SOURCE: Ithaca Energy Inc

May 13, 2013 02:01 ET

Ithaca Energy Inc Announces First Quarter Results

ABERDEEN, SCOTLAND--(Marketwired - May 13, 2013) - Ithaca Energy Inc. (TSX VENTURE: IAE) (LSE: IAE)




(TSX VENTURE: IAE)
Not for Distribution to U.S. Newswire Services or for Dissemination in
the United States

                        Ithaca Energy Inc.

First Quarter 2013 Financial Results and Impact of Valiant Acquisition

                          May 13, 2013

Ithaca Energy Inc. (TSX VENTURE: IAE), (LSE: IAE) ("Ithaca" or
the "Company") announces its quarterly results for the three months
ended March 31, 2013 ("Q1 2013"). In light of the Valiant transaction
closing on April 19, 2013, also included is the unaudited financial
highlights for the same period, for illustrative purposes only, showing
the contribution from Valiant Petroleum plc ("Valiant") for the period,
together with an update on integration activities.

Ithaca Q1 2013 Highlights

Financial

- Cashflow from operations increased over 20% to $34.8 million (Q1
2012: $28.4 million) - cash flow per share $0.13 (Q1 2012: $0.11).

- $14.6 million of earnings excluding unrealised losses on
financial instruments of $11.1 million (Q1 2012: $12.1 million).

- Average realised oil price of $114.32 / bbl (Q1 2012: $116.42 /
bbl) including a realised hedging gain of $8.00 / bbl.

- Strong clean balance sheet with cash net of drawn debt of $10.6
million at end Q1 2013.

- UK tax allowance pool of $424 million at end Q1 2013.

- Approximately 2.6 million barrels of future 2013-2014 oil
production hedged at a weighted average price of ~$106 / bbl
(approximately 25% puts / 75% swaps).

Production & Operations

- Total average net export production in Q1-2013 increased 51% to
approximately 6,475 barrels of oil equivalent ("boe") per day ("boepd")
(Q1-2012: 4,299 boepd), including production from the Cook field
interest acquired from Noble Energy Capital Limited (transaction
effective January 1, 2012 and completed on February 5, 2013).

- Production during the quarter was in the upper range of that
anticipated by the 2013 annual guidance range of 6,000 to 6,700 boepd.
The Ithaca operated Athena field had another strong quarter, with the
field continuing to produce "dry" oil at a stable gross daily
production potential of between 10,000 and 11,000 bopd, 2,250 to 2,475
bopd net to Ithaca.


Greater Stella Area Development

- The FPF-1 has been moved on to the dry dock barge at the
Remontowa shipyard in Gdansk, Poland.

- The Ensco 100 heavy duty jack-up drilling rig has now completed
operations on the wells being drilled prior to commencement of the
Greater Stella Area ("GSA") development drilling programme - rig
scheduled to be on location at Stella field in Q2 2013.

- Delivery to the Remontowa yard of the long lead topsides
processing plant equipment and pipework that is to be installed on the
FPF-1 has commenced.

- Fabrication of the subsea structures that are to be installed by
Technip in 2013 has been completed on schedule at Global Energy Group's
facilities in North East ("NE") Scotland. Installation and testing of
the pipework spools, valves and control systems being fitted within the
structures is nearing completion.

- Welding is underway at Technip's Evanton spool base in NE
Scotland of the 10-inch steel export infrastructure linepipe that is to
be installed in 2013.

Ithaca & Valiant Q1 2013 Combination Highlights

The financial consolidation of Valiant is only applicable from Q2 2013,
as the acquisition completed on April 19, 2013. However, the following
unaudited Q1 2013 consolidated financial summary has been prepared, for
illustrative purposes only, to provide a high-level overview of the
potential cashflow performance of the enlarged Company.

Q1 2013                                     Ithaca Valiant Combined

Total Production                      boepd  6,475   8,372   14,847

Av. Realised Oil Price (Exc. Hedging) $/bbl    106     113      110

Revenue                                  M$   59.8    90.2    150.0

Inventory Increase/(Decrease)            M$  (3.8)   (3.8)    (7.5)

Operating Costs                          M$ (23.2)  (14.2)   (37.4)

G&A                                      M$  (1.9)   (7.4)    (9.3)

Realised Derivatives Gain / (Loss)       M$    3.9   (0.3)      3.6

Cashflow From Operations                 M$   34.8    64.5     99.5

CFPS (using issued Shares 316.9m)      $USD   0.11    0.20     0.31

This information is provided to assist shareholders with quantifying
the impact of the Valiant acquisition on the Company. It does not
represent a guide to future financial performance. The Valiant data
used above has been extracted from the management accounts of Valiant
for Q1 2013. The Valiant accounting policies are broadly similar to
those used by Ithaca.


The Q1 2013 combined Ithaca and Valiant highlights are:

- Total net average export production of ~14,850 boepd,
approximately 95% oil.

- Production in line with the Company's full year 2013 guidance
range of 14,000 to 16,000 boepd, with volumes in the second half of
2013 scheduled to benefit from infill drilling activities on the Don
Southwest field.

- Cashflow from operations of ~$100 million during Q1 2013.

- A substantial reduction in unit operating costs to ~$28 / boe,
driven by the addition of a higher proportion of low cost barrels.

- Over 30% increase in the netback per barrel, to ~$80 / boe,
attributable to the predominantly oil production base and lower
operating cost per barrel.

- A combined UK tax allowances pool of over $900 million at the
end of Q1 2013.

Progress on Valiant Acquisition Integration

The integration of Valiant's activities into Ithaca's existing
operations is progressing well. The Company has made major steps since
completion of the acquisition to realise the substantial cost synergies
that are achievable through removal of operational and administrative
overlaps. The Company has formally announced the closure of Valiant's
UK office, with all activities being transferred to Ithaca's existing
operations in Aberdeen, UK. It is anticipated that over three quarters
of the UK integration activities and removal of associated overheads
will have been completed within approximately six to eight weeks of
completion of the acquisition, with closure of Valiant's UK office
anticipated in July 2013.

The Company has made significant progress towards its objective of
substantially reducing the future UK exploration expenditure
commitments that were transferred to Ithaca as part of the Valiant
acquisition. In overall portfolio terms the Company has reduced net
exploration expenditure commitments via farm-outs by over $45million.

The Valiant acquisition has established Ithaca as a leading mid-cap
North Sea oil and gas operator. The transaction has significantly
enhanced the Company's existing production base and producing asset
reserves, establishing a highly cash generative business, with tax
allowances sheltering the Company from the payment of UK tax over the
medium term, and provided operational entry into Norway. The Company
has total proven and probable reserves of ~70 million boe and a strong
balance sheet containing only low risk / low cost senior debt.

In the announcement made by the Company on March 1, 2013 in connection
with the Valiant acquisition, Ithaca confirmed that, upon completion of
the acquisition, two existing directors of Valiant, Mr. Jannik Lindbaek
and Mr. Michael Bonte-Friedheim, were to be appointed to the Board of
Ithaca as Non-Executive Directors.

Mr Bonte-Freidheim has since informed Ithaca that, due to other
business commitments, he will be unable to dedicate sufficient time to
the proposed role and, accordingly, will be unable to join the Board of
Ithaca as previously announced. The Company wishes Mr. Bonte-Freidheim
every success in the future and thank him for his invaluable assistance
in the post-acquisition integration process.

The Company is pleased to confirm that Mr. Jannik Lindbaek will be
appointed to the Board as a Non-Executive Director in May 2013.
Mr. Lindbaek was previously Chairman of the Norwegian international oil
and gas company, Statoil ASA, prior to its merger with Norsk Hydro in
2007. A further announcement will be made regarding Mr Lindbaek's
appointment in due course.

Additional Information

An updated corporate presentation is available on the Company's
website,  www.ithacaenergy.com . A short film summarising the Company's
GSA strategy and development execution plan is also available on the
website.

Notes:

In accordance with AIM Guidelines, John Horsburgh, BSc (Hons)
Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and Subsurface
Manager at Ithaca is the qualified person that has reviewed the
technical information contained in this press release. Mr Horsburgh has
over 15 years operating experience in the upstream oil industry.

This press release contains non-International Financial Reporting
Standards ("IFRS") industry benchmarks and terms, such as "netbacks"
and "cashflow from operations". Netbacks are calculated on a per unit
basis as oil, gas and natural gas liquids revenues less royalties and
transportation and operating costs. Cashflow from operations is
determined by adding back changes in non-cash operating working capital
to cash from operating activities. The non-IFRS financial measures do
not have any standardized meaning and therefore are unlikely to be
comparable to similar measures presented by other companies. The
Company uses the foregoing measures to help evaluate its performance.
As an indicator of the Company's performance, cashflow from operations
should not be considered as an alternative to, or more meaningful than,
net cash from operating activities as determined in accordance with
IFRS. The Company considers cashflow from operations to be a key
measure as it demonstrates the Company's underlying ability to generate
the cash necessary to fund operations and support activities related to
its major assets.

Further details on the above are provided in the unaudited interim
consolidated financial statements of Ithaca for the quarter ended March
31, 2013, which have been filed with the securities regulatory
authorities in Canada. These financial statements are available on the
System for Electronic Document Analysis and Retrieval at  www.sedar.com 
and on the Company's website:  www.ithacaenergy.com .

Enquiries:

Ithaca Energy Inc.
Iain McKendrick,    imckendrick@ithacaenergy.com    +44 (0) 1224 650 261
CEO
Graham Forbes, CFO  gforbes@ithacaenergy.com        +44 (0) 1224 652 151

Cenkos Securities
plc
Jon Fitzpatrick     jfitzpatrick@cenkos.com         +44 (0) 207 397 8900
Neil McDonald       nmcdonald@cenkos.com            +44 (0) 131 220 6939

RBC Capital
Markets
Tim Chapman         tim.chapman@rbccm.com           +44 (0) 207 653 4641
Matthew Coakes      matthew.coakes@rbccm.com        +44 (0) 207 653 4871

FTI Consulting
Billy Clegg         billy.clegg@fticonsulting.com    +44 (0) 207 269 7157
Edward Westropp   edward.westropp@fticonsulting.com  +44 (0) 207 269 7230
Georgia Mann        georgia.mann@fticonsulting.com   +44 (0) 207 269 7212

About Ithaca Energy:

Ithaca Energy Inc. (TSX VENTURE: IAE), (LSE: IAE),is an oil and gas
operator focused on North Sea production, appraisal and development
activities. The Company's strategy is centred on building a highly
profitable North Sea oil and gas company by maximising production and
cashflow from its existing assets, the appraisal and development of
existing discoveries on properties held by the Company and the delivery
of additional growth via acquisitions and licence round participation.

Forward-looking statements

Some of the statements and information in this press release are
forward-looking. Forward-looking statements and forward-looking
information (collectively, "forward-looking statements") are based on
the Company's internal expectations, estimates, projections,
assumptions and beliefs as at the date of such statements or
information, including, among other things, assumptions with respect to
production, future capital expenditures, future acquisitions and cash
flow. The reader is cautioned that assumptions used in the preparation
of such information may prove to be incorrect. When used in this press
release, the words "anticipate", "continue", "estimate", "expect","may",
"will", "project", "plan", "should", "believe", "could","target" and
similar expressions, and the negatives thereof., whether
used in connection with operational activities, production forecasts,
budgetary figures contained in the corporate presentation, potential
developments or otherwise, are intended to identify forward-looking
statements. Such statements are not promises or guarantees, and are
subject to known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from those
anticipated in such forward-looking statements. The Company believes
that the expectations reflected in those forward-looking statements and
are reasonable but no assurance can be given that these expectations,
or the assumptions underlying these expectations, will prove to be
correct and such forward-looking statements and included in this press
release should not be unduly relied upon. 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.

Notes Regarding Oil and Gas Disclosure:

References herein to "boe" mean barrel of oil equivalent derived by
converting gas to oil in the ratio of six thousand cubic feet ("Mcf")
of gas to one barrel ("bbl") of oil. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1
bbl is based on an energy conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.

Statements relating to reserves are deemed to be forward-looking
statements, as they involve the implied assessment, based on certain
estimates and assumptions, that the reserves described can be
profitably produced in the future.

The reserve estimates set forth in this press release are estimates
only and the actual reserves and realized revenue may be greater or
less than those calculated. The estimates of reserves for individual
properties may not reflect the same confidence level as estimates of
reserves and future net revenue for all properties, due to the effects
of aggregation.

With respect to Ithaca's reserves, the figures are derived from a
report prepared by Sproule International Limited ("Sproule"), an
independent qualified reserves evaluator, evaluating the reserves of
Ithaca as of December 31, 2012 and forming the basis for the Statement
of Reserves Data and Other Oil and Gas Information of Ithaca dated
March 19, 2013 (the "Statement"). The reserves for the South West
Heather Field included in the Statement are those estimated by Ithaca
and reviewed by Sproule. With respect to Valiant reserves acquired by
Ithaca, the figures are derived from an Audit of Certain Reserves as at
December 31, 2012 prepared by RPS Energy Consultants Limited, an
independent qualified reserves evaluator, dated January 24, 2013. The
reserves estimates of Ithaca are based on the Canadian Oil and Gas
Evaluation Handbook ("COGEH") pursuant to National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities. The reserves
estimates of Valiant are based on the 2007 SPE/AAPG/WPC/SPEE Petroleum
Resource Management System which is not materially different from
COGEH. The Valiant reserves have been adjusted to reflect the increased
Fionn field interest being transferred to Valiant by Antrim Resources
(N.I.) Limited.

Not for Distribution to U.S. Newswire Services or for Dissemination in
the United States

                            -ENDS-

                    HIGHLIGHTS FIRST QUARTER 2013

Strong cashflow     - Cashflow from operations increased over
from operations     20% to $34.8 million (Q1 2012: $28.4 million) -
                    cashflow per share $0.13 (Q1 2012: $0.11)

                    - Adjusted earnings of $14.6 million*
                    excluding unrealised revaluation loss on financial
                    instruments (Q1 2012: $12.1 million)

                       o Unadjusted earnings of $3.5 million (Q1 2012:
                    $12.9 million)

                    - Q1 2013 average realized oil price of $114
                    / bbl (Q1 2012: $116 / bbl), including a realized
                    hedging gain of $8 / bbl

                    - Cash balance of $10.6 million net of drawn
                    debt (Q4 2012: $31.4 million)

                    - UK tax allowances pool of $424 million at
                    quarter end

                    - Approximately 2.6 million barrels of
                    future 2013-14 oil production hedged at a weighted
                    average price of around $106 / bbl (approximately
                    25% puts / 75% swaps)


Q1 production in    - Export production increased 51% to
line with forecast  approximately 6,475 barrels of oil equivalent per
                    day ("boepd") (Q1 2012: 4,299 boepd), including
                    production from the Cook field interest acquired
                    from Noble Energy Capital Limited ("Noble"),
                    effective January 1, 2012

Greater Stella      - "FPF-1" floating production unit
Area hub - major   transferred to dry dock
milestones being
achieved            - Contract signed with Applied Drilling
                    Technology International ("ADTI") in April 2013 to
                    manage development drilling and completion
                    operations on the Greater Stella Area ("GSA")
under"turnkey" contract arrangements

                    - Ensco 100 drilling rig has now completed
                    operations on the wells being drilled prior to
                    commencement of the GSA development drilling
                    programme - rig scheduled to be on location at
                    Stella field in Q2 2013

                    - Fabrication of all the required subsea
                    infrastructure that is to be installed by Technip
                    in 2013 is progressing according to plan

Step-change in      - Acquisition of Valiant Petroleum plc
growth of the       ("Valiant") for a total enterprise value of
Corporation         approximately $459 million completed on April 19,
                    2013

                    - Completion of the acquisition of an
                    additional 12.885% interest in the Cook field ("the
                    Cook Acquisition")


*Adjusted earnings removes the unrealised (non-cash) losses arising
from revaluation of hedges at the quarter end. Revaluation at the end
of April 2013 would have resulted in a gain as opposed to the loss of
$11.1 million reported.

