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Ithaca Energy Inc Announces First Quarter Results

May 13, 2013 - Aberdeen, Scotland

Ithaca Energy Inc. (TSX VENTURE: IAE)(LSE: IAE)

Not for Distribution to U.S. Newswire Services or for Dissemination in
the United States

Ithaca Energy Inc.

First Quarter 2013 Financial Results and Impact of Valiant Acquisition

May 13, 2013

Ithaca Energy Inc. (TSX VENTURE: IAE), (LSE: IAE) ("Ithaca" or
the "Company") announces its quarterly results for the three months
ended March 31, 2013 ("Q1 2013"). In light of the Valiant transaction
closing on April 19, 2013, also included is the unaudited financial
highlights for the same period, for illustrative purposes only, showing
the contribution from Valiant Petroleum plc ("Valiant") for the period,
together with an update on integration activities.

Ithaca Q1 2013 Highlights


- Cashflow from operations increased over 20% to $34.8 million (Q1
2012: $28.4 million) - cash flow per share $0.13 (Q1 2012: $0.11).

- $14.6 million of earnings excluding unrealised losses on
financial instruments of $11.1 million (Q1 2012: $12.1 million).

- Average realised oil price of $114.32 / bbl (Q1 2012: $116.42 /
bbl) including a realised hedging gain of $8.00 / bbl.

- Strong clean balance sheet with cash net of drawn debt of $10.6
million at end Q1 2013.

- UK tax allowance pool of $424 million at end Q1 2013.

- Approximately 2.6 million barrels of future 2013-2014 oil
production hedged at a weighted average price of ~$106 / bbl
(approximately 25% puts / 75% swaps).

Production & Operations

- Total average net export production in Q1-2013 increased 51% to
approximately 6,475 barrels of oil equivalent ("boe") per day ("boepd")
(Q1-2012: 4,299 boepd), including production from the Cook field
interest acquired from Noble Energy Capital Limited (transaction
effective January 1, 2012 and completed on February 5, 2013).

- Production during the quarter was in the upper range of that
anticipated by the 2013 annual guidance range of 6,000 to 6,700 boepd.
The Ithaca operated Athena field had another strong quarter, with the
field continuing to produce "dry" oil at a stable gross daily
production potential of between 10,000 and 11,000 bopd, 2,250 to 2,475
bopd net to Ithaca.

Greater Stella Area Development

- The FPF-1 has been moved on to the dry dock barge at the
Remontowa shipyard in Gdansk, Poland.

- The Ensco 100 heavy duty jack-up drilling rig has now completed
operations on the wells being drilled prior to commencement of the
Greater Stella Area ("GSA") development drilling programme - rig
scheduled to be on location at Stella field in Q2 2013.

- Delivery to the Remontowa yard of the long lead topsides
processing plant equipment and pipework that is to be installed on the
FPF-1 has commenced.

- Fabrication of the subsea structures that are to be installed by
Technip in 2013 has been completed on schedule at Global Energy Group's
facilities in North East ("NE") Scotland. Installation and testing of
the pipework spools, valves and control systems being fitted within the
structures is nearing completion.

- Welding is underway at Technip's Evanton spool base in NE
Scotland of the 10-inch steel export infrastructure linepipe that is to
be installed in 2013.

Ithaca & Valiant Q1 2013 Combination Highlights

The financial consolidation of Valiant is only applicable from Q2 2013,
as the acquisition completed on April 19, 2013. However, the following
unaudited Q1 2013 consolidated financial summary has been prepared, for
illustrative purposes only, to provide a high-level overview of the
potential cashflow performance of the enlarged Company.

Q1 2013 Ithaca Valiant Combined

Total Production boepd 6,475 8,372 14,847

Av. Realised Oil Price (Exc. Hedging) $/bbl 106 113 110

Revenue M$ 59.8 90.2 150.0

Inventory Increase/(Decrease) M$ (3.8) (3.8) (7.5)

Operating Costs M$ (23.2) (14.2) (37.4)

G&A M$ (1.9) (7.4) (9.3)

Realised Derivatives Gain / (Loss) M$ 3.9 (0.3) 3.6

Cashflow From Operations M$ 34.8 64.5 99.5

CFPS (using issued Shares 316.9m) $USD 0.11 0.20 0.31

This information is provided to assist shareholders with quantifying
the impact of the Valiant acquisition on the Company. It does not
represent a guide to future financial performance. The Valiant data
used above has been extracted from the management accounts of Valiant
for Q1 2013. The Valiant accounting policies are broadly similar to
those used by Ithaca.

The Q1 2013 combined Ithaca and Valiant highlights are:

- Total net average export production of ~14,850 boepd,
approximately 95% oil.

- Production in line with the Company's full year 2013 guidance
range of 14,000 to 16,000 boepd, with volumes in the second half of
2013 scheduled to benefit from infill drilling activities on the Don
Southwest field.

- Cashflow from operations of ~$100 million during Q1 2013.

- A substantial reduction in unit operating costs to ~$28 / boe,
driven by the addition of a higher proportion of low cost barrels.

- Over 30% increase in the netback per barrel, to ~$80 / boe,
attributable to the predominantly oil production base and lower
operating cost per barrel.

- A combined UK tax allowances pool of over $900 million at the
end of Q1 2013.

Progress on Valiant Acquisition Integration

The integration of Valiant's activities into Ithaca's existing
operations is progressing well. The Company has made major steps since
completion of the acquisition to realise the substantial cost synergies
that are achievable through removal of operational and administrative
overlaps. The Company has formally announced the closure of Valiant's
UK office, with all activities being transferred to Ithaca's existing
operations in Aberdeen, UK. It is anticipated that over three quarters
of the UK integration activities and removal of associated overheads
will have been completed within approximately six to eight weeks of
completion of the acquisition, with closure of Valiant's UK office
anticipated in July 2013.

The Company has made significant progress towards its objective of
substantially reducing the future UK exploration expenditure
commitments that were transferred to Ithaca as part of the Valiant
acquisition. In overall portfolio terms the Company has reduced net
exploration expenditure commitments via farm-outs by over $45million.

