Ithaca Energy Inc.
TSX VENTURE : IAE
AIM : IAE

Ithaca Energy Inc.

January 23, 2008 09:00 ET

Ithaca Energy Enters Into Farmout Agreements at Polly, Manuel and Carna

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - Jan. 23, 2008) -

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Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE), a Canadian independent oil & gas company with exploration and development assets in the UK North Sea, is pleased to announce that it has farmed out an interest in the Polly, Manuel and Carna prospects.

Ithaca has entered into an agreement with North Sea Energy covering a portion of its 100% owned Licence P1392 in the Inner Moray Firth area of the North Sea under which they will pay 30% of the costs of the Ithaca operated 12/26c-5 exploratory test which is currently being drilled, to earn a 20% interest in the Polly prospect.

A further provision of the agreement provides North Sea Energy with the right and obligation to participate with identical interests in the drilling of Ithaca's Manuel prospect on identical terms to the Polly prospect to enable North Sea Energy to earn a 20% interest in another portion of Licence P1392. It is intended that Manuel will be drilled later this year. North Sea Energy is a partner of Ithaca's in the area, having earlier farmed into and earned a 10% interest in the Jacky oil discovery which Ithaca intends to put on production by the end of this year. Both Polly and Manuel are near the recently announced acquisition by Ithaca of the producing Beatrice oilfield.

Ithaca has also entered into an agreement with Venture Production plc. in relation to its 60% owned Carna prospect in the Southern North Sea Gas Basin. Under the agreement Venture will assume the role of operator and pay, on behalf of Ithaca, 30% of the drilling costs of a well in return for a 20% interest in a specified defined area being portions of blocks 43/21b and 43/22c. Subsequent to the drilling of the well, the Carna prospect will be owned 56% by Venture, 40% by Ithaca and 4% by EWE Aktiengesellschaft. Under the terms of the farmout, Ithaca will have the residual responsibility of paying 30% of the well costs. It is anticipated that the well will be drilled in the last half of 2008.

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

"The farmout mechanism is an integral part of Ithaca's financial strategy and these transactions are consistent with the company's objectives of creating drilling activity on company prospects, financing the activity in a manner that will provide financial leverage and retaining a significant participating interest. We look forward to strong working relationships with both Venture and North Sea Energy."

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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