Ithaca Energy Inc Announces First Quarter Results

Ithaca Energy Inc Announces First Quarter Results 
ABERDEEN, SCOTLAND -- (Marketwired) -- 05/13/13 --  Ithaca Energy
Inc. (TSX VENTURE: IAE) (LSE: IAE) *T 
(TSX VENTURE: 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 
Financial 
- 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-F
reidheim 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, www.ithacaenergy.com. A short film summarising the Company's
GSA strategy and development execution plan is also available on the
website. 
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 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 www.sedar.com
and on the Company's website: www.ithacaenergy.com. 
Enquiries: 
Ithaca Energy Inc.
Iain McKendrick,   imckendrick@ithacaenergy.com   +44 (0) 1224 650 261
CEO
Graham Forbes, CFO gforbes@ithacaenergy.com       +44 (0) 1224 652 151 
Cenkos Securities
plc
Jon Fitzpatrick    jfitzpatrick@cenkos.com        +44 (0) 207 397 8900
Neil McDonald      nmcdonald@cenkos.com           +44 (0) 131 220 6939 
RBC Capital
Markets
Tim Chapman        tim.chapman@rbccm.com          +44 (0) 207 653 4641
Matthew Coakes     matthew.coakes@rbccm.com       +44 (0) 207 653 4871 
FTI Consulting
Billy Clegg        billy.clegg@fticonsulting.com   +44 (0) 207 269 7157
Edward Westropp  edward.westropp@fticonsulting.com +44 (0) 207 269 7230
Georgia Mann       georgia.mann@fticonsulting.com  +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 refl
ect 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 
-ENDS-  
HIGHLIGHTS FIRST QUARTER 2013 
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, 
2013 
- 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. 
SUMMARY STATEMENT OF INCOME 
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)                $/Sh.    0.13    0.11    18% 
(1) Average realized price before hedging 
(2 Weighted average number of shares of 259.9 million
  pre Valiant Acquisition 
SUMMARY BALANCE SHEET 
M$                                                   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 
CORPORATE STRATEGY 
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 
CONSOLIDATION 
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. 
PRODUCTION & OPERATIONS UPDATE 
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. 
GREATER STELLA AREA DEVELOPMENT UPDATE 
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 
progress. 
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 
yard. 
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. 
Q1 2013 CORPORATE ACTIVITIES 
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 
field. 
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. 
ACQUISITION OF VALIANT PETROLEUM PLC 
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, 
2013. 
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 
assets; 
- 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. 
COMMODITY HEDGING 
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. 
Q1 2013 RESULTS OF OPERATIONS 
REVENUE 
Record
quarterly
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 
COST OF SALES 
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 
inventory. 
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/ 
boe). 
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 
ADMINISTRATION & EXPLORATION & EVALUATION EXPEN
SES 
$'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. 
FOREIGN EXCHANGE & FINANCIAL INSTRUMENTS 
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 
hedges. 
TAXATION 
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. 
CAPITAL INVESTMENTS 
$'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. 
LIQUIDITY AND CAPITAL RESOURCES 
Significant
investment
in            $'000                    Q1 2013   Q4 2012   Increase /
development                                               (Decrease)
projects 
Cash & Cash Equivalents   65,636    31,376      34,260 
Trade & Other            139,915   173,949    (34,034) 
Receivables 
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 
Athena. 
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 
works. 
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. 
COMMITMENTS 
$'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. 
OUTSTANDING SHARE INFORMATION 
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 
shares. 
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, 
2013 
SUMMARY OF QUARTERLY RESULTS 
Restated 
$'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 
After 
Tax 
EPS -      0.01  0.17    0.02   0.12   0.05   0.05   0.06   0.01 
Basic 
EPS -      0.01  0.17    0.02   0.11   0.05   0.05   0.06   0.01 
Diluted 
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(R). Refer to
the"Changes in Accounting Policies" below for more details. 
FINANCIAL INSTRUMENTS 
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, 
2013. 
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 
2013 
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 
CRITICAL ACCOUNTING ESTIMATES 
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 
estimates. 
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 
periods. 
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 
instrument. 
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. 
CONTROL ENVIRONMENT 
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 
finan
cial 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. 
CHANGES IN ACCOUNTING POLICIES 
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 Financial 
Reporting Standards as issued by the International Accounting 
Standards Board ("IASB"). 
The Corporation elected to present all acquisitions since the IFRS 
transition date as business combinations in accordance with 
IFRS 3(R). 
One impact of accounting for acquisitions as business combinations 
is the recognition of asset values, upon which the DD&A rate is 
calculated as pre-tax fair values and the recognition of a deferred 
tax liability on estimated future cash flows. With current tax rates 
at 62% this increases the DD&A charge for such assets. An offsetting 
reduction is recognized in the deferred tax charged through the 
consolidated statement of income. 
In May 2011, the IASB issued the following standards: IFRS 10, 
Consolidated Financial Statements ("IFRS 10"), IFRS 11, Joint 
Arrangements ("IFRS 11"), IFRS 12, Disclosure of Interests in Other 
Entities ("IFRS 12"), IAS 27, Separate Financial Statements ("IAS 
27"), IFRS 13, Fair Value Measurement ("IFRS 13") and amended IAS 
28, Investments in Associates and Joint Ventures ("IAS 28"). Each of 
the new standards is effective for annual periods beginning on or 
after 1 January 2013. There has been no material impact from the 
adoption of the new and amended standards on the Corporation's 
financial statements. 
OTHER 
Non-IFRS
Measures'Cashflow from operations' referred to in this MD&A is 
not prescribed by IFRS. This non-IFRS financial measure 
does not have any standardized meaning and therefore is 
unlikely to be comparable to similar measures presented 
by other companies. The Corporation uses this measure to 
help evaluate its performance. As an indicator of the 
Corporation'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 Corporation 
considers Cashflow from operations to be a key measure 
as it demonstrates the Corporation's underlying ability 
to generate the cash necessary to fund operations and 
support activities related to its major assets. Cashflow 
from operations is determined by adding back changes in 
non-cash operating working capital to cash from 
operating activities. 
BOE
Presentation 
The calculation of boe is based on a conversion rate of 
six thousand cubic feet of natural gas ("mcf") to one 
barrel of crude oil ("bbl"). The term boe may be 
misleading, particularly if used in isolation. A boe 
conversion ratio of 6 mcf: 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. 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, utilizing a conversion 
ratio at 6 mcf: 1 bbl may be misleading as an indication 
of value. 
Off Balance
Sheet
Arrangements   The Corporation has certain lease agreements and rig 
commitments which were entered into in the normal course 
of operations, all of which are disclosed under the 
heading "Commitments", above. Leases are treated as 
either operating leases or finance leases based on the 
extent to which risks and rewards incidental to 
ownership lie with the lessor or the lessee under IAS 
17. No asset or liability value has been assigned to 
any leases on the balance sheet as at March 31, 2013. 
Related
Party
Transactions   A director of the Corporation is a partner of Burstall 
Winger LLP who acts as counsel for the Corporation. The 
amount of fees paid to Burstall Winger LLP in Q1 2013 
was $0.1 million (Q1 2012: $Nil). These transactions 
are in the normal course of business and are conducted 
on normal commercial terms with consideration comparable 
to those charged by third parties. 
As at March 31, 2013 the Corporation had a loan 
receivable from FPF-1 Ltd, an associate of the 
Corporation, for $21.6 million (Q1 2012: $Nil) as a 
result of the completion of the GSA transactions in 
2012. 
RISKS AND UNCERTAINTIES 
The business of exploring for, developing and producing oil 
and natural gas reserves is inherently risky. There is 
substantial risk that the manpower and capital employed 
will not result in the finding of new reserves in economic 
quantities. There is a risk that the sale of reserves may 
be delayed due to processing constraints, lack of pipeline 
capacity or lack of markets. The Corporation is dependent 
upon the production rates and oil price to fund the current 
development program. 
For additional detail regarding the Corporation's risks and 
uncertainties, refer to the Corporation's Annual 
Information Form dated March 25, 2013, (the "AIF") filed on 
SEDAR at www.sedar.com. 
RISK                           MITIGATIONS 
Commodity   The Corporation's performance  In order to mitigate the
Price       is significantly impacted by   risk of fluctuations in oil
Volatility  prevailing oil and natural gas and gas prices, the 
prices, which are primarily    Corporation routinely 
driven by supply and demand as executes commodity price 
well as economic and political derivatives, predominantly 
factors.                       in relation to oil 
production, as a means of 
establishing a floor in 
realised prices. 