  SUMMARY STATEMENT OF INCOME

                                             Q1 2013 Q1 2012       %

  Average Brent Oil Price              $/bbl     113     119     -5%

  Average Realised Oil Price(1)        $/bbl     106     116     -9%

  Revenue                                 M$    59.8    40.6     47%

  Cost of Sales - excluding DD&A          M$  (27.0)  (12.6)    114%

  G&A etc                                 M$   (1.9)     0.6    N/A

  Realised Derivatives Gain / (Loss)      M$     3.9   (0.2)    N/A

  Cashflow From Operations                M$    34.8    28.4    23%

  DD&A                                    M$  (19.5)  (13.4)    46%

  Unrealised Derivatives Gain / (Loss)    M$  (11.1)     0.8    N/A

  Other                                   M$   (1.9)   (2.0)    -5%

  Profit Before Tax                       M$     2.3    13.8   -83%

  Deferred Tax Credit / (Charge)          M$     1.2   (0.9)    N/A

  Profit After Tax                        M$     3.5    12.9   -73%

  Earnings Per Share(2)                $/Sh.    0.01    0.05   -80%

  Cashflow Per Share(2)                $/Sh.    0.13    0.11    18%


   (1) Average realized price before hedging

   (2 Weighted average number of shares of 259.9 million
  pre Valiant Acquisition

  SUMMARY BALANCE SHEET

  M$                                                   Q1 2013  Q4 2012

  Cash & Equivalents                                        66       31

  Other Current Assets                                     173      198

  PP&E                                                     749      663

  Other Non-Current Assets                                  41       41

  Total Assets                                           1,029      934

  Current Liabilities                                    (197)    (206)

  Asset Retirement Obligations                            (57)     (53)

  Deferred Tax Liabilities                               (103)     (62)

  Other Non-Current Liabilities                           (62)      (7)

  Total Liabilities                                      (420)    (328)


  Net Assets                                               609      606

  Share Capital                                            431      431

  Other Reserves                                            21       20

  Surplus / (Deficit)                                      157      154

  Shareholders Equity                                      609      606


  CORPORATE STRATEGY

  Ithaca Energy Inc. (the "Corporation" or "Ithaca" or the "Company")
  is an oil and gas operator focused on North Sea production, appraisal
  and development activities.

  Ithaca's strategy is to grow shareholder value by building a highly
  profitable 25kboepd North Sea oil and gas company. The execution of
  this plan is centred on:

  - Maximising production and cashflow from its existing assets

  - Delivering material growth by appraising and developing
  existing hydrocarbon discoveries

  - Continuing to increase and diversify the Company's portfolio
  and cashflows through acquisitions

  CONSOLIDATION

  The consolidated financial statements of the Corporation and the
  financial data contained in this management's discussion and analysis
  ("MD&A") are prepared in accordance with international financial
  reporting standards ("IFRS"). The consolidated financial statements
  include the accounts of Ithaca and its wholly-owned subsidiaries
  Ithaca Energy (Holdings) Limited ("Ithaca Holdings"), Ithaca Energy
  (UK) Limited ("Ithaca UK"), Ithaca Minerals North Sea Limited
  ("Ithaca Minerals") and Ithaca Energy Holdings (UK) Limited ("Ithaca
  Holdings UK") and its associates FPU Services Limited ("FPU") and
  FPF-1 Limited ("FPF-1").

  All inter-company transactions and balances have been eliminated on
  consolidation. A significant portion of the Corporation's North Sea
  oil and gas activities are carried out jointly with others. The
  consolidated financial statements reflect only the Corporation's
  proportionate interest in such activities.
                       PRODUCTION & OPERATIONS UPDATE

51% increase in        Q1 2013 PRODUCTION
production compared
to Q1 2012, with       Ithaca's total net export production in Q1 2013
production in line     was 6,475 boepd, approximately 90% oil,
with forecast          representing an increase of approximately 51% on
performance            Q1 2012 production (Q1 2012: 4,299 boepd). The
                       production performance was in the upper range of
                       that anticipated by the Corporation as part of
                       the 2013 annual production guidance range of
                       6,000 to 6,700 boepd.

                       Production in the period was derived from the
                       operated Athena, Beatrice, Jacky and Anglia
                       fields and the non-operated Cook, Broom and
                       Topaz fields. The total Q1 2013 production of
                       6,475 boepd includes the contribution from the
                       additional 12.885% Cook field interest acquired
                       from Noble.

                       The material increase in production delivered in
                       Q1 2013 compared to the same quarter in 2012 was
                       primarily attributable to the contribution from
                       the Athena field (first oil May 2012) and the
                       acquisition of the additional Cook field
                       interest from Noble.

                       The two primary fields contributing
                       approximately 70% of total net production during
                       the quarter were Athena and Cook, with each
                       contributing broadly equally. The Ithaca
                       operated Athena field had another strong
                       quarter, with the stable gross daily production
                       potential of field remaining at between 10,000
                       and 11,000 bopd, 2,250 to 2,475 bopd net to
                       Ithaca. Consistent daily delivery of the field
                       potential over the period has been achievable as
                       a result of the solid performance of the BW
                       Athena floating, production, storage and
                       offloading vessel ("FPSO"). The field continues
                       to produce "dry" oil.
                       GREATER STELLA AREA DEVELOPMENT UPDATE

GSA: Significant       FPF-1 Modification Works
progress being made,
with commencement of   Following the transfer in late 2012 of the FPF-1
drilling campaign      floating production facility to the Remontowa
set for Q2-2013        shipyard in Gdansk, Poland, the modifications
                       work programme being performed by Petrofac in
                       the yard has been focused on preparation for the
                       dry dock.

                       Inspection, repair and coating of the hull tanks
                       is progressing well and the vessel has now been
                       transferred to the yard's dry dock barge to
                       enable completion of the marine system works.
                       This milestone marks the start of the
                       installation of additional buoyancy on the FPF-1
                       as part of the marine upgrade works, with steel
                       cutting, rolling and welding operations in
                       progress.

                       Installation of the new topsides processing
                       plant will commence upon completion of the dry
                       dock works. The vessel preparatory works have
                       largely been completed and delivery to the yard
                       of the equipment and materials required for the
                       construction and fabrication work programme has
                       commenced. The gas export compressors, which
                       represent the key processing plant package with
                       the longest lead time (having being order at the
                       start of 2012), have now been delivered to the
                       yard.

                       The FPF-1 is being modified and upgraded by
                       Petrofac under the terms of a lump sum
                       incentivised contract that was awarded by the
                       GSA joint venture partners in October 2011.

                       Drilling Programme

                       The high-spec Ensco 100 heavy duty jack-up
                       drilling rig that has been contracted for the
                       GSA development drilling campaign has now
                       completed operations on the wells being drilled
for the North Sea operator that has being using
                       the rig immediately prior to commencement of the
                       GSA programme.

                       The rig is being prepared for demobilisation
                       from its current location and will shortly
                       commence its transit to the Able shipyard in
                       Hartlepool, UK, where Ensco will complete a
                       scheduled routine inspection of the unit and
                       certain minor upgrade works to improve the well
                       construction capabilities of the rig
                       specifically designed to improve the efficiency
                       of GSA drilling operations. The unit is
                       expected to arrive on location at the Stella
                       field in Q2-2013.

                       The initial development drilling campaign
                       involves the completion of four wells on the
                       Stella field prior to start-up of production.
                       As previously announced, Advanced Drilling
                       Technology International ("ADTI"), a subsidiary
                       of Transocean, has been contracted to manage the
                       drilling and completion operations under"turnkey"
contract arrangements. The turnkey
                       contract locks in the expenditure and
                       performance requirements of the core drilling
                       operations, with each well anticipated to take
                       approximately 80-90 days to drill, complete and
                       clean-up test.

                       Subsea Infrastructure Works

                       Significant progress is being made by Technip UK
                       Limited ("Technip") with preparation for the
                       main subsea infrastructure installation
                       activities that are scheduled to take place
                       offshore in 2013. The subsea programme is being
                       performed under the terms of an Engineering,
                       Procurement, Installation and Construction
                       ("EPIC") contract, thereby ensuring a fully
                       integrated execution plan covering all aspects
                       of this key element of the GSA development.

                       - Manufacturing, coating and delivery to
                       Technip's Evanton spool base in NE Scotland of
                       all the required 10-inch export infrastructure
                       linepipe has been completed and the welding of
                       12 metre pipes into 1000 metre pipe stalks has
                       commenced. The pipe stalks are scheduled to be
                       reeled on to Technip's Apache II pipelay vessel
                       in Q3-2013 for subsequent installation offshore.

                       - Manufacture of the static flexible
                       flowlines that will connect the drill centres to
                       the FPF-1 is nearing completion at Technip's
                       manufacturing facility in Le Trey, France.
                       These are scheduled to be installed by the
                       Skandi Arctic construction and dive support
                       vessel, commencing in Q3-2013.

                       - The first pipeline trenches to be cut in
                       advance of installation of the flexible
                       flowlines will commence in Q2-2013, marking the
                       start of the offshore installation campaign.

                       - Fabrication of the subsea structures
                       that will connect the drill centres with the
                       FPF-1 has been completed at Global Energy
                       Group's facilities in NE Scotland. Installation
                       and testing of the pipework spools, valves and
                       control systems being fitted within the
                       structures is nearing completion. The
                       structures are scheduled to be installed by the
                       Skandi Arctic in Q3-2013.

                       Q1 2013 CORPORATE ACTIVITIES

                       Acquisition of Cook Field Interest Completed,
                       Lapse of MacCulloch Field Interest Acquisition
Further broadening
of the producing       In October 2012, the Corporation announced that
asset portfolio -      it had entered into agreements with Noble Energy
acquisition of         Capital Limited (a subsidiary of Noble Energy
additional Cook        Inc.) to acquire a 12.885% interest in the Cook
field interest         field and a 14% interest in the MacCulloch
                       field.

                       The acquisition of the Cook field interest was
                       completed in February 2013, increasing the
                       Corporation's overall interest in the field to
                       41.345%.The consideration paid at completion
                       was $37.7 million, with approximately $14
                       million of this payment being offset by the
                       transfer of oil inventory awaiting offload from
                       the Anasuria floating production, storage and
                       offloading vessel (the host facility for the
                       Cook field) to the Corporation.

                       The agreement for acquisition of the MacCulloch
                       field interest from Noble has now lapsed and the
                       Corporation has decided not to further pursue
                       this acquisition given the field has remained
                       shut-in since late December 2012.The
                       MacCulloch field was only anticipated to
                       contribute approximately 5% of the Corporation's
                       total forecast 2013 production guidance of 6,000
                       to 6,700 boepd and represented 1.4MMbbl or less
                       than 3% of the total 51.9MMbbl proved and
                       probable ("2P") reserves at the end of 2012.


                       ACQUISITION OF VALIANT PETROLEUM PLC

Highly accretive
acquisition -
materially             On March 1, 2013, it was announced that the
increasing             Boards of Ithaca and of Valiant reached
production, reserves   agreement on the terms of a recommended
and cashflow           acquisition (the "Acquisition") under which
                       Ithaca would acquire all the shares of Valiant.
                       The Acquisition was completed on April 19, 2013,
                       with the cessation of trading of Valiant shares.
                       The total Acquisition price was approximately
                       $309 million. The Corporation also repaid
                       approximately $150 million of Valiant debt /
                       working capital, implying a total enterprise
                       value of approximately $459 million.

                       The Acquisition is financed by a low interest
                       (London Inter Bank Offered Rate plus 1.0 - 1.6%)
                       $350 million bridge loan and the issue of new
                       Ithaca shares. The bridge facility, which has
                       been agreed with BNP Paribas, the Bank of Nova
                       Scotia and Bank of America Merrill Lynch, is
                       available for 12 months. The intention is to
                       fold the borrowing secured against the Valiant
                       assets into an enlarged borrowing base facility
                       during 2013.

                       A total of 56,952,321 new Ithaca common shares
                       have been issued and allotted to holders of
                       Valiant shares, immediately following which
                       issue and allotment Ithaca had a total of
                       316,905,657 common shares outstanding.
                       Admission of the new shares to trading on the
                       Alternative Investment Market ("AIM") and the
                       Toronto Stock Exchange occurred by April 22,
                       2013.

                       The Acquisition has resulted in:

                       - The establishment of Ithaca as a mid
                       cap North Sea oil and gas operator, with 2P
                       reserves of approximately 70MMboe, of which
                       approximately 50% relates to currently producing
                       assets;

                       - A more than doubling of Ithaca's
                       current forecast 2013 production to 14-16kboepd
                       (90% oil), forecast to rise to approximately
                       27kboepd in 2015; and

                       - Anticipated four fold increase in
                       Ithaca's anticipated 2013 cash flow from
                       operations to $400 million, rising to over $700
                       million in 2015.


  COMMODITY HEDGING

  At the start of Q1 2013 approximately 3 million barrels of 2013-14
  oil production had been hedged at a weighted average price of $109 /
  bbl (approximately 25% puts / 75% swaps).

  In the quarter, the Corporation received $4.2 million through the
  settlement of commodity hedges relating to approximately 0.4 million
  barrels of oil.

  In April 2013, the Corporation exercised an option to swap 1 million
  barrels of production at $107/bbl. On the day of exercise, the Brent
  forward curve, for the period to which the hedge related, was at $101
  / bbl resulting in the swaption being converted to a cash settlement
  of $6 million and a forward swap of 1 million barrels of production
  at $101 / bbl.

  Following the above transactions, 2.6 million barrels of future
  2013-14 oil production are hedged at a weighted average price of ~
  $106 / bbl (approximately 25% puts / 75% swaps).

