Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE) announces that it has concluded
its development concept select process for the Greater Stella Area (GSA) fields,
with the decision to create a production hub based on a floating production unit
located over the Stella field. The GSA development concept involves the
introduction of Petrofac as a new strategic partner; Petrofac is a global
integrated energy services company listed in London on the FTSE 100 (LSE:PFC).
The Company will submit a Stella / Harrier Field Development Plan to the
Department of Energy and Climate Change ("DECC") at the end of 2011.

--  Creation of a Production "Hub" - The most expedient and value enhancing
    method of developing the Stella, Harrier, Hurricane and Helios fields,
    (collectively the "GSA Fields") is by the deployment of a floating
    production unit, with the export of processed fluids to nearby oil and
    gas transportation pipelines. This decision has resulted in the
    selection of the Petrofac owned "FPF-1" as the optimal vessel for the
    development. Establishing a production processing hub provides full
    control and flexibility over execution of the Stella / Harrier
    development project. The overall value of the GSA is further enhanced by
    a secure processing solution for Hurricane and Helios, following their
    appraisal, and provides the opportunity to unlock other undeveloped
    discoveries in the area. 
--  Higher Production Rates, Higher Value - First hydrocarbons from the hub
    are forecast by management in H2-2013 at an initial annualised average
    rate of approximately 30,000 boepd (gross), a level higher than
    previously anticipated by the Company. Development of the GSA Fields
    will be focused on prioritising oil and condensate production over gas
    in the early years, thus maximising the economic value. 
--  Strategically Aligned Partnership - To maximise the value of the chosen
    development solution, the Company, Dyas UK Limited ("Dyas") and
    Challenger Minerals (North Sea) Limited ("CMNSL"), which, further to an
    earlier announcement today is now a wholly owned subsidiary of Ithaca,
    have entered into various transactions with the Petrofac group, and a
    number of its affiliates (collectively "Petrofac"), effective 1 October
    2011. These transactions include the transfer of ownership interests in
    the FPF-1 floating production unit to the Company and Dyas BV while
    granting Petrofac the right to earn a 20% interest in Stella / Harrier
    and the transfer of interests in Hurricane and Helios. This creates a
    fully integrated partnership for the GSA hub and the ability to increase
    the recovery of hydrocarbons from the fields. 
--  Development De-risking - De-risking of the overall development is
    achieved by the addition of a strategic partner of the size and quality
    of Petrofac The capital expenditure to be paid for preparing the FPF-1
    for deployment has also been de-risked through the award of a contract
    to Petrofac to upgrade and modify the vessel on a lump sum basis with
    cost and vessel performance incentivisation mechanisms. The value of the
    FPF-1 development solution is further underpinned by an option granted
    to the owners of the FPF-1 to sell the vessel to Petrofac after
    cessation of production from the fields. 
--  Drilling Rig Commitment Pending - The Company is in advanced discussions
    with potential drilling rig providers, with a view to securing a
    suitable rig to commence the Stella / Harrier development drilling
    campaign in late 2012. 

A conference call for analysts in the UK and Europe will be held at 09.00 GMT on
October 20 2011 and with North American analysts on the same day at 14.00 GMT
(07.00 EST) to provide further background information on the details presented
in this and other press releases today. Dial-in details for the call can be
obtained by contacting Pelham Bell Pottinger.

A presentation concerning the information covered in this press release will be
available on the Company's website ( immediately prior to
the conference call on October 20 2011. 

Iain McKendrick, CEO, commented:

"The successful completion of the development concept select process for the GSA
Fields and execution of the associated transactions marks the start of the next
exciting phase in the Company's development of a true production hub; one that
unlocks the significant value underpinning the fields and provides a further
springboard for Ithaca's continued growth. 

The decision to develop the fields via a stand-alone solution, tied directly
into existing export infrastructure, provides the Company and its joint venture
partners with the control required to maximise the value of the fields and the
opportunity to secure long term growth in an area of the Central North Sea
characterised by an array of undeveloped discoveries.

