Island Oil & Gas swap agreement approved

Island Oil & Gas plc has today announced that the company's asset swap agreement with OMV has received the relevant governmental and partner approvals.

The assignment of the 50% interest in the Durresi Block, offshore Albania from OMV to Island has been approved by the competent authorities in Albania and the assignment of the 50% interest in Frontier Exploration Licence 3/05 (FEL 3/05) offshore the west of Ireland in the Rockall Basin, which includes the Killala Prospect, from Island to OMV has been approved by the Minister for Communications, Marine and Natural Resources Eamon Ryan, subject to receipt of a Deed of Assignment.

The Agreement is between Island Rockall JV Limited, a wholly-owned subsidiary of Island, and OMV (Albanien) Adriatic Sea Exploration GMBH (OMV), a wholly-owned subsidiary of

OMV Exploration & Production GmbH.

Under the terms of the Agreement, Island will retain a 50% interest in FEL 3/05. In addition, Island will take over operatorship of the Durresi Block.

Island plans to acquire a 3D seismic survey in 2008 in FEL 3/05 in order to prepare the large Killala prospect for a drilling decision.

OMV has a strong track record on the Atlantic Margin, with significant exploration success in both Irish and UK waters.