Ithaca Energy Inc.
TSX VENTURE : IAE
AIM : IAE

Ithaca Energy Inc.

December 29, 2008 02:00 ET

Ithaca Energy Commences Drilling on the Carna Prospect

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - Dec. 29, 2008) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Ithaca Energy Inc. ("Ithaca" or the "Company") (TSX VENTURE:IAE)(AIM:IAE), of Calgary, Alberta, is pleased to announce its wholly-owned subsidiary Ithaca Energy (UK) Limited has commenced the drilling of the 43/21b-A well, to explore the Carna prospect in the UKCS Southern Gas Basin as expected.

Using the, Ensco 92 rig, operated by Venture North Sea Gas Limited (Venture), the 43/21b-A well was spudded on 26th December. The Carna prospect is a significant potential gas-bearing structure located in Block 43/21b, in which Ithaca has a 29.9% interest. The prospect lies adjacent the Garrow and Kilmar gas fields.

The 43/21b-A well will be drilled vertically to a depth of approximately 11,000 feet TVDSS. The well will take approximately 50 days to reach total depth and will target Permian age Leman sandstones and underlying potential in the Carboniferous section. If successful, the well will be tested and suspended for fast-track development.

Ithaca originally held a 60% interest in this licence block. In January 2008, the Company agreed to farmout a 20% interest in the Carna prospect to Venture in exchange for 30% of the well costs, retaining a 40% working interest. Since then Dyas UK Limited has purchased a 25.25% interest in all Ithaca's assets, including Carna, and will benefit from the terms of Ithaca's original farmout to Venture. Ithaca has thus reduced its overall cost exposure in this well to a 22.425% paying interest whilst retaining 29.9% working interest.

The co-participants involved in the Carna prospect are Venture (56%, operator), Ithaca Energy (UK) Limited (29.9%), Dyas UK Limited (10.1%) and EWE Aktiengesellschaft (4%).

Notes to Editors

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

References to boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6Mcf:1 bbl. is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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 or revisions to any forward-looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based except as required by applicable securities laws.

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