Foreign     The Corporation is exposed to  Given the increasing
Exchange    financial risks including      proportion of development
Risk        financial market volatility,   capital expenditure and 
fluctuation in interest rates  operating costs incurred in 
and various foreign exchange   currencies other than the 
rates.                         United States dollar, the 
Corporation routinely 
executes hedges to mitigate 
foreign exchange rate risk 
on committed expenditure. 
Debt        The Corporation is exposed to  The Corporation believes
Facility    borrowing risks relating to    that there are no
Risk        drawdown of its senior secured circumstances at present 
borrowing base facility (the   that result in its
failure"Facility"). The ability to    to meet the financial tests 
dra
wdown the Facility is based and it can therefore draw 
on the Corporation meeting     down upon its Facility. 
certain covenants including 
coverage ratio tests, 
liquidity tests and 
development funding tests      The Corporation routinely 
which are determined by a      produces detailed cashflow 
detailed economic model of the forecasts to monitor its 
Corporation. There can be no   compliance with the 
assurance that the Corporation financial tests and 
will satisfy such tests in the liquidity requirements of 
future in order to have access the Facility. 
to the full amount of the 
Facility. 
The Facility includes 
covenants which restrict, 
among other things, the 
Corporation's ability to incur 
additional debt or dispose of 
assets. 
As is standard to a credit 
facility, the Corporation's 
and Ithaca Energy (UK) 
Limited's ("Ithaca UK") assets 
have been pledged as 
collateral and are subject to 
foreclosure in the event the 
Corporation or Ithaca UK 
defaults. 
Financing   To the extent cashflow from    The Corporation has
Risk        operations and Facility        established a fully funded 
resources are ever deemed not  business plan and routinely 
adequate to fund Ithaca's cash monitors its detailed 
requirements, external         cashflow forecasts and 
financing may be required.     liquidity requirements to 
Lack of timely access to such  maintain its funding 
additional financing, or       requirements. The 
access on unfavourable terms,  Corporation believes that 
could limit the future growth  there are no circumstances 
of the business of Ithaca. To  at present that would lead 
the extent that external       to selected divestment, 
sources of capital, including  delays to existing programs 
public and private markets,    or a default relating to the 
become limited or unavailable, Facility. 
Ithaca's ability to make the 
necessary capital investments 
to maintain or expand its 
current business and to make 
necessary principal payments 
under the Facility may be 
impaired. 
A failure to access adequate 
capital to continue its 
expenditure program may 
require that the Corporation 
meet any liquidity shortfalls 
through the selected 
divestment of its portfolio or 
delays to existing development 
programs. 
Third Party The Corporation is and may in  The Corporation believes
Credit Risk the future be exposed to third this risk is mitigated by 
party credit risk through its  the financial position of 
contractual arrangements with  the parties. All of the 
its current and future joint   Corporation's oil production 
venture partners, marketers of from the Beatrice, Jacky and 
its petroleum production and   Athena fields is sold to BP 
other parties. The Corporation Oil International Limited. 
extends unsecured credit to    Oil production from Cook and 
these parties, and therefore,  Broom is sold to Shell 
the collection of any          Trading International Ltd. 
receivables may be affected by Anglia and Topaz gas 
changes in the economic        production is sold through 
environment or other           contracts to RWE NPower PLC 
conditions.                    and Hess Energy Gas Power(UK)
Ltd. Cook gas is sold 
to Shell UK Ltd. and Esso 
Exploration & Production UK 
Ltd. The Corporation has not 
experienced any material 
credit loss in the 
collection of accounts 
receivable to date. 
The joint venture partners 
in those assets operated by 
the Corporation are largely 
well financed international 
companies. Where 
appropriate, a cash call 
process has been implemented 
with the GSA partners to 
cover high levels of 
anticipated capital 
expenditure thereby reducing 
any third party credit risk. 
Property    The Corporation's properties   The Corporation has routine
Risk        will be generally held in the  ongoing communications with 
form of licenses, concessions, the UK oil and gas 
permits and regulatory         regulatory body, the 
consents ("Authorizations").   Department of Energy and 
The Corporation's activities   Climate Change ("DECC"). 
are dependent upon the grant   Regular communication allows 
and maintenance of appropriate all parties to an 
Authorizations, which may not  Authorization to be fully 
be granted; may be made        informed as to the status of 
subject to limitations which,  any Authorization and 
if not met, will result in the ensures the Corporation 
termination or withdrawal of   remains updated regarding 
the Authorization; or may be   fulfilment of any applicable 
otherwise withdrawn. Also, in  requirements. 
the majority of its licenses, 
the Corporation is often a 
joint interest-holder with 
another third party over which 
it has no control. An 
Authorization may be revoked 
by the relevant regulatory 
authority if the other 
interest-holder is no longer 
deemed to be financially 
credible. 
There can be no assurance that 
any of the obligations 
required to maintain each 
Authorization will be met. 
Although the Corporation 
believes that the 
Authorizations will be renewed 
following expiry or granted 
(as the case may be), there 
can be no assurance that such 
Authorizations will be renewed 
or granted or as to the terms 
of such renewals or grants. 
The termination or expiration 
of the Corporation's 
Authorizations may have a 
material adverse effect on the 
Corporation's results of 
operations and business. 
The areas covered by the 
Authorizations are or may be 
subject to agreements with the 
proprietors of the land. If 
such agreements are 
terminated, found void or 
otherwise challenged, the 
Corporation may suffer 
significant damage through the 
loss of opportunity to 
identify and extract oil or 
gas. 
Operational The Corporation is subject to  The Corporation acts at all
Risk        the risks associated with      times as a reasonable and 
owning oil and
 natural gas     prudent operator. The 
properties, including          Corporation takes out market 
environmental risks associated insurance to mitigate many 
with air, land and water. All  of these operational, 
of the Corporation's           construction and 
operations are conducted       environmental risks. 
offshore in the United Kingdom 
Continental Shelf; as such 
Ithaca is exposed to 
operational risk associated    The Corporation uses the 
with weather delays that can   services of Sproule 
result in a material delay in  International Limited 
project execution. Third      ("Sproule") to independently 
parties operate some of the    assess the Corporation's 
assets in which the            reserves on an annual basis. 
Corporation has interests. As 
a result, the Corporation may 
have limited ability to 
exercise influence over the 
operations of these assets and 
their associated costs. The 
success and timing of these 
activities may be outside the 
Corporation's control. 
There are numerous 
uncertainties in estimating 
the Corporation's reserve base 
due to the complexities in 
estimating the magnitude and 
timing of future production, 
revenue, expenses and 
capital. 
Competition In all areas of the            The Corporation places
Risk        Corporation's business, there  appropriate emphasis on 
is competition with entities   ensuring it attracts and 
that may have greater          retains high quality 
technical and financial        resources to enable it to 
resources.                     maintain its competitive 
position. 
FORWARD-LOOKING INFORMATION 
This MD&A and any documents incorporated by reference 
herein contain certain forward-looking statements and 
forward-looking information which are based on the 
Corporation'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. The use of any of the words
"anticipate","continue", "estimate", "expect", "may", "will","project",
"plan", "should", "believe", "could","scheduled", "targeted",
"approximately" and similar 
expressions are intended to identify forward-looking 
statements and forward-looking information. These 
statements are not guarantees of future performance and 
involve 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 or information. The Corporation believes that 
the expectations reflected in those forward-looking 
statements and information 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 information 
included in this MD&A and any documents incorporated by 
reference herein should not be unduly relied upon. Such 
forward-looking statements and information speak only as 
of the date of this MD&A and any documents incorporated by 
reference herein and the Corporation does not undertake 
any obligation to publicly update or revise any 
forward-looking statements or information, except as 
required by applicable laws. 
In particular, this MD&A and any documents incorporated by 
reference herein, contains specific forward-looking 
statements and information pertaining to the following: 
- the quality of and future net revenues from the 
Corporation's reserves; 
- oil, natural gas liquids ("NGLs") and natural gas 
production levels; 
- commodity prices, foreign currency exchange rates 
and interest rates; 
- capital expenditure programs and other 
expenditures; 
- the sale, farming in, farming out or development of 
certain exploration properties using third party 
resources; 
- supply and demand for oil, NGLs and natural gas; 
- the Corporation's ability to raise capital; 
- the continued availability of the Facility; 
- the Corporation's acquisition strategy, the 
criteria to be considered in connection therewith and the 
benefits to be derived therefrom; 
- the realization of anticipated benefits from 
acquisitions and dispositions; 
- the Corporation's ability to continually add to 
reserves; 
- schedules and timing of certain projects and the 
Corporation's strategy for growth; 
- the Corporation's future operating and financial 
results; 
- the ability of the Corporation to optimize 
operations and reduce operational expenditures; 
- treatment under governmental and other regulatory 
regimes and tax, environmental and other laws; 
- production rates; 
- targeted production levels; and 
- timing and cost of the development of the 
Corporation's reserves. 