The Valiant acquisition has established Ithaca as a leading mid-cap
North Sea oil and gas operator. The transaction has significantly
enhanced the Company's existing production base and producing asset
reserves, establishing a highly cash generative business, with tax
allowances sheltering the Company from the payment of UK tax over the
medium term, and provided operational entry into Norway. The Company
has total proven and probable reserves of ~70 million boe and a strong
balance sheet containing only low risk / low cost senior debt.

In the announcement made by the Company on March 1, 2013 in connection
with the Valiant acquisition, Ithaca confirmed that, upon completion of
the acquisition, two existing directors of Valiant, Mr. Jannik Lindbaek
and Mr. Michael Bonte-Friedheim, were to be appointed to the Board of
Ithaca as Non-Executive Directors.

Mr Bonte-Freidheim has since informed Ithaca that, due to other
business commitments, he will be unable to dedicate sufficient time to
the proposed role and, accordingly, will be unable to join the Board of
Ithaca as previously announced. The Company wishes Mr. Bonte-Freidheim
every success in the future and thank him for his invaluable assistance
in the post-acquisition integration process.

The Company is pleased to confirm that Mr. Jannik Lindbaek will be
appointed to the Board as a Non-Executive Director in May 2013.
Mr. Lindbaek was previously Chairman of the Norwegian international oil
and gas company, Statoil ASA, prior to its merger with Norsk Hydro in
2007. A further announcement will be made regarding Mr Lindbaek's
appointment in due course.

Additional Information

An updated corporate presentation is available on the Company's
website, A short film summarising the Company's
GSA strategy and development execution plan is also available on the


In accordance with AIM Guidelines, John Horsburgh, BSc (Hons)
Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and Subsurface
Manager at Ithaca is the qualified person that has reviewed the
technical information contained in this press release. Mr Horsburgh has
over 15 years operating experience in the upstream oil industry.

This press release contains non-International Financial Reporting
Standards ("IFRS") industry benchmarks and terms, such as "netbacks"
and "cashflow from operations". Netbacks are calculated on a per unit
basis as oil, gas and natural gas liquids revenues less royalties and
transportation and operating costs. Cashflow from operations is
determined by adding back changes in non-cash operating working capital
to cash from operating activities. The non-IFRS financial measures do
not have any standardized meaning and therefore are unlikely to be
comparable to similar measures presented by other companies. The
Company uses the foregoing measures to help evaluate its performance.
As an indicator of the Company's performance, cashflow from operations
should not be considered as an alternative to, or more meaningful than,
net cash from operating activities as determined in accordance with

IFRS. The Company considers cashflow from operations to be a key
measure as it demonstrates the Company's underlying ability to generate
the cash necessary to fund operations and support activities related to
its major assets.

Further details on the above are provided in the unaudited interim
consolidated financial statements of Ithaca for the quarter ended March
31, 2013, which have been filed with the securities regulatory
authorities in Canada. These financial statements are available on the
System for Electronic Document Analysis and Retrieval at
and on the Company's website:


Ithaca Energy Inc.
Iain McKendrick, +44 (0) 1224 650 261
Graham Forbes, CFO +44 (0) 1224 652 151

Cenkos Securities
Jon Fitzpatrick +44 (0) 207 397 8900
Neil McDonald +44 (0) 131 220 6939

RBC Capital
Tim Chapman +44 (0) 207 653 4641
Matthew Coakes +44 (0) 207 653 4871

FTI Consulting
Billy Clegg +44 (0) 207 269 7157
Edward Westropp +44 (0) 207 269 7230
Georgia Mann +44 (0) 207 269 7212

About Ithaca Energy:

Ithaca Energy Inc. (TSX VENTURE: IAE), (LSE: IAE),is an oil and gas
operator focused on North Sea production, appraisal and development
activities. The Company's strategy is centred on building a highly
profitable North Sea oil and gas company by maximising production and
cashflow from its existing assets, the appraisal and development of
existing discoveries on properties held by the Company and the delivery
of additional growth via acquisitions and licence round participation.

Forward-looking statements

Some of the statements and information in this press release are
forward-looking. Forward-looking statements and forward-looking
information (collectively, "forward-looking statements") are based on
the Company's internal expectations, estimates, projections,
assumptions and beliefs as at the date of such statements or
information, including, among other things, assumptions with respect to
production, future capital expenditures, future acquisitions and cash
flow. The reader is cautioned that assumptions used in the preparation
of such information may prove to be incorrect. When used in this press
release, 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 operational activities, production forecasts,
budgetary figures contained in the corporate presentation, potential
developments or otherwise, are intended to identify forward-looking
statements. Such statements are not promises or guarantees, and are
subject to known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from those
anticipated in such forward-looking statements. The Company believes
that the expectations reflected in those forward-looking statements and
are reasonable but no assurance can be given that these expectations,
or the assumptions underlying these expectations, will prove to be
correct and such forward-looking statements and included in this press
release should not be unduly relied upon. 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.

Notes Regarding Oil and Gas Disclosure:

References herein to "boe" mean barrel of oil equivalent derived by
converting gas to oil in the ratio of six thousand cubic feet ("Mcf")
of gas to one barrel ("bbl") of oil. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1
bbl is based on an energy conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.

Statements relating to reserves are deemed to be forward-looking
statements, as they involve the implied assessment, based on certain
estimates and assumptions, that the reserves described can be
profitably produced in the future.

The reserve estimates set forth in this press release are estimates
only and the actual reserves and realized revenue may be greater or
less than those calculated. The estimates of reserves for individual
properties may not reflect the same confidence level as estimates of
reserves and future net revenue for all properties, due to the effects
of aggregation.

