09:09 EDT Monday, June 29, 2009

LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - June 29, 2009) -

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

Ithaca Energy Inc. ("Ithaca" or the "Company") (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited, an independent oil & gas company with exploration and development assets in the UK sector of the North Sea, announces that it has entered into an agreement with Dyas UK Limited ("Dyas") for the conversion of Dyas' US$61.2 million outstanding secured loan.

Under the agreement entered into in October 2008, Dyas had the option (the "2008 Option") to convert the US$61.2 million loan by 1st November 2010 in consideration for the purchase of an additional 15.15% of all of Ithaca's interests held at 1st November 2008 (the "Effective Date").

Upon the early conversion of the Dyas loan, Ithaca will become debt free and will receive an additional cash payment from Dyas of approximately US$35.8 million in exchange for Dyas taking further equity in all of its properties, including the Jacky and Beatrice fields, in addition to the 15.15% interest entitlement under the 2008 Option.

Ithaca and Dyas have revised the working interest positions in its key assets through this transaction as follows:

                          -------  -----------------------  ---------------
                            Pre         Post 1/11/08         Post Revised
                          1/11/08  (excluding 2008 option)    Transaction
                          -------  -----------------------  ---------------
Asset              Type    Ithaca      Ithaca     Dyas      Ithaca     Dyas
                                %           %        %           %        %

Beatrice     Production       100       74.75    25.25       50.00    50.00

Jacky        Production          90       67.28    22.73       47.50    42.50

Athena      Development     70       52.33    17.68       22.50    47.50

Carna       Development      40       29.90    10.10       16.00    24.00

Stella      Development       66.67   49.83    16.83       35.00    31.67

In addition, equity in all of Ithaca's remaining exploration assets will also be transferred, such that Dyas will acquire a final equity holding equivalent to 50% of Ithaca's equity positions immediately prior to the Effective Date.

The total aggregate consideration for this revised transaction will be approximately US$97 million. Based on the Company's evaluation of proven and probable reserves as at 31 December 2008, Ithaca is selling 11.6 million developed and undeveloped barrels of oil equivalent (boe) at a price of US$8.36 per boe.

The key benefits to Ithaca as a result of this transaction are:

- Receipt of a cash payment of approximately US$35.8 million which will provide funding for additional projects in particular to enhance production from Jacky and Beatrice areas, to appraise Stella and to seek new opportunities to broaden its asset base;

- Strong cash position with no debt;

- Reduced working interests ahead of major capital expenditures on Stella, Carna and the Beatrice Area; and

- Improved forward planning with no Dyas option overhang.

The transaction is subject to the approval of the UK Department for Environment and Climate Change ("DECC"), Talisman Energy and usual third party consents. The TSX Venture Exchange has approved the transaction subject to the usual post closing filing conditions.

Iain McKendrick, CEO of Ithaca said:

"This is a major step forward, putting the Company onto an excellent long term footing. This revised deal leaves the Company debt free and with financial resources sufficient to finance a manageable future capital expenditure program that will develop existing projects as well as new opportunities. The Company now has a diverse portfolio and is poised for growth from the platform that has been created through this second transaction with Dyas. I regard this as a transformational move, securing the future of Ithaca in an exciting environment in which to expand".

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.

References to 'boe' may be misleading, particularly if used in isolation. A boe conversion ratio of 6Mcf: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.

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," "anticipates," "plans," "may," "will," "should" and similar expressions, and the negatives thereof, 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.

FOR FURTHER INFORMATION PLEASE CONTACT:

Ithaca Energy Inc.
Iain McKendrick
CEO
+44 (0) 1224 650 261

imckendrick@ithacaenergy.com