GOIL Granby Oil

    18 December 2006

Granby Oil and Gas plc

("Granby" or "the Company" or "the Group")

UKCS Block 42/28c Watling Exploration Well - Drilling Commences

Granby  is pleased to announce that drilling operations have commenced on the Watling prospect  on
block  42/28c  ("spudded") on 18th December 2006.  The well is targeting a Rotliegendes  reservoir
with significant gas potential and will be drilled to a total depth of approximately 3,100 metres.
The  well  is  being  drilled by the ENCSO 92 rig and is operated by Centrica  Resources  Limited.
Drilling operations are expected to take around 30 days.

Centrica  and  Gas Plus will together fund the cost of the well to earn a 50% and 16.67%  interest
respectively in the 42/28c block.  Granby has the remaining 33.33% interest in the block  and  its
share of costs will be fully carried by Centrica and Gas Plus.

David Grassick, Managing Director of Granby Oil and Gas, said:

"This  is Granby's first exploration well in the Southern North Sea where we now have an expanding
portfolio of drillable prospects, as well as our interest in the Tristan NW development."

Richard Moreton, Director of Granby Oil and Gas, said:

"Watling  is  our  first  23rd round prospect to be drilled, and we are now  actively  engaged  on
farming  out  several  other  prospects from our portfolio  to  expand  our  exploration  drilling
programme."


Enquiries:
 Granby Oil and Gas                                    
    David Grassick, Managing Director                  07785 921080
                                                       david.grassick@granbyoil.com
    Richard Moreton, Executive Director                07814 579246
                                                       richard.moreton@granbyoil.com
    Nigel Burton, Finance Director                     07785 234447
                                                       nigel.burton@granbyoil.com
                                                       
 College Hill                                          
    Nick Elwes                                         020 7457 2020
                                                       

Notes to Editors

Background
This  exploration well on block 42/28c is Granby's third exploration well since its  flotation  on
AIM  in  June  2005, and the Company's first in the Southern North Sea.  The block  was  initially
awarded  to  a  Granby-led group in the 22nd Licensing Round. Centrica and Gas  Plus  subsequently
agreed  to  farm  in to the block, leaving Granby fully carried for the cost of  this  exploration
well.  Granby since acquired an additional interest from the original co-venturer to increase  its
carried interest to 33.33%.

Interests in block 42/28c are as follows:

Centrica Resources                        50.00%
Granby                                   33.33%
Gas Plus Group                           16.67%


Overview of the Business
Granby  Oil and Gas plc (ticker symbol GOIL) is an oil and gas business focused on exploration  in
carefully  selected  areas  in  the North Sea and elsewhere, and also  on  securing  oil  and  gas
production  and developments. The Group's strategy is to build a significant portfolio  of  assets
through both discovery and exploitation of oil and gas reserves.

The  Group  was  created by the combination of Granby Enterprises and Team  Oil,  two  independent
companies  formed  in 2002 which have had common management teams and ownership since  June  2004.
Granby raised �11.5m in 2005, of which �10m was from a placing and Admission to AIM in June  2005,
and an additional �9m in a placing in August 2006.

Granby's portfolio and plans
Granby  is  planning a multi-well exploration programme for 2006 and 2007, with two  fully  funded
wells expected to begin drilling during December (drilling the Guinea and Watling prospects) and a
third in the New Year, and is in the advanced stages of farming out several other licences awarded
in the 22nd and 23rd Rounds.

Granby's current acreage comprises interests in a portfolio of offshore licences in the North  Sea
,  containing multiple prospects generated by the Company. Granby also has an interest in a single
onshore licence in Yorkshire.

In  addition,  Granby  has  a  9.14% indirect interest in the Galoc field,  offshore  Philippines,
through its 15.69% shareholding in the Galoc Production Company ('GPC') which operates the  field.
Development  of  the  Galoc  oil  field is now fully approved by  co-venturers  and  the  relevant
authorities.  First oil production from the field is expected in late 2007 at an initial  rate  of
approximately 15,000 bopd.

Granby has also recently announced that it has earned a 42% interest in the Tristan North West gas
development  in  block 49/29b in the UK Southern North Sea and executed a loan facility  agreement
with  Mitsubishi Corporation for the development. First production is currently anticipated to  be
in late 2007, subject to availability of a suitable rig and other items with long lead times.


                                                                
Granby Oil & Gas plc



                                                                

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