With respect to Ithaca's reserves, the figures are derived from a
report prepared by Sproule International Limited ("Sproule"), an
independent qualified reserves evaluator, evaluating the reserves of
Ithaca as of December 31, 2012 and forming the basis for the Statement
of Reserves Data and Other Oil and Gas Information of Ithaca dated
March 19, 2013 (the "Statement"). The reserves for the South West
Heather Field included in the Statement are those estimated by Ithaca
and reviewed by Sproule. With respect to Valiant reserves acquired by
Ithaca, the figures are derived from an Audit of Certain Reserves as at
December 31, 2012 prepared by RPS Energy Consultants Limited, an
independent qualified reserves evaluator, dated January 24, 2013. The
reserves estimates of Ithaca are based on the Canadian Oil and Gas
Evaluation Handbook ("COGEH") pursuant to National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities. The reserves
estimates of Valiant are based on the 2007 SPE/AAPG/WPC/SPEE Petroleum
Resource Management System which is not materially different from
COGEH. The Valiant reserves have been adjusted to reflect the increased
Fionn field interest being transferred to Valiant by Antrim Resources
(N.I.) Limited.

Not for Distribution to U.S. Newswire Services or for Dissemination in
the United States



Strong cashflow - Cashflow from operations increased over
from operations 20% to $34.8 million (Q1 2012: $28.4 million) -
cashflow per share $0.13 (Q1 2012: $0.11)

- Adjusted earnings of $14.6 million*
excluding unrealised revaluation loss on financial
instruments (Q1 2012: $12.1 million)

o Unadjusted earnings of $3.5 million (Q1 2012:
$12.9 million)

- Q1 2013 average realized oil price of $114
/ bbl (Q1 2012: $116 / bbl), including a realized
hedging gain of $8 / bbl

- Cash balance of $10.6 million net of drawn
debt (Q4 2012: $31.4 million)

- UK tax allowances pool of $424 million at
quarter end

- Approximately 2.6 million barrels of
future 2013-14 oil production hedged at a weighted
average price of around $106 / bbl (approximately
25% puts / 75% swaps)

Q1 production in - Export production increased 51% to
line with forecast approximately 6,475 barrels of oil equivalent per
day ("boepd") (Q1 2012: 4,299 boepd), including
production from the Cook field interest acquired
from Noble Energy Capital Limited ("Noble"),
effective January 1, 2012

Greater Stella - "FPF-1" floating production unit
Area hub - major transferred to dry dock
milestones being
achieved - Contract signed with Applied Drilling
Technology International ("ADTI") in April 2013 to
manage development drilling and completion
operations on the Greater Stella Area ("GSA")
under"turnkey" contract arrangements

- Ensco 100 drilling rig has now completed
operations on the wells being drilled prior to
commencement of the GSA development drilling
programme - rig scheduled to be on location at
Stella field in Q2 2013

- Fabrication of all the required subsea
infrastructure that is to be installed by Technip
in 2013 is progressing according to plan

Step-change in - Acquisition of Valiant Petroleum plc
growth of the ("Valiant") for a total enterprise value of
Corporation approximately $459 million completed on April 19,

- Completion of the acquisition of an
additional 12.885% interest in the Cook field ("the
Cook Acquisition")

*Adjusted earnings removes the unrealised (non-cash) losses arising
from revaluation of hedges at the quarter end. Revaluation at the end
of April 2013 would have resulted in a gain as opposed to the loss of
$11.1 million reported.


Q1 2013 Q1 2012 %

Average Brent Oil Price $/bbl 113 119 -5%

Average Realised Oil Price(1) $/bbl 106 116 -9%

Revenue M$ 59.8 40.6 47%

Cost of Sales - excluding DD&A M$ (27.0) (12.6) 114%

G&A etc M$ (1.9) 0.6 N/A

Realised Derivatives Gain / (Loss) M$ 3.9 (0.2) N/A

Cashflow From Operations M$ 34.8 28.4 23%

DD&A M$ (19.5) (13.4) 46%

Unrealised Derivatives Gain / (Loss) M$ (11.1) 0.8 N/A

Other M$ (1.9) (2.0) -5%

Profit Before Tax M$ 2.3 13.8 -83%

Deferred Tax Credit / (Charge) M$ 1.2 (0.9) N/A

Profit After Tax M$ 3.5 12.9 -73%

Earnings Per Share(2) $/Sh. 0.01 0.05 -80%

Cashflow Per Share(2) $/Sh. 0.13 0.11 18%

(1) Average realized price before hedging

(2 Weighted average number of shares of 259.9 million
pre Valiant Acquisition


M$ Q1 2013 Q4 2012

Cash & Equivalents 66 31

Other Current Assets 173 198

PP&E 749 663

Other Non-Current Assets 41 41

Total Assets 1,029 934

Current Liabilities (197) (206)

Asset Retirement Obligations (57) (53)

Deferred Tax Liabilities (103) (62)

Other Non-Current Liabilities (62) (7)

Total Liabilities (420) (328)

Net Assets 609 606

Share Capital 431 431

Other Reserves 21 20

Surplus / (Deficit) 157 154

Shareholders Equity 609 606


Ithaca Energy Inc. (the "Corporation" or "Ithaca" or the "Company")
is an oil and gas operator focused on North Sea production, appraisal
and development activities.

Ithaca's strategy is to grow shareholder value by building a highly
profitable 25kboepd North Sea oil and gas company. The execution of
this plan is centred on:

- Maximising production and cashflow from its existing assets

- Delivering material growth by appraising and developing
existing hydrocarbon discoveries

- Continuing to increase and diversify the Company's portfolio
and cashflows through acquisitions


The consolidated financial statements of the Corporation and the
financial data contained in this management's discussion and analysis
("MD&A") are prepared in accordance with international financial
reporting standards ("IFRS"). The consolidated financial statements
include the accounts of Ithaca and its wholly-owned subsidiaries
Ithaca Energy (Holdings) Limited ("Ithaca Holdings"), Ithaca Energy
(UK) Limited ("Ithaca UK"), Ithaca Minerals North Sea Limited
("Ithaca Minerals") and Ithaca Energy Holdings (UK) Limited ("Ithaca
Holdings UK") and its associates FPU Services Limited ("FPU") and
FPF-1 Limited ("FPF-1").

All inter-company transactions and balances have been eliminated on
consolidation. A significant portion of the Corporation's North Sea
oil and gas activities are carried out jointly with others. The
consolidated financial statements reflect only the Corporation's
proportionate interest in such activities.

