Handcross Transaction

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

Ithaca Energy Inc.

Handcross Transaction

20 December 2013

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") announces execution of an agreement with Oyster Petroleum Limited ("Oyster Petroleum") that results in further monetisation of the Handcross exploration prospect ahead of drilling the scheduled commitment well. The Company also announces that it has entered into an agreement with TOTAL E&P Norge AS ("TOTAL") to acquire a 10% non-operated interest in licence PL102 (F&G) in the Norwegian North Sea.

Highlights

· Divestment of a further 6% working interest in the Handcross exploration well to Oyster Petroleum for a cash consideration, thereby reducing the Company's working interest to 25%.

· Acquisition of a 10% working interest in the TOTAL-operated "Trell" prospect in the Norwegian North Sea.

· The transactions are in line with the Company's strategy to both minimise its exposure to the UK exploration commitments transferred as part of the Valiant Petroleum plc ("Valiant") acquisition and restructure the former Valiant portfolio in Norway to focus on lower risk geological and geographic opportunities capable of monetisation prior to development.

Handcross Exploration Well

Ithaca has entered into an agreement with Oyster Petroleum concerning UK licences P1631 and P1832 (blocks 204/14c, 204/18b and 204/19c), which contain the Handcross prospect. The agreement will result in the transfer of a further 6% working interest in the licences, thereby reducing Ithaca's working interest from 31% to 25%. Ithaca retains operatorship of the licences.

When combined with the previously announced Handcross farm-outs, Ithaca has a fully carried interest in the exploration well that is to be drilled on the prospect and in addition will receive cash payments from the various agreements.

Handcross is a Palaeocene prospect located in the Judd Basin in the West of Shetland sector of the UK Continental Shelf. An exploration well is to be drilled on the prospect using the Stena Carron drillship, with operations anticipated to commence shortly. The results of the well will be announced once available.

Completion of the transaction is subject to normal regulatory and third party consents. Following completion of the various P1631 and P1832 transactions, the Handcross partners will be Ithaca (25%, Operator), Edison (25%), RWE Dea (20%), Sussex Energy (15%) and Oyster Petroleum (15%).

PL102 (F&G) Norwegian North Sea Farm-in

Ithaca has entered into an agreement with TOTAL to acquire a 10% non-operated working interest in licence PL102 (F&G) in the Norwegian North Sea. The licence contains the "Trell" prospect, which TOTAL has just commenced drilling using Ocean's Leiv Eriksson semi-submersible rig. Trell lies within approximately 20 kilometres of the Alvheim and Heimdal production hubs and in proximity to a number of existing oil discoveries. Completion of the PL102 (F&G) transaction is subject to normal regulatory consents. Following completion, the licence partners will be TOTAL (40%, Operator), Petoro (30%), Centrica (10%), Det Norske Oljeselskap (10%) and Ithaca (10%). The forecast gross pre-tax cost of drilling the well is approximately $50 million (100%) or $11 million (100%) post the applicable Norwegian 78% tax refund.

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Enquiries:

Ithaca Energy

About Ithaca Energy

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) is a North Sea oil and gas operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries, the exploitation of its existing UK producing asset portfolio and a Norwegian exploration and appraisal business targeting the generation of discoveries capable of monetisation prior to development. Ithaca's strategy is centred on generating sustainable long term shareholder value by building a highly profitable 25kboe/d North Sea oil and gas company. For further information please consult the Company's website www.ithacaenergy.com.

About Oyster Petroleum

Formed in summer 2013, Oyster Petroleum is a new exploration and production company focused on the UKCS. The company is financially backed and fully funded by HitecVision, a leading international oil and gas investor. HitecVision has committed funds of USD150 million to Oyster Petroleum from its HitecVision VI L.P. fund. Since 2003, HitecVision has invested in a number of highly successful start-ups in the North Sea, including Revus Energy, Noreco, Spring Energy, Core Energy and Spike Exploration.

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, drilling, well completion times, 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, 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 press release. 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.