Petrofac is a world class provider of engineering and operational services with
a reputation for delivering value in the North Sea and I am delighted to be
welcoming the company into the heart of the GSA development, not only as a
provider of key services during the execution phase of the project, but also as
a co-venturer within each of the GSA Fields."

GSA Development Concept Select

The Company and its co-venturers, Dyas and CMNSL, now a subsidiary of Ithaca,
have concluded the Stella / Harrier development concept select process and
determined that the optimal solution is the deployment of a floating production
unit for the processing of hydrocarbons and onward evacuation of oil and gas
through existing pipeline infrastructure. The creation of a stand-alone
processing hub provides control and flexibility over the development of Stella /
Harrier and also means future production from the Hurricane and Helios fields,
which comprise the GSA, can readily be accommodated following appraisal. As
previously announced by the Company, it is intended that an appraisal well will
be drilled on Hurricane in Q1-2012. 

The development solution will involve the use of the FPF-1 semi-submersible
floating production unit, formerly known as the "AH001" that was previously used
on the Hess operated Ivanhoe / Rob Roy North Sea oil fields. The FPF-1 is
currently 100% owned by Petrofac.

The FPF-1 will be modified to process oil and gas from the GSA Fields and will
be located in the vicinity of the Stella field. The processing capacity of the
vessel will be 38,000 barrels of oil per day ("bopd") and 85 million standard
cubic feet per day ("mmscf/d") of gas.

Following processing on the FPF-1, oil and gas will be exported into existing
nearby transportation pipelines for onward transmission to market. The Company
has received firm offers for capacity from oil and gas pipeline owners operating
in the area and will advise shareholders on the selected export systems in due

The Company is in the process of conducting Front End Engineering and Design
(FEED) for the subsea facilities required for development of the fields and
invitations to tender will shortly be issued for the various subsea work

Completion of the development concept select process means that the Company and
its co-venturers are able to progress finalisation of the necessary regulatory
approvals for the Stella / Harrier development. The Environmental Statement will
shortly be submitted for public consultation and subsequent DECC approval. The
FDP will be submitted to the DECC at the end of 2011. 

Stella / Harrier Production

The Stella / Harrier development will consist of five subsea wells on Stella and
two subsea wells on Harrier, tied back via in-field flowlines to the FPF-1. 

Initially production will come from four Stella wells, three into the Stella
Andrew reservoir and one into the Stella Ekofisk reservoir. The exact location
of these will be optimised to preferentially produce high value oil and
condensate production. Production from these wells will initially fill the gas
processing capacity on the FPF-1.

Following the drilling and completion of the four initial Stella wells, and in
direct continuation, a well will be drilled into the Harrier Ekofisk reservoir.
Once gas processing capacity becomes available on the FPF-1, as production from
the initial Stella wells comes off plateau, the development plan involves the
drilling of a fifth well on Stella (into the Andrew reservoir) and the tie-in of
production from the Harrier Field and drilling of a well into the Harrier Tor

Management forecast that first hydrocarbons will be in H2-2013 at an initial
annualised average rate of approximately 30,000 boepd (gross). This represents a
higher rate than previously advised by the Company, driven by optimisation of
the reservoir management strategy and the ability of the FPF-1 to handle higher
oil rates than those of other development solutions. Management forecasts that
gas production from Stella / Harrier should remain on plateau at the gas
processing limit of the FPF-1 for nearly three years.

The Company has identified incremental opportunities for wells in both Stella
and Harrier, the drilling of which will be assessed once production performance
of the initial wells has been analysed.