51% increase in Q1 2013 PRODUCTION
production compared
to Q1 2012, with Ithaca's total net export production in Q1 2013
production in line was 6,475 boepd, approximately 90% oil,
with forecast representing an increase of approximately 51% on
performance Q1 2012 production (Q1 2012: 4,299 boepd). The
production performance was in the upper range of
that anticipated by the Corporation as part of
the 2013 annual production guidance range of
6,000 to 6,700 boepd.

Production in the period was derived from the
operated Athena, Beatrice, Jacky and Anglia
fields and the non-operated Cook, Broom and
Topaz fields. The total Q1 2013 production of
6,475 boepd includes the contribution from the
additional 12.885% Cook field interest acquired
from Noble.

The material increase in production delivered in
Q1 2013 compared to the same quarter in 2012 was
primarily attributable to the contribution from
the Athena field (first oil May 2012) and the
acquisition of the additional Cook field
interest from Noble.

The two primary fields contributing
approximately 70% of total net production during
the quarter were Athena and Cook, with each
contributing broadly equally. The Ithaca
operated Athena field had another strong
quarter, with the stable gross daily production
potential of field remaining at between 10,000
and 11,000 bopd, 2,250 to 2,475 bopd net to
Ithaca. Consistent daily delivery of the field
potential over the period has been achievable as
a result of the solid performance of the BW
Athena floating, production, storage and
offloading vessel ("FPSO"). The field continues
to produce "dry" oil.

GSA: Significant FPF-1 Modification Works
progress being made,
with commencement of Following the transfer in late 2012 of the FPF-1
drilling campaign floating production facility to the Remontowa
set for Q2-2013 shipyard in Gdansk, Poland, the modifications
work programme being performed by Petrofac in
the yard has been focused on preparation for the
dry dock.

Inspection, repair and coating of the hull tanks
is progressing well and the vessel has now been
transferred to the yard's dry dock barge to
enable completion of the marine system works.
This milestone marks the start of the
installation of additional buoyancy on the FPF-1
as part of the marine upgrade works, with steel
cutting, rolling and welding operations in

Installation of the new topsides processing
plant will commence upon completion of the dry
dock works. The vessel preparatory works have
largely been completed and delivery to the yard
of the equipment and materials required for the
construction and fabrication work programme has
commenced. The gas export compressors, which
represent the key processing plant package with
the longest lead time (having being order at the
start of 2012), have now been delivered to the

The FPF-1 is being modified and upgraded by
Petrofac under the terms of a lump sum
incentivised contract that was awarded by the
GSA joint venture partners in October 2011.

Drilling Programme

The high-spec Ensco 100 heavy duty jack-up
drilling rig that has been contracted for the
GSA development drilling campaign has now
completed operations on the wells being drilled
for the North Sea operator that has being using
the rig immediately prior to commencement of the
GSA programme.

The rig is being prepared for demobilisation
from its current location and will shortly
commence its transit to the Able shipyard in
Hartlepool, UK, where Ensco will complete a
scheduled routine inspection of the unit and
certain minor upgrade works to improve the well
construction capabilities of the rig
specifically designed to improve the efficiency
of GSA drilling operations. The unit is
expected to arrive on location at the Stella
field in Q2-2013.

The initial development drilling campaign
involves the completion of four wells on the
Stella field prior to start-up of production.
As previously announced, Advanced Drilling
Technology International ("ADTI"), a subsidiary
of Transocean, has been contracted to manage the
drilling and completion operations under"turnkey"
contract arrangements. The turnkey
contract locks in the expenditure and
performance requirements of the core drilling
operations, with each well anticipated to take
approximately 80-90 days to drill, complete and
clean-up test.

Subsea Infrastructure Works

Significant progress is being made by Technip UK
Limited ("Technip") with preparation for the
main subsea infrastructure installation
activities that are scheduled to take place
offshore in 2013. The subsea programme is being
performed under the terms of an Engineering,
Procurement, Installation and Construction
("EPIC") contract, thereby ensuring a fully
integrated execution plan covering all aspects
of this key element of the GSA development.

- Manufacturing, coating and delivery to
Technip's Evanton spool base in NE Scotland of
all the required 10-inch export infrastructure
linepipe has been completed and the welding of
12 metre pipes into 1000 metre pipe stalks has
commenced. The pipe stalks are scheduled to be
reeled on to Technip's Apache II pipelay vessel
in Q3-2013 for subsequent installation offshore.

- Manufacture of the static flexible
flowlines that will connect the drill centres to
the FPF-1 is nearing completion at Technip's
manufacturing facility in Le Trey, France.
These are scheduled to be installed by the
Skandi Arctic construction and dive support
vessel, commencing in Q3-2013.

- The first pipeline trenches to be cut in
advance of installation of the flexible
flowlines will commence in Q2-2013, marking the
start of the offshore installation campaign.

- Fabrication of the subsea structures
that will connect the drill centres with the
FPF-1 has been completed at Global Energy
Group's facilities in NE Scotland. Installation
and testing of the pipework spools, valves and
control systems being fitted within the
structures is nearing completion. The
structures are scheduled to be installed by the
Skandi Arctic in Q3-2013.


Acquisition of Cook Field Interest Completed,
Lapse of MacCulloch Field Interest Acquisition
Further broadening
of the producing In October 2012, the Corporation announced that
asset portfolio - it had entered into agreements with Noble Energy
acquisition of Capital Limited (a subsidiary of Noble Energy
additional Cook Inc.) to acquire a 12.885% interest in the Cook
field interest field and a 14% interest in the MacCulloch

The acquisition of the Cook field interest was
completed in February 2013, increasing the
Corporation's overall interest in the field to
41.345%.The consideration paid at completion
was $37.7 million, with approximately $14
million of this payment being offset by the
transfer of oil inventory awaiting offload from
the Anasuria floating production, storage and
offloading vessel (the host facility for the
Cook field) to the Corporation.

The agreement for acquisition of the MacCulloch
field interest from Noble has now lapsed and the
Corporation has decided not to further pursue
this acquisition given the field has remained
shut-in since late December 2012.The
MacCulloch field was only anticipated to
contribute approximately 5% of the Corporation's
total forecast 2013 production guidance of 6,000
to 6,700 boepd and represented 1.4MMbbl or less
than 3% of the total 51.9MMbbl proved and
probable ("2P") reserves at the end of 2012.


