Exploration Portfolio Update

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

Ithaca Energy Inc.

Exploration Portfolio Update

13 May 2013

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") announces the execution of a farm-out transaction with Shell UK Limited ("Shell") in respect of the UK exploration assets acquired pursuant to the acquisition of Valiant Petroleum plc ("Valiant"), completed on 19 April 2013 (the "Acquisition"). The Company has now substantially reduced its exposure to all remaining firm UK exploration well expenditure commitments transferred as part of the Acquisition. The Company also confirms the commencement of the Norvarg appraisal well, operated by TOTAL E&P Norge, in PL535 located in the Barents Sea.

Summary

Since the announcement of the Acquisition, the Company has reduced its net exploration expenditure commitments by over $45 million. This leaves approximately $30 million of remaining committed UK exploration expenditure, mainly consisting of the Handcross well.

The costs of the committed exploration and appraisal wells transferred to Ithaca as a result of the Acquisition were accounted for in the price paid for Valiant, with no exploration success assumed from those wells.

The Company will continue to pursue farm-outs and divestments of the existing UK exploration license interests to further minimise exploration expenditure, whilst continuing to be exposed to the potential upside associated with several high impact wells.

Beverley Farm-Out

Ithaca has entered into an agreement with Shell to farm-out half of the Company's 40% non-operated interest in UK license P1792, covering blocks 21/30f and 22/26c in the Central North Sea. The farm-out is in exchange for a partial carry of Ithaca's 20% share of the costs of a well on the Beverley prospect, with the license terms requiring the well to be drilled by early 2015. The license contains the Beverley prospect and the Belinda and Evelyn discoveries. The Beverley prospect lies on the flank of an undrilled salt diapir, analogous with other structures in the area, and is located close to the Shell-operated Gannet fields.

The agreement with Shell is subject to normal regulatory consents.

Norwegian Appraisal Well Spuds

The Company also confirms an appraisal well (7225/3-2) on the Norvarg discovery, located in PL535 in the Norwegian sector of the Barents Sea, has commenced. The well, operated by TOTAL E&P Norge, is being drilled to prove up the volume potential in the north-eastern segment of the Norvarg closure. Drilling operations (not including testing) are anticipated to last for at least 70 days.

The Norwegian exploration and appraisal portfolio transferred from Valiant benefits from the 78% tax refund system that the Norwegian government has in place, thus enabling the cost exposure to exploration risk to be substantially mitigated.

A full update of all the exploration and appraisal opportunities acquired from Valiant will be made available on the Ithaca website in June 2013.

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About Ithaca Energy:

Ithaca Energy Inc. (TSX: IAE, LSE AIM: 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.

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

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 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 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.

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