IAE Ithaca Energy Inc.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES


Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary
Ithaca Energy (UK) Limited ("Ithaca" or "the Company"), an independent oil & gas
company with exploration, development and production assets in the UK sector of
the North Sea, announces that the Sedco 704 drilling unit is now being anchored
on location over the Athena field ready to commence an approximate 180 day
campaign to drill a fourth production well and a water injector well and
complete the three existing wells on the field as producers. In addition,
modification and re-certification of the Floating Production Storage and Offtake
("FPSO") vessel (BW Athena) is well underway in a Dubai shipyard.


The Sedco 704 drilling unit will initially drill one water injection well,
followed by a fourth production well (three suspended appraisal wells are to be
completed for production as part of this campaign). The four production wells
will be installed with downhole submersible pumps to maximise field production
rates. Initial production from the field is estimated at a gross rate of 22,500
barrels of oil per day ("bopd") (5,062 bopd net to Ithaca). Applied Drilling
Technology International (a division of Transocean Drilling UK Ltd) will manage
the programme on a 'turnkey' basis which is anticipated to last approximately
180 days. Subsea work will follow in Q3 2011, to install field pipelines and
subsea manifolds. The Company will update the market as and when drilling and/or
completion work reaches key milestones.


The FPSO 'BW Athena' is at dockside in Dubai and preparation works have
commenced to re-certify existing equipment and install new equipment. In Q2 2011
the vessel will be 'dry docked' for the installation of a turret mooring section
amidships, extending the FPSO by approximately 65ft. Steelwork for the mooring
section is being prepared alongside the dry dock. All work is anticipated to be
completed in Q3 2011 allowing the vessel to return to UK waters and arrive on
location at Athena at end Q3 2011. Installation of the FPSO vessel to the
mooring buoy, as well as, hook up and commissioning will be completed in
anticipation of targeted first oil in Q4 2011. Both BW Offshore's Site Office
and the Ithaca Representative's Office in Dubai are manned and operational.


John Woods, Ithaca's Chief Development Officer, commented:

"The drilling programme at Athena has commenced on schedule enabling the rig to
complete its scope of work ahead of other field construction activities. Work on
the Athena field remains very much in line with targeted first production from
the field in Q4 this year at a gross rate of 22,500 barrels of oil per day. Work
on the FPSO in Dubai and the other project construction activities have also all
commenced on schedule and within budget giving the project team an excellent
start to the New Year."


The Athena Joint Venture Partners are Ithaca (operator, 22.5%), Dyas UK Ltd
(47.5%), EWE Aktiengesellschaft (20%) and Zeus Petroleum Limited (10%).


In accordance with AIM Guidelines, Lawrie Payne, MA Marine Geology (Alberta &
Columbia) and Chairman of Ithaca Energy is the qualified person that has
reviewed the technical information contained in this press release.


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 "expects," "believes,"
"anticipate," "plans," "may," "will," "should", "scheduled", "targeted",
"estimated" and similar expressions, and the negatives thereof, whether used in
connection with the estimated production levels, actual production levels from
the Athena development, anticipated timing of the Athena development, oil in
place, hydrocarbon composition or otherwise, are intended to identify
forward-looking statements. Such statements are not promises or guarantees, and
are subject to risks and uncertainties that could cause actual outcome to differ
materially from those suggested by any such statements. 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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