Tender Deadline Reminder

10 Apr

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014).

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) (“Ithaca” or the “Company”) highlights, in respect of the previously announced all-cash takeover offer by Delek Group Ltd (“Delek”) for all of the issued and to be issued common shares of the Company not currently owned by Delek or any of its affiliates for C$1.95 per share (the “Offer”), that the initial deposit period deadline is 17.00 (Toronto time) on 20 April 2017 (the “Expiry Time”).

Shareholders wishing to accept the Offer must take action to deposit their shares. No shareholders will be deemed to have accepted the Offer as a result of the actions of other holders.

Shareholders who hold their shares via an intermediary such as an investment advisor, stockbroker, bank, trust company or nominee, should note that their intermediary’s deposit cut-off times will likely be prior to the Expiry Time of the Offer.

Successful completion of the Offer is conditional upon, amongst other things, more than 50% of the common shares outstanding (excluding the shares already owned by Delek and its affiliates) being validly deposited under the Offer prior to the Expiry Time (the “Minimum Tender Condition”). No deposited shares will be purchased by Delek or any of its affiliates if the Minimum Tender Condition is not satisfied.

The Board of Directors, excluding the Delek related party directors, reiterates its unanimous recommendation that acceptance of the Offer is in the best interests of shareholders. It is also noted that the independent equity research coverage of the Company has been supportive of the transaction.

Full details of the Offer are contained in the takeover bid circular issued by Delek and the Directors’ Circular issued by Ithaca, both of which are available on the Company’s website (www.ithacaenergy.com) and on SEDAR (www.sedar.com).

Information on Depositing Your Shares

Shares Held via an Intermediary
If you hold your shares through an intermediary such as an investment advisor, stockbroker, bank, trust company or nominee, to accept the Offer you should contact your intermediary as soon as possible and they will assist you in validly depositing your shares.

Letter of Transmittal (Yellow Form)
If you have share certificate(s) for your shares – you MUST use the Letter of Transmittal (available at www.ithacaenergy.com). You should complete and return the form along with your share certificate(s). If you are unable to return your certificate(s) (eg. because they are lost), please see (i) paragraph 11 (Lost or Mutilated Certificates) on page 21 of the form; (ii) the Pink Form below and / or (iii) contact Computershare who can advise you of the further actions you must take

If you hold your shares electronically in Canada through CDS - you MUST follow the procedure for book-entry established by CDS (in which case you will be deemed to have completed and submitted a Letter of Transmittal)

If you hold your shares electronically in the UK through the CREST system – DO NOT use the Letter of Transmittal. You need to submit an electronic TTE Instruction as set out on pages 23-24 of the takeover bid circular dated 14 March 2017 (in which case you will be deemed to have completed and submitted the Letter of Transmittal). Please note that the TTE Instruction must be submitted by no later than 15.00 (London time) on 19 April 2017, although it is likely your intermediary will have set an instruction deadline ahead of this time

Notice of Guaranteed Delivery (Pink Form)
The Notice of Guaranteed Delivery is only applicable in certain circumstances for certificated shareholders (available at www.ithacaenergy.com). This form is to be completed and returned along with the Letter of Transmittal for certificated shareholders whose share certificates are not immediately available if the deposit of shares will be made by or through an “Eligible Institution” (being a relevant financial institution as set out on page 3 of the form)

If assistance is required with accepting the Offer and depositing your shares, please contact Computershare (the Depositary) on:

• North America: +1 800 564 6253 or +1 514 982 7555 (collect calls accepted)
• UK: +44 (0)370 703 6347
• Email: corporateactions@computershare.com

Questions on the Offer can also be directed to the information agents, Laurel Hill Advisory Group and RD:IR. Laurel Hill Advisory Group can be contacted on +1 877 452 7184 (within North America) or +1 416 304 0211 (outside of North America) or by e-mail at assistance@laurelhill.com. RD:IR can be contacted by email at corporateactions@rdir.com.

Further Information on the Offer

As previously announced, the Board of Directors excluding the Delek related party directors (the “Directors”), after consulting with its financial and legal advisers, considers the terms of the Offer to be in the best interests of Ithaca and its shareholders and accordingly unanimously recommends that shareholders accept the Offer and deposit their shares.

Reasons to Accept the Offer
In reaching its unanimous recommendation to shareholders to accept the Offer, the Directors evaluated multiple factors, including those summarised below. The evaluation and its conclusion was made in light of the Directors’ own knowledge of the business, the industry and the financial condition and prospects of the Company and based upon the recommendation of a special committee of independent directors (“the Special Committee”), which has been advised by RBC Capital Markets (“RBC”) in its capacity as financial advisor to the Company.

The principal reasons for the recommendation are centred on an evaluation of the fullness of the Offer relative to the future risk profile of the business.

