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Ithaca Energy Inc.

Third Quarter 2016 Operations Update

6 October 2016

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") provides an operations update following the end of the third quarter of the year ("Q3-2016" or the "Quarter"). The Company is scheduled to issue its financial results for the first nine months of the year on 14 November 2016.

Highlights

· 9,550 boepd average production for first nine months of 2016 - ahead of 9,000 boepd guidance

· FPF-1 offshore hook-up and commissioning operations progressing to plan - start-up of the Stella field continues to be anticipated in November 2016

· Significant progress made on installation of the oil export pipeline from the FPF-1 to the Norpipe system

· Continued deleveraging, with net debt at 30 September 2016 reduced to $598 million

Production & Operations

The producing asset portfolio has performed well over the first nine months of the year ("YTD-2016"), with production running ahead of guidance. Average production during the Quarter was approximately 9,900 boepd, resulting in YTD-2016 average production of 9,550 boepd.

It is anticipated that full year base production, excluding any contribution from the start-up of the Stella field during 2016, will be modestly ahead of the 9,000 boepd guidance range. During the final quarter of the year, base production volumes will be reduced compared to the previous quarters as a result of the approximately two week planned maintenance shutdown of the Brent Pipeline System that serves the Company's Northern North Sea fields.

Greater Stella Area Development

Good progress has been made on the final stages of the Stella development programme since the FPF-1 floating production facility set sail from Poland in August 2016. The FPF-1 was safely towed to the field, moored on location and the dynamic risers and umbilical connecting the subsea infrastructure to the vessel installed as planned. Technip is in the process of concluding the remaining subsea commissioning works. At the same time the FPF-1 offshore commissioning programme is on-going, with preparation of the topsides processing and utility systems for the introduction of hydrocarbons underway. The scheduled completion of these activities remains in line with previous guidance, with first hydrocarbons from the Stella field anticipated in November 2016.

Significant progress was also made during the Quarter on the work programme associated with making the switch from tanker loading to oil pipeline exports for the Greater Stella Area in 2017. The 44 kilometre spurline from the FPF-1 to the Norpipe system was successfully installed as planned in September 2016. The key outstanding activities that now remain to be completed are the manufacture and installation of pipeline export pumps on the FPF-1 and the final subsea connections that need undertaking immediately prior to the switchover.

Financials

Hedging

During Q3-2016 approximately 9,900 boepd (47% oil) of commodity hedges were realised at an average price of $56/boe. The volume of production hedged in the final quarter of 2016 remains unchanged, at approximately 8,800 boepd (50% oil) at an average price of $59/boe.

Operating Expenditure

As previously guided, average unit operating expenditure in 2016 for the existing producing asset base is anticipated to be approximately $25/boe. Following the start-up of production from the Stella field this cost is forecast to reduce to approximately $20/boe, reflecting the lower unit operating costs associated with the field.

Net Debt

Net debt at 30 September 2016 reduced to $598 million. The Company has in place total available debt facilities of $730 million, providing in excess of $130 million of funding headroom ahead of planned first hydrocarbons from the Stella field. This funding capacity comprises $300 million unsecured senior notes and $430 million bank debt facilities.

Q3-2016 Financial Results Conference Call

The Company is scheduled to release its Q3-2016 financial results on 14 November 2016. A conference call and webcast for investors and analysts will be held on the same day at 12.00 GMT (07.00 EST). Listen to the call live via the Company's website (www.ithacaenergy.com) or alternatively dial-in on one of the following telephone numbers and request access to the Ithaca Energy conference call: UK +44 (0)203 059 8125; Canada +1 855 287 9927; US +1 855 442 0877.

Glossary

boe Barrels of oil equivalent

boepd Barrels of oil equivalent per day

MMbbl Millions of barrels of oil

RBL Reserves Based Lending facility

- ENDS -

Enquiries:

Ithaca Energy

Les Thomas lthomas@ithacaenergy.com +44 (0)1224 650 261

Graham Forbes gforbes@ithacaenergy.com +44 (0)1224 652 151

Richard Smith rsmith@ithacaenergy.com +44 (0)1224 652 172

FTI Consulting

Edward Westropp edward.westropp@fticonsulting.com +44 (0)203 727 1521

Cenkos Securities

Neil McDonald nmcdonald@cenkos.com +44 (0)207 397 1953

Nick Tulloch ntulloch@cenkos.com +44 (0)131 220 9772

Beth McKiernan bmckiernan@cenkos.com +44 (0)131 220 9778

RBC Capital Markets

Matthew Coakes matthew.coakes@rbccm.com +44 (0)207 653 4000

Laura White laura.white@rbccm.com +44 (0)207 653 4000

Notes

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 and gas industry.

References herein to barrels of oil equivalent ("boe") are 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. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 bbl, utilising a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.

About Ithaca Energy

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) is a North Sea oil and gas operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries and the exploitation of its existing UK producing asset portfolio. Ithaca's strategy is centred on generating sustainable long term shareholder value by building a highly profitable 25kboe/d North Sea oil and gas company. For further information please consult the Company's website www.ithacaenergy.com.

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, drilling, construction and maintenance times, well completion times, risks associated with operations, future capital expenditures, continued availability of financing for future capital expenditures, future acquisitions and dispositions 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 and phrases like "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, including remaining FPF-1 work activities prior to Stella first hydrocarbons, the timing of Stella start-up and first hydrocarbons, production forecasts, duration and timing of planned maintenance shutdowns and expected reduction in base production volumes during the final quarter of the year as a result, timing of Q3-2016 financial results release, anticipated operating expenditures, 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 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 included in this press release should not be unduly relied upon. These forward-looking statements speak only as of the date of this press release. 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.

Additional information on these and other factors that could affect Ithaca's operations and financial results are included in the Company's Management Discussion and Analysis for the quarter ended 30 June 2016 and the Company's Annual Information Form for the year ended 31 December 2015 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

This announcement contains inside information.