With respect to forward-looking statements contained in 
this MD&A and any documents incorporated by reference 
herein, the Corporation has made assumptions regarding, 
among other things: 
-  Ithaca's ability to obtain additional drilling rigs 
and other equipment in a timely manner, as required; 
-  access to third party hosts and associated 
pipelines can be negotiated and accessed within the 
expected timeframe; 
-  FDP approval and operational construction and 
development is obtained within expected timeframes; 
-  the Corporation's development plan for the Stella 
and Harrier discoveries will be implemented as planned; 
-  the effect of the Valiant Acquisition on Ithaca; 
-  reserves volumes assigned to Ithaca's properties; 
-  ability to recover reserves volumes assigned to 
Ithaca's properties; 
-  revenues do not decrease below anticipated levels 
and operating costs do not increase significantly above 
anticipated levels; 
- future oil, NGLs and natural gas production levels 
from Ithaca's properties and the prices obtained from the 
sales of such production;   -  the level of future capital
expenditure required to 
exploit and develop reserves; 
- Ithaca's ability to obtain financing on acceptable 
terms, in particular, the Corporation's ability to access 
the Facility; 
-  the continued ability of the Corporation to collect 
from third parties who Ithaca has provided credit to; 
- Ithaca's reliance on partners and their ability to 
meet commitments under relevant agreements; and 
- the state of the debt and equity markets in the 
current economic environment. 
The Corporation's actual results could differ materially 
from those anticipated in these forward-looking statements 
and information as a result of assumptions proving 
inaccurate and of both known and unknown risks, including 
the risk factors set forth in this MD&A and under the 
heading "Risk Factors" in the AIF and the documents 
incorporated by reference herein, and those set forth 
below: 
-  risks associated with the exploration for and 
development of oil and natural gas reserves in the North 
Sea; 
-  risks associated with the integration of Valiant 
into Ithaca's existing operations; 
-  risks associated with offshore development and 
production including transport facilities; 
-  operational risks and liabilities that are not 
covered by insurance; 
-  volatility in market prices for oil, NGLs and 
natural gas; 
-  the ability of the Corporation to fund its 
substantial capital requirements and operations; 
-  risks associated with ensuring title to the 
Corporation's properties; 
-  changes in environmental, health and safety or 
other legislation applicable to the Corporation's 
operations, and the Corporation's ability to comply with 
current and future environmental, health and safety and 
other laws; 
-  the accuracy of oil and gas reserve estimates and 
estimated production levels as they are affected by the 
Corporation's exploration and development drilling and 
estimated decline rates; 
-  the Corporation's success at acquisition, 
exploration, exploitation and development of reserves; 
-  risks associated with realisation of anticipated 
benefits of acquisitions; 
-  risks related to changes to government policy with 
regard to offshore drilling; 
-  the Corporation's reliance on key operational and 
management personnel; 
-  the ability of the Corporation to obtain and 
maintain all of its required permits and licenses; 
-  competition for, among other things, capital, 
drilling equipment, acquisitions of reserves, undeveloped 
lands and skilled personnel; 
-  changes in general economic, market and business 
conditions in Canada, North America, the United Kingdom, 
Europe and worldwide; 
-  actions by governmental or regulatory authorities 
including changes in income tax laws or changes in tax 
laws, royalty rates and incentive programs relating to the 
oil and gas industry including any increase in UK taxes; 
-  adverse regulatory rulings, orders and decisions; 
and 
-  risks associated with the nature of the common 
shares. 
Additional
Reader
Advisories   The information in this MD&A is provided as of May 10, 
2013. The Q1 2013 results have been compared to the 
results of the comparative period in 2012. This MD&A 
should be read in conjunction with the Corporation's 
unaudited consolidated financial statements as at March 
31, 2013 and 2012 and with the Corporation's audited 
consolidated financial statements as at December 31, 2012 
together with the accompanying notes and MD&A, and AIF for 
the 2012 fiscal year. Copies of these documents are 
available without charge from Ithaca or electronically on 
the internet on Ithaca's SEDAR profile at www.sedar.com. 
With respect to Ithaca's reserves disclosure, the figures 
are derived from a report prepared by 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 the 
Corporation and reviewed by Sproule. 
With respect to Valiant reserves, 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 Canadian 
National Instrument 51-101 - Standards of Disclosure for 
Oil and Gas Activities, with references to oil referring 
to medium quality oil. 
The Ithaca reserves correspond to those in the Statement
adjusted to reflect the increased Carna and Cook field 
equities acquired following the date of issue of the 
Statement. 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. 
If a discovery is made, there is no certainty that it will 
be developed, or if it is developed, there is no certainty 
as to the timing of such development or the benefits (if 
any) which may flow to the Corporation. Cashflow from 
operations includes the impact of executed hedges and does 
not include non-cash items such as DD&A, revaluation of 
financial instruments, impairments of fixed assets and 
movements in goodwill, which may have a significant impact 
on the Corporation's results. 
The reserve estimates set forth in this MD&A 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. 
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. 
Consolidated Statement of Income
For the three months ended 31 March 2013 and 2012
(unaudited)                                  2013     2012 
Note  US$'000  US$'000 
Revenue                                         4      59,769   40,553 
Cost of Sales                                   5    (46,458) (26,006) 
Gross Profit                                           13,311   14,547 
Exploration and evaluation expenses             9       (312)     (75) 
Administrative expenses                         6     (2,771)  (1,206) 
Operating Profit                                      10,228    13,266 
Foreign exchange                                         563     1,648 
(Loss) on financial instruments                 
23   (7,172)     (728) 
Negative goodwill                               11       914         - 
Profit on ordinary activities Before Interest and      4,533    14,186
Tax 
Finance costs                                   7    (2,276)     (469) 
Interest income                                           20        65 
Profit Before Tax                                      2,277    13,782 
Taxation - Deferred tax                         21     1,195     (866) 
Profit After Tax                                       3,472    12,916 
Earnings per share 
Basic                                           20      0.01      0.05 
Diluted                                         20      0.01      0.05 
The accompanying notes on pages 7 to 22 are an integral part of the
financial statements. 
Consolidated Statement of Comprehensive Income
For the three months ended 31 March 2013 and 2012
(unaudited) 
2013       2012 
US$'000    US$'000 
Profit for the period                                 3,472     12,916 
Net (loss) on oil price hedge                             -      (376) 
Other comprehensive income                                -      (376) 
Total comprehensive income                            3,472     12,540 
The accompanying notes on pages 7 to 22 are an integral part of the
financial statements. 
Consolidated Statement of Financial Position
(unaudited) 
31 March 2013 31 Dec 2012 
US$'000     US$'000 
ASSETS 
Current assets 
Cash and cash equivalents                          65,634       31,374 
Restricted cash                                         2            2 
Accounts receivable                               126,303      159,195 
Deposits, prepaid expenses and other                5,925       14,754 
Inventory                                8         26,131       15,878 
Derivative financial instruments         24         7,368        8,251 
231,363      229,454 
Non-current assets 
Long-term receivable                               21,551      21,551 
Investment in associate                            18,337      18,337 
Exploration and evaluation assets        9         49,186      47,390 
Property, plant & equipment              10       699,391     615,788
Goodwill                                 12           985         985 
789,450     704,051 
Total assets                                    1,020,813     933,505 
LIABILITIES AND EQUITY 
Current liabilities 
Trade and other payables                         194,278     205,635 
Derivative financial instruments         24        2,296           - 
196,574     205,635 
Non-current liabilities 
Bank debt                                14       47,312           - 
Decommissioning liabilities              15       57,494      52,834 
Other long term liabilities              16        2,961       3,018 
Contingent consideration                 17        4,000       4,000 
Deferred tax liabilities                 21      102,329      62,370 
214,096     122,222 
Net assets                                       610,143     605,648 
Shareholders' equity 
Share capital                            18      431,365     431,318 
Share based payment reserve              19       21,316      20,340 
Retained earnings                                157,462     153,990 
Total equity                                     610,143     605,648 
The financial statements were approved by the Board of Directors on 10
May 2013 and signed on its behalf by:"John Summers"
Director"Jay Zammit"
Director 
The accompanying notes on pages 7 to 22 are an integral part of the
financial statements. 
