Ithaca Energy Inc.
TSX VENTURE : IAE
AIM : IAE

Ithaca Energy Inc.

September 20, 2010 11:06 ET

Ithaca Energy Inc.: Agreement Reached With Gemini Relating to Ithaca's Interest in the Athena Field

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - Sept. 20, 2010) -

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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 on September 20, 2010 the Company entered into an agreement with Gemini Oil & Gas Fund II, L.P. ("Gemini") in relation to the Company's interest in the Athena field (the Agreement").

Ithaca has outlined in the Annual Information Form submitted for year ended December 31, 2009 and dated April 8, 2010, Gemini's existing rights in relation to Ithaca's interest in the Athena field with regard to proceeds from disposal and warrants to acquire common shares in Ithaca Energy Inc.

The Agreement provides that the Company shall not make any payment to Gemini in relation to proceeds received by the Company as part of the previously announced Athena asset sale of interests in 2008 and 2009 involving transactions which relate to certain assets sold by the Company to Dyas UK Limited.

In exchange for and in consideration of Gemini's waiver of any right to proceeds from the disposal of equity interest in the Athena discovery and in substitution for any previously awarded or agreed warrants, Ithaca Energy Inc. grants to Gemini warrants to acquire up to 2,500,000 common shares in Ithaca Energy Inc. on September 20, 2010. The warrants may be exercised at a price which is the higher of the closing price of a share on the TSX Venture, as at close of business on the dealing date immediately prior to the effective date of the Agreement and CAD $2.25 per share on or before the day six months after Field Development Plan has been approved for the Athena field by the Department of Energy and Climate Change. In addition to these terms, the Agreement terminates all rights that Gemini has in respect of the Company's interests.

Prior to this Agreement the Ithaca Energy Inc. end 2009 Annual Information Form (April 8, 2010) noted that in relation to Ithaca's previous agreement with Gemini dated August 5, 2008 which replaced the first agreement dated September 15, 2006 "Gemini retains rights to a share of the proceeds of a disposal in Athena subject to an economic test of such disposal which takes into account oil price at the time of the disposal, Gemini's previous (now terminated) right to Athena production, Athena asset value at the time of the disposal and the US$9 million already paid under the August 2008 supplemental agreement".

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. 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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