As only four Stella wells are required at the date of first hydrocarbons to fill
the gas processing facilities on the FPF-1, to maximise the overall value of the
Stella / Harrier development, capital expenditure will be phased. The Company
anticipates that the net capital expenditure that will be incurred prior to the
receipt of revenue from oil and gas sales will be approximately $425 - $460
million. The Company's estimated net capital expenditure for the full
development of Stella / Harrier is approximately $550 - $590 million. Both these
estimates take into account the Company's 54.66 % interest, after the
acquisition of CMNSL.

Petrofac Transaction 

The Company, Dyas and CMNSL, now a subsidiary of Ithaca, have entered into
various agreements with Petrofac, effective from 1 October 2011, as a result of
the decision to use the FPF-1 for the development of the GSA. These agreements
provide for the transfer by Petrofac of a majority ownership interest in the
company that owns the FPF-1 and the provision of certain services, while
granting Petrofac the right to earn an interest in Stella / Harrier (Blocks
30/6a and 29/10a) and the transfer of an interest in Hurricane (Block 29/10b)
and Helios (Block 29/10d).

The FPF-1 ownership interest to be transferred by Petrofac will be by way of a
transfer of shares in FPF-1 Limited, a wholly owned Petrofac subsidiary based in
Jersey. An agreement has also been executed that provides the owners of FPF-1
Limited with an option to sell to Petrofac, in accordance with an agreed pricing
mechanism, their ownership interests in the FPF-1, after cessation of production
from the GSA.

Ithaca, Dyas and CMNSL will grant Petrofac a right to earn a 20% pro-rated
equity interest in Stella / Harrier. Ithaca and Dyas will also transfer to
Petrofac a 20% pro-rated equity interest in Helios. Ithaca will transfer to
Petrofac a 20% interest in Hurricane.

The earn-in agreement executed by the Company, Dyas and CMNSL provides for
Petrofac to pay a 20% share of the Stella / Harrier development costs from the
effective date. The 20% interest earned by Petrofac in Stella / Harrier will
only be transferred upon first hydrocarbons being produced from the development
and will be subject to DECC approval at that time. The interests in Hurricane
and Helios will be transferred, subject to normal DECC consents, on or after
submission to DECC of a Field Development Plan for Stella / Harrier. Petrofac
will pay its 20% share of all Hurricane and Helios costs from the effective

The Company and the Stella / Harrier co-venturers have entered into a contract
with Petrofac to upgrade and modify the FPF-1 to enable it to be used for
processing of hydrocarbons from the GSA Fields. The contract provides for the
required works to be performed for a lump sum total contract value, along with
vessel performance incentivisation mechanisms, thereby de-risking the FPF-1
related development capital expenditure and the ultimate "uptime" of the fields.
A contract has also been entered into with Petrofac for the provision of
dutyholder services during the operational phase of the fields, under
incentivised cost and uptime contractual terms.

Greater Stella Area Field Interests

As a result of the acquisition of CMNSL, the divestment of an interest in
Hurricane to Dyas and the transfer of interests in the various Greater Stella
Area ("GSA") fields to Petrofac, the Company and its GSA co-venturers now have
full field interest alignment across Stella / Harrier, Hurricane and Helios.

The interests of each co-venturer in the various GSA fields, post completion of
all the transactions announced today, will be as follows:

Field                     Block  Ithaca(i)       Dyas   Petrofac
Stella / Harrier          30/6a     54.66%     25.34%        20%
Hurricane                29/10b     54.66%     25.34%        20%
Helios                   29/10d     54.66%     25.34%        20%
(i)post acquisition of CMNSL                                                

The Company continues to be fully funded, with more than sufficient financial
resources to cover the anticipated level of development capital expenditure
commitments and continue the pursuit of additional asset acquisition
opportunities, through its existing cash balance ($177 million at the end of
Q2-2011), forecast cashflow from operations. and its undrawn $140 million bank
debt facility ($140 million excludes the forecast incremental debt capacity of
approximately $45 million associated with the Cook acquisition).


