Ithaca Energy Inc.

Ithaca Energy Inc.

October 24, 2006 09:30 ET

Ithaca Energy Successfully Tests Oil at Athena Project

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(CCNMatthews - Oct. 24, 2006) -

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

Ithaca Energy Inc. (LSE-AIM: IAE, TSX-V: IAE), an independent oil & gas company with exploration and development assets in the UK North Sea, is pleased to announce today that it has successfully tested 25 degree API sweet oil at a restricted rate of 1,330 barrels of oil per day (bopd), from its 14/18b-15 well on the Athena project in the Outer Moray Firth area of the United Kingdom's continental shelf. Initial analysis indicates that the well would produce approximately 5,000 bopd upon development, which is in line with management's expectations. Ithaca owns a 70% interest in the project together with, EWE Akteingellschaft 20%, and Zeus Petroleum 10%.

The Athena 14/18b-15 well was drilled at a 60 degree angle to vertical and penetrated 632 feet of gross oil-bearing sandstones in the Upper Leek formation. Following perforation of a 143 foot vertical interval, the 14/18b-15 well flowed 1,330 bopd through a 28/64" choke in a test of 18 hours duration. No water was produced during the test period.

While ultimate production rates for the well will be determined after full analysis has been completed, initial analysis indicates that under full production conditions planned for the development, the well would produce approximately 5,000 bopd. Ithaca believes the tested flow rate of the well is commercial.

Currently the well is being suspended for future re-entry as a production well. Based on this success, Ithaca will now proceed to seek approval for a field development plan covering the entire Athena accumulation with first oil projected in late 2008. Ithaca believes that substantial incremental potential lies within the Upper and Lower Leek sands and is planning to appraise this potential in future wells.

Neill Carson, Ithaca's COO, said "We are delighted with the results of this well, having tested oil at rates which were comparable to flow rates encountered in the early drilling of the nearby Scapa field. Our plans to establish a new multi-well development in close proximity to producing infra-structure are well underway. The safe and successful completion of our first drilling operation in the North Sea is very exciting and our objectives now are to develop the accumulation established by this well and appraise the considerable upside potential."

Lawrence Payne, CEO of Ithaca, commented "The Athena well exemplifies the latent potential of the North Sea. We believe that the company's expectations and objectives have been realized and look forward to exploitation of the reserves established in the well and the upside potential of the accumulation. The credit for success on Ithaca's first attempt must go to a dedicated staff and the support of our shareholders."

Forward-looking statements

Some of the statements in this announcement are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of Ithaca Energy Inc. or its officers with respect to various matters. When used in this announcement, the words "expects," "believes," "anticipates," "plans," "may," "will," "should" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements. These forward-looking statements speak only as of the date of this announcement. Ithaca Energy Inc. expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

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

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

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