Consolidated Statement of Changes in Equity
(unaudited) 
Share      Share   Retained Other comp.    Total 
capital      based     E'ings      income 
payment 
reserve 
US$'000    US$'000    US$'000     US$'000   US$'000 
Balance, 1 Jan 2012 429,502     17,318     60,591           -   507,411 
Share based payment       -        862          -           -       862 
Unrealised hedging        -          -          -       (376)     (376)
loss 
Net income for the        -          -     12,916           -    12,916
period 
Balance, 31 March   429,502     18,180     73,507       (376)   520,813
2012 
Balance, 1 Jan 2013 431,318     20,340    153,990           -   605,648 
Share based payment       -        994          -           -       994 
Options exercised        47       (18)          -           -        29 
Net income for the        -          -      3,472           -     3,472
period 
Balance, 31 March   431,365     21,316    157,462           -   610,143
2013 
The accompanying notes on pages 7 to 22 are an integral part of the
financial statements. 
Consolidated Statement of Cash Flow
For the three months ended 31 March 2013 and 2012
(unaudited) 
Note                    2013      2012 
US$'000   US$'000 
Operating activities 
Profit Before Tax                                      2,277    13,782 
Adjustments for: 
Depletion, depreciation and     10                    19,498    13,385
amortisation 
Exploration and evaluation      9                        312        75
write off 
Share based payment             6                        295       135 
Loan fee amortisation                                    592        78 
Unrealised (gain)/loss on       23                    11,065     (765)
financial instruments 
Revaluation of contingent       17                        -      1,294
consideration 
Movement in goodwill            11                    (914)          - 
Accretion                       7                       502        384 
Bank charges                                          1,159          - 
Cashflow from operations                             34,786     28,368 
Changes in inventory, debtors                           882      (820)
and creditors relating to
operating activities 
Net cash from operating                             35,668      27,548
activities 
Investing activities 
Acquisition of Cook                               (33,370)           - 
Capital expenditure                               (25,384)    (22,508) 
Changes in debtors and
creditors relating to investing
activities                                         12,439      (7,810) 
Net cash (used in) investing                     (46,315)     (30,318)
activities 
Financing activities 
Proceeds from issuance of                             29            -
shares 
(Increase) in restricted cash                          -      (4,167) 
Derivatives                                      (7,947)            - 
Loan draw down                                    55,000            - 
Bank charges                                     (1,110)            - 
Net cash from/(used in)                           45,972      (4,167)
financing activities 
Currency translation                             (1,065)        1,336
differences relating to cash
and cash equivalents 
Increase/(decrease) in cash and                   34,260      (5,601)
cash equivalents 
Cash and cash equivalents,                        31,374       95,545
beginning of period 
Cash and cash equivalents, end                    65,634       89,944
of period 
The accompanying notes on pages 7 to 22 are an integral part of the
financial statements. 
1. NATURE OF OPERATIONS 
Ithaca Energy Inc. (the "Corporation" or "Ithaca"), incorporated and
domiciled in Alberta, Canada on 27 April 2004, is a publicly traded
company involved in the exploration, development and production of oil
and gas in the North Sea. The Corporation's registered office is 1600,
333 - 7th Avenue S.W., Calgary, Alberta, Canada, T2P 2Z1. The
Corporation's shares trade on the Toronto Stock Exchange in Canada and
the London Stock Exchange's Alternative Investment Market in the United
Kingdom under the symbol "IAE". Ithaca has four wholly-owned
subsidiaries, Ithaca Energy (UK) Limited ("Ithaca UK"), Ithaca Minerals
(North Sea) Limited ("Ithaca Minerals"), Ithaca Energy Holdings (UK)
Limited ("Ithaca Holdings UK"), all incorporated in Scotland, and
Ithaca Energy (Holdings) Limited ("Ithaca Holdings"), incorporated in
Bermuda. Ithaca also has two associates, FPU Services Limited ("FPU
Services") and FPF-1 Limited ("FPF-1"), both incorporated in Jersey. 
2. BASIS OF PREPARATION 
These interim consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
applicable to the preparation of interim financial statements,
including IAS 34 Interim Financial Reporting. These interim
consolidated financial statements do not include all the necessary
annual disclosures in accordance with IFRS. 
The policies applied in these condensed interim consolidated financial
statements are based on IFRS issued and outstanding as of 10 May 2012,
the date the Board of Directors approved the statements. Any subsequent
changes to IFRS that are given effect in the Corporation's annual
consolidated financial statements for the year ending 31 December 2013
could result in restatement of these interim consolidated financial
statements. 
The condensed interim consolidated financial statements should be read
in conjunction with the Corporation's annual financial statements for
the year ended 31 December 2012. 
3. SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATION
UNCERTAINTY 
Basis of measurement 
The consolidated financial statements have been prepared under the
historical cost convention, except for the revaluation of certain
financial assets and financial liabilities (under IFRS) to fair value,
including derivative instruments. 
Basis of consolidation 
The consolidated financial statements of the Corporation include the
accounts of Ithaca Energy Inc. and the wholly-owned subsidiaries Ithaca
Energy (UK) Limited, Ithaca Minerals (North Sea) Limited, Ithaca Energy
(Holdings) Limited and Ithaca Energy Holdings (UK) Limited. All
inter-company transactions and balances have been eliminated on
consolidation. 
A subsidiary is an entity which the Corporation controls by having the
power to govern the financial and operating policies. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether Ithaca controls
another entity. A subsidiary is fully consolidated from the date on
which control is obtained by Ithaca and is de-consolidated from the
date that control ceases. 
Investments in associates 
Interests in entities over which Ithaca has significant influence, but
not control or joint control, are accounted for using the equity
method. Ithaca's share of equity investments' results are recorded in
the consolidated statement of income 
Business Combinations 
Business combinations are accounted for using the acquisition method.
The cost of an acquisition is measured as the fair value of the assets
acquired, equity instruments issued and liabilities incurred or assumed
at the date of completion of the acquisition. Acquisition costs
incurred are expensed and included in administrative expenses.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair
values at the acquisition date. The excess of the cost of acquisition
over the fair value of the Corporation's share of the identifiable net
assets acquired is recorded as goodwill. If the cost of the acquisition
is less than the Corporation's share of the net assets required, the
difference is recognised directly in the statement of income. 
Goodwill 
Capitalisation 
Goodwill acquired through business combinations is initially measured
at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised as the fair value of the
Corporation's share of the identifiable net assets acquired and
liabilities assumed. If this consideration is lower than the fair value
of the identifiable assets acquired, the difference is recognised in
the statement of income. 
Impairment 
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 cash generating unit ("CGU") to which the goodwill
relates. Where the recoverable amount of the CGU is less than its
carrying amount, an impairment loss is recognised in the statement of
income. Impairment losses relating to goodwill cannot be reversed in
future periods. 
Foreign currency translation 
Items included in the financial statements are measured using the
currency of the primary economic environment in which the Corporation
and its subsidiaries operate (the 'functional currency'). The
consolidated financial statements are presented in United States
Dollars, which is the Corporation's functional and presentation
currency. 
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the statement of income. 
Share based payments 
The Corporation has a share based payment plan as described in note 18
(c). The expense is recorded in the statement of income or capitalised
for all options granted in the year, with the gross increase recorded
in the share based payment reserve. Compensation costs are based on the
estimated fair values at the time of the grant and the expense or
capitalised amount is recognised over the vesting period of the
options. Upon the exercise of the stock options, consideration paid
together with the amount previously recognised in share based payment
reserve is recorded as an increase in share capital. In the event that
vested options expire unexercised, previously recognised compensation
expense associated with such stock options is not reversed. In the
event that unvested options are forfeited or expired, previously
recognised compensation expense associated with the unvested portion of
such stock options is reversed. 
Cash and cash equivalents 
For the purpose of the statement of cash flow, cash and cash
equivalents include investments with an original maturity of three
months or less. 
Restricted cash 
Cash that is held for security for bank guarantees is reported in the
statement of financial position and statement of cash flow separately.
If the expected duration of the restriction is less than twelve months
then it is shown in current assets. 
