Ivanhoe Energy 2007 fourth-quarter results and update on operations



    
       Ivanhoe Energy initiates major restructuring in preparation for
                 multiple,commercial HTL Heavy-Oil Projects

            Robert Friedland will become Executive Chairman & CEO
                           of Ivanhoe Energy Inc.
    

    VANCOUVER, March 17 /CNW/ - Ivanhoe Energy Inc. (NASDAQ:   IVAN and
TSX: IE) announces summary financial results for the fourth quarter of 2007
and will file its Annual Report on Form 10-K for the year ended December 31,
2007, later today.

    HTL Technology Development Activities and Corporate Restructuring

    Ivanhoe Energy is an independent international, heavy-oil development and
production company focused on pursuing long-term growth in its reserves and
production using advanced technologies, including its proprietary heavy-oil
upgrading process (HTL(TM)). Ivanhoe's patented HTL technology addresses the
key challenges faced by heavy-oil asset owners with cost-effective,
field-located, small minimum-scale upgrading facilities. Ivanhoe intends to
use this technology advantage, together with the extensive experience base of
its management team, to develop heavy-oil opportunities in Canada and
worldwide through production-sharing agreements, joint ventures and/or
acquisitions.
    To facilitate the implementation of our business strategy, we plan to
undertake a reorganization of our corporate, business and governance
structures. We will create two new geographically focused business units that
will pursue project opportunities in Latin America and the Middle East and
North Africa (MENA), respectively. These new business units will operate
through separate subsidiary companies in much the same way as our China
business unit is operated through our Sunwing subsidiary. Like Sunwing, our
new Latin America and MENA business units each will have its own board of
directors and senior management team. Initially, the Latin America and MENA
subsidiaries and Sunwing will remain wholly owned, and will be funded by
Ivanhoe Energy. However it is intended that each of them eventually will
become financially independent and as their respective, regional business
strategies unfold, it is expected that each of them will seek and obtain
external sources of funding from third parties and capital markets that will
effectively reduce Ivanhoe Energy's ownership interest.
    Ivanhoe Energy itself will retain ownership of the HTL technology and
will concentrate its business development efforts on project opportunities in
Canada, the US, and other areas not addressed by subsidiary companies. The
Athabasca Oil Sands will be a primary focus. Our Latin America business unit
will continue the pursuit of opportunities to apply the HTL technology to
heavy-oil projects in Ecuador and elsewhere in Latin America. Our MENA
business unit will focus on heavy-oil project opportunities in the Middle East
and North Africa region, with a particular focus on Iraq, Egypt and Libya. It
also will be responsible for advancing our Gas-to-Liquids project opportunity
in Egypt. Sunwing will continue to operate our existing enhanced oil recovery
(EOR) and exploration projects in China and to pursue business development
initiatives in the East Asia region. Each of our Latin America, MENA and East
Asia business units will have the exclusive right within its own defined
geographical region to obtain from Ivanhoe Energy project-specific site
licenses for the HTL technology as and when decisions are made to develop HTL
projects.
    To more effectively utilize the extensive geographically-specific
experience and expertise of our existing senior management personnel and board
of directors, certain Ivanhoe Energy executive officers will be re-assigned to
senior management positions within the Latin America and MENA business units
and a number of incumbent directors will leave the Ivanhoe Energy board of
directors and become directors of one or more of our Latin America, MENA and
Sunwing subsidiaries. Robert M. Friedland, Deputy Chairman of Ivanhoe Energy
Inc., will become Executive Chairman and Chief Executive Officer.. These
changes to the Ivanhoe Energy board of directors and senior management will
take effect following the annual general meeting of shareholders, which is
scheduled to be held on May 29, 2008.
    In 2007, Ivanhoe completed the HTL equipment and process testing
associated with the Commercial Demonstration Facility in California. Following
this work, Ivanhoe's principal focus has shifted to full-scale commercial
deployment of HTL facilities. This effort includes the pursuit of
opportunities in Canada and elsewhere in business arrangements that may
provide Ivanhoe with a share of reserves and production of heavy oil. In
addition, in certain industrial and geographic markets, Ivanhoe is pursuing
opportunities where shareholder value can be generated through commercial
deployment of HTL in business arrangements that may not include the generation
of reserves and production for Ivanhoe.