  The unrealised losses of $11.1 million from the revaluation of
  financial instruments included a loss of $9.1 million driven by the
  revaluation of oil swaps and put options. The hedging instruments are
  measured at March 31, 2013 and a valuation attributed based on the
  Brent oil forward curve on that date (spot Brent was trading at
  $108.46/bbl on March 31, 2013). The losses relate to movement in the
  Brent oil forward curve, a reduction in the implied volatility and
  the elapsing of time. Whilst significant, these marked-to-market
  movements represent non-cash revaluations which are highly sensitive
  to the oil price on the day of valuation and do not affect underlying
  cashflow from operations. For example, had the revaluation taken
  place at the end of April 2013, the revaluation would have resulted
  in a gain rather than a loss.

              Q1 2013 RESULTS OF OPERATIONS

              REVENUE

Record
quarterly
revenue of    Revenue increased by $19.2 million in Q1 2013 to $59.8
$59.8         million (Q1 2012: $40.6 million). This was mainly driven
million       by an increase in oil sales volumes, partially offset by
              a reduction in oil price.

              Oil sales volumes increased primarily due to the
              inclusion of sales from the Athena field and the Cook
              Acquisition in Q1 2013 (Athena commenced production in
              May 2012) offset by natural declines in the Beatrice and
              Jacky fields. Of the reported 6,475 boepd production,
              6,148 boepd flows through the statement of income with
              the additional 327 boepd reflecting production from the
              Cook Acquisition prior to completion. The value of the
              pre-completion production is captured as part of the
              acquisition accounting on the balance sheet.

              Q1 2013 gas sales are in line with Q1 2012 despite a
              reduction in Anglia and Topaz gas volumes, which was
              offset by the addition of Cook gas sales as well as an
              increase in realized gas prices.

              Average realized oil prices decreased quarter on quarter
              from $116/bbl in Q1 2012 to $106/bbl in Q1 2013. The
              average Brent price for the quarter was $113/bbl compared
              to $119/bbl for Q1 2012. The Corporation's realized oil
              prices do not strictly follow the Brent price pattern
              given the various oil sales' contracts in place, with
              certain field sales sold at a discount or premium to
              Brent. This decrease in average realized oil price was
              nonetheless offset by a realized hedging gain of $8/bbl
              in Q1 2013.

              Average Realized Price       Q1 2013 Q1 2012

              Oil Pre-Hedging        $/bbl     106     116

              Oil Post-Hedging       $/bbl     114     116

              Gas                    $/boe      47      41

   COST OF SALES
                                   Q1 2013 Q1 2012  Q1 2013 Q1 2012
                                     $'000   $'000    $/boe   $/boe

    Operating Expenditure           23,227  15,721       42      40

    DD&A                            19,498  13,385       35      34

    Movement in Oil & Gas Inventory  3,576 (3,100)        -       -

    Oil purchases                      157       -        -       -

    Total                           46,458  26,006       84     66.
    Cost of sales increased in Q1 2013 to $46.5 million (Q1 2012: $26.0
    million) due to increases in operating costs, depletion,
    depreciation and amortization ("DD&A") and movement in oil and gas
    inventory.

    Operating costs increased in the quarter to $23.2 million (Q1 2012:
    $15.7 million) primarily due to the inclusion of Athena operating
    costs (nil Q1 2012) and the additional acquired interest in Cook.

    Operating costs/boe increased to $42/boe in the period (Q1 2012:
    $40) mainly as a result of the phasing of Cook costs in 2012 with
    lower costs in the first quarter 2012 compared to the comparative
    period 2013. Although operating costs per boe are up compared to Q1
    2012, a combined rate of $42/boe for Q1 is in line with the
    Corporation's forecast to reduce operating costs for its current
    portfolio (excluding Valiant assets) for the full year to under $40
    /boe. The absence of production from other fields sharing the FPSO
    through which Cook oil is exported gives rise to the higher
    allocation of costs in the quarter. The other main field producing
    across the FPSO (in which Ithaca has no equity interest)
    recommenced production at the start of May, ahead of forecast,
    supporting the expectation of a lower operating cost per barrel
    over the year.

    DD&A expense for the quarter increased to $19.5 million (Q1 2012:
    $13.4 million). This was primarily due to higher production volumes
    in Q1 2013 with the addition of the Athena field as well as the
    recently acquired additional interest in Cook. The blended rate
    for the quarter was relatively unchanged at $35/boe (Q1 2012: $34/
    boe).

    As the below "Changes in Accounting Policies" section outlines, the
    adoption of IFRS and accounting for acquisitions as business
    combinations has led to increased DD&A rates. It should be noted
    that this increase in DD&A and hence Cost of Sales is offset by a
    credit in the Deferred Tax charged through the Statement of Income.

    An oil and gas inventory movement of $3.6 million was charged to
    cost of sales in Q1 2013 (Q1 2012 credit of $3.1 million).
    Movements in oil inventory arise due to differences between barrels
    produced and sold with production being recorded as a credit to
    movement in oil inventory through cost of sales until oil has been
    sold. In Q1 2013 more barrels of oil were sold (528k bbls) than
    produced (495k bbls), as a result of timings of Cook liftings and
    Athena shuttle tankers. Volumes account for $3.8 million of the
    movement, partially offset by a credit of $0.2 million due to the
    change in valuation of the opening inventory barrels.

    Movement in oil & gas inventory   Oil   Gas   Total
                                    kbbls kboes   kboes

    Operating inventory               149    13     162

    Production                        496    57     553

    Liftings/sales                  (527)  (59)   (586)

    Acquired volumes                  124     -     124

    Closing volumes                   241    11     253



             ADMINISTRATION & EXPLORATION & EVALUATION EXPENSES

              $'000                         Q1 2013  Q1 2012

              General & Administration        2,476    1,071

              Share Based Payments              295      135

              Total Administration Expenses   2,771    1,206


              Exploration & Evaluation          312       75

              Total                           3,083    1,281

              Total administrative expenses increased in the quarter to
              $2.8 million (Q1 2012: $1.2 million) primarily due to an
              increase in general and administrative expenses as a
              result of higher levels of corporate activity ongoing in
              the quarter, particularly in relation to the Acquisition
              of Valiant. Share based payment expenses increased as a
              result of options being granted towards the end of 2012
              (none end 2011), therefore higher amortisation expense
              has been reflected through Q1 2013.

              Exploration and evaluation expenses of $0.3 million were
              recorded in the quarter (Q1 2012: $0.1 million) primarily
              due to the expensing of previously capitalized costs
              relating to areas where exploration and evaluation
              activities have ceased.

              FOREIGN EXCHANGE & FINANCIAL INSTRUMENTS

              A foreign exchange gain of $0.6 million was recorded in
              Q1 2013 (Q1 2012: $1.6 million). The majority of the
              Corporation's revenue is US dollar driven while operating
              expenditures a re primarily incurred in British pounds.
              As such, general volatility in the USD:GBP exchange rate
              is the driver behind the foreign exchange gains and
              losses, particularly on the revaluation of the GBP bank
              accounts (USD:GBP at January 1, 2013: 1.62. USD:GBP at
              March 31, 2013: 1.52 with fluctuation between 1.48 and
              1.64 during the quarter). This volatility was partially
              offset by foreign exchange hedges as described in the"Risks
and Uncertainties" section below.

              The Corporation recorded a $7.2 million loss on financial
              instruments for the quarter ended March 31, 2013 (Q1 2012:
              $0.7 million loss). The loss was predominantly due to a
              $9.1 million reduction in value of oil swaps and put
              options, due to a relatively strong Brent oil price at
              quarter end together with a reduction in implied
              volatility in the period and the elapsing of time. In
              addition, the Corporation recorded a $2.1 million loss on
              the revaluation of foreign exchange instruments. The
              Corporation's exposure to fluctuations in the USD:GBP
exchange rate has nonetheless been limited due to the
              forward contracts entered into to hedge GBP120 million of
              capital expenditure on the GSA development at a rate of
              $1.52:GBP1.00. The revaluation losses were partially
              offset by a $4.2 million realized gain on commodity
              hedges.

              TAXATION

No UK tax
anticipated   A deferred tax credit of $1.2 million was recognized in
to be         the quarter ended March 31, 2013 (Q1 2012: $0.9 million
payable in    charge).  This credit is a product of adjustments to the
the           tax charge primarily relating to the UK Ring Fence
mid-term      Expenditure Supplement and share based payments. As noted
              in the Cost Of Sales section the deferred tax credit is
              increased by the use of accounting for acquisitions as
              business combinations.

              As a result of the above factors, profit after tax
              increased to $3.5 million (Q1 2012: $12.9 million).

              No taxes are expected to be paid in the mid-term relating
              to upstream oil and gas activities as a result of the
              $424 million tax losses available to the Corporation.

              CAPITAL INVESTMENTS

              $'000                            Q1 2013  Q1 2012

              Development & Production ("D&P") 103,070   26,539

              Exploration & Evaluation ("E&E")   2,108    1,254

              Other Fixed Assets                    31       26

              Total                            105,209   27,819

              $70.9 million of the total $103.1 million capital
              additions to D&P assets in Q1 2013 was attributable to
              the acquisition of the additional interest in the Cook
              field, of which $37.7 million represents cash paid with
              the remainder being due to business combination
accounting. The remaining D&P additions were primarily
              focused on execution of the GSA development, with the
              main areas of expenditure being on the manufacture and
              fabrication of subsea infrastructure and the FPF-1
              modification works (as described above).

              Capital expenditure on E&E assets in Q1 2013 was $2.1
              million with spending primarily focused on Hurricane and
              development projects.
              LIQUIDITY AND CAPITAL RESOURCES

Significant
investment
in            $'000                    Q1 2013   Q4 2012   Increase /
development                                               (Decrease)
projects
              Cash & Cash Equivalents   65,636    31,376      34,260

              Trade & Other            139,915   173,949    (34,034)
              Receivables

              Inventory                 26,131    15,878      10,253

              Trade & Other Payables (194,278) (205,635)      11,357

              Net Working Capital      37,404     15,568      21,836

              As at March 31, 2013, Ithaca had working capital of $37.4
              million including a cash balance of $65.6 million.
              Available cash has been, and is currently, invested in
              money market deposit accounts with BNP Paribas.
              Management has received confirmation from the financial
              institution that these funds are available on demand.

              Cash and cash equivalents increased as a result of $55
              million of bank debt drawings towards the end of the
              quarter offsetting the continued cash investment in the
              Stella development. The funds were required for
              substantial payments due for imminent release post March
              31, 2013 on the Stella project together with funds
              required to be held over as part of the Valiant
              Acquisition. Other working capital movements are driven
              by the timing of receipts and payments of balances.

              A significant proportion of Ithaca's accounts receivable
              balance is with customers in the oil and gas industry and
              is subject to normal joint venture/industry credit risks.
              The Corporation assesses partners' credit worthiness
              before entering into joint venture agreements. The
              Corporation regularly monitors all customer receivable
              balances outstanding in excess of 90 days. As at March
              31, 2013, substantially all of the accounts receivable is
              current, being defined as less than 90 days. In the past,
              the Corporation has not experienced credit loss in the
              collection of accounts receivable.

              At March 31, 2013, Ithaca had unused credit facilities
              totalling $375 million (Q4 2012: $430 million). $55
              million was drawn down under this facility in Q1 2013.

              During the quarter ended March 31, 2013, there was a net
              cash inflow of approximately $34.8 million (Q1 2012:
              outflow of $5.6 million).

              Cashflow from operations

              Cash generated from operating activities was $34.8
              million primarily due to cash generated from Athena,
              Beatrice, Jacky, Anglia, Cook and Broom operations,
              augmented in Q1 2013 primarily due to the inclusion of
              Athena.

              Cashflow from financing activities

              Cash generated from financing activities was $46.0
              million primarily due to the draw down of the existing
              debt facility in Q1 2013 ($55 million), partially offset
              by oil hedging premiums paid.

              Cashflow from investing activities

              Cash used in investing activities was $59.4 million
              primarily due to capital expenditure on the Cook
              Acquisition and the GSA development, including
              modification of the FPF-1, subsea design and fabrication
              works.

              The Corporation continues to be fully funded, with more
              than sufficient financial resources to cover the
              anticipated level of development capital expenditure
              commitments and to continue the pursuit of additional
              asset acquisition opportunities and exploration and
              appraisal activities on existing and newly acquired
              licenses through its existing cash balance, forecast
              cashflow from operations and its debt facility. No
              unusual trends or fluctuations are expected outside the
              ordinary course of business.

              COMMITMENTS

              $'000                    1 Year  2-5 Years 5+ Years

              Office Leases               423      1,421        -

              Other Operating Leases   12,319     14,300        -

              Exploration Licence Fees    583          -        -

              Engineering              53,550          -        -

              Rig Commitments          37,305          -        -

              Total                   104,180     15,721        -

              The engineering financial commitments relate to
              pre-development committed capital expenditure on the
              Stella and Harrier fields, as well as ongoing capital and
              operating expenditure on existing producing fields. Rig
              commitments reflect rig hire costs committed in relation
              to the anticipated Stella wells. As stated above, these
              commitments are expected to be funded through the
              Corporation's existing cash balance, forecast cashflow
              from operations and its debt facility.

              OUTSTANDING SHARE INFORMATION

              The Corporation's common shares are traded on the Toronto
              Stock Exchange ("TSX") in Canada under the symbol "IAE"
              and on the Alternative Investment Market ("AIM") in the
              United Kingdom under the symbol "IAE".

              As at March 31, 2013, Ithaca had 259,953,336 common
              shares outstanding along with 20,344,631 options
              outstanding to employees and directors to acquire common
              shares.

              In Q1 2013, the Corporation's Board of Directors granted
              90,000 options at a weighted average exercise price of
              C$1.79. Each of the options granted may be exercised over
              a period of four years from the grant date. One third of
              the options will vest at the end of each of the first,
              second and third years from the effective date of grant.

              As at May 10, 2013, following completion of the Valiant
              Acquisition, Ithaca had 317,088,991 common shares
              outstanding along with 20,011,297 options outstanding to
              employees and directors to acquire common shares.

                                          March 31, 2013

              Common Shares Outstanding      259,953,336

              Share Price(1)               $1.70 / Share

              Total Market Capitalisation   $441,920,671


              (1) Represents the TSX close price (CAD$1.73 on last
              trading day of March, 2013. US$:CAD$ 0.9825 on March 31,
              2013


             SUMMARY OF QUARTERLY RESULTS
                                                              Restated
      $'000    31 Mar 31 Dec 30 Sep 30 Jun 31 Mar 31 Dec 30 Sep 30 Jun
                 2013   2012   2012   2012   2012   2011   2011   2011

      Revenue  59,769 52,566 41,579 35,779 40,553 54,870 26,415 16,724

      Profit    3,472 45,347  4,894 30,238 12,916 13,318 16,016  2,743
      After
      Tax

      EPS -      0.01  0.17    0.02   0.12   0.05   0.05   0.06   0.01
      Basic

      EPS -      0.01  0.17    0.02   0.11   0.05   0.05   0.06   0.01
      Diluted

              The most significant factors to have affected the
              Corporation's results during the above quarters are
              fluctuation in underlying commodity prices and movement
              in production volumes. The Corporation has utilized
              forward sales contracts and foreign exchange contracts to
              take advantage of higher commodity prices while reducing
              the exposure to price volatility. These contracts can
              cause volatility in profit after tax as a result
              of unrealized gains and losses due to movements in the
              oil price and USD : GBP exchange rate.

