible drilling unit from Norwegian drilling specialist Petrolia for work on the drilling programme. The initial drilling deal will cover a 75-day period. Fellow Irish oil firm Petroceltic, which has drilling programmes scheduled for Ireland, Italy and the African states of Algeria and Tunisia, will act as a joint venture partner. The fundraising programme announced yesterday was arranged by Davy Stockbrokers.
Island was set up by Mr Griffiths, a former Gulf oil geologist, and finance director Jack McKinney, who floated the company late last year. It had previously secured €11.8m in funding through a private placing of shares. It has four wholly-owned subsidiaries: Island Expro; Island Asset Porcupine; Island Donegal and Island Seven Heads.
The company has interests in a total of eight Irish offshore licences. It acts as operator in three of these cases and as technical manager in a further two.