Highly accretive
acquisition -
materially On March 1, 2013, it was announced that the
increasing Boards of Ithaca and of Valiant reached
production, reserves agreement on the terms of a recommended
and cashflow acquisition (the "Acquisition") under which
Ithaca would acquire all the shares of Valiant.
The Acquisition was completed on April 19, 2013,
with the cessation of trading of Valiant shares.
The total Acquisition price was approximately
$309 million. The Corporation also repaid
approximately $150 million of Valiant debt /
working capital, implying a total enterprise
value of approximately $459 million.

The Acquisition is financed by a low interest
(London Inter Bank Offered Rate plus 1.0 - 1.6%)
$350 million bridge loan and the issue of new
Ithaca shares. The bridge facility, which has
been agreed with BNP Paribas, the Bank of Nova
Scotia and Bank of America Merrill Lynch, is
available for 12 months. The intention is to
fold the borrowing secured against the Valiant
assets into an enlarged borrowing base facility
during 2013.

A total of 56,952,321 new Ithaca common shares
have been issued and allotted to holders of
Valiant shares, immediately following which
issue and allotment Ithaca had a total of
316,905,657 common shares outstanding.
Admission of the new shares to trading on the
Alternative Investment Market ("AIM") and the
Toronto Stock Exchange occurred by April 22,

The Acquisition has resulted in:

- The establishment of Ithaca as a mid
cap North Sea oil and gas operator, with 2P
reserves of approximately 70MMboe, of which
approximately 50% relates to currently producing

- A more than doubling of Ithaca's
current forecast 2013 production to 14-16kboepd
(90% oil), forecast to rise to approximately
27kboepd in 2015; and

- Anticipated four fold increase in
Ithaca's anticipated 2013 cash flow from
operations to $400 million, rising to over $700
million in 2015.


At the start of Q1 2013 approximately 3 million barrels of 2013-14
oil production had been hedged at a weighted average price of $109 /
bbl (approximately 25% puts / 75% swaps).

In the quarter, the Corporation received $4.2 million through the
settlement of commodity hedges relating to approximately 0.4 million
barrels of oil.

In April 2013, the Corporation exercised an option to swap 1 million
barrels of production at $107/bbl. On the day of exercise, the Brent
forward curve, for the period to which the hedge related, was at $101
/ bbl resulting in the swaption being converted to a cash settlement
of $6 million and a forward swap of 1 million barrels of production
at $101 / bbl.

Following the above transactions, 2.6 million barrels of future
2013-14 oil production are hedged at a weighted average price of ~
$106 / bbl (approximately 25% puts / 75% swaps).

The unrealised losses of $11.1 million from the revaluation of
financial instruments included a loss of $9.1 million driven by the
revaluation of oil swaps and put options. The hedging instruments are
measured at March 31, 2013 and a valuation attributed based on the
Brent oil forward curve on that date (spot Brent was trading at
$108.46/bbl on March 31, 2013). The losses relate to movement in the
Brent oil forward curve, a reduction in the implied volatility and
the elapsing of time. Whilst significant, these marked-to-market
movements represent non-cash revaluations which are highly sensitive
to the oil price on the day of valuation and do not affect underlying
cashflow from operations. For example, had the revaluation taken
place at the end of April 2013, the revaluation would have resulted
in a gain rather than a loss.



revenue of Revenue increased by $19.2 million in Q1 2013 to $59.8
$59.8 million (Q1 2012: $40.6 million). This was mainly driven
million by an increase in oil sales volumes, partially offset by
a reduction in oil price.

Oil sales volumes increased primarily due to the
inclusion of sales from the Athena field and the Cook
Acquisition in Q1 2013 (Athena commenced production in
May 2012) offset by natural declines in the Beatrice and
Jacky fields. Of the reported 6,475 boepd production,
6,148 boepd flows through the statement of income with
the additional 327 boepd reflecting production from the
Cook Acquisition prior to completion. The value of the
pre-completion production is captured as part of the
acquisition accounting on the balance sheet.

Q1 2013 gas sales are in line with Q1 2012 despite a
reduction in Anglia and Topaz gas volumes, which was
offset by the addition of Cook gas sales as well as an
increase in realized gas prices.

Average realized oil prices decreased quarter on quarter
from $116/bbl in Q1 2012 to $106/bbl in Q1 2013. The
average Brent price for the quarter was $113/bbl compared
to $119/bbl for Q1 2012. The Corporation's realized oil
prices do not strictly follow the Brent price pattern
given the various oil sales' contracts in place, with
certain field sales sold at a discount or premium to
Brent. This decrease in average realized oil price was
nonetheless offset by a realized hedging gain of $8/bbl
in Q1 2013.

Average Realized Price Q1 2013 Q1 2012

Oil Pre-Hedging $/bbl 106 116

Oil Post-Hedging $/bbl 114 116

Gas $/boe 47 41

Q1 2013 Q1 2012 Q1 2013 Q1 2012
$'000 $'000 $/boe $/boe

Operating Expenditure 23,227 15,721 42 40

DD&A 19,498 13,385 35 34

Movement in Oil & Gas Inventory 3,576 (3,100) - -

Oil purchases 157 - - -

Total 46,458 26,006 84 66.
Cost of sales increased in Q1 2013 to $46.5 million (Q1 2012: $26.0
million) due to increases in operating costs, depletion,
depreciation and amortization ("DD&A") and movement in oil and gas

Operating costs increased in the quarter to $23.2 million (Q1 2012:
$15.7 million) primarily due to the inclusion of Athena operating
costs (nil Q1 2012) and the additional acquired interest in Cook.

Operating costs/boe increased to $42/boe in the period (Q1 2012:
$40) mainly as a result of the phasing of Cook costs in 2012 with
lower costs in the first quarter 2012 compared to the comparative
period 2013. Although operating costs per boe are up compared to Q1
2012, a combined rate of $42/boe for Q1 is in line with the
Corporation's forecast to reduce operating costs for its current
portfolio (excluding Valiant assets) for the full year to under $40
/boe. The absence of production from other fields sharing the FPSO
through which Cook oil is exported gives rise to the higher
allocation of costs in the quarter. The other main field producing
across the FPSO (in which Ithaca has no equity interest)
recommenced production at the start of May, ahead of forecast,
supporting the expectation of a lower operating cost per barrel
over the year.

