New Debt Facilities

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

Ithaca Energy Inc.

New Debt Facilities

10 October 2013

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") announces that it has executed extended and improved long term senior bank debt financing facilities and oil sales agreements.

Highlights

· Increased existing Reserve Based Lending ("RBL") facility from $430 million to $610 million, with enhanced terms in the form of a reduced margin cost and greater flexibility over future unallocated capital. This has enabled retirement of the $350 million bridge credit facility established to facilitate the Valiant Petroleum plc ("Valiant") acquisition in April 2013.

· Established a new five year $100 million corporate facility, providing additional funding flexibility to add new appraisal / development opportunities to the existing portfolio.

Graham Forbes, Chief Financial Officer, commented:

"I am delighted to close a heavily over-subscribed debt facility process, with a leading group of experienced oil and gas sector banks, and to be delivering improved financial terms and flexibility associated with the Company's senior debt funding. It is also particularly pleasing to put in place a corporate facility, which underlines the graduation of the Company into that of a leading independent North Sea oil and gas operator".

Xavier Venereau, Global Head of Structured Debt, Oil & Gas, at BNP Paribas, commented:

"Ithaca is a very important client for BNP Paribas in the North Sea and we are delighted to continue our support of the Company through the establishment of these two new debt facilities. After having successfully completed the acquisition of Valiant, Ithaca has continued to actively monitor its portfolio and its developments. The Company has an attractive portfolio of assets and an excellent reputation in the debt market, which was clearly demonstrated by the significant interest shown by banks in these new facilities. We look forward to continuing our support of the Company and its growth strategy".

Further Information

The $610 million RBL facility replaces both the existing $430 million RBL facility that was put in place in May 2012 and the $350 million bridge credit facility that was established in March 2013 to facilitate Ithaca's acquisition of Valiant. This increased RBL facility is based on conventional oil and gas industry borrowing base financing terms, with a loan term until June 2017, and is available to fund on-going development activities and any producing asset acquisitions.

Restrictions on the previous RBL facility regarding the distribution of unallocated capital have been reduced, thereby allowing the Company to consider the optimal allocation of future cashflow upon the commencement of production from the Greater Stella Area hub.

The corporate facility provides additional financial flexibility for the Company to continue to deliver upon its strategy of securing lower risk organic growth such as the acquisition and appraisal of undeveloped discoveries that have a strong fit within the existing portfolio. This facility is based on normal corporate debt covenants, relating to EBITDAX ("Earnings before Interest Tax Depreciation, Amortisation and Exploration costs") coverage of debt and interest obligations.

Syndicate Banks

The banks involved in the financing facilities and respective roles in the RBL facility are as follows:

· BNP Paribas & Scotiabank - Bookrunners and Mandated Lead Arrangers.

· Deutsche Bank AG, Lloyds Bank, Royal Bank of Scotland, Barclays Bank PLC, Commonwealth Bank of Australia, Skandinaviska Enskilda Banken AB (publ) and Société Générale - Mandated Lead Arrangers.

· NIBC - Manager.

BNP Paribas was also sole Bookrunner and Mandated Lead Arranger of the corporate facility.

Oil Sales Agreements

As part of completing the integration of the Valiant assets into the Company's oil sales arrangements, Ithaca has entered into an extension of its existing agreement with BP Oil International Limited for the marketing of niche grade crudes and its oil sales agreement with Shell Trading International Limited ("Shell") for production from the Cook, Dons, Causeway Area and Broom producing fields. Future volumes from the Stella field may also be included. This latter agreement includes the ability for Ithaca, at its option, to receive pre-payments for future crude sales to Shell.

- ENDS -

Enquiries:

Ithaca Energy

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

Richard Smith [email protected] +44(0) 1224 652 172

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

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

Neil McDonald [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

BNP Paribas

Sue Mingay [email protected] +44 (0)207 595 3455

Xavier Venereau [email protected] +33 (0)1 4316 8212

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 centred on 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.

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

Notes

"EBITDAX" is defined as earnings before interest, taxes, Depreciation, Amortisation and Exploration costs. EBITDAX is a supplemental non-GAAP financial measure that is not recognized under international financial reporting standards ("IFRS") and does not have a standardized meaning prescribed by IFRS. EBITDAX should not be considered as an alternative to, or more meaningful than, net profit and comprehensive income or cash flows from operating activities as determined in accordance with IFRS or as an indicator of operating performance or liquidity. Management believes that EBITDAX is a useful supplemental measure as it provides an indication of the results generated by the principal business activities. The computations of EBITDAX may not be comparable to other similarly titled measures of other companies, and accordingly EBITDAX may not be comparable to measures used by other companies.

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, potential future acquisition and development opportunities, cash flow, future allocation of cashflow from operations, potential for shareholder returns and uses of available credit under the debt facilities. 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 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 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.