              Each of the quarters from Q4 2010 to Q3 2011 was restated
              following the Corporation's election to present all
              acquisitions since the IFRS transition date as business
              combinations in accordance with IFRS 3®. Refer to
the"Changes in Accounting Policies" below for more details.


   FINANCIAL INSTRUMENTS

   All financial instruments are initially measured in the balance
   sheet at fair value. Subsequent measurement of the financial
   instruments is based on their classification. The Corporation has
   classified each financial instrument into one of these categories:
   held-for-trading, held-to-maturity investments, loans and
   receivables, or other financial liabilities. Loans and receivables,
   held-to-maturity investments and other financial liabilities are
   measured at amortized cost using the effective interest rate
   method. For all financial assets and financial liabilities that are
   not classified as held-for-trading, the transaction costs that are
   directly attributable to the acquisition or issue of a financial
   asset or financial liability are adjusted to the fair value
   initially recognized for that financial instrument. These costs are
   expensed using the effective interest rate method and are recorded
   within interest expense. Held-for-trading financial assets are
   measured at fair value and changes in fair value are recognized in
   net income.

   All derivative instruments are recorded in the balance sheet at fair
   value unless they qualify for the expected purchase, sale and usage
   exemption. All changes in their fair value are recorded in income
   unless cash flow hedge accounting is used, in which case changes in
   fair value are recorded in other comprehensive income until the
   hedged transaction is recognized in net earnings.

   The Corporation has classified its cash and cash equivalents,
   restricted cash, derivatives, commodity hedges and long term
   liability as held-for-trading, which are measured at fair value with
   changes being recognized in net income. Accounts receivable are
   classified as loans and receivables; operating bank loans, accounts
   payable and accrued liabilities are classified as other liabilities,
   all of which are measured at amortized cost. The classification of
   all financial instruments is the same at inception and at March 31,
   2013.

   The table below presents the total gain / (loss) on financial
   instruments that has been disclosed through the statement of
   comprehensive income.

   $'000                                      Q1 2013  Q1 2012

   Revaluation Forex Forward Contracts        (2,055)      969

   Revaluation of Gas Contract                      -    (114)

   Revaluation of Other Long Term Liability        57     (90)

   Revaluation of Commodity Hedges            (9,067)        -

   Total Revaluation Gain / (Loss)           (11,065)      765

   Realised Loss on Forex Contracts             (293)        -

   Realised Gain/(Loss) on Commodity Hedges     4,186    (199)

   Total Realised Gain/(Loss)                   3,893    (199)

   Total Realised / Revaluation Gain / (Loss) (7,172)      566

   Contingent Consideration                         -  (1,294)

   Total (Loss) on Financial Instruments      (7,172)    (728)

   The following table summarises the commodity hedges in place at the
   beginning of the quarter.

   Derivative      Term                         Volume   Average Price
                                                   bbl           $/bbl

   Oil Swaps*      January 2013              2,297,753           108.0
                   - September 2014

   Put Options     January 2013                779,299           110.4
                   - March 2014

   Derivative      Term                         Volume   Average Price
                                                Therms         p/therm

   Gas Swaps       January 2013              3,066,000           66.45
                   - December 2014

   *Includes swaption of 1 million bbls which was exercised in April
   2013

   The table below summarises the foreign exchange financial
   instruments in place during Q1 2013.

   Derivative      Forward Plus         Forward contract

   Term            Jan 13 - Dec 13      Apr 13 - Jan 14

   Value           GBP4million / month  GBP120 million

   Protection Rate $1.59/GBP1.00        $1.52/GBP1.00

   Trigger Rate    $1.50/GBP1.00         N/A


   CRITICAL ACCOUNTING ESTIMATES

   Certain accounting policies require that management make appropriate
   decisions with respect to the formulation of estimates and
   assumptions that affect the reported amounts of assets, liabilities,
   revenues and expenses. These accounting policies are discussed
   below and are included to aid the reader in assessing the critical
   accounting policies and practices of the Corporation and the
   likelihood of materially different results being reported. Ithaca's
   management reviews these estimates regularly. The emergence of new
   information and changed circumstances may result in actual results
   or changes to estimated amounts that differ materially from current
   estimates.

   The following assessment of significant accounting policies and
   associated estimates is not meant to be exhaustive. The Corporation
   might realize different results from the application of new
   accounting standards promulgated, from time to time, by various
   rule-making bodies.

   Capitalized costs relating to the exploration and development of oil
   and gas reserves, along with estimated future capital expenditures
   required in order to develop proved and probable reserves are
   depreciated on a unit-of-production basis, by asset, using estimated
   proved and probable reserves as adjusted for production.

   A review is carried out each reporting date for any indication that
   the carrying value of the Corporation's D&P assets may be impaired.
   For D&P assets where there are such indications, an impairment test
   is carried out on the Cash Generating Unit ("CGU"). Each CGU is
   identified in accordance with IAS 36. The Corporation's CGUs are
   those assets which generate largely independent cash flows and are
   normally, but not always, single developments or production areas.
   The impairment test involves comparing the carrying value with the
   recoverable value of an asset. The recoverable amount of an asset is
   determined as the higher of its fair value less costs to sell and
   value in use, where the value in use is determined from estimated
   future net cash flows. Any additional depreciation resulting from
   the impairment testing is charged to the Statement of Income.

   Goodwill is tested annually for impairment and also when
   circumstances indicate that the carrying value may be at risk of
   being impaired. Impairment is determined for goodwill by assessing
   the recoverable amount of each CGU to which the goodwill relates.
   Where the recoverable amount of the CGU is less than its carrying
   amount, an impairment loss is recognized in the Statement of Income.
   Impairment losses relating to goodwill cannot be reversed in future
   periods.

   Recognition of decommissioning liabilities associated with oil and
   gas wells are determined using estimated costs discounted based on
   the estimated life of the asset. In periods following recognition,
   the liability and associated asset are adjusted for any changes in
   the estimated amount or timing of the settlement of the obligations.
   The liability is accreted up to the actual expected cash outlay to
   perform the abandonment and reclamation. The carrying amounts of the
   associated assets are depleted using the unit of production method,
   in accordance with the depreciation policy for development and
   production assets. Actual costs to retire tangible assets are
   deducted from the liability as incurred.

   All financial instruments, other than those designated as effective
   hedging instruments, are initially recognized at fair value on the
   balance sheet. The Corporation's financial instruments consist of
   cash, restricted cash, accounts receivable, deposits, derivatives,
   accounts payable, accrued liabilities and the long term liability on
   the Beatrice acquisition. Measurement in subsequent periods is
   dependent on the classification of the respective financial
   instrument.

   In order to recognize share based payment expense, the Corporation
   estimates the fair value of stock options granted using assumptions
   related to interest rates, expected life of the option, volatility
   of the underlying security and expected dividend yields. These
   assumptions may vary over time.

   The determination of the Corporation's income and other tax
   liabilities / assets requires interpretation of complex laws and
   regulations. Tax filings are subject to audit and potential
   reassessment after the lapse of considerable time. Accordingly, the
   actual income tax liability may differ significantly from that
   estimated and recorded on the financial statements.

   The accrual method of accounting will require management to
   incorporate certain estimates of revenues, production costs and
   other costs as at a specific reporting date. In addition, the
   Corporation must estimate capital expenditures on capital projects
   that are in progress or recently completed where actual costs have
   not been received as of the reporting date.

   CONTROL ENVIRONMENT

   Ithaca has established disclosure controls, procedures and corporate
   policies so that its consolidated financial results are presented
   accurately, fairly and on a timely basis. The Chief Executive
   Officer and Chief Financial Officer have designed, or have caused
   such internal controls over financial reporting to be designed under
   their supervision, to provide reasonable assurance regarding the
   reliability of financial reporting and preparation of the
   Corporation's financial statements in accordance with IFRS with no
   material weaknesses identified.

   Based on their inherent limitations, disclosure controls and
   procedures and internal controls over financial reporting may not
   prevent or detect misstatements and even those options determined to
   be effective can provide only reasonable assurance with respect to
   financial statement preparation and presentation.

   As of March 31, 2013, there were no changes in Ithaca's internal
   control over financial reporting that occurred during the quarter
   ended March 31, 2013 that have materially affected, or are
   reasonably likely to materially affect, our internal control over
   financial reporting.

   CHANGES IN ACCOUNTING POLICIES

   On January 1, 2011, the Corporation adopted IFRS using a transition
   date of January 1, 2010. The financial statements for the quarter
   ended March 31, 2013, including required comparative information,
   have been prepared in accordance with International Financial
   Reporting Standards as issued by the International Accounting
   Standards Board ("IASB").

   The Corporation elected to present all acquisitions since the IFRS
   transition date as business combinations in accordance with
   IFRS 3®.

   One impact of accounting for acquisitions as business combinations
   is the recognition of asset values, upon which the DD&A rate is
   calculated as pre-tax fair values and the recognition of a deferred
   tax liability on estimated future cash flows. With current tax rates
   at 62% this increases the DD&A charge for such assets. An offsetting
   reduction is recognized in the deferred tax charged through the
   consolidated statement of income.

   In May 2011, the IASB issued the following standards: IFRS 10,
   Consolidated Financial Statements ("IFRS 10"), IFRS 11, Joint
   Arrangements ("IFRS 11"), IFRS 12, Disclosure of Interests in Other
   Entities ("IFRS 12"), IAS 27, Separate Financial Statements ("IAS
   27"), IFRS 13, Fair Value Measurement ("IFRS 13") and amended IAS
   28, Investments in Associates and Joint Ventures ("IAS 28"). Each of
   the new standards is effective for annual periods beginning on or
   after 1 January 2013. There has been no material impact from the
   adoption of the new and amended standards on the Corporation's
   financial statements.


              OTHER

Non-IFRS
Measures'Cashflow from operations' referred to in this MD&A is
               not prescribed by IFRS. This non-IFRS financial measure
               does not have any standardized meaning and therefore is
               unlikely to be comparable to similar measures presented
               by other companies. The Corporation uses this measure to
               help evaluate its performance. As an indicator of the
               Corporation's performance, cashflow from operations
               should not be considered as an alternative to, or more
               meaningful than, net cash from operating activities as
               determined in accordance with IFRS. The Corporation
               considers Cashflow from operations to be a key measure
               as it demonstrates the Corporation's underlying ability
               to generate the cash necessary to fund operations and
               support activities related to its major assets. Cashflow
               from operations is determined by adding back changes in
               non-cash operating working capital to cash from
               operating activities.

BOE
Presentation
               The calculation of boe is based on a conversion rate of
               six thousand cubic feet of natural gas ("mcf") to one
               barrel of crude oil ("bbl"). The term boe 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. Given the value ratio based
               on the current price of crude oil as compared to natural
               gas is significantly different from the energy
               equivalency of 6 mcf: 1 bbl, utilizing a conversion
               ratio at 6 mcf: 1 bbl may be misleading as an indication
               of value.

Off Balance
Sheet
Arrangements   The Corporation has certain lease agreements and rig
               commitments which were entered into in the normal course
               of operations, all of which are disclosed under the
               heading "Commitments", above. Leases are treated as
               either operating leases or finance leases based on the
               extent to which risks and rewards incidental to
               ownership lie with the lessor or the lessee under IAS
               17. No asset or liability value has been assigned to
               any leases on the balance sheet as at March 31, 2013.

Related
Party
Transactions   A director of the Corporation is a partner of Burstall
               Winger LLP who acts as counsel for the Corporation. The
               amount of fees paid to Burstall Winger LLP in Q1 2013
               was $0.1 million (Q1 2012: $Nil). These transactions
               are in the normal course of business and are conducted
               on normal commercial terms with consideration comparable
               to those charged by third parties.

               As at March 31, 2013 the Corporation had a loan
               receivable from FPF-1 Ltd, an associate of the
               Corporation, for $21.6 million (Q1 2012: $Nil) as a
               result of the completion of the GSA transactions in
               2012.


            RISKS AND UNCERTAINTIES

            The business of exploring for, developing and producing oil
            and natural gas reserves is inherently risky. There is
            substantial risk that the manpower and capital employed
            will not result in the finding of new reserves in economic
            quantities. There is a risk that the sale of reserves may
            be delayed due to processing constraints, lack of pipeline
            capacity or lack of markets. The Corporation is dependent
            upon the production rates and oil price to fund the current
            development program.

            For additional detail regarding the Corporation's risks and
            uncertainties, refer to the Corporation's Annual
            Information Form dated March 25, 2013, (the "AIF") filed on
            SEDAR at  www.sedar.com .

            RISK                           MITIGATIONS

Commodity   The Corporation's performance  In order to mitigate the
Price       is significantly impacted by   risk of fluctuations in oil
Volatility  prevailing oil and natural gas and gas prices, the
            prices, which are primarily    Corporation routinely
            driven by supply and demand as executes commodity price
            well as economic and political derivatives, predominantly
            factors.                       in relation to oil
                                           production, as a means of
                                           establishing a floor in
                                           realised prices.

Foreign     The Corporation is exposed to  Given the increasing
Exchange    financial risks including      proportion of development
Risk        financial market volatility,   capital expenditure and
            fluctuation in interest rates  operating costs incurred in
            and various foreign exchange   currencies other than the
            rates.                         United States dollar, the
                                           Corporation routinely
                                           executes hedges to mitigate
                                           foreign exchange rate risk
                                           on committed expenditure.

Debt        The Corporation is exposed to  The Corporation believes
Facility    borrowing risks relating to    that there are no
Risk        drawdown of its senior secured circumstances at present
            borrowing base facility (the   that result in its
failure"Facility"). The ability to    to meet the financial tests
            drawdown the Facility is based and it can therefore draw
            on the Corporation meeting     down upon its Facility.
            certain covenants including
            coverage ratio tests,
            liquidity tests and
            development funding tests      The Corporation routinely
            which are determined by a      produces detailed cashflow
            detailed economic model of the forecasts to monitor its
            Corporation. There can be no   compliance with the
            assurance that the Corporation financial tests and
            will satisfy such tests in the liquidity requirements of
            future in order to have access the Facility.
            to the full amount of the
            Facility.

            The Facility includes
            covenants which restrict,
            among other things, the
            Corporation's ability to incur
            additional debt or dispose of
            assets.

