Ithaca Energy Inc. announces acquisition of UK North Sea Asset

Ithaca Energy Inc. announced it has entered into an agreement to acquire a 28.46% non-operated interest in the Cook oil field and a 7.41% non-operated interest in the Maclure oil field from Hess Limited. The investment is for a consideration of US$74.5 million and the transfer from Ithaca to Hess of a 10% interest in each of exploration Blocks in the Southern North Sea.

Iain McKendrick, Ithaca CEO, commented that the acquisition strengthens the Company’s portfolio of producing oil assets and diversifies Ithaca’s existing UK North Sea production base, whilst keeping decommissioning liabilities to a minimum. McKendrick reiterated that significant non-operated interests, particularly in the Cook field, are highly strategic for the Company.

It permits the Company to focus on extracting value from its existing operated portfolio, whilst being underpinned by additional non-operated production and cash flow being generated though the acquisition, said McKendrick.

According to McKendrick, final negotiations to crystallize the transaction were conducted after the recent changes to the UK Fiscal system. McKendrick said the acquisition demonstrates Ithaca’s capability to be opportunistic, execute accretive deals and build value for its shareholders.

Cook, operated by Shell, lies in Block 21/20a in the Central North Sea. Gross average production from the field for 2010 was 7,940 barrels of oil equivalent per day (boepd) of mainly oil (2,260 boepd net to Hess interest).

Maclure, operated by BP, is located in Block 9/19 in the Northern North Sea. The field produces mainly oil; gross average production from the field for 2010 was 5,857 boepd (434 boepd net to Hess interest).

Maclure production is temporarily suspended. Production is routed through the third party owned Gryphon Floating Production Storage and Offloading vessel, which broke some of its moorings in February 2011. The operator of the FPSO is taking measures to investigate and repair the mooring system. The acquisition of Maclure is subject to pre-emption within 30 days of notification of the transaction by other parties in the Maclure field.

The Acquisition will be effected through a sale and purchase agreement (SPA) between Ithaca Energy (UK) Limited, as the purchaser, and Hess Limited, as the seller. The Acquisition is expected to complete in Q3 2011 with an effective date of January 1, 2011.

Ithaca Energy Inc. and its wholly owned subsidiary Ithaca Energy (UK) Limited, is an oil and gas exploration, development and production company active in the United Kingdom’s Continental Shelf.

5th April 2011