Ithaca Energy Completes Acquisition of Stella & Harrier Discovery & Secures FPSO for Athena Development

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August 21, 2008

Ithaca Energy Inc ('Ithaca Energy' or 'Company') (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited is pleased to announce it has completed the acquisition of a 66.67% working interest in the Stella and Harrier Shallow discoveries; as well as secured the services of the 'Uisge Gorm, a Floating Production, Storage and Offloading vessel (FPSO), for the development of the Athena Field. The successful conclusion to both of these agreements follows the completion of the recent equity financing.

Stella & Harrier:

The Stella and Harrier Shallow discoveries have been acquired from joint owners Shell U.K. Limited and Esso Exploration and Production UK Limited. As previously stated, the initial consideration for the acquisition is US$15 million, with an additional US$15 million payable at the time of field development approval. Ithaca's net proceeds from production will be subject to a 5% over-riding royalty.

Stella and Harrier lie in UKCS Block 30/6 Rest of Block (Chalk Layers and Younger). Sproule Associates Limited, in its review of Ithaca Energy's reserves effective May 31, 2008, assigned proved reserves of 4.60 million barrels of oil equivalent ('MMboe'), probable reserves of 5.19 MMboe and possible reserves of 13.87 MMboe to the Stella field.

Ithaca Energy (UK) Limited will work with the block operator and license partner, Maersk, on planning an appraisal well on the Stella discovery for drilling in the first half 2009. If this well proves successful, the Company intends to fast track the project towards Field Development Plan ('FDP') approval with its partner, the Department of Business Enterprise and Regulatory Reform ('BERR') and other stake holders.

Stella was discovered in 1979 by the 30/6-2 well and subsequently appraised by well 30/6-3 in 1983, which tested at 2,750 barrels of oil equivalent per day ('bopd') of condensate and 23 million cubic feet per day ('MMcfpd'). A well drilled by Maersk in 2004, confirmed the presence of gas-condensate, testing at 3,200 bopd and 17MMcfpd. A gas water contact has yet to be encountered.

Harrier Shallow was discovered in 2002, with well 30/6-4 testing condensate and gas in the upper Cretaceous Ekofisk and Tor formations. Further technical work is required to better understand the Harrier Shallow discovery.

Athena FPSO Agreement:

The Company has now entered into an Execution Agreement with Bluewater Operations (UK) Ltd, which secures the services of the 'Uisge Gorm, FPSO for the development of the Athena field as planned. This agreement follows the previous Exclusivity Agreement announced on 29th May 2008.

With the services of an FPSO secured and the field Environmental Statement being currently out for public consultation, the development of the Athena field remains on schedule for production at the end of 2009 or early 2010, subject to BERR approval of the FDP.

The use of an FPSO over a conventional tie back facility significantly reduces the Company's capital outlay, increases potential production levels as well as accelerates first oil production from the Athena field by up to one year.

The Execution Agreement reflects the results of engineering studies into the modifications required on the FPSO to develop the Athena field and represents agreement on the terms and conditions of the FPSO contract. Final definition of a small number of outstanding technical aspects of the service will be concluded within the next
few days.

Ithaca Energy is the operator of the Athena field and holds a 70% working interest, with partners EWE Aktiengesellschaft holding 20% and Zeus Petroleum holding the remaining 10%.

Commenting, Lawrie Payne, CEO of Ithaca, said:

'Delivering both of these major agreements as expected post the recent fund raising is a major step forward for the Company. The successful acquisition of the Stella and Harrier discoveries adds significant additional opportunities, reserves and value. Securing the FPSO on time and within the terms set out in the original Exclusivity Agreement is also a huge achievement and a leap forward in the development of the Athena field.'

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