            As is standard to a credit
            facility, the Corporation's
            and Ithaca Energy (UK)
            Limited's ("Ithaca UK") assets
            have been pledged as
            collateral and are subject to
            foreclosure in the event the
            Corporation or Ithaca UK
            defaults.

Financing   To the extent cashflow from    The Corporation has
Risk        operations and Facility        established a fully funded
            resources are ever deemed not  business plan and routinely
            adequate to fund Ithaca's cash monitors its detailed
            requirements, external         cashflow forecasts and
            financing may be required.     liquidity requirements to
            Lack of timely access to such  maintain its funding
            additional financing, or       requirements. The
            access on unfavourable terms,  Corporation believes that
            could limit the future growth  there are no circumstances
            of the business of Ithaca. To  at present that would lead
            the extent that external       to selected divestment,
            sources of capital, including  delays to existing programs
            public and private markets,    or a default relating to the
            become limited or unavailable, Facility.
            Ithaca's ability to make the
            necessary capital investments
            to maintain or expand its
            current business and to make
            necessary principal payments
            under the Facility may be
            impaired.

            A failure to access adequate
            capital to continue its
            expenditure program may
            require that the Corporation
            meet any liquidity shortfalls
            through the selected
            divestment of its portfolio or
            delays to existing development
            programs.

Third Party The Corporation is and may in  The Corporation believes
Credit Risk the future be exposed to third this risk is mitigated by
            party credit risk through its  the financial position of
            contractual arrangements with  the parties. All of the
            its current and future joint   Corporation's oil production
            venture partners, marketers of from the Beatrice, Jacky and
            its petroleum production and   Athena fields is sold to BP
            other parties. The Corporation Oil International Limited.
            extends unsecured credit to    Oil production from Cook and
            these parties, and therefore,  Broom is sold to Shell
            the collection of any          Trading International Ltd.
            receivables may be affected by Anglia and Topaz gas
            changes in the economic        production is sold through
            environment or other           contracts to RWE NPower PLC
            conditions.                    and Hess Energy Gas Power(UK)
Ltd. Cook gas is sold
                                           to Shell UK Ltd. and Esso
                                           Exploration & Production UK
                                           Ltd. The Corporation has not
                                           experienced any material
                                           credit loss in the
                                           collection of accounts
                                           receivable to date.

                                           The joint venture partners
                                           in those assets operated by
                                           the Corporation are largely
                                           well financed international
                                           companies. Where
                                           appropriate, a cash call
                                           process has been implemented
                                           with the GSA partners to
                                           cover high levels of
                                           anticipated capital
                                           expenditure thereby reducing
                                           any third party credit risk.

Property    The Corporation's properties   The Corporation has routine
Risk        will be generally held in the  ongoing communications with
            form of licenses, concessions, the UK oil and gas
            permits and regulatory         regulatory body, the
            consents ("Authorizations").   Department of Energy and
            The Corporation's activities   Climate Change ("DECC").
            are dependent upon the grant   Regular communication allows
            and maintenance of appropriate all parties to an
            Authorizations, which may not  Authorization to be fully
            be granted; may be made        informed as to the status of
            subject to limitations which,  any Authorization and
            if not met, will result in the ensures the Corporation
            termination or withdrawal of   remains updated regarding
            the Authorization; or may be   fulfilment of any applicable
            otherwise withdrawn. Also, in  requirements.
            the majority of its licenses,
            the Corporation is often a
            joint interest-holder with
            another third party over which
            it has no control. An
            Authorization may be revoked
            by the relevant regulatory
            authority if the other
            interest-holder is no longer
            deemed to be financially
            credible.

            There can be no assurance that
            any of the obligations
            required to maintain each
            Authorization will be met.
            Although the Corporation
            believes that the
            Authorizations will be renewed
            following expiry or granted
            (as the case may be), there
            can be no assurance that such
            Authorizations will be renewed
            or granted or as to the terms
            of such renewals or grants.
            The termination or expiration
            of the Corporation's
            Authorizations may have a
            material adverse effect on the
            Corporation's results of
            operations and business.

            The areas covered by the
            Authorizations are or may be
            subject to agreements with the
            proprietors of the land. If
            such agreements are
            terminated, found void or
            otherwise challenged, the
            Corporation may suffer
            significant damage through the
            loss of opportunity to
            identify and extract oil or
            gas.

Operational The Corporation is subject to  The Corporation acts at all
Risk        the risks associated with      times as a reasonable and
            owning oil and natural gas     prudent operator. The
            properties, including          Corporation takes out market
            environmental risks associated insurance to mitigate many
            with air, land and water. All  of these operational,
            of the Corporation's           construction and
            operations are conducted       environmental risks.
            offshore in the United Kingdom
            Continental Shelf; as such
            Ithaca is exposed to
            operational risk associated    The Corporation uses the
            with weather delays that can   services of Sproule
            result in a material delay in  International Limited
            project execution. Third      ("Sproule") to independently
            parties operate some of the    assess the Corporation's
            assets in which the            reserves on an annual basis.
            Corporation has interests. As
            a result, the Corporation may
            have limited ability to
            exercise influence over the
            operations of these assets and
            their associated costs. The
            success and timing of these
            activities may be outside the
            Corporation's control.

            There are numerous
            uncertainties in estimating
            the Corporation's reserve base
            due to the complexities in
            estimating the magnitude and
            timing of future production,
            revenue, expenses and
            capital.

Competition In all areas of the            The Corporation places
Risk        Corporation's business, there  appropriate emphasis on
            is competition with entities   ensuring it attracts and
            that may have greater          retains high quality
            technical and financial        resources to enable it to
            resources.                     maintain its competitive
                                           position.

             FORWARD-LOOKING INFORMATION

             This MD&A and any documents incorporated by reference
             herein contain certain forward-looking statements and
             forward-looking information which are based on the
             Corporation's internal expectations, estimates,
             projections, assumptions and beliefs as at the date of
             such statements or information, including, among other
             things, assumptions with respect to production, future
             capital expenditures, future acquisitions and cash flow.
             The reader is cautioned that assumptions used in the
             preparation of such information may prove to be
             incorrect. The use of any of the words
"anticipate","continue", "estimate", "expect", "may", "will","project",
"plan", "should", "believe", "could","scheduled", "targeted",
"approximately" and similar
             expressions are intended to identify forward-looking
             statements and forward-looking information. These
             statements are not guarantees of future performance and
             involve known and unknown risks, uncertainties and other
             factors that may cause actual results or events to differ
             materially from those anticipated in such forward-looking
             statements or information. The Corporation believes that
             the expectations reflected in those forward-looking
             statements and information are reasonable but no assurance
             can be given that these expectations, or the assumptions
             underlying these expectations, will prove to be correct
             and such forward-looking statements and information
             included in this MD&A and any documents incorporated by
             reference herein should not be unduly relied upon. Such
             forward-looking statements and information speak only as
             of the date of this MD&A and any documents incorporated by
             reference herein and the Corporation does not undertake
             any obligation to publicly update or revise any
             forward-looking statements or information, except as
             required by applicable laws.

             In particular, this MD&A and any documents incorporated by
             reference herein, contains specific forward-looking
             statements and information pertaining to the following:

             - the quality of and future net revenues from the
             Corporation's reserves;

             - oil, natural gas liquids ("NGLs") and natural gas
             production levels;

             - commodity prices, foreign currency exchange rates
             and interest rates;

             - capital expenditure programs and other
             expenditures;

             - the sale, farming in, farming out or development of
             certain exploration properties using third party
             resources;

             - supply and demand for oil, NGLs and natural gas;

             - the Corporation's ability to raise capital;

             - the continued availability of the Facility;

             - the Corporation's acquisition strategy, the
             criteria to be considered in connection therewith and the
             benefits to be derived therefrom;

             - the realization of anticipated benefits from
             acquisitions and dispositions;

             - the Corporation's ability to continually add to
             reserves;

             - schedules and timing of certain projects and the
             Corporation's strategy for growth;

             - the Corporation's future operating and financial
             results;

             - the ability of the Corporation to optimize
             operations and reduce operational expenditures;

             - treatment under governmental and other regulatory
             regimes and tax, environmental and other laws;

             - production rates;

             - targeted production levels; and

             - timing and cost of the development of the
             Corporation's reserves.

             With respect to forward-looking statements contained in
             this MD&A and any documents incorporated by reference
             herein, the Corporation has made assumptions regarding,
             among other things:

             -  Ithaca's ability to obtain additional drilling rigs
             and other equipment in a timely manner, as required;

             -  access to third party hosts and associated
             pipelines can be negotiated and accessed within the
             expected timeframe;

             -  FDP approval and operational construction and
             development is obtained within expected timeframes;

             -  the Corporation's development plan for the Stella
             and Harrier discoveries will be implemented as planned;

             -  the effect of the Valiant Acquisition on Ithaca;

             -  reserves volumes assigned to Ithaca's properties;

             -  ability to recover reserves volumes assigned to
             Ithaca's properties;

             -  revenues do not decrease below anticipated levels
             and operating costs do not increase significantly above
             anticipated levels;

             - future oil, NGLs and natural gas production levels
             from Ithaca's properties and the prices obtained from the
             sales of such production;   -  the level of future capital
expenditure required to
             exploit and develop reserves;

             - Ithaca's ability to obtain financing on acceptable
             terms, in particular, the Corporation's ability to access
             the Facility;

             -  the continued ability of the Corporation to collect
             from third parties who Ithaca has provided credit to;

             - Ithaca's reliance on partners and their ability to
             meet commitments under relevant agreements; and

             - the state of the debt and equity markets in the
             current economic environment.

             The Corporation's actual results could differ materially
             from those anticipated in these forward-looking statements
             and information as a result of assumptions proving
             inaccurate and of both known and unknown risks, including
             the risk factors set forth in this MD&A and under the
             heading "Risk Factors" in the AIF and the documents
             incorporated by reference herein, and those set forth
             below:

             -  risks associated with the exploration for and
             development of oil and natural gas reserves in the North
             Sea;

             -  risks associated with the integration of Valiant
             into Ithaca's existing operations;

             -  risks associated with offshore development and
             production including transport facilities;

             -  operational risks and liabilities that are not
             covered by insurance;

             -  volatility in market prices for oil, NGLs and
             natural gas;

             -  the ability of the Corporation to fund its
             substantial capital requirements and operations;

             -  risks associated with ensuring title to the
             Corporation's properties;

             -  changes in environmental, health and safety or
             other legislation applicable to the Corporation's
             operations, and the Corporation's ability to comply with
             current and future environmental, health and safety and
             other laws;

             -  the accuracy of oil and gas reserve estimates and
             estimated production levels as they are affected by the
             Corporation's exploration and development drilling and
             estimated decline rates;

             -  the Corporation's success at acquisition,
             exploration, exploitation and development of reserves;

             -  risks associated with realisation of anticipated
             benefits of acquisitions;

             -  risks related to changes to government policy with
             regard to offshore drilling;

             -  the Corporation's reliance on key operational and
             management personnel;

             -  the ability of the Corporation to obtain and
             maintain all of its required permits and licenses;

             -  competition for, among other things, capital,
             drilling equipment, acquisitions of reserves, undeveloped
             lands and skilled personnel;

             -  changes in general economic, market and business
             conditions in Canada, North America, the United Kingdom,
             Europe and worldwide;

             -  actions by governmental or regulatory authorities
             including changes in income tax laws or changes in tax
             laws, royalty rates and incentive programs relating to the
             oil and gas industry including any increase in UK taxes;

             -  adverse regulatory rulings, orders and decisions;
             and

             -  risks associated with the nature of the common
             shares.

Additional
Reader
Advisories   The information in this MD&A is provided as of May 10,
             2013. The Q1 2013 results have been compared to the
             results of the comparative period in 2012. This MD&A
             should be read in conjunction with the Corporation's
             unaudited consolidated financial statements as at March
             31, 2013 and 2012 and with the Corporation's audited
             consolidated financial statements as at December 31, 2012
             together with the accompanying notes and MD&A, and AIF for
             the 2012 fiscal year. Copies of these documents are
             available without charge from Ithaca or electronically on
             the internet on Ithaca's SEDAR profile at  www.sedar.com .

             With respect to Ithaca's reserves disclosure, the figures
             are derived from a report prepared by Sproule, an
             independent qualified reserves evaluator, evaluating the
             reserves of Ithaca as of December 31, 2012 and forming the
             basis for the Statement of Reserves Data and Other Oil and
             Gas information of Ithaca dated March 19, 2013
(the"Statement"). The reserves for the South West Heather
             field included in the Statement are those estimated by the
             Corporation and reviewed by Sproule.

             With respect to Valiant reserves, the figures are derived
             from an Audit of Certain Reserves as at December 31, 2012
             prepared by RPS Energy Consultants Limited, an independent
             qualified reserves evaluator, dated January 24, 2013. The
             reserves estimates of Ithaca are based on the Canadian Oil
             and Gas Evaluation Handbook ("COGEH") pursuant to Canadian
             National Instrument 51-101 - Standards of Disclosure for
             Oil and Gas Activities, with references to oil referring
             to medium quality oil.

             The Ithaca reserves correspond to those in the Statement
adjusted to reflect the increased Carna and Cook field
             equities acquired following the date of issue of the
             Statement. The reserves estimates of Valiant are based on
             the 2007 SPE/AAPG/WPC/ SPEE Petroleum Resource Management
             System which is not materially different from COGEH. The
             Valiant reserves have been adjusted to reflect the
             increased Fionn field interest being transferred to
             Valiant by Antrim Resources (N.I.) Limited.

             If a discovery is made, there is no certainty that it will
             be developed, or if it is developed, there is no certainty
             as to the timing of such development or the benefits (if
             any) which may flow to the Corporation. Cashflow from
             operations includes the impact of executed hedges and does
             not include non-cash items such as DD&A, revaluation of
             financial instruments, impairments of fixed assets and
             movements in goodwill, which may have a significant impact
             on the Corporation's results.

             The reserve estimates set forth in this MD&A are estimates
             only and the actual reserves and realized revenue may be
             greater or less than those calculated. The estimates of
             reserves for individual properties may not reflect the
             same confidence level as estimates of reserves and future
             net revenue for all properties, due to the effects of
             aggregation.

             Statements relating to reserves are deemed to be
             forward-looking statements, as they involve the implied
             assessment, based on certain estimates and assumptions,
             that the reserves described can be profitably produced in
             the future.

Consolidated Statement of Income
For the three months ended 31 March 2013 and 2012
(unaudited)                                  2013     2012
                                                Note  US$'000  US$'000

Revenue                                         4      59,769   40,553

Cost of Sales                                   5    (46,458) (26,006)

Gross Profit                                           13,311   14,547


Exploration and evaluation expenses             9       (312)     (75)

Administrative expenses                         6     (2,771)  (1,206)

Operating Profit                                      10,228    13,266


Foreign exchange                                         563     1,648

(Loss) on financial instruments                 23   (7,172)     (728)

Negative goodwill                               11       914         -

Profit on ordinary activities Before Interest and      4,533    14,186
Tax


Finance costs                                   7    (2,276)     (469)

Interest income                                           20        65

Profit Before Tax                                      2,277    13,782


Taxation - Deferred tax                         21     1,195     (866)

Profit After Tax                                       3,472    12,916


Earnings per share

Basic                                           20      0.01      0.05

Diluted                                         20      0.01      0.05


The accompanying notes on pages 7 to 22 are an integral part of the
financial statements.