DD&A expense for the quarter increased to $19.5 million (Q1 2012:
$13.4 million). This was primarily due to higher production volumes
in Q1 2013 with the addition of the Athena field as well as the
recently acquired additional interest in Cook. The blended rate
for the quarter was relatively unchanged at $35/boe (Q1 2012: $34/

As the below "Changes in Accounting Policies" section outlines, the
adoption of IFRS and accounting for acquisitions as business
combinations has led to increased DD&A rates. It should be noted
that this increase in DD&A and hence Cost of Sales is offset by a
credit in the Deferred Tax charged through the Statement of Income.

An oil and gas inventory movement of $3.6 million was charged to
cost of sales in Q1 2013 (Q1 2012 credit of $3.1 million).
Movements in oil inventory arise due to differences between barrels
produced and sold with production being recorded as a credit to
movement in oil inventory through cost of sales until oil has been
sold. In Q1 2013 more barrels of oil were sold (528k bbls) than
produced (495k bbls), as a result of timings of Cook liftings and
Athena shuttle tankers. Volumes account for $3.8 million of the
movement, partially offset by a credit of $0.2 million due to the
change in valuation of the opening inventory barrels.

Movement in oil & gas inventory Oil Gas Total
kbbls kboes kboes

Operating inventory 149 13 162

Production 496 57 553

Liftings/sales (527) (59) (586)

Acquired volumes 124 - 124

Closing volumes 241 11 253


$'000 Q1 2013 Q1 2012

General & Administration 2,476 1,071

Share Based Payments 295 135

Total Administration Expenses 2,771 1,206

Exploration & Evaluation 312 75

Total 3,083 1,281

Total administrative expenses increased in the quarter to
$2.8 million (Q1 2012: $1.2 million) primarily due to an
increase in general and administrative expenses as a
result of higher levels of corporate activity ongoing in
the quarter, particularly in relation to the Acquisition
of Valiant. Share based payment expenses increased as a
result of options being granted towards the end of 2012
(none end 2011), therefore higher amortisation expense
has been reflected through Q1 2013.

Exploration and evaluation expenses of $0.3 million were
recorded in the quarter (Q1 2012: $0.1 million) primarily
due to the expensing of previously capitalized costs
relating to areas where exploration and evaluation
activities have ceased.


A foreign exchange gain of $0.6 million was recorded in
Q1 2013 (Q1 2012: $1.6 million). The majority of the
Corporation's revenue is US dollar driven while operating
expenditures a re primarily incurred in British pounds.
As such, general volatility in the USD:GBP exchange rate
is the driver behind the foreign exchange gains and
losses, particularly on the revaluation of the GBP bank
accounts (USD:GBP at January 1, 2013: 1.62. USD:GBP at
March 31, 2013: 1.52 with fluctuation between 1.48 and
1.64 during the quarter). This volatility was partially
offset by foreign exchange hedges as described in the"Risks
and Uncertainties" section below.

The Corporation recorded a $7.2 million loss on financial
instruments for the quarter ended March 31, 2013 (Q1 2012:
$0.7 million loss). The loss was predominantly due to a
$9.1 million reduction in value of oil swaps and put
options, due to a relatively strong Brent oil price at
quarter end together with a reduction in implied
volatility in the period and the elapsing of time. In
addition, the Corporation recorded a $2.1 million loss on
the revaluation of foreign exchange instruments. The
Corporation's exposure to fluctuations in the USD:GBP
exchange rate has nonetheless been limited due to the
forward contracts entered into to hedge GBP120 million of
capital expenditure on the GSA development at a rate of
$1.52:GBP1.00. The revaluation losses were partially
offset by a $4.2 million realized gain on commodity


No UK tax
anticipated A deferred tax credit of $1.2 million was recognized in
to be the quarter ended March 31, 2013 (Q1 2012: $0.9 million
payable in charge). This credit is a product of adjustments to the
the tax charge primarily relating to the UK Ring Fence
mid-term Expenditure Supplement and share based payments. As noted
in the Cost Of Sales section the deferred tax credit is
increased by the use of accounting for acquisitions as
business combinations.

As a result of the above factors, profit after tax
increased to $3.5 million (Q1 2012: $12.9 million).

No taxes are expected to be paid in the mid-term relating
to upstream oil and gas activities as a result of the
$424 million tax losses available to the Corporation.


$'000 Q1 2013 Q1 2012

Development & Production ("D&P") 103,070 26,539

Exploration & Evaluation ("E&E") 2,108 1,254

Other Fixed Assets 31 26

Total 105,209 27,819

$70.9 million of the total $103.1 million capital
additions to D&P assets in Q1 2013 was attributable to
the acquisition of the additional interest in the Cook
field, of which $37.7 million represents cash paid with
the remainder being due to business combination
accounting. The remaining D&P additions were primarily
focused on execution of the GSA development, with the
main areas of expenditure being on the manufacture and
fabrication of subsea infrastructure and the FPF-1
modification works (as described above).

Capital expenditure on E&E assets in Q1 2013 was $2.1
million with spending primarily focused on Hurricane and
development projects.

in $'000 Q1 2013 Q4 2012 Increase /
development (Decrease)
Cash & Cash Equivalents 65,636 31,376 34,260

Trade & Other 139,915 173,949 (34,034)

Inventory 26,131 15,878 10,253

Trade & Other Payables (194,278) (205,635) 11,357

Net Working Capital 37,404 15,568 21,836

As at March 31, 2013, Ithaca had working capital of $37.4
million including a cash balance of $65.6 million.
Available cash has been, and is currently, invested in
money market deposit accounts with BNP Paribas.
Management has received confirmation from the financial
institution that these funds are available on demand.

Cash and cash equivalents increased as a result of $55
million of bank debt drawings towards the end of the
quarter offsetting the continued cash investment in the
Stella development. The funds were required for
substantial payments due for imminent release post March
31, 2013 on the Stella project together with funds
required to be held over as part of the Valiant
Acquisition. Other working capital movements are driven
by the timing of receipts and payments of balances.