Based on the Company's 31st December 2010 Sproule International Ltd ("Sproule")
reserves report, the transactions presented in this press release will result in
Ithaca and CMNSL transferring to Petrofac 8.33 million barrels of oil equivalent
("Mboe") of proved and probable reserves. As a result of the two preceding
transactions announced today, the acquisition of CMNSL will result in the
transfer to Ithaca of 9.68 Mboe of Stella / Harrier proved and probable reserves
and Ithaca will transfer to Dyas 1.24 Mboe of Hurricane proved and probable
reserves. The overall impact of all these transactions is a small increase of
0.11 Mboe in the Company's net GSA proved and probable reserves (and excludes
the additional proved plus probable reserves in the Broom field acquired in the
CMNSL acquisition).

The positive impact on net reserves should also be considered within the overall
context of the transactions announced today, which result in a significant
increase in the value of the GSA through the specification of a development
solution that provides the opportunity to maximise the recovery of reserves,
considerably de-risks the execution of the development, provides certainty over
capital and operating expenses and achieves overall alignment of the GSA

Following all the GSA transactions and based on the 31st December 2010 Sproule
reserves report, the Company's adjusted net proved and probable GSA reserves are
as follows: 

                          Stella     Harrier   Hurricane       Total
                          (Mboe)      (Mboe)      (Mboe)      (Mboe)
(Proved + Probable)        16.26       13.15        2.68       32.09

The change in reserves resulting from the agreed transfer of interests set out
in this press release will be taken into account in the normal year-end
independent reserves assessment that will be performed by Sproule, along with
any amendments that may be required as a result of finalising the GSA
development solution.


- boe/d       barrels of oil per day                  
- Mboe        millions of barrels of oil equivalent   
- mmscf/d     millions of standard cubic feet per day 

Notes to oil and gas disclosure:

In accordance with AIM Guidelines, Hugh Morel, BSc Physics and Geology (Durham),
PhD Hydrogeology (London) and senior petroleum engineer at Ithaca is the
qualified person that has reviewed the technical information contained in this
press release. Dr Morel has 30 years operating experience in the upstream oil

About Ithaca Energy:

Ithaca Energy Inc. and its wholly owned subsidiary Ithaca Energy (UK) Limited
("Ithaca" or "the Company"), is an oil and gas exploration, development and
production company active in the United Kingdom's Continental Shelf ("UKCS").
The goal of Ithaca, in the near term, is to maximize production and achieve
early production from the development of existing discoveries on properties held
by Ithaca, to originate and participate in exploration and appraisal on
properties held by Ithaca when capital permits, and to consider other
opportunities for growth as they are identified from time to time by Ithaca

About Petrofac:

Petrofac has more than 14,500 employees in 27 offices worldwide and 7 business
units providing life of asset solutions; from design to decommissioning. The
Company is quoted on the London Stock Exchange (symbol:PFC) and a constituent of
the FTSE 100 Index. With a Diverse customer base comprising national,
international and integrated oil companies, Petrofac focuses its activities in
UK Continental Shelf, Middle East, Africa, Commonwealth of Independent States,
and Asia Pacific. In 2010 Petrofac made a net profit of US$557.8m.

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 "anticipate", "continue",
"estimate", "expect", "may", "will", "project", "plan", "should", "believe",
"could", "target" and similar expressions, and the negatives thereof, whether
used in connection with the estimated production levels of the Stella / Harrier
fields, anticipated time of first oil from the Stella / Harrier fields or
reserves associated with the Stella / Harrier and Hurricane fields are intended
to identify forward-looking statements. The reserves for individual properties
may not reflect the same confidence level as estimates of reserves of all
properties, due to the effects of aggregation. Such statements are not promises
or guarantees, and are subject to known and unknown risks and uncertainties and
other factors that may cause actual results or events to differ materially from
those anticipated in such forward-looking statements or information. 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. 

The term "boe" may be misleading, particularly if used in isolation. A boe
conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.

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