Ithaca Farms Interests in the North Sea


Moray Firth
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Ithaca Energy Inc. announces that it has farmed out an interest in the Polly, Manuel and Carna prospects.

Ithaca has entered into an agreement with North Sea Energy covering a portion of its 100% owned License P1392 in the Inner Moray Firth area of the North Sea under which they will pay 30% of the costs of the Ithaca operated 12/26c-5 exploratory test which is currently being drilled, to earn a 20% interest in the Polly prospect.

A further provision of the agreement provides North Sea Energy with the right and obligation to participate with identical interests in the drilling of Ithaca's Manuel prospect on identical terms to the Polly prospect to enable North Sea Energy to earn a 20% interest in another portion of License P1392. It is intended that Manuel will be drilled later this year. North Sea Energy is a partner of Ithaca's in the area, having earlier farmed into and earned a 10% interest in the Jacky oil discovery which Ithaca intends to put on production by the end of this year. Both Polly and Manuel are near the recently announced acquisition by Ithaca of the producing Beatrice oilfield.

Ithaca has also entered into an agreement with Venture Production in relation to its 60% owned Carna prospect in the Southern North Sea Gas Basin. Under the agreement Venture will assume the role of operator and pay, on behalf of Ithaca, 30% of the drilling costs of a well in return for a 20% interest in a specified defined area being portions of blocks 43/21b and 43/22c. Subsequent to the drilling of the well, the Carna prospect will be owned 56% by Venture, 40% by Ithaca and 4% by EWE Aktiengesellschaft. Under the terms of the farmout, Ithaca will have the residual responsibility of paying 30% of the well costs. It is anticipated that the well will be drilled in the last half of 2008.

"The farmout mechanism is an integral part of Ithaca's financial strategy," Lawrie Payne, Ithaca Energy's CEO commented, "and these transactions are consistent with the company's objectives of creating drilling activity on company prospects, financing the activity in a manner that will provide financial leverage and retaining a significant participating interest. We look forward to strong working relationships with both Venture and North Sea Energy.

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