    The Company's implementation strategy includes the following:

    
    1.  Build a portfolio of major HTL projects. We will continue to deploy
        our personnel and our financial resources in support of our goal to
        capture opportunities for development projects utilizing our HTL
        technology.

    2.  Advance the technology. Additional development work will continue as
        we advance the technology through the first commercial application,
        and beyond.

    3.  Enhance our financial position in anticipation of major projects.
        Implementation of large projects requires significant capital
        outlays. We are refining our financing plans and establishing the
        relationships required for the development activities that we see
        ahead.

    4.  Build internal capabilities in advance of major projects. The HTL
        technical team, which includes our own staff, specialized consultants
        - including the inventors of the technology - and our EOR team will
        be supplemented and expanded to add expertise in areas such as
        project management.

    5.  Build the relationships that we will need for the future.
        Commercialization of our technologies demands close alignment with
        partners, suppliers, host governments and financiers.

    U.S. Oil and Gas Operations
    (unaudited; thousands of U.S. dollars except per share and production
     amounts)

                        -------------------------------  --------------------
                               Three Months Ended             Year Ended
                        -------------------------------  --------------------
                         Dec. 31   Sept. 30    Dec. 31    Dec. 31    Dec. 31
                           2007      2007        2006       2007       2006
                        ---------  ---------  ---------  ---------  ---------
    Financial
    ---------
    Revenue             $    563   $  1,469   $  2,213   $  6,828   $ 11,780
    Depletion and
     depreciation       $  1,482   $  1,306   $  1,472   $  5,884   $  5,378
    Capital investments $    614   $    645   $    568   $  3,052   $  5,550
    Identifiable assets
     (at end of period) $ 40,726   $ 42,328   $ 42,158

    Operating
    ---------
    Net production
     (after royalties):
      Barrel of oil
       equivalent (BOE)   48,611     43,374     53,274    198,844    219,930
      BOE/day for the
       period                528        471        579        545        603


    South Midway
    ------------
    We have 60 producing wells in the 1,400-acre South Midway heavy-oil field
in California, with a working interest of 100%. Production results from our
recent eight-well program will begin to be realized in the first quarter of
2008. This field, which makes up the majority of our U.S. production, is
currently producing approximately 497 gross barrels of oil per day.

    China Oil and Gas Operations
    (unaudited; thousands of U.S. dollars except per share and production
     amounts)

                        -------------------------------  --------------------
                               Three Months Ended             Year Ended
                        -------------------------------  --------------------
                         Dec. 31   Sept. 30    Dec. 31    Dec. 31    Dec. 31
                           2007      2007        2006       2007       2006
                        ---------  ---------  ---------  ---------  ---------
    Financial
    ---------
    Revenue             $  5,250   $  7,286   $  8,774   $ 26,430   $ 35,746
    Depletion and
     depreciation       $  5,631   $  4,537   $  5,772   $ 19,222   $ 23,345
    Capital investments $  5,435   $  7,735   $  2,794   $ 23,488   $  9,086
    Identifiable assets
     (at end of period) $ 73,298   $ 82,384   $ 72,970

    Operating
    Net production
     (after royalties):
      Barrel of oil
       equivalent (BOE)  125,148    116,184    143,282    483,585    575,131
      BOE/day for the
       period              1,360      1,263      1,557      1,325      1,576
    


    Dagang
    ------
    The gross production rate at the end of 2007 at the Dagang project was
1,900 gross barrels of oil per day from 44 wells, compared to 1,830 gross
barrels per day at the end of the third quarter of 2007. We drilled and
completed five new wells in 2007.

    Zitong
    ------
    Ivanhoe Energy now has completed the first phase under the Zitong
Contract (Phase 1). This included reprocessing approximately 1,649 miles of
existing 2D seismic data and acquiring approximately 705 miles of new 2D
seismic data, and interpreting this data. This was followed by drilling two
wells, totaling an aggregate of 22,293 feet. Both wells encountered expected
reservoirs and gas was tested on the second well, but neither well
demonstrated commercially viable flow rates and both have been suspended. The
company may elect to re-enter these wells to stimulate or drill directionally
in the future. In December 2007, the Company and Mitsubishi (the Zitong
Partners) made a decision to enter into the next three-year exploration phase
(Phase 2).
    By electing to participate in Phase 2, the Zitong Partners must
relinquish 30%, plus or minus 5%, of the Zitong block acreage and complete a
minimum work program involving approximately 23,700 feet of drilling
(including a Phase 1 shortfall), with estimated minimum expenditures for this
program of $25 million. The Zitong Partners plan to acquire new seismic lines
in 2008, commence drilling late in 2009 and complete drilling, completion and
evaluation of this prospect in late 2010.