Consolidated Statement of Comprehensive Income
For the three months ended 31 March 2013 and 2012
(unaudited)




                                                       2013       2012

                                                    US$'000    US$'000


Profit for the period                                 3,472     12,916

Net (loss) on oil price hedge                             -      (376)

Other comprehensive income                                -      (376)

Total comprehensive income                            3,472     12,540


The accompanying notes on pages 7 to 22 are an integral part of the
financial statements.

Consolidated Statement of Financial Position
(unaudited)

                                             31 March 2013 31 Dec 2012
                                                   US$'000     US$'000

ASSETS


Current assets

Cash and cash equivalents                          65,634       31,374

Restricted cash                                         2            2

Accounts receivable                               126,303      159,195

Deposits, prepaid expenses and other                5,925       14,754

Inventory                                8         26,131       15,878

Derivative financial instruments         24         7,368        8,251

                                                  231,363      229,454

Non-current assets

Long-term receivable                               21,551      21,551

Investment in associate                            18,337      18,337

Exploration and evaluation assets        9         49,186      47,390

Property, plant & equipment              10       699,391     615,788
Goodwill                                 12           985         985

                                                  789,450     704,051


Total assets                                    1,020,813     933,505


LIABILITIES AND EQUITY


Current liabilities

Trade and other payables                         194,278     205,635

Derivative financial instruments         24        2,296           -

                                                 196,574     205,635


Non-current liabilities

Bank debt                                14       47,312           -

Decommissioning liabilities              15       57,494      52,834

Other long term liabilities              16        2,961       3,018

Contingent consideration                 17        4,000       4,000

Deferred tax liabilities                 21      102,329      62,370

                                                 214,096     122,222


Net assets                                       610,143     605,648


Shareholders' equity

Share capital                            18      431,365     431,318

Share based payment reserve              19       21,316      20,340

Retained earnings                                157,462     153,990

Total equity                                     610,143     605,648


The financial statements were approved by the Board of Directors on 10
May 2013 and signed on its behalf by:"John Summers"
Director"Jay Zammit"
Director

The accompanying notes on pages 7 to 22 are an integral part of the
financial statements.

Consolidated Statement of Changes in Equity
(unaudited)


                      Share      Share   Retained Other comp.    Total
                    capital      based     E'ings      income
                               payment
                               reserve
                    US$'000    US$'000    US$'000     US$'000   US$'000

Balance, 1 Jan 2012 429,502     17,318     60,591           -   507,411

Share based payment       -        862          -           -       862

Unrealised hedging        -          -          -       (376)     (376)
loss

Net income for the        -          -     12,916           -    12,916
period

Balance, 31 March   429,502     18,180     73,507       (376)   520,813
2012


Balance, 1 Jan 2013 431,318     20,340    153,990           -   605,648

Share based payment       -        994          -           -       994

Options exercised        47       (18)          -           -        29

Net income for the        -          -      3,472           -     3,472
period

Balance, 31 March   431,365     21,316    157,462           -   610,143
2013

The accompanying notes on pages 7 to 22 are an integral part of the
financial statements.


Consolidated Statement of Cash Flow
For the three months ended 31 March 2013 and 2012
(unaudited)

                                Note                    2013      2012
                                                     US$'000   US$'000

Operating activities


Profit Before Tax                                      2,277    13,782


Adjustments for:

Depletion, depreciation and     10                    19,498    13,385
amortisation

Exploration and evaluation      9                        312        75
write off

Share based payment             6                        295       135

Loan fee amortisation                                    592        78

Unrealised (gain)/loss on       23                    11,065     (765)
financial instruments

Revaluation of contingent       17                        -      1,294
consideration

Movement in goodwill            11                    (914)          -

Accretion                       7                       502        384

Bank charges                                          1,159          -


Cashflow from operations                             34,786     28,368


Changes in inventory, debtors                           882      (820)
and creditors relating to
operating activities


Net cash from operating                             35,668      27,548
activities


Investing activities


Acquisition of Cook                               (33,370)           -

Capital expenditure                               (25,384)    (22,508)

Changes in debtors and
creditors relating to investing
activities                                         12,439      (7,810)


Net cash (used in) investing                     (46,315)     (30,318)
activities


Financing activities

Proceeds from issuance of                             29            -
shares

(Increase) in restricted cash                          -      (4,167)

Derivatives                                      (7,947)            -

Loan draw down                                    55,000            -

Bank charges                                     (1,110)            -


Net cash from/(used in)                           45,972      (4,167)
financing activities


Currency translation                             (1,065)        1,336
differences relating to cash
and cash equivalents


Increase/(decrease) in cash and                   34,260      (5,601)
cash equivalents


Cash and cash equivalents,                        31,374       95,545
beginning of period


Cash and cash equivalents, end                    65,634       89,944
of period

The accompanying notes on pages 7 to 22 are an integral part of the
financial statements.

1. NATURE OF OPERATIONS

Ithaca Energy Inc. (the "Corporation" or "Ithaca"), incorporated and
domiciled in Alberta, Canada on 27 April 2004, is a publicly traded
company involved in the exploration, development and production of oil
and gas in the North Sea. The Corporation's registered office is 1600,
333 - 7th Avenue S.W., Calgary, Alberta, Canada, T2P 2Z1. The
Corporation's shares trade on the Toronto Stock Exchange in Canada and
the London Stock Exchange's Alternative Investment Market in the United
Kingdom under the symbol "IAE". Ithaca has four wholly-owned
subsidiaries, Ithaca Energy (UK) Limited ("Ithaca UK"), Ithaca Minerals
(North Sea) Limited ("Ithaca Minerals"), Ithaca Energy Holdings (UK)
Limited ("Ithaca Holdings UK"), all incorporated in Scotland, and
Ithaca Energy (Holdings) Limited ("Ithaca Holdings"), incorporated in
Bermuda. Ithaca also has two associates, FPU Services Limited ("FPU
Services") and FPF-1 Limited ("FPF-1"), both incorporated in Jersey.

2. BASIS OF PREPARATION

These interim consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
applicable to the preparation of interim financial statements,
including IAS 34 Interim Financial Reporting. These interim
consolidated financial statements do not include all the necessary
annual disclosures in accordance with IFRS.

The policies applied in these condensed interim consolidated financial
statements are based on IFRS issued and outstanding as of 10 May 2012,
the date the Board of Directors approved the statements. Any subsequent
changes to IFRS that are given effect in the Corporation's annual
consolidated financial statements for the year ending 31 December 2013
could result in restatement of these interim consolidated financial
statements.

The condensed interim consolidated financial statements should be read
in conjunction with the Corporation's annual financial statements for
the year ended 31 December 2012.

3. SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATION
UNCERTAINTY

Basis of measurement

The consolidated financial statements have been prepared under the
historical cost convention, except for the revaluation of certain
financial assets and financial liabilities (under IFRS) to fair value,
including derivative instruments.

Basis of consolidation

The consolidated financial statements of the Corporation include the
accounts of Ithaca Energy Inc. and the wholly-owned subsidiaries Ithaca
Energy (UK) Limited, Ithaca Minerals (North Sea) Limited, Ithaca Energy
(Holdings) Limited and Ithaca Energy Holdings (UK) Limited. All
inter-company transactions and balances have been eliminated on
consolidation.

A subsidiary is an entity which the Corporation controls by having the
power to govern the financial and operating policies. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether Ithaca controls
another entity. A subsidiary is fully consolidated from the date on
which control is obtained by Ithaca and is de-consolidated from the
date that control ceases.

Investments in associates

Interests in entities over which Ithaca has significant influence, but
not control or joint control, are accounted for using the equity
method. Ithaca's share of equity investments' results are recorded in
the consolidated statement of income

Business Combinations

Business combinations are accounted for using the acquisition method.
The cost of an acquisition is measured as the fair value of the assets
acquired, equity instruments issued and liabilities incurred or assumed
at the date of completion of the acquisition. Acquisition costs
incurred are expensed and included in administrative expenses.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair
values at the acquisition date. The excess of the cost of acquisition
over the fair value of the Corporation's share of the identifiable net
assets acquired is recorded as goodwill. If the cost of the acquisition
is less than the Corporation's share of the net assets required, the
difference is recognised directly in the statement of income.

Goodwill

Capitalisation

Goodwill acquired through business combinations is initially measured
at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised as the fair value of the
Corporation's share of the identifiable net assets acquired and
liabilities assumed. If this consideration is lower than the fair value
of the identifiable assets acquired, the difference is recognised in
the statement of income.

Impairment

Goodwill is tested annually for impairment and also when circumstances
indicate that the carrying value may be at risk of being impaired.
Impairment is determined for goodwill by assessing the recoverable
amount of each cash generating unit ("CGU") to which the goodwill
relates. Where the recoverable amount of the CGU is less than its
carrying amount, an impairment loss is recognised in the statement of
income. Impairment losses relating to goodwill cannot be reversed in
future periods.

Foreign currency translation

Items included in the financial statements are measured using the
currency of the primary economic environment in which the Corporation
and its subsidiaries operate (the 'functional currency'). The
consolidated financial statements are presented in United States
Dollars, which is the Corporation's functional and presentation
currency.

Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the statement of income.

Share based payments

The Corporation has a share based payment plan as described in note 18
(c). The expense is recorded in the statement of income or capitalised
for all options granted in the year, with the gross increase recorded
in the share based payment reserve. Compensation costs are based on the
estimated fair values at the time of the grant and the expense or
capitalised amount is recognised over the vesting period of the
options. Upon the exercise of the stock options, consideration paid
together with the amount previously recognised in share based payment
reserve is recorded as an increase in share capital. In the event that
vested options expire unexercised, previously recognised compensation
expense associated with such stock options is not reversed. In the
event that unvested options are forfeited or expired, previously
recognised compensation expense associated with the unvested portion of
such stock options is reversed.

Cash and cash equivalents

For the purpose of the statement of cash flow, cash and cash
equivalents include investments with an original maturity of three
months or less.

Restricted cash

Cash that is held for security for bank guarantees is reported in the
statement of financial position and statement of cash flow separately.
If the expected duration of the restriction is less than twelve months
then it is shown in current assets.

Financial instruments

All financial instruments, other than those designated as effective
hedging instruments, are initially recognised at fair value in the
statement of financial position. The Corporation's financial
instruments consist of cash, restricted cash, accounts
receivable, deposits, derivatives, accounts payable, accrued
liabilities, contingent consideration and the long term liability on
the Beatrice acquisition. The Corporation classifies its financial
instruments into one of the following categories: held-for-trading
financial assets and financial liabilities; held-to-maturity
investments; loans and receivables; and other financial liabilities.
All financial instruments are required to be measured at fair value on
initial recognition. Measurement in subsequent periods is dependent on
the classification of the respective financial instrument.

Held-for-trading financial instruments are subsequently measured at
fair value with changes in fair value recognised in net earnings. All
other categories of financial instruments are measured at amortised
cost using the effective interest method. Cash and cash equivalents are
classified as held-for-trading and are measured at fair value. Accounts
receivable are classified as loans and receivables. Accounts payable,
accrued liabilities, certain other long-term liabilities, and long-term
debt are classified as other financial liabilities. Although the
Corporation does not intend to trade its derivative financial
instruments, they are classified as held-for-trading for accounting
purposes.

Transaction costs that are directly attributable to the acquisition or
issue of a financial asset or liability and original issue discounts on
long-term debt have been included in the carrying value of the related
financial asset or liability and are amortised to consolidated net
earnings over the life of the financial instrument using the effective
interest method.

The Corporation may designate financial instruments as a hedging
instrument for accounting purposes. Hedge accounting requires the
designation of a hedging relationship, including a hedged and a hedging
item, identification of the risk exposure being hedged and an
expectation that the hedging relationship will be highly effective
throughout its term.

The Corporation assesses, both at the hedge's inception and on an
ongoing basis, whether the derivative financial instruments designated
as hedges are highly effective in offsetting changes in cash flows of
the hedged items. The effective portion of the gains and losses on cash
flow hedges is recorded in Other Comprehensive Income until the hedged
transaction is recognised in net earnings. Any hedge ineffectiveness is
immediately recognised in net earnings. When the hedged transaction is
recognised in net earnings, the fair value of the associated cash flow
hedging item is reclassified from other reserves into net earnings.
Hedge accounting is discontinued on a prospective basis when the
hedging relationship no longer qualifies for hedge accounting.

Analyses of the fair values of financial instruments and further
details as to how they are measured are provided in notes 23 to 25.

Inventory

Inventories of materials and product inventory supplies, other than oil
and gas inventories, are stated at the lower of cost and net realisable
value. Cost is determined on the first-in, first-out method. Oil and
gas inventories are stated at fair value less cost to sell.

Property, plant and equipment

Oil and gas expenditure - exploration and evaluation assets

Capitalisation

Pre-acquisition costs on oil and gas assets are recognised in the
statement of income when incurred. Costs incurred after rights to
explore have been obtained, such as geological and geophysical surveys,
drilling and commercial appraisal costs and other directly attributable
costs of exploration and evaluation including technical,
administrative and share based payment expenses are capitalised as
intangible exploration and evaluation ("E&E") assets.

E&E costs are not amortised prior to the conclusion of evaluation
activities. At completion of evaluation activities, if technical
feasibility is demonstrated and commercial reserves are discovered
then, following development sanction, the carrying value of the E&E
asset is reclassified as a development and production ("D&P") asset,
but only after the carrying value is assessed for impairment and where
appropriate its carrying value adjusted. If after completion of
evaluation activities in an area, it is not possible to determine
technical feasibility and commercial viability or if the legal right to
explore expires or if the Corporation decides not to continue
exploration and evaluation activity, then the costs of such
unsuccessful exploration and evaluation are written off to the
statement of income in the period the relevant events occur.

Impairment

The Corporation's oil and gas assets are analysed into CGU for
impairment review purposes, with E&E asset impairment testing being
performed at a grouped CGU level. The current E&E CGU consists of the
Corporation's whole E&E portfolio. E&E assets are reviewed for
impairment when circumstances arise which indicate that the carrying
value of an E&E asset exceeds the recoverable amount. When reviewing E&E
assets for impairment, the combined carrying value of the grouped
CGU is compared with the grouped CGU's recoverable amount. The
recoverable amount of a grouped CGU is determined as the higher of its
fair value less costs to sell and value in use. Impairment losses
resulting from an impairment review are written off to the statement of
income.

