Ithaca Energy Inc.

Ithaca Energy Inc.

April 30, 2008 13:04 ET

Ithaca Energy: Increased Reserves and Values for 31 December 2007

Release of 2007 Financial Statements and Annual Information Form and 51-101 Reserves

CALGARY, ALBERTA--(Marketwire - April 30, 2008) -


Ithaca Energy Inc. ("Ithaca Energy" or the "Corporation") (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited is pleased to announce a positive reserves update and its financial results for the year ended 31 December 2007.

Reserves Summary

- 31% increase in Proved plus Probable reserves to 26,264.7 thousands of barrels of oil equivalent ("Mboe")

- 38% increase in Proved plus Probable plus Possible reserves to 39,359.5 Mboe

- Reclassification of Jacky and Athena reserves from Probable to Proved and Probable

The Net Present Value discounted at 10% per annum (NPV10) of the Athena Proved plus Probable ("2P") net reserves as calculated by Sproule are US$312 million using their December 2007 forecast price deck. This represents a significant portion of Ithaca Energy's value and the Corporation intends to develop the pool to first production in 2010 with further drilling in 2008.

The second most significant property is the Jacky discovery, made in 2007. The 2P net reserves attributed to Jacky are 4.7 million barrels of oil equivalent ("MMboe") of which 1.7MMboe or 37% are considered Proven. The 2P net reserves have an NPV10 of US$122.7 million. Production facilities for Jacky are under construction in anticipation of first production at the end of 2008.

The third component of the Corporation's established reserves are represented by a small interest in a gas and condensate pool in the Barbara area of the Central Basin. The 2P reserves net to the Corporation have been evaluated as 0.8MMboe having an NPV10 of US$7.1 million. The operator of this field is in the process of planning its development for first production in 2010.

In 2008, Ithaca Energy drilled a well near to the Beatrice oilfield which encountered oil and is in the process of negotiating final agreements for the purchase of a 100% interest in the Beatrice oilfield.

Remaining Reserves Net to Remaining Reserves Net to
Ithaca Energy Ithaca Energy
as at 31 December 2007 as at 31 December 2006
Category Net Present Net Present
Value Value
(US$ 000) (US$ 000)
Before Tax After Tax % change
Net discounted discounted Net from
Reserves at at Reserves 2006 to
(Mboe) 10% 10% (Mboe) 2007
Proved 12,600.0 110,272 63,312 - (i)
Probable 13,664.7 327,443 163,837 20,015.7 (32%)
Proved plus
Probable 26,264.7 437,715 227,149 20,015.7 31%
Possible 13,094.8 353,803 179,452 8,489.9 54%
Proved plus
Probable plus
Possible 39,359.5 791,518 406,601 28,505.6 38%

(i) equals number meaningless

The Corporation's petroleum and natural gas reserves (the "Reserves") were independently evaluated by Sproule International Limited ("Sproule") in accordance with Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions and evaluation practices and procedures, as specified by National Instrument 51-101 ("NI 51-101"). The evaluation uses Sproule's forecast prices and costs at December 31, 2007. Full details of Ithaca Energy's Reserves as at December 31, 2007 and presented in the format specified by NI 51-101, are located in Ithaca Energy's Annual Information Form dated April 30, 2008 and filed on SEDAR at or on Ithaca Energy's website

2007 Financial Highlights

- Total assets increased to US$ 226.1 million (US$ 114.9 million in 2006)

- Cash balance at year end increased to US$ 96.2 million (US$ 51.4 million in 2006)

- Net loss for the year decreased to US$ 2.3 million (loss of US$ 4.3 million in 2006) - due to significant capitalisation of expenditure and a positive foreign exchange gain

- Net funds raised through share offerings totalled US$103.6 million (US$ 105.1 million in 2006)

The audited consolidated financial statements, notes and Management's Discussion and Analysis for the year ended December 31, 2007 are available on Ithaca Energy's website and are also available on SEDAR at

2007 Exploration, Appraisal and Development Drilling

In November 2007, Ithaca Energy entered into a heads of agreement (effective January 1, 2008) to acquire Talisman Energy (UK) Limited's 100% interest in the Beatrice oilfield for a cash consideration of Pounds Sterling 10 million (US$21 million). The acquisition of the Beatrice field provides Ithaca Energy with its first oil production and control of the producing infrastructure in the area. Current production from these facilities is 1,800bopd. Final documentation is expected to be executed by the end of the second quarter of 2008.

