Greater Stella Area Development Update

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

Ithaca Energy Inc.

Greater Stella Area Development Update

12 November 2012

Ithaca Energy (TSX: IAE, LSE AIM: IAE) provides an update on the progress made with its Greater Stella Area ("GSA") development activities and schedule.

Highlights

o The modifications contract for the "FPF-1" floating production unit has been awarded to the Remontowa shipyard in Gdansk, Poland. The FPF-1 is now located In Gdansk.

o The Ensco 100 drilling rig is now forecast to commence the development drilling campaign in Q1-2013, due to delays in the completion of drilling programmes for other operators.

o Four initial Stella wells are to be drilled over a period of approximately twelve months prior to the arrival of the FPF-1 for hook-up and commissioning, currently anticipated in H1-2014.

o Detailed design has been completed for the subsea infrastructure that is to be installed in 2013 by Technip, a world leader in the execution of subsea projects. Fabrication of the required linepipe is underway.

o A suite of gas transportation and processing agreements has been executed for export of gas processed on the FPF-1 via the Central Area Transmission System ("CATS") and Teeside Gas and Liquids Processing ("TGLP") terminal.

o The Company's net share of remaining capital expenditure prior to first hydrocarbons from the GSA production hub is $395 million, which will be funded from existing financial resources.

o The successful appraisal of the Hurricane discovery in Q3-2012 and the offer of Block 29/5e, adjacent to Hurricane, in the 27th UK Offshore License Round in October 2012, have further augmented the opportunity set for the GSA hub.

o The Company's partners in the GSA are Dyas UK Limited, a long established privately owned North Sea oil and gas producer, and Petrofac, a leading international service provider to the oil and gas industry listed on the FTSE 100 in London.

Iain McKendrick, Chief Executive Officer, commented:

"This is exciting progress towards the creation of a 25kboe/d North Sea oil and gas operator and unlocks substantial value by monetising over 30Mboe of the Company's reserves base. We are pleased with the significant milestones achieved by all the major service providers to this development. The Company is firmly focused on executing the project safely and efficiently and creating further long term value by building upon its position in the GSA."

 Further Information

FPF-1 Modification Works

The contract for the modification of the FPF-1 for deployment on the GSA production hub was awarded to Petrofac in October 2011. Following completion of detailed design studies and removal of the existing topsides processing equipment in Teeside, Petrofac, under the terms of its lump sum incentivised modification contract with the GSA co-venturers, will install new processing equipment on the FPF-1. The decision to install new equipment, rather than partially re-use the existing facilities, will lead to a higher quality vessel capable of achieving high operational uptime performance being deployed on the GSA.

The contract for completion of the FPF-1 modification works has been awarded to the Remontowa shipyard in Gdansk, Poland, where the vessel is now located. The shipyard is located approximately 10 days towing time from its future final location at the Stella field.

The immediate work programme in the shipyard is focused on the performance of a detailed inspection to verify the requirements of the envisaged marine systems workscope and preparation for dry dock works, which are anticipated to commence in Q1-2013. Once these activities have been completed and the vessel is in the dry dock, the schedule for completion of the full modification work programme will be finalised.

Drilling Programme

A contract was signed with Ensco Offshore UK Limited ("Ensco") in November 2011 for use of the Ensco 100 heavy duty jack-up drilling rig on the Stella and Harrier development drilling campaign. The rig is currently anticipated to be on location at the Stella field around late Q1-2013, later than originally anticipated when the contract with Ensco was signed, due to delays in the completion of drilling programmes for previous users of the rig.

As previously announced, to maximise initial oil and condensate production and fill the gas processing facilities on the FPF-1, four Stella wells are planned for the start-up of production from the hub. Each well is anticipated to take approximately 90 days to drill, complete and undergo a clean-up test designed to give further assurance around flow rates prior to start-up of the field. Further wells on Stella and Harrier, plus other potential targets, including Hurricane, will then be drilled post first hydrocarbons from Stella to maintain the gas processing facilities on plateau.

Subsea Infrastructure Construction & Installation Activities

An Engineering, Procurement, Installation and Construction ("EPIC") contract was awarded to Technip UK Limited in July 2012, for completion of the major subsea works that are to be conducted on the GSA hub. The engineering and construction activities associated with the subsea work programme are progressing as planned and remain on target for the main installation works to be performed in 2013.

During October 2012, terms were finalised for use of the BP operated CATS pipeline for the transportation of gas from the FPF-1 to shore and for processing of the gas in the TGLP terminal, owned and operated by Teeside Gas Processing Plant Limited. The gas processing that will be performed at the TGLP terminal involves the separation of natural gas, which will be sold to the UK spot market on a daily basis, and the associated propane, butane and condensate from within the gas exported from the FPF-1, with such natural gas liquids being sold by TGLP at prevailing market prices.

GSA Strategy

The Company's focus on the GSA is driven by monetisation of 31.7 million barrels of oil equivalent of net proven and probable reserves, as independently assessed by Sproule International Limited, and generation of additional value via the wider opportunities provided by the range of undeveloped discoveries surrounding the infrastructure hub.

Initial annualised production from the hub is anticipated to be approximately 16,000 barrels of oil equivalent per day ("boepd") net to Ithaca, thereby pushing the Company's annualised production over 20,000 boepd and achieving a significant step towards the mid term objective of creating a highly profitable 25,000 boepd oil and gas production company.

The Company's net share of remaining capital expenditure prior to first hydrocarbons from the GSA production hub is $395 million. This figure reflects completion of all the major contracting required to achieve first hydrocarbons from the development and is within ten percent of the budget specified at the time of the development concept select decision in October 2011.

The Company will fund the forecast capital expenditure from its existing cash balance, the anticipated cash flow generated by its producing asset portfolio and some of its undrawn $430 million debt facility.

Further information is available on the Company's website, www.ithacaenergy.com.

Enquiries:

Ithaca Energy:

Iain McKendrick, CEO [email protected] +44 (0) 1224 650 261

Graham Forbes, CFO [email protected] +44 (0) 1224 652 151

FTI Consulting:

Billy Clegg [email protected] +44 (0) 207 269 7157

Edward Westropp [email protected] +44 (0) 207 269 7230

Georgia Mann [email protected] +44 (0) 207 269 7212

Cenkos Securities plc:

Jon Fitzpatrick [email protected] +44 (0) 207 397 8900

Ken Fleming [email protected] +44 (0) 131 220 6939

RBC Capital Markets:

Tim Chapman [email protected] +44 (0) 207 653 4641

Matthew Coakes [email protected] +44 (0) 207 653 4871

Notes to oil and gas disclosure:

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.

The term "boe" may be misleading, particularly if used in isolation. A boe conversion 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.

About Ithaca Energy:

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited ("Ithaca" or "the Company"), is an oil and gas operator focused on production, appraisal and development activities on the United Kingdom Continental Shelf. The goal of Ithaca, in the near term, is to maximize production and achieve early production from the development of existing discoveries on properties held by Ithaca, to originate and participate in exploration and appraisal on properties held by Ithaca when capital permits, and to consider other opportunities for growth as they are identified from time to time by Ithaca.

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

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 "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target" and similar expressions, and the negatives thereof, whether used in connection with anticipated development activity schedules, the anticipated timing of first hydrocarbons from the GSA production hub or the estimated reserves and production levels associated with the fields using the hub or otherwise are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to known and unknown risks and uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements or information. 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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