• Offer Price at the Upper End of Independent Valuation Range. The Special Committee engaged GMP FirstEnergy, as an independent valuator, to prepare a formal valuation in connection with the Offer in accordance with Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). GMP FirstEnergy was of the opinion that, as of 9 March 2017, the fair market value of the common shares was in the range of C$1.60 to C$2.10 per common share.
• Premium to Analyst Consensus Price Targets. The Offer price represents a premium of approximately 20% to the average analyst consensus target price of C$1.60 per share as at 3 February 2017¹.
• Favourable Transaction Timing. The consideration payable for oil and gas company transactions is driven predominantly by calculations of discounted future cash flows, with risk factors applied to development projects dependent on remaining uncertainties. For this reason, the Directors consider entering into the transaction shortly before Stella first hydrocarbons to be highly advantageous for realising full value without taking exposure to post start-up operational risk.
• Avoidance of Operational and Refinancing Risks. The Company has near term operational and re-financing execution risks ahead of it, the most immediate of which include: bringing the Stella field into full production in line with expectations; executing Harrier development drilling on budget and with reservoir performance in line with expectations; and, refinancing the aggregate approximately US$910 million² of existing bank facilities, senior notes and prepayment facilities. While the Company expects it would be able to successfully navigate such risks, the Directors do not consider that the resultant shareholder value creation is likely to be sufficiently in excess of the Offer price to compensate for taking such risks.
• Reliance on Greater Stella Area Satellites. The Company intends to build out the Greater Stella Area ("GSA") production hub through securing satellite field tie-backs. If these are not secured, the potential benefits of the hub will be diluted. One of the anticipated near term tie-backs, Vorlich, is not solely under the control of the Company. While the Company believes the most efficient development solution for the Vorlich field is a tie-back to the GSA infrastructure, the field development plan has yet to be agreed with the operator, who owns other infrastructure in the area, and the UK Oil and Gas Authority. The potential impact of this risk has been considered by the Directors in recommending the Offer.
• Future Growth Potential. Notwithstanding the successful track record of the Company, at this point in the lifecycle of the UK Continental Shelf oil and gas sector, the Directors believe that there are limited prospects for delivering a step change in the scale and operations of the Company without the addition of significant capital. There can be no guarantee that such capital would be available to the Company in the timeframes or on the terms required to provide shareholders with the prospect of a satisfactory equity rate of return.
• Review of Alternatives. The Special Committee, after thorough review and discussion with its financial advisor, believes that there are limited prospects for alternative transactions that provide an immediate premium cash consideration to shareholders given the lack of potential acquirers of UK North Sea oil and gas companies.
• Immediate Cash Premium to Shareholders. The Offer provides shareholders with the opportunity to crystallise the value of their holdings in cash, with the Offer price representing a 12% premium to the Toronto Stock Exchange closing price on the 3 February 2017 (being the last trading day before announcement of the Offer) and a 27% premium to the 60 day volume weighted average trading price to 3 February 2017.
• Capitalising on Share Price Appreciation. The Offer allows shareholders to capitalise in cash on the value of the Company’s sustained share price growth over the last 12 months, with the Offer price of C$1.95 per share being more than 360% higher than the 30 day volume weighted average trading price to 6 February 2016.

A fuller explanation of the reasons underlying the recommendation to accept the Offer is contained in the Directors’ Circular, along with a full summary of the definitive support agreement entered into between Ithaca and Delek on 6 February 2017.

The Directors’ Circular also sets out other factors concerning the Offer that shareholders should be aware of, including:

• There is no obligation on the Offeror to complete a compulsory acquisition of any shares not tendered to the Offer.
• While the AIM Rules for Companies (“AIM Rules”) do not prescribe the required levels of free float for a company to be eligible for trading on AIM, depending on the number of shares purchased pursuant to the Offer it is possible that the subsequent remaining free float could be insufficient to satisfy the criteria for continued admission of the shares for trading on AIM.
• If the Offeror acquires sufficient shares under the Offer it could be in a position to force delisting or cancellation of the Company’s shares from AIM. Under the AIM Rules, cancellation of a company’s shares from trading on AIM is generally conditional upon the consent of not less than 75% of votes cast by its shareholders given in a shareholder meeting.
• The rules of the Toronto Stock Exchange (“TSX”) establish certain criteria, which if not met, could lead to the cessation of trading and delisting of the Company’s shares from the TSX.

Lock-Up Agreements
Based on the reasons underpinning the Directors’ recommendation, all the Directors and officers of Ithaca have entered into lock-up agreements under which they have irrevocably undertaken to tender their own beneficial shareholdings in the Company, which amount in aggregate to 11,275,940 common shares (excluding common shares issued under options with an exercise price higher than the Offer price), representing approximately 2.6% of the entire issued and to be issued common shares of Ithaca. The lock-up agreements are subject to customary termination provisions. There are no agreements or arrangements in place between the Directors and officers of Ithaca and Delek providing any payment or other benefit proposed to be made or given by way of compensation for loss of office or their remaining in or retiring from office if the Offer is successful.