The 90% owned Jacky well was drilled in the second quarter 2007 using the GSF II drilling rig. The well encountered hydrocarbons and was suspended as a future producer. This discovery will be tied back to the Beatrice facilities outlined above and construction of equipment needed has already commenced. The tie-back of the Jacky discovery to the Beatrice facilities will enable Ithaca Energy to increase oil flow through the acquired facilities, which will in turn provide economies of scale. The Corporation remains on schedule for producing first oil by the end of 2008.

Following the success of the Jacky well, the Polly prospect, which lies immediately east of the Beatrice field, was prepared for drilling in the first quarter of 2008. The well was drilled and is interpreted to have intersected 14.5 feet of net hydrocarbon-bearing sand. Work is continuing to determine the commerciality of this discovery.

The Manuel prospect, located to the west of the Beatrice field, was drilled immediately after Polly using the GSF Galaxy II drilling rig. The well, which was the first to be drilled on the block, encountered hydrocarbons throughout the section but the sands were not of reservoir quality and the well was abandoned. The results of this well will assist in further exploration evaluation of the block.

In the third quarter of 2007, Ithaca Energy drilled an appraisal well on the Athena project which encountered 426 feet of gross oil-bearing sandstones and a net pay interval of 115 feet (92 feet vertical). The well flowed at a peak rate of 1,375 barrels of oil per day ("bopd") and a stable rate of 1,200 bopd. The well has been suspended for future use as a production well. This was the Corporation's second discovery well in the core Athena area.

In April 2008, a further appraisal well was drilled on the Athena discovery to test a possible southern extension of the accumulation. The well penetrated the Lower Cretaceous Leek sands and although the Leek formation was found to be oil-bearing, it was of lower quality than is found in the main Athena Reservoir and the well has been suspended for later use in the wider Athena development scheme.

Application for approval to develop the Athena accumulation has been submitted for comment. Subject to access to host facilities, first production remains on schedule for the first half of 2010.


Negotiation of the formal purchase and sale agreement for the acquisition of the Beatrice field currently remains on schedule with completion expected by the end of the second quarter of 2008. This timetable is in line with bringing first oil production for the Jacky field by the end of 2008.

Ithaca Energy has an extensive drill programme for 2008, as already announced. This programme includes participation in up to six wells, three of which have been drilled to date. Over the next eight months, development drilling will continue in the core Athena area and exploration wells will be drilled in the Southern North Sea Gas Basin.

As previously highlighted, the Corporation is currently looking at a number of new appraisal and development acquisition projects and expects at least one of these to conclude in the near future. The Corporation continues to review ongoing financing requirements, possible farm-outs or working interest swaps or partial dispositions in furtherance of its ongoing strategy and business plan. In addition, Ithaca Energy will participate in applications in the 25th Round of Licences.

In the first quarter of 2008, Ithaca Energy concluded a US$60 million pre-development facility with the Royal Bank of Scotland and negotiations for a borrowing base facility will ensue.

Commenting, Lawrie Payne, CEO of Ithaca, said:

"The Corporation made significant progress in 2007 and entered 2008 in a strong position, with solid finances, greatly increased reserves and an extensive 2008 drill programme. The Corporation has again made further progress in the first quarter of the current year and remains on schedule for first oil production from Beatrice (effective from January 1, 2008) and from Jacky at the end of 2008. The signing of the pre-development credit facility earlier this year is a measure of the progress made to date and further negotiations for a borrowing base facility to meet the Company's capital requirements are in hand".


This news release contains certain forward-looking statements, including all statements which address activities, events or developments that Ithaca Energy expects, believes or anticipates will or may occur in the future. Such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Ithaca Energy's control and which are based on various assumptions (including assumptions with respect to (i) availability of funds; and (ii) future capital expenditures) which may prove incorrect. Such risks and uncertainties include, without limitation the impact of general economic conditions in the areas in which Ithaca Energy operates, civil unrest, industry conditions, changes in laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. Please refer to the Corporation's Annual Information Form for the year ended 2007 and dated April 30th, 2008 and available for viewing at, for a list of additional risk factors. Ithaca Energy's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Ithaca Energy will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Ithaca Energy or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Ithaca Energy does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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

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