    
    Consolidated Financial Highlights
    (unaudited; thousands of U.S. dollars except per share and production
     amounts)

                        -------------------------------  --------------------
                               Three Months Ended             Year Ended
                        -------------------------------  --------------------
                         Dec. 31   Sept. 30    Dec. 31    Dec. 31    Dec. 31
                           2007      2007        2006       2007       2006
                        ---------  ---------  ---------  ---------  ---------
    Financial
    ---------
    Net loss and
     comprehensive loss $(18,849)  $ (7,232)  $(11,323)  $(39,207)  $(25,492)
    Net loss per share
     - basic and
     diluted            $  (0.07)  $  (0.03)  $  (0.05)  $  (0.16)  $  (0.11)
    Cash flow from
     operating
     activities         $    923   $  1,766   $  3,007   $  5,489   $ 14,352
    Revenue             $  5,848   $  8,823   $ 11,137   $ 33,517   $ 48,100
    Depletion and
     depreciation       $  7,564   $  6,044   $  7,742   $ 26,524   $ 32,550
    Capital
     investments        $  9,081   $  9,100   $  4,220   $ 31,638   $ 17,842
    Total assets (at
     end of period)     $236,916   $243,214   $248,544
    Cash and cash
     equivalents (at
     end of period)     $ 11,356   $ 14,779   $ 13,879

    Operating
    ---------
    Net production
     (after royalties):
      Barrel of oil
       equivalent (BOE)  173,759    159,558    196,556    682,429    795,061
      BOE/day for the
       period              1,888      1,734      2,136      1,870      2,178
    



    Summary of Fourth Quarter
    -------------------------
    Cash flow from operating activities remained positive for the 13th
consecutive quarter, generating $0.9 million, with capital investments for the
quarter at $9.1 million. Revenue fell 34% from the third quarter of 2007 as
benchmark crude prices were at their high at the end of the fourth quarter,
resulting in large losses on derivative instruments that were put in place as
part of our banking facilities. In addition, our loss widened from the third
quarter due to a non-cash impairment of our China oil and gas properties of
$6.1 million and increased business and technology development expenses as we
continue our focus on the deployment of our HTL Technology. Revenue was down
47% from the same quarter a year earlier due to the losses on derivative
instruments.

    Summary of Full Year 2007
    -------------------------
    Cash flow from operating activities decreased 62% in 2007, generating
$5.5 million for the year. Capital investments for 2007 were $31.6 million.
Revenue fell by 30%, or $14.6 million, mainly due to losses on derivative
instruments, in addition to a decrease in production, resulting in a loss of
$39.2 million for the year.

    Liquidity and Capital Resources

    On December 31, 2007, our cash position was $11.4 million. Our operating
activities provided $0.9 million in cash for the fourth quarter of 2007 and
$5.5 million for the full year 2007. Capital investments for the fourth
quarter of 2007 were $9.1 million and for the full year 2007 were
$31.6 million. Based on our current plans, we estimate that we will need
approximately $15 to $20 million to fund our capital investment programs for
2008, a material portion of which is related to the HTL program.
    Our Annual Report on Form 10-K includes an audit report on our
consolidated financial statements from our Independent Registered Chartered
Accountants, Deloitte & Touche LLP, which expresses an unqualified opinion
and, in addition, includes a separate report titled "Comments by Independent
Registered Chartered Accountants on Canada-United States of America Reporting
Differences," referring to conditions and events that cast substantial doubt
on the Company's ability to continue as a going concern.
    We will require additional funding and management's plans to fund its
activities include alliances or other arrangements with entities with the
resources to support our projects as well as project financing, debt and
mezzanine financing or the sale of equity securities to generate sufficient
resources to assure continuation of our operations and achieve our capital
investment objectives. We intend to utilize revenue from existing operations
to fund our transition to a heavy-oil exploration, production and upgrading
company and non-heavy-oil-related investments in our portfolio will be
leveraged or monetized to capture value and provide maximum return.