Financial instruments 
All financial instruments, other than those designated as effective
hedging instruments, are initially recognised at fair value in the
statement of financial position. The Corporation's financial
instruments consist of cash, restricted cash, accounts
receivable, deposits, derivatives, accounts payable, accrued
liabilities, contingent consideration and the long term liability on
the Beatrice acquisition. The Corporation classifies its financial
instruments into one of the following categories: held-for-trading
financial assets and financial liabilities; held-to-maturity
investments; loans and receivables; and other financial liabilities.
All financial instruments are required to be measured at fair value on
initial rec
ognition. Measurement in subsequent periods is dependent on
the classification of the respective financial instrument. 
Held-for-trading financial instruments are subsequently measured at
fair value with changes in fair value recognised in net earnings. All
other categories of financial instruments are measured at amortised
cost using the effective interest method. Cash and cash equivalents are
classified as held-for-trading and are measured at fair value. Accounts
receivable are classified as loans and receivables. Accounts payable,
accrued liabilities, certain other long-term liabilities, and long-term
debt are classified as other financial liabilities. Although the
Corporation does not intend to trade its derivative financial
instruments, they are classified as held-for-trading for accounting
purposes. 
Transaction costs that are directly attributable to the acquisition or
issue of a financial asset or liability and original issue discounts on
long-term debt have been included in the carrying value of the related
financial asset or liability and are amortised to consolidated net
earnings over the life of the financial instrument using the effective
interest method. 
The Corporation may designate financial instruments as a hedging
instrument for accounting purposes. Hedge accounting requires the
designation of a hedging relationship, including a hedged and a hedging
item, identification of the risk exposure being hedged and an
expectation that the hedging relationship will be highly effective
throughout its term. 
The Corporation assesses, both at the hedge's inception and on an
ongoing basis, whether the derivative financial instruments designated
as hedges are highly effective in offsetting changes in cash flows of
the hedged items. The effective portion of the gains and losses on cash
flow hedges is recorded in Other Comprehensive Income until the hedged
transaction is recognised in net earnings. Any hedge ineffectiveness is
immediately recognised in net earnings. When the hedged transaction is
recognised in net earnings, the fair value of the associated cash flow
hedging item is reclassified from other reserves into net earnings.
Hedge accounting is discontinued on a prospective basis when the
hedging relationship no longer qualifies for hedge accounting. 
Analyses of the fair values of financial instruments and further
details as to how they are measured are provided in notes 23 to 25. 
Inventory 
Inventories of materials and product inventory supplies, other than oil
and gas inventories, are stated at the lower of cost and net realisable
value. Cost is determined on the first-in, first-out method. Oil and
gas inventories are stated at fair value less cost to sell. 
Property, plant and equipment 
Oil and gas expenditure - exploration and evaluation assets 
Capitalisation 
Pre-acquisition costs on oil and gas assets are recognised in the
statement of income when incurred. Costs incurred after rights to
explore have been obtained, such as geological and geophysical surveys,
drilling and commercial appraisal costs and other directly attributable
costs of exploration and evaluation including technical,
administrative and share based payment expenses are capitalised as
intangible exploration and evaluation ("E&E") assets. 
E&E costs are not amortised prior to the conclusion of evaluation
activities. At completion of evaluation activities, if technical
feasibility is demonstrated and commercial reserves are discovered
then, following development sanction, the carrying value of the E&E
asset is reclassified as a development and production ("D&P") asset,
but only after the carrying value is assessed for impairment and where
appropriate its carrying value adjusted. If after completion of
evaluation activities in an area, it is not possible to determine
technical feasibility and commercial viability or if the legal right to
explore expires or if the Corporation decides not to continue
exploration and evaluation activity, then the costs of such
unsuccessful exploration and evaluation are written off to the
statement of income in the period the relevant events occur. 
Impairment 
The Corporation's oil and gas assets are analysed into CGU for
impairment review purposes, with E&E asset impairment testing being
performed at a grouped CGU level. The current E&E CGU consists of the
Corporation's whole E&E portfolio. E&E assets are reviewed for
impairment when circumstances arise which indicate that the carrying
value of an E&E asset exceeds the recoverable amount. When reviewing E&E
assets for impairment, the combined carrying value of the grouped
CGU is compared with the grouped CGU's recoverable amount. The
recoverable amount of a grouped CGU is determined as the higher of its
fair value less costs to sell and value in use. Impairment losses
resulting from an impairment review are written off to the statement of
income. 
Oil and gas expenditure - development and production assets 
Capitalisation 
Costs of bringing a field into production, including the cost of
facilities, wells and sub-sea equipment, direct costs including staff
costs and share based payment expense together with E&E assets
reclassified in accordance with the above policy, are capitalised as a
D&P asset. Normally each individual field development will form an
individual D&P asset but there may be cases, such as phased
developments, or multiple fields around a single production facility
when fields are grouped together to form a single D&P asset. 
Depreciation 
All costs relating to a development are accumulated and not depreciated
until the commencement of production. Depreciation is calculated on a
unit of production basis based on the proved and probable reserves of
the asset. Any re-assessment of reserves affects the depreciation rate
prospectively. Significant items of plant and equipment will normally
be fully depreciated over the life of the field. However, these items
are assessed to consider if their useful lives differ from the expected
life of the D&P asset and should this occur a different depreciation
rate would be charged. 
Impairment 
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 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. 
Non oil and natural gas operations 
Computer and office equipment is recorded at cost and depreciated over
its estimated useful life on a straight-line basis over three years.
Furniture and fixtures are recorded at cost and depreciated over their
estimated useful lives on a straight-line basis over five years. 
Decommissioning liabilities 
The Corporation records the present value of legal obligations
associated with the retirement of long-term tangible assets, such as
producing well sites and processing plants, in the period in which they
are incurred with a corresponding increase in the carrying amount of
the related long-term asset. The obligation generally arises when the
asset is installed or the ground/environment is disturbed at the field
location. In subsequent periods, the asset is adjusted for any changes
in the estimated amount or timing of the settlement of the obligations.
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. 
Contingent consideration 
Contingent consideration is accounted for as a financial liability and
measured at fair value at the date of acquisition with any subsequent
remeasurements recognised either in profit or loss or in other
comprehensive income in accordance with IAS 39. 
Taxation 
Current income tax 
Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amounts are those that are
enacted or substantively enacted by the reporting date. 
Deferred income tax 
Deferred tax is recognised for all deductible temporary differences and
the carry-forward of unused tax losses. Deferred tax assets and
liabilities are measured using enacted or substantively enacted income
tax rates expected to apply to taxable income in the years in which
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in rates is
included in earnings in the period of the enactment date. Deferred tax
assets are recorded in the consolidated financial statements if
realisation is considered more likely than not. 
Recent accounting pronouncements 
In May 2011, the IASB issued the following standards: IFRS 10,
Consolidated Financial Statements ("IFRS 10"), IFRS 11, Joint
Arrangements ("IFRS 11"), IFRS 12, Disclosure of Interests in Other
Entities ("IFRS 12"), IAS 27, Separate Financial Statements ("IAS 27"),
IFRS 13, Fair Value Measurement ("IFRS 13") and amended IAS 28,
Investments in Associates and Joint Ventures ("IAS 28"). Each of the
new standards is effective for annual periods beginning on or after 1
January 2013. There has been no material impact from the adoption of
the new and amended standards on the Corporation's financial
statements. 
Significant accounting judgements and estimation uncertainties 
The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions regarding certain
assets, liabilities, revenues and expenses. Such estimates must often
be made based on unsettled transactions and other events and a precise
determination of many assets and liabilities is dependent upon future
events. Actual results may differ from estimated amounts. 
The amounts recorded for depletion, depreciation of property and
equipment, long-term liability, share based payment, contingent
consideration, decommissioning liabilities, derivatives, and deferred
taxes are based on estimates. The depreciation charge and any
impairment tests are based on estimates of proved and probable
reserves, production rates, prices, future costs and other relevant
assumptions. By their nature, these estimates are subject to
measurement uncertainty and the effect on the financial statements of
changes in such estimates in future periods could be material. Further
information on each of these estimates is included within the notes to
the financial statements. 