A significant proportion of Ithaca's accounts receivable
balance is with customers in the oil and gas industry and
is subject to normal joint venture/industry credit risks.
The Corporation assesses partners' credit worthiness
before entering into joint venture agreements. The
Corporation regularly monitors all customer receivable
balances outstanding in excess of 90 days. As at March
31, 2013, substantially all of the accounts receivable is
current, being defined as less than 90 days. In the past,
the Corporation has not experienced credit loss in the
collection of accounts receivable.

At March 31, 2013, Ithaca had unused credit facilities
totalling $375 million (Q4 2012: $430 million). $55
million was drawn down under this facility in Q1 2013.

During the quarter ended March 31, 2013, there was a net
cash inflow of approximately $34.8 million (Q1 2012:
outflow of $5.6 million).

Cashflow from operations

Cash generated from operating activities was $34.8
million primarily due to cash generated from Athena,
Beatrice, Jacky, Anglia, Cook and Broom operations,
augmented in Q1 2013 primarily due to the inclusion of

Cashflow from financing activities

Cash generated from financing activities was $46.0
million primarily due to the draw down of the existing
debt facility in Q1 2013 ($55 million), partially offset
by oil hedging premiums paid.

Cashflow from investing activities

Cash used in investing activities was $59.4 million
primarily due to capital expenditure on the Cook
Acquisition and the GSA development, including
modification of the FPF-1, subsea design and fabrication

The Corporation continues to be fully funded, with more
than sufficient financial resources to cover the
anticipated level of development capital expenditure
commitments and to continue the pursuit of additional
asset acquisition opportunities and exploration and
appraisal activities on existing and newly acquired
licenses through its existing cash balance, forecast
cashflow from operations and its debt facility. No
unusual trends or fluctuations are expected outside the
ordinary course of business.


$'000 1 Year 2-5 Years 5+ Years

Office Leases 423 1,421 -

Other Operating Leases 12,319 14,300 -

Exploration Licence Fees 583 - -

Engineering 53,550 - -

Rig Commitments 37,305 - -

Total 104,180 15,721 -

The engineering financial commitments relate to
pre-development committed capital expenditure on the
Stella and Harrier fields, as well as ongoing capital and
operating expenditure on existing producing fields. Rig
commitments reflect rig hire costs committed in relation
to the anticipated Stella wells. As stated above, these
commitments are expected to be funded through the
Corporation's existing cash balance, forecast cashflow
from operations and its debt facility.


The Corporation's common shares are traded on the Toronto
Stock Exchange ("TSX") in Canada under the symbol "IAE"
and on the Alternative Investment Market ("AIM") in the
United Kingdom under the symbol "IAE".

As at March 31, 2013, Ithaca had 259,953,336 common
shares outstanding along with 20,344,631 options
outstanding to employees and directors to acquire common

In Q1 2013, the Corporation's Board of Directors granted
90,000 options at a weighted average exercise price of
C$1.79. Each of the options granted may be exercised over
a period of four years from the grant date. One third of
the options will vest at the end of each of the first,
second and third years from the effective date of grant.

As at May 10, 2013, following completion of the Valiant
Acquisition, Ithaca had 317,088,991 common shares
outstanding along with 20,011,297 options outstanding to
employees and directors to acquire common shares.

March 31, 2013

Common Shares Outstanding 259,953,336

Share Price(1) $1.70 / Share

Total Market Capitalisation $441,920,671

(1) Represents the TSX close price (CAD$1.73 on last
trading day of March, 2013. US$:CAD$ 0.9825 on March 31,

$'000 31 Mar 31 Dec 30 Sep 30 Jun 31 Mar 31 Dec 30 Sep 30 Jun
2013 2012 2012 2012 2012 2011 2011 2011

Revenue 59,769 52,566 41,579 35,779 40,553 54,870 26,415 16,724

Profit 3,472 45,347 4,894 30,238 12,916 13,318 16,016 2,743

EPS - 0.01 0.17 0.02 0.12 0.05 0.05 0.06 0.01

EPS - 0.01 0.17 0.02 0.11 0.05 0.05 0.06 0.01

The most significant factors to have affected the
Corporation's results during the above quarters are
fluctuation in underlying commodity prices and movement
in production volumes. The Corporation has utilized
forward sales contracts and foreign exchange contracts to
take advantage of higher commodity prices while reducing
the exposure to price volatility. These contracts can
cause volatility in profit after tax as a result
of unrealized gains and losses due to movements in the
oil price and USD : GBP exchange rate.

Each of the quarters from Q4 2010 to Q3 2011 was restated
following the Corporation's election to present all
acquisitions since the IFRS transition date as business
combinations in accordance with IFRS 3®. Refer to
the"Changes in Accounting Policies" below for more details.


All financial instruments are initially measured in the balance
sheet at fair value. Subsequent measurement of the financial
instruments is based on their classification. The Corporation has
classified each financial instrument into one of these categories:
held-for-trading, held-to-maturity investments, loans and
receivables, or other financial liabilities. Loans and receivables,
held-to-maturity investments and other financial liabilities are
measured at amortized cost using the effective interest rate
method. For all financial assets and financial liabilities that are
not classified as held-for-trading, the transaction costs that are
directly attributable to the acquisition or issue of a financial
asset or financial liability are adjusted to the fair value
initially recognized for that financial instrument. These costs are
expensed using the effective interest rate method and are recorded
within interest expense. Held-for-trading financial assets are
measured at fair value and changes in fair value are recognized in
net income.

All derivative instruments are recorded in the balance sheet at fair
value unless they qualify for the expected purchase, sale and usage
exemption. All changes in their fair value are recorded in income
unless cash flow hedge accounting is used, in which case changes in
fair value are recorded in other comprehensive income until the
hedged transaction is recognized in net earnings.

