03 July 2006

Irvine to Acquire Interest USA
Shale Gas Project

• Initial 30,000 acres of oil & gas leases covering Chattanooga Shale
• Additional leasing program targeting 100,000 to 200,000 acres
• 3D Seismic & drilling program to prove up Shale gas on the leases
• Experienced shale gas development partner
• Conventional oil & gas targets

Irvine Energy plc is pleased to announce the signing of agreements ('the Agreements') to acquire a 75% working interest in approximately 30,000 acres of oil and gas leases ('the Initial Leases'), as part of a lease acquisition, exploration and development program in respect to the Chattanooga Shale in Kansas, USA ('the Project'). The primary focus of the Project is shale gas exploration and development of the Chattanooga Shale, in joint venture with Metro Energy Group Inc and Kanco Energy Inc (together the 'Metro Group'), within an exclusive Area of Mutual Interest ('AMI') of approximately 7 million acres covering the Chattanooga Shale. The Metro Group, who are experienced shale gas developers, will be the Operator of the Project and will hold a 25% working interest in the Project.

Irvine and the Metro Group will seek to build a large strategic acreage position over the Chattanooga Shale, with a target acquisition of 100,000 to 200,000 acres of oil and gas leases within the AMI. In conjunction with acquiring additional oil & gas leases within the AMI, Irvine and the Metro Group will undertake three dimensional ('3-D') seismic studies and drilling programs to establish the economic parameters of the Chattanooga Shale gas formations. The directors believe this exploration program has the potential to generate conventional oil and gas targets for testing, with the possibility of early cash flow from the conventional targets and the shale gas wells.

Irvine's Chairman, Mr Michael Frayne, commented 'the Project is an exciting opportunity for Irvine to partner with an experienced operator in a large, new USA shale gas play in an established oil and gas region with excellent infrastructure and the potential to create significant value for Irvine shareholders.'

Irvine will acquire its interest in the Project for the total share consideration of 80 million shares in Irvine upon Completion, and up to an additional 110 million Irvine shares upon achievement of two performance milestones. Under the first performance milestone, an additional 72.5 million Irvine shares will be issued upon acquisition of leases covering a total of 100,000 acres within the AMI, and the weighted average price of Irvine shares over any subsequent consecutive 20 trading days being 6 pence or greater. Under the second performance milestone, an additional 37.5 million Irvine shares will be issued upon acquisition of leases covering a total of 150,000 acres within the AMI, and the weighted average price of Irvine shares being 8 pence or greater over any 20 consecutive trading days after achievement of the first performance milestone. Of the total share consideration, the Principals of the Metro Group will receive up to 75 million shares, to be issued on Completion and achievement of the first milestone.

Completion of the Agreements is conditional on, amongst other things, completion of satisfactory due diligence by Irvine and approval by Irvine shareholders.

Irvine will acquire its interest in the Project through the acquisition of 100% of the issued capital of Wattle Energy Inc and Halcyon Holdings Pty Ltd ('Halcyon'). Prior to Completion, Irvine will lend Halcyon up to US$$4.0 million on a secured basis, to enable Halcyon to settle on the acquisition of 20,000 acres of the Initial Leases. On Completion, Irvine will outlay an additional US$$2.0 million to settle on the acquisition of the balance of the Initial Leases of 10,000 acres.

Under the terms of the Agreements, Irvine will fund the first US$$1.5 million in 3-D seismic studies and the total third party costs of acquiring additional oil and gas leases within the AMI. Irvine and the Metro Group will then contribute to all other costs, primarily drilling and further 3-D seismic, in proportion to their 75% and 25% respective working interests. The working interests, represent the net revenue interest of the joint venture parties after total third-party royalties of 20%. Post Completion, Irvine's share of Project funding to the end of the first quarter 2007 is estimated at US$$4.5 million.

Irvine will undertake an unconditional share placement for a minimum of £3 million ('the Placement') to provide funding for completion of the Agreements and working capital to meet its commitments in respect to the Project.

These Agreements represent a fundamental change in the nature of Irvine's business and accordingly the transaction is a reverse takeover under the AIM Rules and is subject to shareholder approval. Consequently, Irvine's shares have been suspended from trading until a Re-admission document is posted to shareholders.

Irvine has engaged Gaffney Cline, a leading international oil & gas consulting firm, to undertake due diligence and provide a Competent Persons' Report for inclusion in Irvine's re-admission document.

Post Completion, the existing board of Irvine will remain in place and it is their intention to appoint an independent technical director, with significant oil & gas expertise, as soon as possible. It is planned that Gaffney Cline will continue to provide the Irvine Board with on-going independent technical reviews and advice.

About USA Shale Gas, the Operator and Project AMI

Organic rich shales are hydrocarbon source rocks which are pervasive across large geographic areas, and not confined to limited traps or structures. These shales typically have lower gas flow rates than conventional reservoirs, but tend to produce over longer periods. Recent technological advancements, including fracture stimulation combined with horizontal drilling, and higher gas prices have enabled economic natural gas production from extensive shale basins. This has resulted in the development of the multi-billion dollar shale gas industry in the USA, one of the fastest growing energy sectors in onshore USA.

The Metro Group has oil & gas operations in Oklahoma, Louisiana and Kansas and has significant in-house experience and expertise in geology, prospect generation, field operations, and oil and gas marketing. The principals of the Metro Group have over 40 years combined experience in the oil and gas industry. The Metro Group has a proven track record in shale gas development, including an operating agreement in the Woodford Shale gas play in Oklahoma with Devon Energy, one of the largest shale gas developers in the USA.

The Project AMI covers 11 contiguous counties in Kansas which cover the Chattanooga Shale. The Project AMI covers an area of approximately seven million acres. The AMI has a history of prolific oil & gas production from a number of formations and has significant infrastructure in place, including gas pipeline networks. Over the past two decades, there has been limited application of the technologies proposed under the Project, including 3-D seismic and horizontal drilling.

For further information please contact:

Irvine Energy plc
Michael Frayne, Chairman: +44 (0) 207 016 9579

Nabarro Wells & Co Limited
Hugh Oram, Director: +44 (0) 207 710 7400