    Conference Call

    Ivanhoe Energy will host a conference call on Monday, March 17 for
investors and analysts at 4:30 p.m. EST (1:30 p.m. PST) to discuss 2007 fourth
quarter and year-end results and provide an update on operations. The
conference call may be accessed by dialing toll-free 1-866-540-8136 in Canada
and the United States, or 1-416-340-8010 in the Toronto area and
internationally. A simultaneous webcast of the conference call will be
provided through www.ivanhoeenergy.com. The call will be archived for later
playback by dialing 1-416-695-5800 and entering the pass code 3252629 followed
by the number sign, or via www.ivanhoeenergy.com. The archived playback will
be available until April 18, 2008.

    This news release summarizes our 2007 fourth quarter results of
operations and financial condition and should be read in conjunction with our
Annual Report on Form 10-K for the year ended December 31, 2007, which
contains financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations. The Form 10-K is expected to be
filed on March 17, 2008 and copies may be obtained from the Ivanhoe Energy
website at www.ivanhoeenergy.com, on EDGAR at www.sec.gov or SEDAR at
www.sedar.com.

    Ivanhoe Energy is an independent international heavy oil development and
production company focused on pursuing long-term growth in its reserves and
production using advanced technologies, including its proprietary heavy oil
upgrading process (HTL). Core operations are in the United States and China,
with business development opportunities worldwide. Ivanhoe Energy trades on
the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock
Exchange with the symbol IE.


    FORWARD-LOOKING STATEMENTS: This document includes forward-looking
statements, including forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, but are not limited to, statements concerning the potential benefits
of Ivanhoe Energy's heavy oil upgrading technology, the potential for
commercialization and future application of the heavy oil upgrading technology
and other technologies, statements relating to the continued advancement of
Ivanhoe Energy's projects, the potential for successful exploration and
development drilling, dependence on new product development and associated
costs, statements relating to anticipated capital expenditures, the necessity
to seek additional funding, statements relating to increases in production and
other statements which are not historical facts. When used in this document,
the words such as "could," "plan," "estimate," "expect," "intend," "may,"
"potential," "should," and similar expressions relating to matters that are
not historical facts are forward-looking statements. Although Ivanhoe Energy
believes that its expectations reflected in these forward-looking statements
are reasonable, such statements involve risks and uncertainties and no
assurance can be given that actual results will be consistent with these
forward-looking statements. Important factors that could cause actual results
to differ from these forward-looking statements include the potential that the
company's projects will experience technological and mechanical problems, new
product development will not proceed as planned, the HTL technology to upgrade
bitumen and heavy oil may not be commercially viable, geological conditions in
reservoirs may not result in commercial levels of oil and gas production, the
availability of drilling rigs and other support services, uncertainties about
the estimates of reserves, the risk associated with doing business in foreign
countries, environmental risks, changes in product prices, our ability to
raise capital as and when required, competition and other risks disclosed in
Ivanhoe Energy's Annual Report on Form 10-K filed with the U.S. Securities and
Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR.

    RESERVES DATA AND OTHER OIL AND GAS INFORMATION: Ivanhoe Energy's
disclosure of reserves data and other oil and gas information in the Annual
Report on Form 10-K is made in reliance on an exemption granted to Ivanhoe
Energy by Canadian securities regulatory authorities, which permits Ivanhoe
Energy to provide disclosure in accordance with U.S. disclosure requirements
rather than in accordance with the requirements of Form 51-101F1. Reports on
Form 51-101F2 and Form 51-101F3 will be filed in Canada concurrently with the
Annual Report on Form 10-K and copies may be obtained at www.sedar.com.
    The information provided by Ivanhoe Energy may differ from the
corresponding information prepared in accordance with Canadian disclosure
standards under National Instrument 51-101 (NI 51-101). Further information
about the differences between the U.S. requirements and the NI 51-101
requirements is set forth under the heading "Reserves, Production and Related
Information" in Ivanhoe Energy's Annual Report on Form 10-K.





For further information:

For further information: Investors Contact: Ian Barnett, (416) 792-3308;
Bill Trenaman, (604) 688-8323; Media Contact: Bob Williamson, (604) 608-8323;
Website: www.ivanhoeenergy.com

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