The Corporation has classified its cash and cash equivalents,
restricted cash, derivatives, commodity hedges and long term
liability as held-for-trading, which are measured at fair value with
changes being recognized in net income. Accounts receivable are
classified as loans and receivables; operating bank loans, accounts
payable and accrued liabilities are classified as other liabilities,
all of which are measured at amortized cost. The classification of
all financial instruments is the same at inception and at March 31,

The table below presents the total gain / (loss) on financial
instruments that has been disclosed through the statement of
comprehensive income.

$'000 Q1 2013 Q1 2012

Revaluation Forex Forward Contracts (2,055) 969

Revaluation of Gas Contract - (114)

Revaluation of Other Long Term Liability 57 (90)

Revaluation of Commodity Hedges (9,067) -

Total Revaluation Gain / (Loss) (11,065) 765

Realised Loss on Forex Contracts (293) -

Realised Gain/(Loss) on Commodity Hedges 4,186 (199)

Total Realised Gain/(Loss) 3,893 (199)

Total Realised / Revaluation Gain / (Loss) (7,172) 566

Contingent Consideration - (1,294)

Total (Loss) on Financial Instruments (7,172) (728)

The following table summarises the commodity hedges in place at the
beginning of the quarter.

Derivative Term Volume Average Price
bbl $/bbl

Oil Swaps* January 2013 2,297,753 108.0
- September 2014

Put Options January 2013 779,299 110.4
- March 2014

Derivative Term Volume Average Price
Therms p/therm

Gas Swaps January 2013 3,066,000 66.45
- December 2014

*Includes swaption of 1 million bbls which was exercised in April

The table below summarises the foreign exchange financial
instruments in place during Q1 2013.

Derivative Forward Plus Forward contract

Term Jan 13 - Dec 13 Apr 13 - Jan 14

Value GBP4million / month GBP120 million

Protection Rate $1.59/GBP1.00 $1.52/GBP1.00

Trigger Rate $1.50/GBP1.00 N/A


Certain accounting policies require that management make appropriate
decisions with respect to the formulation of estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. These accounting policies are discussed
below and are included to aid The reader in assessing the critical
accounting policies and practices of the Corporation and the
likelihood of materially different results being reported. Ithaca's
management reviews these estimates regularly. The emergence of new
information and changed circumstances may result in actual results
or changes to estimated amounts that differ materially from current

The following assessment of significant accounting policies and
associated estimates is not meant to be exhaustive. The Corporation
might realize different results from the application of new
accounting standards promulgated, from time to time, by various
rule-making bodies.

Capitalized costs relating to the exploration and development of oil
and gas reserves, along with estimated future capital expenditures
required in order to develop proved and probable reserves are
depreciated on a unit-of-production basis, by asset, using estimated
proved and probable reserves as adjusted for production.

A review is carried out each reporting date for any indication that
the carrying value of the Corporation's D&P assets may be impaired.
For D&P assets where there are such indications, an impairment test
is carried out on the Cash Generating Unit ("CGU"). Each CGU is
identified in accordance with IAS 36. The Corporation's CGUs are
those assets which generate largely independent cash flows and are
normally, but not always, single developments or production areas.
The impairment test involves comparing the carrying value with the
recoverable value of an asset. The recoverable amount of an asset is
determined as the higher of its fair value less costs to sell and
value in use, where the value in use is determined from estimated
future net cash flows. Any additional depreciation resulting from
the impairment testing is charged to the Statement of Income.

Goodwill is tested annually for impairment and also when
circumstances indicate that the carrying value may be at risk of
being impaired. Impairment is determined for goodwill by assessing
the recoverable amount of each CGU to which the goodwill relates.
Where the recoverable amount of the CGU is less than its carrying
amount, an impairment loss is recognized in the Statement of Income.
Impairment losses relating to goodwill cannot be reversed in future

Recognition of decommissioning liabilities associated with oil and
gas wells are determined using estimated costs discounted based on
the estimated life of the asset. In periods following recognition,
the liability and associated asset are adjusted for any changes in
the estimated amount or timing of the settlement of the obligations.
The liability is accreted up to the actual expected cash outlay to
perform the abandonment and reclamation. The carrying amounts of the
associated assets are depleted using the unit of production method,
in accordance with the depreciation policy for development and
production assets. Actual costs to retire tangible assets are
deducted from the liability as incurred.

All financial instruments, other than those designated as effective
hedging instruments, are initially recognized at fair value on the
balance sheet. The Corporation's financial instruments consist of
cash, restricted cash, accounts receivable, deposits, derivatives,
accounts payable, accrued liabilities and the long term liability on
the Beatrice acquisition. Measurement in subsequent periods is
dependent on the classification of the respective financial

In order to recognize share based payment expense, the Corporation
estimates the fair value of stock options granted using assumptions
related to interest rates, expected life of the option, volatility
of the underlying security and expected dividend yields. These
assumptions may vary over time.

The determination of the Corporation's income and other tax
liabilities / assets requires interpretation of complex laws and
regulations. Tax filings are subject to audit and potential
reassessment after the lapse of considerable time. Accordingly, the
actual income tax liability may differ significantly from that
estimated and recorded on the financial statements.

The accrual method of accounting will require management to
incorporate certain estimates of revenues, production costs and
other costs as at a specific reporting date. In addition, the
Corporation must estimate capital expenditures on capital projects
that are in progress or recently completed where actual costs have
not been received as of the reporting date.


Ithaca has established disclosure controls, procedures and corporate
policies so that its consolidated financial results are presented
accurately, fairly and on a timely basis. The Chief Executive
Officer and Chief Financial Officer have designed, or have caused
such internal controls over financial reporting to be designed under
their supervision, to provide reasonable assurance regarding the
reliability of financial reporting and preparation of the
Corporation's financial statements in accordance with IFRS with no
material weaknesses identified.

Based on their inherent limitations, disclosure controls and
procedures and internal controls over financial reporting may not
prevent or detect misstatements and even those options determined to
be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.

As of March 31, 2013, there were no changes in Ithaca's internal
control over financial reporting that occurred during the quarter
ended March 31, 2013 that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.


On January 1, 2011, the Corporation adopted IFRS using a transition
date of January 1, 2010. The financial statements for the quarter
ended March 31, 2013, including required comparative information,
have been prepared in accordance with International Finan


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