Ithaca Energy Inc.

Ithaca Energy Inc.

January 14, 2008 08:30 ET

Ithaca Energy Commences Drilling on Polly Oil Prospect and Provides Operational Update

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - Jan. 14, 2008) -


Ithaca Energy Inc. (AIM:IAE)(TSX VENTURE:IAE), a Canadian independent oil & gas company with exploration and development assets in the UK North Sea, is pleased to announce that drilling operations have commenced on its 100% owned Polly Prospect on Block 12/26c near the Beatrice oilfield in the Inner Moray Firth area of the United Kingdom's continental shelf.

The Polly Prospect is located approximately 2 kilometers east of the Beatrice field and is structurally similar to Beatrice itself. Gaffney Cline & Associates ("GCA") evaluated Polly as having the potential for 59 million barrels of recoverable oil. Utilizing the GSF Galaxy II jack up drilling rig and the drilling services of ADTI, the well will be drilled vertically through the Middle Jurassic Beatrice sands to a target vertical depth of approximately 2,465 meters or 8,110 ft. The well is expected to take approximately 22 days to drill.

Particular care has been taken to assess and reduce any potential impact on the sensitive Inner Moray Firth environment. Drilling plans have been subject to public consultation and comments received from a number of external interested parties have been addressed in the preparations for this work.

Ithaca is also pleased to announce the award of a significant contract to design, construct, install and commission a wellhead platform for the development of the (90% owned) Jacky discovery 5 km to the northeast of the Beatrice field. This contract has been awarded to HSM Steel Structures of Shiedam in Holland and is scheduled for delivery and installation in Q4 2008.

The award of this major contract is a milestone in the development of the Jacky field which will be tied back to the Beatrice production infrastructure. A Field Development Plan for Jacky is under discussion with the UK government and approval is expected in Q2 2008. Jacky initial production rates are estimated to be over 6,000 barrels of oil per day, significantly increasing throughput at the Beatrice field and onshore Nigg oil storage and transshipment terminal, both of which are in the process of being acquired by Ithaca (100%) from Talisman Energy.

On the Company's 70% owned Athena prospect, major engineering work to determine the topsides modifications required for production at the host Claymore facility has commenced in order to maintain a target of late 2009 for first production. AGR have been contracted to drill a further appraisal/development well in late February or early March to determine the potential for additional reserves in the southern area of this field.

Lawrie Payne, Ithaca Energy's Chief Executive Officer commented:

"Polly is the first well in our 2008 UK North Sea drilling program and our first exploratory test. Should it be successful, it will be incorporated into our plans to place our Jacky discovery on stream through the Beatrice facility before year end. The entire Beatrice area has become a core region for the Company following the announced intention to acquire the Beatrice oilfield effective January 1, 2008. Upon closing of this transaction, the Beatrice oilfield will represent our first production of 1,800 bopd which will increase substantially late this year with the completion of Jacky. 2008 will be a very significant year in the growth of Ithaca, with significant production being achieved and a planned drilling program of up to 6 exploration and development wells. Funds raised in the latter part of 2007 will enable us to finance this program."

Notes to Editors

Ithaca Energy Inc. (AIM:IAE)(TSX VENTURE:IAE) is an independent oil & gas company with exploration and development assets in the UK North Sea. The Beatrice field comprises UK Offshore Licenses P187, P982 and P1031 of the United Kingdom's Continental Shelf.

Forward-looking statements

Some of the statements in this announcement are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of Ithaca Energy Inc. or its officers with respect to various matters. When used in this announcement, the words "expects," "believes," "anticipates," "plans," "may," "will," "should" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements. These forward-looking statements speak only as of the date of this announcement. Ithaca Energy Inc. expressly disclaims any obligation or undertaking to release publicly any updates, other than as required by the AIM Rules for Companies.

In accordance with AIM Guidelines, Lawrie Payne, BA Economics (Alberta) and MA Marine Geology (Columbia) and CEO of Ithaca Energy is the qualified person that has reviewed the technical information contained in this press release.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

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