Ithaca Energy Inc., an independent oil & gas company with exploration and development assets in the UK sector of the North Sea, says that Sproule Associates Limited have redetermined company reserves as of May 31, 2008, and that drilling on its Athena 14/18b-18 well in the outer Moray Firth area has reached total true vertical depth of 9492 feet and the well is being completed for testing and future production.

Reserves

The independent evaluation of reserves report indicates an increase since December 31, 2007 in total reserves of 66%, with an increase in Net Present Value before tax of 146%. The report was prepared by Sproule Associates Limited (the Sproule Report) for the purpose of determining Ithaca’s Petroleum and Natural Gas reserves in accordance with the reserve definitions and standards outlined in the Canadian Oil and Gas Evaluation Handbook and in compliance with National Instrument 51-101of the Canadian Securities Administrators.

Of particular significance are the Net Proven and Probable reserves of 20.8 Million barrels equivalent (MMboe) with a Net Present Value before tax of US$343.3MM ascribed to the Athena accumulation for which a Floating Production, Storage and Offloading vessel has been secured to facilitate production as early as the end of 2009, and the Net Proven and Probable reserves of 9.9MMboe with a Net Present Value before tax of US $355.7MM at Stella which Ithaca has entered into a binding agreement to acquire.

Ithaca is in the process of finalizing definitive agreements with respect to the Beatrice acquisition and closing documentation with respect to the Stella acquisition. Although the company has no reason to believe that either the Beatrice acquisition or the Stella acquisition will not close, there is no assurance that either of such acquisitions will close until final definitive agreements have been consummated with respect to the Beatrice acquisition and until final closing documentation has been completed with respect to the Stella acquisition.

Drilling results

The 14/18b-18 well is currently being cased for further evaluation, testing and future production. It is the third well drilled by Ithaca on the Athena discovery and was directionally drilled from the same surface location as the previous wells.

Electric logs indicate that the well has intersected the top of the Upper Leek formation at 8733 feet, which is 68 feet high to the 14/18b-15 well, and has 129 feet of net pay on a true vertical basis within a gross 447 foot section of Upper Leek, comparing favorably with the #15 well which contained 127 feet of net pay on a true vertical basis. The entire interval of Upper Leek is within the oil column. Porosities in the oil column range from 10% to 23% with an average of 15%. A 58 foot core was recovered and in correlation with the electric logs, the reservoir parameters as observed are of better quality than the #15 well. MDT tests indicate superior permeability within the oil bearing sand.

The 14/18b-18 well also encountered an oil bearing Upper Jurassic sand, which will be sampled and evaluated.

Testing of the well and completion will take approximately 6 days after which the well will be made ready for future production.

Ithaca is the operator of Athena with the beneficial interest of the participating companies being 70% Ithaca, 20% EWE Akteingesellschaft (EWE) and 10% Zeus Petroleum (previously Wimbledon).

Lawrie Payne, CEO of Ithaca commented, “The independent third-party assessment of our reserves has confirmed the successful execution of the company’s business plan over the last five months. Beatrice and Stella will also establish two new core areas, further diversifying our reserve portfolio and sources of future income.

The positive results obtained from the 14/18b-18 well on Athena confirm our intention to proceed with plans to develop the pool using the Floating Production and Storage Offloading vessel Uisge Gorm. Ithaca has applied for field development approval and production is anticipated to commence from Athena at the end of 2009 at an initial gross rate of approximately 21,000 barrels of oil per day.”

Tags: Ithaca Energy Inc., Sproule Associates Limited