Ithaca Energy Completes Acquisition of Stella & Harrier Discovery & Secures FPSO for Athena Development

LONDON, UNITED KINGDOM and CALGARY, ALBERTA–(EMWNews – Aug. 21, 2008) –

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

Ithaca Energy Inc (‘Ithaca Energy’ or ‘Company’) (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited is pleased to announce it has completed the acquisition of a 66.67% working interest in the Stella and Harrier Shallow discoveries; as well as secured the services of the ‘Uisge Gorm, a Floating Production, Storage and Offloading vessel (FPSO), for the development of the Athena Field. The successful conclusion to both of these agreements follows the completion of the recent equity financing.

Stella & Harrier:

The Stella and Harrier Shallow discoveries have been acquired from joint owners Shell U.K. Limited and Esso Exploration and Production UK Limited. As previously stated, the initial consideration for the acquisition is US$15 million, with an additional US$15 million payable at the time of field development approval. Ithaca’s net proceeds from production will be subject to a 5% over-riding royalty.

Stella and Harrier lie in UKCS Block 30/6 Rest of Block (Chalk Layers and Younger). Sproule Associates Limited, in its review of Ithaca Energy’s reserves effective May 31, 2008, assigned proved reserves of 4.60 million barrels of oil equivalent (“MMboe”), probable reserves of 5.19 MMboe and possible reserves of 13.87 MMboe to the Stella field.

Ithaca Energy (UK) Limited will work with the block operator and license partner, Maersk, on planning an appraisal well on the Stella discovery for drilling in the first half 2009. If this well proves successful, the Company intends to fast track the project towards Field Development Plan (‘FDP’) approval with its partner, the Department of Business Enterprise and Regulatory Reform (“BERR”) and other stake holders.

Stella was discovered in 1979 by the 30/6-2 well and subsequently appraised by well 30/6-3 in 1983, which tested at 2,750 barrels of oil equivalent per day (‘bopd’) of condensate and 23 million cubic feet per day (‘MMcfpd’). A well drilled by Maersk in 2004, confirmed the presence of gas-condensate, testing at 3,200 bopd and 17MMcfpd. A gas water contact has yet to be encountered.

Harrier Shallow was discovered in 2002, with well 30/6-4 testing condensate and gas in the upper Cretaceous Ekofisk and Tor formations. Further technical work is required to better understand the Harrier Shallow discovery.

Athena FPSO Agreement:

The Company has now entered into an Execution Agreement with Bluewater Operations (UK) Ltd, which secures the services of the ‘Uisge Gorm, FPSO for the development of the Athena field as planned. This agreement follows the previous Exclusivity Agreement announced on 29th May 2008.

With the services of an FPSO secured and the field Environmental Statement being currently out for public consultation, the development of the Athena field remains on schedule for production at the end of 2009 or early 2010, subject to BERR approval of the FDP.

The use of an FPSO over a conventional tie back facility significantly reduces the Company’s capital outlay, increases potential production levels as well as accelerates first oil production from the Athena field by up to one year.

The Execution Agreement reflects the results of engineering studies into the modifications required on the FPSO to develop the Athena field and represents agreement on the terms and conditions of the FPSO contract. Final definition of a small number of outstanding technical aspects of the service will be concluded within the next few days.

Ithaca Energy is the operator of the Athena field and holds a 70% working interest, with partners EWE Aktiengesellschaft holding 20% and Zeus Petroleum holding the remaining 10%.

Commenting, Lawrie Payne, CEO of Ithaca, said:

“Delivering both of these major agreements as expected post the recent fund raising is a major step forward for the Company. The successful acquisition of the Stella and Harrier discoveries adds significant additional opportunities, reserves and value. Securing the FPSO on time and within the terms set out in the original Exclusivity Agreement is also a huge achievement and a leap forward in the development of the Athena field.”

READER ADVISORY

This news release contains certain forward-looking statements, including all statements which address activities, events or developments that Ithaca Energy expects, believes or anticipates will or may occur in the future. Such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Ithaca Energy’s control and which are based on various assumptions (including assumptions with respect to (i) availability of funds; and (ii) future capital expenditures) which may prove incorrect. Such risks and uncertainties include, without limitation the impact of general economic conditions in the areas in which Ithaca Energy operates, civil unrest, industry conditions, changes in laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. Please refer to the company’s Annual Information Form for the year ended 2006 and dated April 30th, 2007 and available for viewing at www.sedar.com, for a list of additional risk factors. Ithaca Energy’s actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Ithaca Energy will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Ithaca Energy or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Ithaca Energy does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

In accordance with AIM Guidelines, Lawrie Payne, MA Marine Geology (Alberta & Columbia) and CEO of Ithaca Energy is the qualified person that has reviewed the technical information contained in this press release.