- ENDS -

Enquiries:

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

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

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

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

Kim Camilleri
kim.camilleri@fticonsulting.com
+44 (0)203 727 1349

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

Martin Copeland
martin.copeland@rbccm.com
+44 (0)207 653 4000

Cenkos Securities
Neil McDonald
nmcdonald@cenkos.com
+44 (0)207 397 8900

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

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

Notes

1. The average analyst consensus target price as of 3 February 2017, being the last trading day prior to announcement of the Offer, is calculated based on the targets produced by the institutions that cover the Company, being: Barclays, BMO, Canaccord Genuity, Cenkos, FinnCap, GMP FirstEnergy, Investec, Mackie Research Capital Corporation, Macquarie, Peel Hunt, RBC. Price targets quoted in pounds sterling have been converted to Canadian dollars using the exchange rate on 3 February 2017.
2. The aggregate amount includes the Company's existing US$535 million senior reserves base lending facility, US$300 million senior unsecured loan notes and approximately US$75 million oil and gas prepayment facilities.

Advisors
RBC is acting as financial advisor to the Company and has delivered a fairness opinion addressed to the Special Committee. GMP FirstEnergy is acting as the formal valuator under the terms of MI 61-101. Pinsent Masons LLP and Burstall Winger Zammit LLP are acting as legal counsel to Ithaca. The Company has also received strategic advice from Geopoint Advisory Limited.

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

About Delek
The Delek Group, Israel's dominant integrated energy company, is the pioneering leader of the natural gas exploration and production activities that are transforming the Eastern Mediterranean's Levant Basin into one of the energy industry's most promising emerging regions. Having discovered Tamar and Leviathan, two of the world's largest natural gas finds since 2000, Delek and its partners are now developing a balanced, world-class portfolio of exploration, development and production assets. Delek’s head office is located at 19 Abba Eban Blvd., P.O.B. 2054, Herzeliya 4612001, Israel.

Forward-Looking Statements
This announcement may contain, in addition to historical information, certain forward-looking statements related to the Company, including anticipated future events and circumstances, including in particular, but not limited to, statements relating to the Offer, satisfaction of the conditions to the Offer, certain strategic and financial benefits expected to result from the completion of the proposed acquisition by the Offeror of more than 50% of the outstanding common shares not already owned by the Offeror or its affiliates and the intentions, and plans and future actions of the Company, the Offeror and Delek. Forward-looking information is provided to assist the reader with understanding the Company’s expectations, plans and priorities for future periods or with respect to applicable events. Readers are cautioned that such information may not be appropriate for other purposes. This information is based on the estimates, beliefs and assumptions of the directors and management of the Company regarding the markets in which the Company operates. In some cases, forward-looking information may be identified by words such as "anticipate", "believe", "could", "expect", "plan", "seek", "may", "intend", "will", "forecast" and similar expressions.

Such forward looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements of Ithaca to differ materially from any future results, performance or achievements expressed or implied by such forward looking statements, including the risk that all conditions of the Offer will not be satisfied. Many of these risks and uncertainties relate to factors that are beyond Ithaca's ability to control or estimate precisely, such as future market conditions, changes in regulatory environment, the behaviour of other market participants and the failure to satisfy the conditions to completion of the Offer (including the Minimum Tender Condition and receiving any required regulatory approvals), the risk of unexpected costs or liabilities relating to the Offer. Some of these risk factors are largely beyond the control of the Company. These are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of the Company’s forward-looking statements. Other unknown and unpredictable factors could also impact its results. Ithaca cannot give any assurance that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. Ithaca disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

For additional information on assumptions used to develop forward-looking information and risk factors that could cause actual results to differ materially from forward-looking information, please refer to the "Risks and Uncertainties" section of the Company’s Management Discussion & Analysis for the period ended 31 December 2016 and the "Forward-Looking Statements" and "Risk Factors" sections of the Company’s Annual Information Form for the year ended 31 December 2016, which are available under the Company's SEDAR profile at www.sedar.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Such an offer may only be made pursuant to an offer and takeover bid circular filed with the securities regulatory authorities in Canada and pursuant to registration or qualification under the securities laws of any other applicable jurisdiction. The distribution of this press release in or into certain jurisdictions may be restricted by law and therefore persons into whose possession this press release comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

This material is not a substitute for the offer and takeover bid circular or the Directors' Circular which will be filed with the securities regulatory authorities in Canada regarding the proposed transaction or for any other document which Ithaca or Delek or the Offeror may file with securities regulators and send to Ithaca shareholders in connection with the proposed transaction. SECURITY HOLDERS OF ITHACA ARE URGED TO READ ANY SUCH DOCUMENTS CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. If and when they become available to eligible viewers, the offer and takeover bid circular and the Directors' Circular, along with any related documents, will be available free of charge under the profile of Ithaca on the website maintained by the Canadian securities regulators at www.sedar.com.

Tender Deadline Reminder