4. REVENUE 
Three months ended 31 March 
2013          2012 
US$'000       US$'000 
Oil sales                                         56,153        35,808 
Gas sales                                          2,771         2,821 
Condensate sales                                     137           170 
Other income                                         708         1,754 
Total                                             59,769        40,553 
5. COST OF SALES 
Three months ended 31 March 
2013           2012 
US$'000        US$'000 
Operating costs                                (23,227)       (15,721) 
Oil purchases                                     (157)              - 
Movement in oil and gas inventory               (3,576)          3,100 
Depletion, depreciation and amortisation 10    (19,498)       (13,385) 
(46,458)       (26,006) 
6. ADMINISTRATIVE EXPENSES 
Three months ended 31 March 
2013           2012 
US$'000        US$'000 
General & administrative                        (2,476)        (1,071) 
Share based payment                               (295)          (135) 
(2,771)        (1,206) 
7. FINANCE COSTS                                    Three months ended 31
March 
2013           2012 
US$'000        US$'000 
Accretion                                         (502)          (384) 
Bank charges & interest                         (1,164)            (6) 
Loan fee amortisation                             (592)           (78) 
Non-operated asset finance fees                    (18)            (1) 
(2,276)          (469) 
8. INVENTORY 
31 March         31 Dec 
2013           2012 
US$'000        US$'000 
Crude oil inventory                              26,118         15,865 
Materials inventory                                  13             13 
26,131         15,878 
9. EXPLORATION AND EVALUATION ASSETS 
US$'000 
At 1 January 2012                                               22,689 
Additions                                                       38,188 
Write offs/relinquishments                                     (4,261) 
Disposals                                                      (9,226) 
At 31 December 2012                                             47,390 
Additions                                                        2,108 
Write offs/relinquishments                                       (312) 
At 31 March 2013                                                49,186 
Following completion of geotechnical evaluation activity, certain
licences were declared unsuccessful and certain prospects were declared
non-commercial and therefore the related expenditures of $0.3 million
were expensed in the three months to 31 March 2013. 
10. PROPERY, PLANT AND EQUIPMENT 
Development & Production  Other fixed 
Oil and Gas Assets       assets      Total 
US$'000      US$'000    US$'000 
Cost 
At 1 January 2012                       623,549        2,292    625,841 
Additions                               139,383          133    139,516 
Disposals                              (37,912)            -   (37,912) 
At 31 December 2012                     725,020        2,425    727,445 
Additions                               103,070           31    103,101 
At 31 March 2013                        828,090        2,456    830,546 
DD&A 
At 1 January 2012                      (53,988)      (1,497)   (55,485) 
Charge for the period                  (55,770)        (402)   (56,172) 
At 31 December 2012                   (109,758)      (1,899)  (111,657) 
Charge for the quarter                 (19,397)        (101)   (19,498) 
At 31 March 2013                      (129,155)      (2,000)  (131,155) 
NBV at 1 January 2012                   569,561          795    570,356 
NBV at 1 January 2013                   615,262          526    615,788 
NBV at 31 March 2013                    698,935          456    699,391 
11. BUSINESS COMBINATION 
On 5 February 2013 the Company completed the acquisition of
wholly-owned UK subsidiary of Noble Energy Capital Limited, which owns
a 12.885% non-operated interest in the Cook field (increasing the
Company's field interest in Cook to 41.345%). The total acquisition
consideration was $37.7 million. 
The fair values of the identifiable assets and liabilities of Cook as
at the acquisition date were: 
Fair value 
US$'000 
Oil and gas properties                                           70,533 
Inventories                                                      14,014 
Trade receivables                                                   142 
Trade and other payables                                          (734) 
Deferred tax liabilities                                       (41,153) 
Provisions                                                      (4,158) 
Total identifiable net assets at fair value                      38,644 
Negative goodwill arising on acquisition                          (914) 
Total consideration                                              37,730 
The cash outflow on acquisition is as follows: 
Cash paid                                                      (37,730) 
Net consolidated cash flow                                     (37,730) 
12. GOODWILL 
US$'000 
Cost 
At 1 January 2012, 31 December 2012 & 31 March 2013                985 
$1.0 million represents goodwill recognised on the acquisition of gas
assets from GDF in December 2010. As at 31 March 2013, the recoverable
amount of assets acquired from GDF was sufficiently high to support the
carrying value of this goodwill. 
13. INVESTMENT IN ASSOCIATES 
31 March    31 Dec 
2013      2012 
US$'000   US$'000 
Investments in FPF-1 and FPU services                 18,337    18,337 
Investment in associates comprises shares, acquired by Ithaca Holdings,
in FPF-1 and FPU services as part of the completion of the Greater
Stella Area transactions in 2012. There has been no change in value
during the period with the above investment reflecting the Company's
share of the associates' results. 
14. LOAN FACILITY 
On 29 June 2012, the Corporation executed a Senior Secured Borrowing
Base Facility agreement (the "Facility") for up to $430 million, being
provided by BNPP as Lead Arranger. The loan term is up to five years
and will attract interest at LIBOR plus 3-4.5%. This Facility replaces
the previous undrawn $140 million debt facility with Lloyds Banking
Group. 
The Corporation is subject to financial and operating covenants related
to the Facility. Failure to meet the terms of one or more of these
covenants may constitute an event of default as defined in the Facility
agreement, potentially resulting in accelerated repayment of the debt
obligations. 
Security provided against the loan 
Security provided against the loan is in the form of a floating charge
over all assets. 
The Corporation is in compliance with its financial and operating
covenants. 
As at 31 March 2013, $55 million was drawn down under the Facility. The
$47 million in the balance sheet represents amounts drawn down net of
unamortised loan fees. 
15. DECOMMISSIONING LIABILITIES 
31 March     31 Dec 
2013       2012 
US$'000    US$'000 
Balance, beginning of period                          52,834    39,3832 
Additions                                              4,158      9,613 
Accretion                                                502      1,777 
Revision to estimates                                      -      2,062 
Balance, end of period                                57,494     52,834 
The total future decommissioning liability was calculated by management
based on its net ownership interest in all wells and facilities,
estimated costs to reclaim and abandon wells and facilities and the
estimated timing of the costs to be incurred in future periods. The
Corporation uses a risk free rate of 3.8 percent (31 December 2012: 3.8
percent) and an inflation rate of 2.1 percent (31 December 2012: 2.1
percent) over the varying lives of the assets to calculate
the present value of the decommissioning liabilities. These costs
are expected to be incurred at various intervals over the next 10
years. 
The economic life and the timing of the obligations are dependent on
Government legislation, commodity price and the future production
profiles of the respective production and development facilities. Note
that upon the acquisition of the Beatrice Field in November 2008, the
Corporation did not assume the decommissioning liabilities. 
16. OTHER LONG-TERM LIABILITIES 
31 March    31 Dec 
2013      2012 
US$'000   US$'000 
Balance, beginning of period                            3,018     2,785 
Revaluation in the period                                (57)       233 
Balance, end of period                                  2,961     3,018 
On completion of the acquisition of the Beatrice Facilities on 10
November 2008 there were 75,000 barrels of oil in an oil storage tank
at the Nigg Terminal. This volume of oil is required to be in the
storage tank when the Beatrice Facilities are retransferred. This
volume of oil is valued at the price on the forward oil price curve at
the expected date of re-transfer and discounted. The liability is
subject to revaluation at each financial period end. The expected date
of re-transfer is likely to be between 2 and 5 years in the future. 
17. CONTINGENT CONSIDERATION 
31 March     31 Dec 
2013       2012 
US$'000    US$'000 
Balance, beginning of period                           4,000     24,580 
Revision to estimates                                      -      1,295 
Release                                                    -   (21,875) 
Balance, end of period                                 4,000      4,000 
The contingent consideration at the end of the period relates to the
acquisition of the Stella field and is payable upon first oil. 
18. SHARE CAPITAL 
No. of ordinary     Amount
Authorised share capital                                000     US$'000 
At 31 December 2012 and 31 March 2013             Unlimited          - 
(a) Issued 
The issued share capital is as follows: 
Issued                                     Number of common      Amount 
shares     US$'000 
Balance 1 January 2012                          259,164,461     429,502 
Issued for cash - options exercised                 755,542       1,020 
Transfer from Share based payment reserve on              -         796
options exercised 
Balance 1 January 2013                          259,920,003     431,318 
Issued for cash - options exercised                  33,333          29 
Transfer from Share based payment reserve on              -          18
options exercised 
Balance 31 March 2013                           259,953,336     431,365 
(b) Stock options 
In the quarter ended 31 March 2013, the Corporation's Board of
Directors granted 90,000 options at a weighted average exercise price
of $2.00 (C$1.97). 
The Corporation's stock options and exercise prices are denominated in
Canadian Dollars when granted. As at 31 March 2013, 20,344,631 stock
options to purchase common shares were outstanding, having an exercise
price range of $0.20 to $2.73 (C$0.25 to C$2.31) per share and a
vesting period of up to 3 years in the future. 