Oil and gas expenditure - development and production assets

Capitalisation

Costs of bringing a field into production, including the cost of
facilities, wells and sub-sea equipment, direct costs including staff
costs and share based payment expense together with E&E assets
reclassified in accordance with the above policy, are capitalised as a
D&P asset. Normally each individual field development will form an
individual D&P asset but there may be cases, such as phased
developments, or multiple fields around a single production facility
when fields are grouped together to form a single D&P asset.

Depreciation

All costs relating to a development are accumulated and not depreciated
until the commencement of production. Depreciation is calculated on a
unit of production basis based on the proved and probable reserves of
the asset. Any re-assessment of reserves affects the depreciation rate
prospectively. Significant items of plant and equipment will normally
be fully depreciated over the life of the field. However, these items
are assessed to consider if their useful lives differ from the expected
life of the D&P asset and should this occur a different depreciation
rate would be charged.

Impairment

A review is carried out each reporting date for any indication that the
carrying value of the Corporation's D&P assets may be impaired. For D&P
assets where there are such indications, an impairment test is carried
out on the CGU. Each CGU is identified in accordance with IAS 36. The
Corporation's CGUs are those assets which generate largely independent
cash flows and are normally, but not always, single developments or
production areas. The impairment test involves comparing the carrying
value with the recoverable value of an asset. The recoverable amount of
an asset is determined as the higher of its fair value less costs to
sell and value in use, where the value in use is determined from
estimated future net cash flows. Any additional depreciation resulting
from the impairment testing is charged to the statement of income.

Non oil and natural gas operations

Computer and office equipment is recorded at cost and depreciated over
its estimated useful life on a straight-line basis over three years.
Furniture and fixtures are recorded at cost and depreciated over their
estimated useful lives on a straight-line basis over five years.

Decommissioning liabilities

The Corporation records the present value of legal obligations
associated with the retirement of long-term tangible assets, such as
producing well sites and processing plants, in the period in which they
are incurred with a corresponding increase in the carrying amount of
the related long-term asset. The obligation generally arises when the
asset is installed or the ground/environment is disturbed at the field
location. In subsequent periods, the asset is adjusted for any changes
in the estimated amount or timing of the settlement of the obligations.
The carrying amounts of the associated assets are depleted using the
unit of production method, in accordance with the depreciation policy
for development and production assets. Actual costs to retire tangible
assets are deducted from the liability as incurred.

Contingent consideration

Contingent consideration is accounted for as a financial liability and
measured at fair value at the date of acquisition with any subsequent
remeasurements recognised either in profit or loss or in other
comprehensive income in accordance with IAS 39.

Taxation

Current income tax

Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amounts are those that are
enacted or substantively enacted by the reporting date.

Deferred income tax

Deferred tax is recognised for all deductible temporary differences and
the carry-forward of unused tax losses. Deferred tax assets and
liabilities are measured using enacted or substantively enacted income
tax rates expected to apply to taxable income in the years in which
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in rates is
included in earnings in the period of the enactment date. Deferred tax
assets are recorded in the consolidated financial statements if
realisation is considered more likely than not.

Recent accounting pronouncements

In May 2011, the IASB issued the following standards: IFRS 10,
Consolidated Financial Statements ("IFRS 10"), IFRS 11, Joint
Arrangements ("IFRS 11"), IFRS 12, Disclosure of Interests in Other
Entities ("IFRS 12"), IAS 27, Separate Financial Statements ("IAS 27"),
IFRS 13, Fair Value Measurement ("IFRS 13") and amended IAS 28,
Investments in Associates and Joint Ventures ("IAS 28"). Each of the
new standards is effective for annual periods beginning on or after 1
January 2013. There has been no material impact from the adoption of
the new and amended standards on the Corporation's financial
statements.

Significant accounting judgements and estimation uncertainties

The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions regarding certain
assets, liabilities, revenues and expenses. Such estimates must often
be made based on unsettled transactions and other events and a precise
determination of many assets and liabilities is dependent upon future
events. Actual results may differ from estimated amounts.

The amounts recorded for depletion, depreciation of property and
equipment, long-term liability, share based payment, contingent
consideration, decommissioning liabilities, derivatives, and deferred
taxes are based on estimates. The depreciation charge and any
impairment tests are based on estimates of proved and probable
reserves, production rates, prices, future costs and other relevant
assumptions. By their nature, these estimates are subject to
measurement uncertainty and the effect on the financial statements of
changes in such estimates in future periods could be material. Further
information on each of these estimates is included within the notes to
the financial statements.

4. REVENUE

                                           Three months ended 31 March
                                                    2013          2012
                                                 US$'000       US$'000

Oil sales                                         56,153        35,808

Gas sales                                          2,771         2,821

Condensate sales                                     137           170

Other income                                         708         1,754

Total                                             59,769        40,553


5. COST OF SALES

                                           Three months ended 31 March
                                                   2013           2012
                                                US$'000        US$'000

Operating costs                                (23,227)       (15,721)

Oil purchases                                     (157)              -

Movement in oil and gas inventory               (3,576)          3,100

Depletion, depreciation and amortisation 10    (19,498)       (13,385)

                                               (46,458)       (26,006)


6. ADMINISTRATIVE EXPENSES

                                           Three months ended 31 March
                                                   2013           2012
                                                US$'000        US$'000

General & administrative                        (2,476)        (1,071)

Share based payment                               (295)          (135)

                                                (2,771)        (1,206)


7. FINANCE COSTS                                    Three months ended 31
March
                                                   2013           2012
                                                US$'000        US$'000

Accretion                                         (502)          (384)

Bank charges & interest                         (1,164)            (6)

Loan fee amortisation                             (592)           (78)

Non-operated asset finance fees                    (18)            (1)

                                                (2,276)          (469)



8. INVENTORY

                                               31 March         31 Dec
                                                   2013           2012
                                                US$'000        US$'000

Crude oil inventory                              26,118         15,865

Materials inventory                                  13             13
                                                 26,131         15,878

9. EXPLORATION AND EVALUATION ASSETS

                                                               US$'000


At 1 January 2012                                               22,689


Additions                                                       38,188

Write offs/relinquishments                                     (4,261)

Disposals                                                      (9,226)


At 31 December 2012                                             47,390


Additions                                                        2,108

Write offs/relinquishments                                       (312)


At 31 March 2013                                                49,186

Following completion of geotechnical evaluation activity, certain
licences were declared unsuccessful and certain prospects were declared
non-commercial and therefore the related expenditures of $0.3 million
were expensed in the three months to 31 March 2013.

10. PROPERY, PLANT AND EQUIPMENT

                       Development & Production  Other fixed
                             Oil and Gas Assets       assets      Total
                                        US$'000      US$'000    US$'000

Cost

At 1 January 2012                       623,549        2,292    625,841


Additions                               139,383          133    139,516

Disposals                              (37,912)            -   (37,912)


At 31 December 2012                     725,020        2,425    727,445


Additions                               103,070           31    103,101


At 31 March 2013                        828,090        2,456    830,546


DD&A


At 1 January 2012                      (53,988)      (1,497)   (55,485)


Charge for the period                  (55,770)        (402)   (56,172)


At 31 December 2012                   (109,758)      (1,899)  (111,657)


Charge for the quarter                 (19,397)        (101)   (19,498)


At 31 March 2013                      (129,155)      (2,000)  (131,155)


NBV at 1 January 2012                   569,561          795    570,356


NBV at 1 January 2013                   615,262          526    615,788


NBV at 31 March 2013                    698,935          456    699,391

11. BUSINESS COMBINATION

On 5 February 2013 the Company completed the acquisition of
wholly-owned UK subsidiary of Noble Energy Capital Limited, which owns
a 12.885% non-operated interest in the Cook field (increasing the
Company's field interest in Cook to 41.345%). The total acquisition
consideration was $37.7 million.

The fair values of the identifiable assets and liabilities of Cook as
at the acquisition date were:





                                                             Fair value
                                                                US$'000

Oil and gas properties                                           70,533

Inventories                                                      14,014

Trade receivables                                                   142


Trade and other payables                                          (734)

Deferred tax liabilities                                       (41,153)

Provisions                                                      (4,158)

Total identifiable net assets at fair value                      38,644

Negative goodwill arising on acquisition                          (914)

Total consideration                                              37,730


The cash outflow on acquisition is as follows:

Cash paid                                                      (37,730)

Net consolidated cash flow                                     (37,730)

12. GOODWILL

                                                               US$'000

Cost

At 1 January 2012, 31 December 2012 & 31 March 2013                985

$1.0 million represents goodwill recognised on the acquisition of gas
assets from GDF in December 2010. As at 31 March 2013, the recoverable
amount of assets acquired from GDF was sufficiently high to support the
carrying value of this goodwill.

13. INVESTMENT IN ASSOCIATES


                                                    31 March    31 Dec
                                                        2013      2012
                                                     US$'000   US$'000

Investments in FPF-1 and FPU services                 18,337    18,337

Investment in associates comprises shares, acquired by Ithaca Holdings,
in FPF-1 and FPU services as part of the completion of the Greater
Stella Area transactions in 2012. There has been no change in value
during the period with the above investment reflecting the Company's
share of the associates' results.

14. LOAN FACILITY

On 29 June 2012, the Corporation executed a Senior Secured Borrowing
Base Facility agreement (the "Facility") for up to $430 million, being
provided by BNPP as Lead Arranger. The loan term is up to five years
and will attract interest at LIBOR plus 3-4.5%. This Facility replaces
the previous undrawn $140 million debt facility with Lloyds Banking
Group.

The Corporation is subject to financial and operating covenants related
to the Facility. Failure to meet the terms of one or more of these
covenants may constitute an event of default as defined in the Facility
agreement, potentially resulting in accelerated repayment of the debt
obligations.

Security provided against the loan

Security provided against the loan is in the form of a floating charge
over all assets.

The Corporation is in compliance with its financial and operating
covenants.

As at 31 March 2013, $55 million was drawn down under the Facility. The
$47 million in the balance sheet represents amounts drawn down net of
unamortised loan fees.

15. DECOMMISSIONING LIABILITIES

                                                    31 March     31 Dec
                                                        2013       2012
                                                     US$'000    US$'000

Balance, beginning of period                          52,834    39,3832

Additions                                              4,158      9,613

Accretion                                                502      1,777

Revision to estimates                                      -      2,062

Balance, end of period                                57,494     52,834

The total future decommissioning liability was calculated by management
based on its net ownership interest in all wells and facilities,
estimated costs to reclaim and abandon wells and facilities and the
estimated timing of the costs to be incurred in future periods. The
Corporation uses a risk free rate of 3.8 percent (31 December 2012: 3.8
percent) and an inflation rate of 2.1 percent (31 December 2012: 2.1
percent) over the varying lives of the assets to calculate
the present value of the decommissioning liabilities. These costs
are expected to be incurred at various intervals over the next 10
years.

The economic life and the timing of the obligations are dependent on
Government legislation, commodity price and the future production
profiles of the respective production and development facilities. Note
that upon the acquisition of the Beatrice Field in November 2008, the
Corporation did not assume the decommissioning liabilities.

16. OTHER LONG-TERM LIABILITIES

                                                     31 March    31 Dec
                                                         2013      2012
                                                      US$'000   US$'000

Balance, beginning of period                            3,018     2,785

Revaluation in the period                                (57)       233

Balance, end of period                                  2,961     3,018

On completion of the acquisition of the Beatrice Facilities on 10
November 2008 there were 75,000 barrels of oil in an oil storage tank
at the Nigg Terminal. This volume of oil is required to be in the
storage tank when the Beatrice Facilities are retransferred. This
volume of oil is valued at the price on the forward oil price curve at
the expected date of re-transfer and discounted. The liability is
subject to revaluation at each financial period end. The expected date
of re-transfer is likely to be between 2 and 5 years in the future.

17. CONTINGENT CONSIDERATION



                                                    31 March     31 Dec
                                                        2013       2012
                                                     US$'000    US$'000

Balance, beginning of period                           4,000     24,580

Revision to estimates                                      -      1,295

Release                                                    -   (21,875)

Balance, end of period                                 4,000      4,000

The contingent consideration at the end of the period relates to the
acquisition of the Stella field and is payable upon first oil.

18. SHARE CAPITAL

                                             No. of ordinary     Amount
Authorised share capital                                000     US$'000

At 31 December 2012 and 31 March 2013             Unlimited          -


(a) Issued


The issued share capital is as follows:


Issued                                     Number of common      Amount
                                                     shares     US$'000

Balance 1 January 2012                          259,164,461     429,502

Issued for cash - options exercised                 755,542       1,020

Transfer from Share based payment reserve on              -         796
options exercised

Balance 1 January 2013                          259,920,003     431,318

Issued for cash - options exercised                  33,333          29

Transfer from Share based payment reserve on              -          18
options exercised

Balance 31 March 2013                           259,953,336     431,365

(b) Stock options

In the quarter ended 31 March 2013, the Corporation's Board of
Directors granted 90,000 options at a weighted average exercise price
of $2.00 (C$1.97).

The Corporation's stock options and exercise prices are denominated in
Canadian Dollars when granted. As at 31 March 2013, 20,344,631 stock
options to purchase common shares were outstanding, having an exercise
price range of $0.20 to $2.73 (C$0.25 to C$2.31) per share and a
vesting period of up to 3 years in the future.

Changes to the Corporation's stock options are summarised as follows:

                               31 March 2013           31 December 2012
                                     Wt. Avg                    Wt. Avg
                            No. of  Exercise       No. of      Exercise
                           Options    Price*      Options        Price*

Balance, beginning of   20,347,964     $1.63   17,506,839         $1.66
period

Granted                     90,000     $2.00    6,045,000         $2.05

Forfeited / expired       (60,000)     $2.70  (2,448,333)         $3.42

Exercised                 (33,333)     $1.79    (755,542)         $1.26

Options                20,344,631      $1.64   20,347,964         $1.63

* The weighted average exercise price has been converted into U.S.
dollars based on the foreign exchange rate in effect at the date of
issuance.

