The Company takes further steps on focused path to value creation
Note: All figures are quoted in U.S. dollars unless otherwise noted.
CALGARY, Dec. 27, 2012 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ:
IVAN) announced today that through its wholly-owned subsidiary Sunwing
Zitong Energy (Sunwing), it has completed the previously announced
transfer of the Company's participating interest in the Contract for
Exploration, Development and Production in the Zitong Block (Petroleum
Contract) to Shell China Exploration and Production Co. (Shell).
In exchange for Sunwing's interest in the Zitong Petroleum Contract, the
Company will receive total pre-tax cash proceeds of $105 million.
Initial pre-tax proceeds of approximately $96 million were delivered on
closing. Per the terms of the transaction, the Company will receive
two remaining components of the proceeds as follows:
the remaining portion of the $85 million recoverable past costs
supported by the 2012 seismic program, once China National Petroleum
Corporation (CNPC) completes its annual cost recovery audit for 2012
$5.1 million representing a customary holdback of 5 per cent of gross
proceeds payable in six months.
With the completion of the transaction, Shell will assume the
obligations under the Supplementary Agreement and will replace the
Company's performance bond with its own. As a result, the collateral
for that performance bond, currently presented as restricted cash on
the Company's balance sheet, will be released.
The closing of this transaction, and the recently closed divestiture of
Pan-China Resources announced on December 17, 2012, will provide
Ivanhoe Energy with available pre-tax working capital of $170 million.
Within the next 30 days the Company will retire the $50 million bridge
loan outstanding as well as the $10 million owed to Ivanhoe Capital.
This will leave Ivanhoe Energy debt-free, other than the CAD$73 million
convertible debentures which will mature on June 30, 2016.
"In 2012, Ivanhoe Energy has taken significant steps to focus the
Company, and enhance our liquidity. We now have a healthy balance
sheet, and in 2013 we will be focused on making substantial progress in
the commercialization of our Heavy to Light (HTL) technology, and developing the Tamarack Project in Canada and
Block 20 in Ecuador," said Carlos A. Cabrera, Ivanhoe Energy's
Ivanhoe Energy is an independent international heavy oil exploration and
development company focused on pursuing long-term growth in its
reserves and production using advanced technologies, including its
proprietary heavy oil upgrading process (HTLTM). Core operations are in Canada, United States, Ecuador, China and
Mongolia, with business development opportunities worldwide. Ivanhoe
Energy trades on the Toronto Stock Exchange with the ticker symbol IE
and on the NASDAQ Capital Market with the ticker symbol IVAN.
For more information about Ivanhoe Energy Inc. please visit www.ivanhoeenergy.com.
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 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, statements relating to the timing and amount
of proceeds of agreed upon and contemplated disposition transactions,
statements relating to anticipated capital expenditures, statements
relating to the timing and success of regulatory review applications,
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 HTLTM 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, our ability to complete
agreed upon and planned asset dispositions, competition and other risks
disclosed in Ivanhoe Energy's 2011 Annual Report on Form 10-K filed
with the U.S. Securities and Exchange Commission on EDGAR and the
Canadian Securities Commissions on SEDAR.
SOURCE: Ivanhoe Energy Inc.
For further information:
Manager, Corporate Communications
(403) 817 1108