Ithaca Begins Drilling, Farms Out Additional Interest in Manuel Prospect

Ithaca Energy Inc., a Canadian independent oil & gas company with exploration and development assets in the UK North Sea, is pleased to announce it has commenced drilling of a well on the Manuel prospect and has also reduced its interest in Manuel further under a farmout arrangement with Norwest Energy. The Manuel prospect is located within block 11/29, 12 kilometers west of the Beatrice field.

The well was spudded on February 17 and is expected to take approximately 20 days to reach a depth of 6696 feet subsea to evaluate the potential of several Upper and Middle Jurassic sands. Utilizing the Galaxy II rig, the well will be drilled under tight hole status.

Under the terms of the Norwest farmout, Norwest will pay 7.5% of the cost of the well in return for a 5% interest. Consistent with Ithaca's strategy, this will reduce the company's responsibility to 52.5% of the costs while retaining a 68.4% interest in the prospect. The other participants in Manuel are Challenger Minerals 13.33% and North Sea Energy 13.33%.

Lawrie Payne, CEO commented, "Manuel is an exciting exploratory prospect with potential for significant reserves of oil. Given the inherent risk in exploration, it is the Company's policy to farm out a portion of its interest and gain financial leverage."

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