Ithaca Energy Inc.
TSX VENTURE : IAE
AIM : IAE

Ithaca Energy Inc.

December 17, 2010 02:00 ET

Ithaca Energy Inc.: Acquisition of UK North Sea Gas Assets Completes

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - Dec. 17, 2010) -

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

Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited ("Ithaca" or the "Company"), an independent oil & gas company with exploration, development and production assets in the UK sector of the North Sea, announces that the Company has completed a transaction to acquire certain UK North Sea gas interests from GDF Suez E&P UK Ltd for an adjusted cash consideration of £6.7 million (approximately US$10.5 million) (the "Acquisition"). The adjustment accounts for free cash flow generated by strong production throughout 2010 since the effective date of January 1, 2010.

Ithaca shall, with immediate effect, assume operatorship of the Anglia field, and the Opal and Garnet undeveloped discoveries. The Company shall assume responsibility for ongoing operations and gas sales nominations with immediate effect for the Anglia field. Ithaca has also become a non-operating partner in the producing Topaz field.

Anglia and Topaz 2010 production post the completion date shall be included in the Company's 2010 production figures. In addition, the assets shall be independently evaluated by Sproule International Limited and included in the 2010 year end reserves assessment of the Company. 

On August 4, 2010, Ithaca Energy (UK) Limited, as the purchaser, announced that the Company had entered into an agreement to acquire certain UK North Sea gas interests from GDF Suez E&P UK Ltd for an unadjusted purchase price effective January 1, 2010 of £11.25 million (approximately US$16.9 million). 

Notes:

Anglia Field – Operated

Ithaca has acquired a 30% interest in and become operator of the producing Anglia Field which is located in Blocks 48/18b, 48/19b and 48/19e of the UK North Sea gas basin. Ithaca's gas entitlement is currently contracted for the life of the field.

Topaz Field – Non Operated

Ithaca has acquired a 35% interest in the producing Topaz Field which is located in Blocks 49/1a and 49/2a in the UK Southern North Sea. Ithaca's gas entitlement is currently sold under a contract set at the daily UK gas market price.

Garnet Field – Operated

Ithaca has acquired a 68.33% interest in and become operator of the undeveloped Garnet Field which is located in Block 44/27a in the UK Southern North Sea. The Garnet Field was discovered in 1986 and to date one well has been drilled, and one further appraisal well has been drilled off structure.

Opal Field – Operated

Ithaca has acquired a 53.84% interest in and become operator of the pre-development Opal Field which is located in Block 43/25a in the UK Southern North Sea. The Opal Field was discovered in 2005 and to date one well has been drilled which was geologically sidetracked to appraise the limits of the field.

Notes to oil and gas disclosure:

Estimates of reserves contained in this press release in connection with the Acquisition may not have been prepared in accordance with the COGE Handbook and have not been prepared by a qualified reserves evaluator of the Company. Sproule International Limited will evaluate the reserves associated with Acquisition at the end of 2010 as part of their annual evaluation of the Company's assets.

The calculation of barrels of oil equivalent ("boe") is based on a conversion rate of six thousand cubic feet of natural gas ("mcf") to one barrel of crude oil ("bbl"). Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 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. 

The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net review for all properties, due to effects of aggregation. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. 

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is an equal probability that the quantities actually recovered will be greater or less than the sum of proved plus probable reserves. There is a 10% probability that at least the sum of the estimated proved reserves plus probable reserves plus possible reserves will be recovered.

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

Forward-looking statements:

Some of the statements in this press release 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, including, without limitation, the potential benefits of the Acquisition, estimates of oil and gas reserves and associated future production and plans of the Company in connection with the Acquisition. When used in this press release, the words "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, whether used in connection with the estimated production levels, anticipated time of first oil, oil in place, hydrocarbon composition or otherwise, 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, including the risk that the Acquisition may not be completed on the terms described herein or at all and the risk that the future benefits and anticipated production by the Company are not realized.. 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.

Neither TSX Venture nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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