Changes to the Corporation's stock options are summarised as follows: 
31 March 2013           31 December 2012 
Wt. Avg                    Wt. Avg 
No. of  Exercise       No. of      Exercise 
Options    Price*      Options        Price* 
Balance, beginning of   20,347,964     $1.63   17,506,839         $1.66
period 
Granted                     90,000     $2.00    6,045,000         $2.05 
Forfeited / expired       (60,000)     $2.70  (2,448,333)         $3.42 
Exercised                 (33,333)     $1.79    (755,542)         $1.26 
Options                20,344,631      $1.64   20,347,964         $1.63 
* The weighted average exercise price has been converted into U.S.
dollars based on the foreign exchange rate in effect at the date of
issuance. 
The following is a summary of stock options as at 31 March 2013 
Options Outstanding 
Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price* 
$2.22-$2.73        5,290,000           1.8        $2.24
(C$2.25-C$2.31) 
$1.49-$1.79       10,421,667           2.4        $1.81
(C$1.54-C$1.99) 
$0.20-$0.81        4,632,964           0.5        $0.56
(C$0.25-C$0.87) 
20,344,631           1.8        $1.64 
Options Exercisable 
Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price*
$2.22-$2.73        3,393,336           1.8        $2.24
(C$2.25-C$2.31) 
$1.49-$1.79        4,500,001           0.9        $1.52
(C$1.54-C$1.99) 
$0.20-$0.81        4,632,964           0.5        $0.56
(C$0.25-C$0.87) 
12,526,301           1.0        $1.36 
The following is a summary of stock options as at 31 December 2012 
Options Outstanding 
Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price* 
$2.22-$2.70        5,350,000           2.0        $2.22
(C$2.25-C$2.69) 
$1.49-$2.03       10,331,667           2.6        $1.81
(C$1.54-C$1.99) 
$0.20-$0.81        4,666,297           0.8        $0.56
(C$0.25-C$0.87) 
20,347,964           2.0        $1.63 
Options Exercisable 
Wt. Avg      Wt. Avg
Range of              No. of          Life     Exercise
Exercise Price       Options       (Years)       Price* 
$2.22-$2.70        3,280,003           2.0        $2.22
(C$2.25-C$2.69) 
$1.49-$2.03        3,113,338           1.2        $1.53
(C$1.54-C$1.99)
$0.20-$0.81        4,666,297           0.8        $0.80
(C$0.25-C$0.87) 
11,059,638            1.3        $1.43 
(c) Share based payments 
Options granted are accounted for using the fair value method. The
cost during the three months ended 31 March 2013 for total stock
options granted was $0.9 million (Q1 2012: $1.6 million). $0.3 million
was charged through the statement of income for stock based
compensation for the three months ended 31 March 2013, being the
Corporation's share of stock based compensation chargeable through the
statement of income. The remainder of the Corporation's share of stock
based compensation has been capitalised. The fair value of each stock
option granted was estimated at the date of grant, using the
Black-Scholes option pricing model with the following assumptions: 
For the three months       For the year 
ended              ended 
31 March 2013   31 December 2012 
Risk free interest rate                         1.3%               0.4%
Expected stock volatility                        63%                74%
Expected life of options                     3 years            3 years
Weighted Average Fair Value                    $0.91              $1.08 
19. SHARE BASED PAYMENT RESERVE 
31 March       31 Dec 
2013         2012 
US$'000      US$'000 
Balance, beginning of period                        20,340       17,318 
Share based payment cost                               994        3,817 
Transfer to share capital on exercise of options      (18)        (795) 
Balance, end of period                              21,316       20,340 
20.  EARNINGS PER SHARE 
The calculation of basic earnings per share is based on the profit
after tax and the weighted average number of common shares in issue
during the period. The calculation of diluted earnings per share is
based on the profit after tax and the weighted average number of
potential common shares in issue during the period. 
Three months ended 31 March 
2013        2012 
Weighted av. number of common shares (basic)    259,944,818 259,164,461 
Weighted av. number of common shares (diluted)  264,926,389 265,009,444 
21.  TAXATION 
Three months ended 31 March 
2013    2012 
US$'000 US$'000 
Deferred tax                                              1,195     866 
2012 deferred tax includes the tax effect of $614,000 on the loss of
oil price hedging shown through the Statement of Other Comprehensive
Income. 
22.  COMMITMENTS 
31 March  31 Dec 
2013    2012
US$'000 US$'000 
Operating lease commitments 
Within one year                                         12,742   12,759 
Two to five years                                       15,722   18,756 
More than five years                                        -        65 
31 March   31 Dec 
2013     2012
Capital commitments                                    US$'000  US$'000 
Capital commitments incurred jointly with other         91,438  111,747
ventures (Ithaca's share) 
23.  FINANCIAL INSTRUMENTS 
To estimate fair value of financial instruments, the Corporation uses
quoted market prices when available, or industry accepted third-party
models and valuation methodologies that utilise observable market data.
In addition to market information, the Corporation incorporates
transaction specific details that market participants would utilise in
a fair value measurement, including the impact of non-performance risk.
The Corporation characterises inputs used in determining fair value
using a hierarchy that prioritises inputs depending on the degree to
which they are observable. However, these fair value estimates may not
necessarily be indicative of the amounts that could be realised or
settled in a current market transaction. The three levels of the fair
value hierarchy are as follows: 
- Level 1 - inputs represent quoted prices in active markets for
identical assets or liabilities (for example, exchange-traded commodity
derivatives). Active markets are those in which transactions occur in
sufficient frequency and volume to provide pricing information on an
ongoing basis. 
- Level 2 - inputs other than quoted prices included within Level 1
that are observable, either directly or indirectly, as of the reporting
date. Level 2 valuations are based on inputs, including quoted forward
prices for commodities, market interest rates, and volatility factors,
which can be observed or corroborated in the marketplace. The
Corporation obtains information from sources such as the New York
Mercantile Exchange and independent price publications. 
- Level 3 - inputs that are less observable, unavailable or where the
observable data does not support the majority of the instrument's fair
value. 
In forming estimates, the Corporation utilises the most observable
inputs available for valuation purposes. If a fair value measurement
reflects inputs of different levels within the hierarchy, the
measurement is categorised based upon the lowest level of input that is
significant to the fair value measurement. The valuation of
over-the-counter financial swaps and collars is based on similar
transactions observable in active markets or industry standard models
that primarily rely on market observable inputs. Substantially all of
the assumptions for industry standard models are observable in active
markets throughout the full term of the instrument. These are
categorised as Level 2. 
The following table presents the Corporation's material financial
instruments measured at fair value for each hierarchy level as of 31
March 2013: 
Total Fair 
Level 1   Level 2  Level 3      Value 
US$'000   US$'000  US$'000    US$'000 
Derivative financial instrument         -     7,368        -      7,368
asset 
Long term liability on Beatrice         -         -   (2,961)   (2,961)
acquisition 
Contingent consideration                -   (4,000)         -   (4,000) 
Derivative financial instrument         -   (2,296)         -   (2,296)
liability 
The table below presents the total gain / (loss) on financial
instruments that has been disclosed through the statement of
comprehensive income: 
Three months ended 31 March     2013
2012 
US$'000  US$'000 
Revaluation of forex forward contracts     (2,055)      969 
Revaluation of gas contract                      -    (114) 
Revaluation of other long term liability        57     (90) 
Revaluation of commodity hedges            (9,067)        - 
(11,065)      765 
Realised loss on forex contracts             (293)        - 
Realised gain/(loss) on commodity hedges     4,186    (199) 
(7,172)      566 
Contingent consideration                        -   (1,294) 
Total (loss) on financial instruments      (7,172)    (728) 
The Corporation has identified that it is exposed principally to these
areas of market risk. 
i) Commodity Risk 
The table below presents the total (loss)/gain on commodity hedges that
has been disclosed through the statement of comprehensive income: 
Three months ended 31 March 
2013      2012 
US$'000   US$'000 
Revaluation of commodity hedges          (9,067)         - 
Realised gain/(loss) on commodity hedges   4,186     (199) 
Total (loss) on commodity hedges         (4,881)     (199) 
Commodity price risk related to crude oil prices is the Corporation's
most significant market risk exposure. Crude oil prices and quality
differentials are influenced by worldwide factors such as OPEC actions,
political events and supply and demand fundamentals. The Corporation is
also exposed to natural gas price movements on uncontracted gas sales.
