QUITO, Ecuador, April 27 /CNW/ - Robert Friedland, Co-Chairman and Chief Executive Officer of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN), and David Martin, President and Chief Executive Officer of Ivanhoe Energy Latin America, announced today that 11 days of steaming operations have been completed at the IP-15 well, the company's initial well in the Pungarayacu field in Ecuador.
The well now is steam soaking and production testing of the Hollin formation, utilizing a jet pump, will begin in early May and continue for approximately three to four weeks to determine the oil flow rate of the well. More than 100 barrels of the oil to be produced from this well will be sent to Ivanhoe's Feedstock Test Facility in San Antonio, Texas for processing using Ivanhoe's patented HTL process. Results will aid in the design of the field development.
Preparations for second well underway
Ivanhoe Energy Ecuador's second well, IP-5b, is located approximately 20 miles south of the first well. The IP-5b well will be drilled close to a well that was drilled by Petroecuador in the 1980s and flowed oil to the surface.
Recent severe flooding in the Napo province has delayed some civil engineering activities at the company's second location. However, construction of the road and drilling pad now are underway, and the drilling rig currently at the IP-15 well will be moved to the IP-5b location to begin drilling in June.
Ivanhoe Energy Ecuador holds environmental permits to drill three initial wells in Block 20 and is working with the Ministry of the Environment and the Ministry of Non-Renewable Natural Resources to obtain approval for an additional 20 wells.
Ivanhoe's Block 20 Special Services Contract
Ivanhoe Energy Ecuador's contract covering the Pungarayacu field, signed in October 2008, is a Specific Services Contract and provides for the company to be paid a fixed fee for every barrel produced and delivered to a local pipeline. This fee is indexed by a basket of three US producer price indices related to equipment used in the oil and gas industry. In addition, Ivanhoe Energy Ecuador has the right to be paid in oil, at market prices, at an Ecuadorian oil terminal on the Pacific Coast.
Since signing this contract, Ivanhoe Energy Ecuador has been advised by senior Ecuador Government officials that they are pleased with the form and approach of the Block 20 Pungarayacu contract. In addition, Ecuadorian Government officials have suggested that the Ivanhoe Energy contract could form the basis of a model contract for other companies wishing to participate in the development of Ecuador's oil and gas resources.
Ivanhoe Energy Ecuador is working closely with Petroecuador and the Government of Ecuador toward the successful development of the massive Pungarayacu oil field. Representatives of Ivanhoe Energy Ecuador attended a ceremony in the Napo province late last week where President Correa thanked Ivanhoe Energy Ecuador for its support of the local communities affected by the recent severe rains.
Agreement signed to help support communities in Block 20
During meetings with representatives of Block 20 communities last week, Ivanhoe Energy Ecuador signed an agreement that will help to fulfill the company's corporate citizenship commitment to provide support and strengthen existing communities.
The agreement, signed with the Puerto Napo Parochial Committee, establishes the roles and responsibilities of all parties in connection with Ivanhoe Energy's activities within Block 20. The company expects that the agreement will help to maximize opportunities for residents to participate in Ivanhoe's Pungarayacu Project through jobs and the supply of goods and services as work progresses.
Meetings also were held with local authorities, community members and several joint parish councils located in Block 20 to discuss Ivanhoe Energy's activities in the region and its roles and responsibilities in conformance with Ecuador's new constitution. Ecuador's President Correa and the Governor of Napo also attended the meetings.
Ecuador is divided administratively into provinces, cantons (municipalities) and parishes. Members of a parish council are elected by direct popular vote and are responsible for improving public services, executing public works, investing revenues and carrying out any other duties as required by law.
Ivanhoe Energy Ecuador, a Canadian company, is a wholly-owned subsidiary of Ivanhoe Energy Latin America Inc., the parent company of Ivanhoe Energy Inc.'s Latin America corporate group.
Ivanhoe Energy Inc. 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, patented heavy to light upgrading process (HTL(TM)). Core operations are in Canada, Ecuador, China and Mongolia, with business development opportunities worldwide. Ivanhoe's shares trade on the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock Exchange under the symbol IE.
For more information about Ivanhoe Energy Inc. please visit our web site at 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, statements concerning the anticipated quantities of recoverable barrels of bitumen from Block 20, the anticipated drill depth of appraisal well IP-15, the scope and timing of the evaluation activities in respect of the results obtained from appraisal well IP-15, the schedule for commencement of drilling and testing of additional wells in different areas of Block 20 for which permits have already been obtained, the commencement of the permitting process for additional wells on Block 20 for which permits have not, to date, been obtained and other statements which are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "anticipate", "intend", "may", "potential", "should", and similar expressions relating to matters that are not historical facts are forward-looking statements. Although Ivanhoe Energy and Ivanhoe Energy Ecuador believe that their 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 result to differ from these forward-looking statements include the possibility that the company will be unable to raise financing, 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, heavy oil samples from Block 20 may not have the product qualities anticipated, Ivanhoe Energy's lack of history in developing commercial HTL opportunities, 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 the reserves, the risk associates with doing business in foreign countries, environmental risks, changes in product prices, our availability to generate cash flow and raise capital as and when required, competition and other risks disclosed in Ivanhoe Energy's Annual Report on Form 10-K files with the U.S. Securities and Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR.
SOURCE Ivanhoe Energy Inc.
For further information: For further information: David Dyck: (403) 817-1138; Ian Barnett: (647) 203-6588; Dorreen Miller: (403) 817-1108; firstname.lastname@example.org