The following is a summary of stock options as at 31 March 2013



                            Options Outstanding
                                   Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price*

$2.22-$2.73        5,290,000           1.8        $2.24
(C$2.25-C$2.31)

$1.49-$1.79       10,421,667           2.4        $1.81
(C$1.54-C$1.99)

$0.20-$0.81        4,632,964           0.5        $0.56
(C$0.25-C$0.87)

                  20,344,631           1.8        $1.64

                          Options Exercisable
                                   Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price*
$2.22-$2.73        3,393,336           1.8        $2.24
(C$2.25-C$2.31)

$1.49-$1.79        4,500,001           0.9        $1.52
(C$1.54-C$1.99)

$0.20-$0.81        4,632,964           0.5        $0.56
(C$0.25-C$0.87)

                  12,526,301           1.0        $1.36


The following is a summary of stock options as at 31 December 2012

                            Options Outstanding
                                   Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price*

$2.22-$2.70        5,350,000           2.0        $2.22
(C$2.25-C$2.69)

$1.49-$2.03       10,331,667           2.6        $1.81
(C$1.54-C$1.99)

$0.20-$0.81        4,666,297           0.8        $0.56
(C$0.25-C$0.87)
                  20,347,964           2.0        $1.63



                          Options Exercisable
                                   Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price*

$2.22-$2.70        3,280,003           2.0        $2.22
(C$2.25-C$2.69)

$1.49-$2.03        3,113,338           1.2        $1.53
(C$1.54-C$1.99)
$0.20-$0.81        4,666,297           0.8        $0.80
(C$0.25-C$0.87)

                 11,059,638            1.3        $1.43



(c) Share based payments

Options granted are accounted for using the fair value method. The
cost during the three months ended 31 March 2013 for total stock
options granted was $0.9 million (Q1 2012: $1.6 million). $0.3 million
was charged through the statement of income for stock based
compensation for the three months ended 31 March 2013, being the
Corporation's share of stock based compensation chargeable through the
statement of income. The remainder of the Corporation's share of stock
based compensation has been capitalised. The fair value of each stock
option granted was estimated at the date of grant, using the
Black-Scholes option pricing model with the following assumptions:

                                For the three months       For the year
                                               ended              ended
                                       31 March 2013   31 December 2012

Risk free interest rate                         1.3%               0.4%
Expected stock volatility                        63%                74%
Expected life of options                     3 years            3 years
Weighted Average Fair Value                    $0.91              $1.08


19. SHARE BASED PAYMENT RESERVE

                                                  31 March       31 Dec
                                                      2013         2012
                                                   US$'000      US$'000

Balance, beginning of period                        20,340       17,318

Share based payment cost                               994        3,817

Transfer to share capital on exercise of options      (18)        (795)

Balance, end of period                              21,316       20,340

20.  EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit
after tax and the weighted average number of common shares in issue
during the period. The calculation of diluted earnings per share is
based on the profit after tax and the weighted average number of
potential common shares in issue during the period.

                                            Three months ended 31 March
                                                       2013        2012

Weighted av. number of common shares (basic)    259,944,818 259,164,461

Weighted av. number of common shares (diluted)  264,926,389 265,009,444


21.  TAXATION


                                            Three months ended 31 March
                                                           2013    2012
                                                        US$'000 US$'000

Deferred tax                                              1,195     866

2012 deferred tax includes the tax effect of $614,000 on the loss of
oil price hedging shown through the Statement of Other Comprehensive
Income.

22.  COMMITMENTS

                                                       31 March  31 Dec
                                                           2013    2012
US$'000 US$'000

Operating lease commitments

Within one year                                         12,742   12,759

Two to five years                                       15,722   18,756

More than five years                                        -        65



                                                      31 March   31 Dec
                                                          2013     2012
Capital commitments                                    US$'000  US$'000

Capital commitments incurred jointly with other         91,438  111,747
ventures (Ithaca's share)

23.  FINANCIAL INSTRUMENTS

To estimate fair value of financial instruments, the Corporation uses
quoted market prices when available, or industry accepted third-party
models and valuation methodologies that utilise observable market data.
In addition to market information, the Corporation incorporates
transaction specific details that market participants would utilise in
a fair value measurement, including the impact of non-performance risk.
The Corporation characterises inputs used in determining fair value
using a hierarchy that prioritises inputs depending on the degree to
which they are observable. However, these fair value estimates may not
necessarily be indicative of the amounts that could be realised or
settled in a current market transaction. The three levels of the fair
value hierarchy are as follows:

- Level 1 - inputs represent quoted prices in active markets for
identical assets or liabilities (for example, exchange-traded commodity
derivatives). Active markets are those in which transactions occur in
sufficient frequency and volume to provide pricing information on an
ongoing basis.

- Level 2 - inputs other than quoted prices included within Level 1
that are observable, either directly or indirectly, as of the reporting
date. Level 2 valuations are based on inputs, including quoted forward
prices for commodities, market interest rates, and volatility factors,
which can be observed or corroborated in the marketplace. The
Corporation obtains information from sources such as the New York
Mercantile Exchange and independent price publications.

- Level 3 - inputs that are less observable, unavailable or where the
observable data does not support the majority of the instrument's fair
value.

In forming estimates, the Corporation utilises the most observable
inputs available for valuation purposes. If a fair value measurement
reflects inputs of different levels within the hierarchy, the
measurement is categorised based upon the lowest level of input that is
significant to the fair value measurement. The valuation of
over-the-counter financial swaps and collars is based on similar
transactions observable in active markets or industry standard models
that primarily rely on market observable inputs. Substantially all of
the assumptions for industry standard models are observable in active
markets throughout the full term of the instrument. These are
categorised as Level 2.

The following table presents the Corporation's material financial
instruments measured at fair value for each hierarchy level as of 31
March 2013:

                                                             Total Fair
                                  Level 1   Level 2  Level 3      Value
                                  US$'000   US$'000  US$'000    US$'000

Derivative financial instrument         -     7,368        -      7,368
asset

Long term liability on Beatrice         -         -   (2,961)   (2,961)
acquisition

Contingent consideration                -   (4,000)         -   (4,000)

Derivative financial instrument         -   (2,296)         -   (2,296)
liability


The table below presents the total gain / (loss) on financial
instruments that has been disclosed through the statement of
comprehensive income:

                                Three months ended 31 March     2013
2012
                                           US$'000  US$'000

Revaluation of forex forward contracts     (2,055)      969

Revaluation of gas contract                      -    (114)

Revaluation of other long term liability        57     (90)

Revaluation of commodity hedges            (9,067)        -

                                          (11,065)      765


Realised loss on forex contracts             (293)        -

Realised gain/(loss) on commodity hedges     4,186    (199)

                                           (7,172)      566


Contingent consideration                        -   (1,294)

Total (loss) on financial instruments      (7,172)    (728)

The Corporation has identified that it is exposed principally to these
areas of market risk.

i) Commodity Risk

The table below presents the total (loss)/gain on commodity hedges that
has been disclosed through the statement of comprehensive income:

                               Three months ended 31 March
                                            2013      2012
                                         US$'000   US$'000

Revaluation of commodity hedges          (9,067)         -

Realised gain/(loss) on commodity hedges   4,186     (199)

Total (loss) on commodity hedges         (4,881)     (199)

Commodity price risk related to crude oil prices is the Corporation's
most significant market risk exposure. Crude oil prices and quality
differentials are influenced by worldwide factors such as OPEC actions,
political events and supply and demand fundamentals. The Corporation is
also exposed to natural gas price movements on uncontracted gas sales.
Natural gas prices, in addition to the worldwide factors noted above,
can also be influenced by local market conditions. The Corporation's
expenditures are subject to the effects of inflation, and prices
received for the product sold are not readily adjustable to cover any
increase in expenses from inflation. The Corporation may periodically
use different types of derivative instruments to manage its exposure to
price volatility, thus mitigating fluctuations in commodity-related
cash flows.

The below represents commodity hedges in place:

Derivative                 Term             Volume           Average
                                                             price

Oil puts                   Jan 13 - Mar 14   779,299  bbls   $110/bbl
Oil swaps (including       Jan 13 - Sep 14 2,297,753  bbls   $108/bbl
swaption)

Gas swaps                  Jan 13 - Dec 14 3,066,000  therms 66.45p/
                                                             therm

ii) Interest Risk

Calculation of interest payments for the Senior Secured Borrowing Base
Facility agreement with BNP Paribas that was signed on 29 June 2012
incorporates LIBOR. The Corporation will therefore be exposed to
interest rate risk to the extent that LIBOR may fluctuate. The
Corporation will evaluate its annual forward cash flow requirements on
a rolling monthly basis.

iii) Foreign Exchange Rate Risk

The table below presents the total (loss) on foreign exchange financial
instruments that has been disclosed through the statement of income:

                                 Three months ended 31 March
                                                2013    2012
                                             US$'000 US$'000

Revaluation of forex forward contracts       (2,055)     969

Realised loss on forex forward contracts       (293)       -

Total (loss)/gain on forex forward contracts (2,348)     969

The Corporation is exposed to foreign exchange risks to the extent it
transacts in various currencies, while measuring and reporting its
results in US Dollars. Since time passes between the recording of a
receivable or payable transaction and its collection or payment, the
Corporation is exposed to gains or losses on non-USD amounts and on
statement of financial position translation of monetary accounts
denominated in non-USD amounts upon spot rate fluctuations from quarter
to quarter.


The below represents foreign exchange financial instruments in place:

Derivative Term            Value          Protection rate Trigger rate
Forward    Jan 13 - Dec 13 GBP4 million/  $1.59/GBP1.00   $1.50/GBP1.00
plus                       month

Forward    Apr 13 - Jan 14 GBP120 million $1.52/GBP1.00   N/A

iv) Credit Risk

The Corporation's accounts receivable with customers in the oil and gas
industry are subject to normal industry credit risks and are unsecured.
All of its oil production from the Beatrice, Jacky and Athena fields is
sold to BP Oil International Limited. Oil production from Cook and
Broom is sold to Shell Trading International Ltd. Anglia and Topaz gas
production is currently sold through three contracts to RWE NPower PLC
and Hess Energy Gas Power (UK) Ltd. Cook gas is sold to Shell UK Ltd
and Esso Exploration & Production UK Ltd.

The Corporation assesses partners' credit worthiness before entering
into farm-in or joint venture agreements. In the past, the Corporation
has not experienced credit loss in the collection of accounts
receivable. As the Corporation's exploration, drilling and development
activities expand with existing and new joint venture partners, the
Corporation will assess and continuously update its management of
associated credit risk and related procedures.

The Corporation regularly monitors all customer receivable balances
outstanding in excess of 90 days. As at 31 March 2013, substantially
all accounts receivables are current, being defined as less than 90
days. The Corporation has no allowance for doubtful accounts as at 31
March 2013 (31 December 2012: $Nil).

The Corporation may be exposed to certain losses in the event that
counterparties to derivative financial instruments are unable to meet
the terms of the contracts. The Corporation's exposure is limited to
those counterparties holding derivative contracts with positive fair
values at the reporting date. As at 31 March 2013, exposure is $7.4
million (31 December 2012: $8.3 million).

The Corporation also has credit risk arising from cash and cash
equivalents held with banks and financial institutions. The maximum
credit exposure associated with financial assets is the carrying
values.

v) Liquidity Risk

Liquidity risk includes the risk that as a result of its operational
liquidity requirements the Corporation will not have sufficient funds
to settle a transaction on the due date. The Corporation manages
liquidity risk by maintaining adequate cash reserves, banking
facilities, and by considering medium and future requirements by
continuously monitoring forecast and actual cash flows. The Corporation
considers the maturity profiles of its financial assets and
liabilities. As at 31 March 2013, substantially all accounts payable
are current.

The following table shows the timing of contractual cash outflows
relating to trade and other payables.

                                         Within 1 year 1 to 5 years
                                              US$'000       US$'000

Accounts payable and accrued liabilities      194,278             -

Other long term liabilities                         -         2,961

                                              194,278         2,961

24.  DERIVATIVE FINANCIAL INSTRUMENTS

                                             31 March   31 December
                                                 2013          2012
                                              US$'000       US$'000

Oil swaps                                       4,013         2,497

Oil put options                                 3,257         5,667

Gas swaps                                       (143)            87

Foreign exchange forward contract             (2,055)             -
5,072         8,251


Refer to note 23 for further details of derivative financial
instruments.

25.  FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Financial instruments of the Corporation consist mainly of cash and
cash equivalents, receivables, payables, loans and financial derivative
contracts, all of which are included in these financial statements. At
31 March 2013, the classification of financial instruments and the
carrying amounts reported on the balance sheet and their estimated fair
values are as follows:


                                     31 March 2013    31 December 2012
                                           US$'000             US$'000

Classification                   Carrying     Fair   Carrying     Fair
                                   Amount    Value     Amount    Value

Cash and cash equivalents (Held   65,634    65,634    31,374    31,374
for trading)

Restricted cash                        2         2         2         2

Accounts receivable (Loans and   126,303   126,303   159,195   159,195
Receivables)

Deposits                             243       243       247       247


Contingent consideration         (4,000)   (4,000)   (4,000)   (4,000)

Derivative financial             (2,296)   (2,296)        -         -
instruments (Held for trading)

Other long term liabilities      (2,961)   (2,961)   (3,018)   (3,018)

Accounts payable (Other        (194,278) (194,278) (205,635) (205,635)
financial liabilities)

26. RELATED PARTY TRANSACTIONS

The consolidated financial statements include the financial statements
of Ithaca Energy Inc and the subsidiaries listed in the following
table:



                            Country of       % equity interest at 31
                            incorporation              March
                                                2013        2012

Ithaca Energy (UK) Limited  Scotland            100%        100%

Ithaca Minerals (North Sea) Scotland            100%        100%
Limited

Ithaca Energy (Holdings)    Bermuda             100%        N/A
Limited

Ithaca Energy Holdings (UK) Scotland            100%        N/A
Limited

Transactions between subsidiaries are eliminated on consolidation.

The following table provides the total amount of transactions that have
been entered into with related parties during the quarter ending 31
March 2013 and 31 March 2012, as well as balances with related parties
as of 31 March 2013 and 31 December 2012:

                             Sales Purchases   Accounts    Accounts
                                             receivable     payable
                           US$'000   US$'000    US$'000     US$'000

Burstall Winger LLP  2013        -        57          -           -

                     2012        -         -          -           -


A director of the Corporation is a partner of Burstall Winger LLP who
acts as counsel for the Corporation.

Loans to related parties   Amounts owed from related parties
                                       2013             2012
                                    US$'000          US$'000

FPF-1 Limited                        21,551           21,551


27. SEASONALITY

The effect of seasonality on the Corporation's financial results for
any individual quarter is not material.

28. POST BALANCE SHEET EVENTS

Acquisition of Valiant Petroleum plc

In March 2013, the Boards of Ithaca and Valiant announced that they had
reached agreement on the terms of a recommended acquisition
(the"Acquisition"). The Acquisition became effective on 19 April 2013 with
Ithaca Energy Holdings (UK) Limited acquiring the entire issued and to
be issued share capital of Valiant.

The total acquisition price was approximately $309 million, which
equated to approximately GBP4.75 per Valiant share. Approximately $200
million of the consideration was payable in cash (being approximately
GBP3.07/ Valiant share) and approximately $109 million in new Ithaca
shares ("Consideration Shares" equating to 1.33 Ithaca shares per
Valiant share). The Company also repaid ~$150 million Valiant debt/
working capital bringing the total enterprise value to $459 million.

Given the proximity of the Acquisition to the quarter end, no
provisional fair values have yet been determined.



                    This information is provided by RNS
          The company news service from the London Stock Exchange

END

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