Natural gas prices, in addition to the worldwide factors noted above,
can also be influenced by local market conditions. The Corporation's
expenditures are subject to the effects of inflation, and prices
received for the product sold are not readily adjustable to cover any
increase in expenses from inflation. The Corporation may periodically
use different types of derivative instruments to manage its exposure to
price volatility, thus mitigating fluctuations in commodity-related
cash flows. 
The below represents commodity hedges in place: 
Derivative                 Term             Volume           Average 
price 
Oil puts                   Jan 13 - Mar 14   779,299  bbls   $110/bbl
Oil swaps (including       Jan 13 - Sep 14 2,297,753  bbls   $108/bbl
swaption) 
Gas swaps                  Jan 13 - Dec 14 3,066,000  therms 66.45p/ 
therm 
ii) Interest Risk 
Calculation of interest payments for the Senior Secured Borrowing Base
Facility agreement with BNP Paribas that was signed on 29 June 2012
incorporates LIBOR. The Corporation will therefore be exposed to
interest rate risk to the extent that LIBOR may fluctuate. The
Corporation will evaluate its annual forward cash flow requirements on
a rolling monthly basis. 
iii) Foreign Exchange Rate Risk 
The table below presents the total (loss) on foreign exchange financial
instruments that has been disclosed through the statement of income: 
Three months ended 31 March 
2013    2012 
US$'000 US$'000 
Revaluation of forex forward contracts       (2,055)     969 
Realised loss on forex forward contracts       (293)       - 
Total (loss)/gain on forex forward contracts (2,348)     969 
The Corporation is exposed to foreign exchange risks to the extent it
transacts in various currencies, while measuring and reporting its
results in US Dollars. Since time passes between the recording of a
receivable or payable transaction and its collection or payment, the
Corporation is exposed to gains or losses on non-USD amounts and on
statement of financial position translation of monetary accounts
denominated in non-USD amounts upon spot rate fluctuations from quarter
to quarter. 
The below represents foreign exchange financial instruments in place: 
Derivative Term            Value          Protection rate Trigger rate
Forward    Jan 13 - Dec 13 GBP4 million/  $1.59/GBP1.00   $1.50/GBP1.00
plus                       month 
Forward    Apr 13 - Jan 14 GBP120 million $1.52/GBP1.00   N/A 
iv) Credit Risk 
The Corporation's accounts receivable with customers in the oil and gas
industry are subject to normal industry credit risks and are unsecured.
All of its oil production from the Beatrice, Jacky and Athena fields is
sold to BP Oil International Limited. Oil production from Cook and
Broom is sold to Shell Trading International Ltd. Anglia and Topaz gas
production is currently sold through three contracts to RWE NPower PLC
and Hess Energy Gas Power (UK) Ltd. Cook gas is sold to Shell UK Ltd
and Esso Exploration & Production UK Ltd. 
The Corporation assesses partners' credit worthiness before entering
into farm-in or joint venture agreements. In the past, the Corporation
has not experienced credit loss in the collection of accounts
receivable. As the Corporation's exploration, drilling and development
activities expand with existing and new joint venture partners, the
Corporation will assess and continuously update its management of
associated credit risk and related procedures. 
The Corporation regularly monitors all customer receivable balances
outstanding in excess of 90 days. As at 31 March 2013, substantially
all accounts receivables are current, being defined as less than 90
days. The Corporation has no allowance for doubtful accounts as at 31
March 2013 (31 December 2012: $Nil). 
The Corporation may be exposed to certain losses in the event that
counterparties to derivative financial instruments are unable to meet
the terms of the contracts. The Corporation's exposure is limited to
those counterparties holding derivative contracts
 with positive fair
values at the reporting date. As at 31 March 2013, exposure is $7.4
million (31 December 2012: $8.3 million). 
The Corporation also has credit risk arising from cash and cash
equivalents held with banks and financial institutions. The maximum
credit exposure associated with financial assets is the carrying
values. 
v) Liquidity Risk 
Liquidity risk includes the risk that as a result of its operational
liquidity requirements the Corporation will not have sufficient funds
to settle a transaction on the due date. The Corporation manages
liquidity risk by maintaining adequate cash reserves, banking
facilities, and by considering medium and future requirements by
continuously monitoring forecast and actual cash flows. The Corporation
considers the maturity profiles of its financial assets and
liabilities. As at 31 March 2013, substantially all accounts payable
are current. 
The following table shows the timing of contractual cash outflows
relating to trade and other payables. 
Within 1 year 1 to 5 years 
US$'000       US$'000 
Accounts payable and accrued liabilities      194,278             - 
Other long term liabilities                         -         2,961 
194,278         2,961 
24.  DERIVATIVE FINANCIAL INSTRUMENTS 
31 March   31 December 
2013          2012 
US$'000       US$'000 
Oil swaps                                       4,013         2,497 
Oil put options                                 3,257         5,667 
Gas swaps                                       (143)            87 
Foreign exchange forward contract             (2,055)             -
5,072         8,251 
Refer to note 23 for further details of derivative financial
instruments. 
25.  FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES 
Financial instruments of the Corporation consist mainly of cash and
cash equivalents, receivables, payables, loans and financial derivative
contracts, all of which are included in these financial statements. At
31 March 2013, the classification of financial instruments and the
carrying amounts reported on the balance sheet and their estimated fair
values are as follows: 
31 March 2013    31 December 2012 
US$'000             US$'000 
Classification                   Carrying     Fair   Carrying     Fair 
Amount    Value     Amount    Value 
Cash and cash equivalents (Held   65,634    65,634    31,374    31,374
for trading) 
Restricted cash                        2         2         2         2 
Accounts receivable (Loans and   126,303   126,303   159,195   159,195
Receivables) 
Deposits                             243       243       247       247 
Contingent consideration         (4,000)   (4,000)   (4,000)   (4,000) 
Derivative financial             (2,296)   (2,296)        -         -
instruments (Held for trading) 
Other long term liabilities      (2,961)   (2,961)   (3,018)   (3,018) 
Accounts payable (Other        (194,278) (194,278) (205,635) (205,635)
financial liabilities) 
26. RELATED PARTY TRANSACTIONS 
The consolidated financial statements include the financial statements
of Ithaca Energy Inc and the subsidiaries listed in the following
table: 
Country of       % equity interest at 31 
incorporation              March 
2013        2012 
Ithaca Energy (UK) Limited  Scotland            100%        100% 
Ithaca Minerals (North Sea) Scotland            100%        100%
Limited 
Ithaca Energy (Holdings)    Bermuda             100%        N/A
Limited 
Ithaca Energy Holdings (UK) Scotland            100%        N/A
Limited 
Transactions between subsidiaries are eliminated on consolidation. 
The following table provides the total amount of transactions that have
been entered into with related parties during the quarter ending 31
March 2013 and 31 March 2012, as well as balances with related parties
as of 31 March 2013 and 31 December 2012: 
Sales Purchases   Accounts    Accounts 
receivable     payable 
US$'000   US$'000    US$'000     US$'000 
Burstall Winger LLP  2013        -        57          -           - 
2012        -         -          -           - 
A director of the Corporation is a partner of Burstall Winger LLP who
acts as counsel for the Corporation. 
Loans to related parties   Amounts owed from related parties 
2013             2012 
US$'000          US$'000 
FPF-1 Limited                        21,551           21,551 
27. SEASONALITY 
The effect of seasonality on the Corporation's financial results for
any individual quarter is not material. 
28. POST BALANCE SHEET EVENTS 
Acquisition of Valiant Petroleum plc 
In March 2013, the Boards of Ithaca and Valiant announced that they had
reached agreement on the terms of a recommended acquisition
(the"Acquisition"). The Acquisition became effective on 19 April 2013 with
Ithaca Energy Holdings (UK) Limited acquiring the entire issued and to
be issued share capital of Valiant. 
The total acquisition price was approximately $309 million, which
equated to approximately GBP4.75 per Valiant share. Approximately $200
million of the consideration was payable in cash (being approximately
GBP3.07/ Valiant share) and approximately $109 million in new Ithaca
shares ("Consideration Shares" equating to 1.33 Ithaca shares per
Valiant share). The Company also repaid ~$150 million Valiant debt/
working capital bringing the total enterprise value to $459 million. 
Given the proximity of the Acquisition to the quarter end, no
provisional fair values have yet been determined. 
This information is provided by RNS 
The company news service from the London Stock Exchange 
END 


 
 
 
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