Ivanhoe Energy reports first quarter 2010 financial results and operational
highlights

CALGARY, May 11 /CNW/ - Ivanhoe Energy Inc. (NASDAQ: IVAN; TSX IE) today reported financial results and operating highlights for the first quarter of 2010 and key highlights and activities to date. Ivanhoe Energy has filed its quarterly financial report on Form 10-Q with the Securities and Exchange Commission and its Interim Financial Statements with the Canadian Securities Administrators for the period ended March 31, 2010. All figures reported are in US dollars unless otherwise noted.

    
    Highlights

    -  Ivanhoe Energy completed its winter delineation drilling program at
       Tamarack in mid-March. This 28-well drilling program completed the
       work required for submission of the regulatory application for the
       development of the Tamarack Project which is expected to be filed in
       mid-2010. Ivanhoe Energy invested $17.9 million in the Tamarack
       Project during the first quarter of 2010.

    -  Steaming and soaking operations have been completed at the Pungarayacu
       IP-15 well, the Company's initial well in Ecuador. Production testing
       of the Hollin formation, utilizing a jet pump, has commenced and will
       continue for approximately two to three weeks to determine the oil
       flow rate of the well. Total investment in Ecuador for the first
       quarter of 2010 was $4.2 million.

    -  Ivanhoe Energy pledged up to $1.0 million in aid for victims of
       torrential rains and flooding in Ecuador's Napo Province. Several
       communities within the boundaries of Ivanhoe Energy's Pungarayacu
       heavy oil project were covered by a state of emergency declared by
       the Ecuadorean government after rivers flooded in mid-April 2010,
       reportedly destroying food crops and more than 100 houses, and
       directly affecting more than 3,500 people, according to estimates by
       government agencies.

    -  Two rigs have been mobilized to the Zitong Block in China, and
       Zitong 1 and Yixin 2 are expected to spud in June and July 2010,
       respectively. These wells will be drilled to a depth of approximately
       4,500 metres and 4,200 metres, with each prospect targeting 0.3 to
       0.5 trillion cubic feet of gas. These two prospects offer significant
       potential upside and could dramatically impact the growth profile of
       the Company's Asian subsidiary.

    -  During the first quarter of 2010, Ivanhoe Energy continued to fine
       tune the commercial HTL design utilizing its Feedstock Test Facility
       (FTF) operated at the Southwest Research Institute in San Antonio,
       Texas. This included improved feed injection and riser hydrodynamics
       resulting in smoother operation and improved yields. The Company also
       continued to build an extensive database of feed and product
       properties for its commercial modeling effort.

    -  A Special Warrant financing of Cdn$150 million was completed in the
       first quarter of 2010. Each Special Warrant was issued at a price of
       Cdn$3.00 and was subsequently converted into one Common Share and one
       quarter (0.25) of one Common Share Purchase Warrant. Each whole
       Purchase Warrant entitles the holder to acquire one Common Share of
       Ivanhoe Energy at an exercise price of Cdn$3.16 on or before
       January 26, 2011. This placement was executed with North American
       institutional investors and a significant sovereign wealth fund.
       Ivanhoe Energy's institutional ownership, exclusive of management, is
       now approximately 50 percent of the Company's outstanding shares.

    -  In March 2010, Standard and Poor's (S&P) added Ivanhoe Energy to the
       S&P/TSX Composite Index as a result of the Quarterly S&P/TSX Composite
       Index Review.

    -  Revenues from continuing operations were $5.3 million in the first
       quarter of 2010 compared to $5.7 million in the first quarter of 2009.
       Although crude oil realizations increased nearly $30 per barrel, the
       Company's working interest share of its production in China decreased
       to 49 percent in the first quarter of 2010 from 82 percent in the
       first quarter of 2009. This decrease, prescribed under the Company's
       production sharing contract, is a result of the Company having
       recovered its development investments in the Dagang field as of
       September 2009.

    -  In the first quarter of 2010, $4.0 million in cash flow was consumed
       in operations, compared to $5.0 million of cash flow consumed in
       operations during the first quarter of 2009.

    -  The net loss from continuing operations for the first quarter of 2010
       was $2.6 million compared to a net loss of $11.6 million for the first
       quarter of 2009. The Company benefited from lower operating and
       general and administrative expenses, and lower depletion expense in
       the first quarter of 2010 compared to the same period in 2009.

    -  Cash and cash equivalents were $136.4 million at March 31, 2010
       compared to $21.5 million at December 31, 2009. The Company's cash
       position at March 31, 2010 was supplemented by the proceeds from the
       Cdn$150 million Special Warrant financing completed in early 2010.
    

Tamarack Project - Canada

Ivanhoe Energy completed its winter delineation drilling program at Tamarack in mid-March. The Company is on track to submit its regulatory application for the development of the Tamarack Project in mid-2010. Ongoing reservoir and geological modeling work incorporating the recent data gathered from the winter delineation program will be completed in the second quarter of 2010, in time for the submission of the Tamarack regulatory application.

Engineering tasks related to the Tamarack HTL facility, the upstream facilities (production and surface facilities), and infrastructure (power and access) are proceeding as planned. Significant engineering has already been completed by AMEC and AMEC-BDR for the HTL and upstream facilities and Phase 1 of the 20,000 barrel per day facility at Tamarack, including completion of Basic Engineering and Design (BED) for the HTL and upstream facilities as well as sufficient Front End Engineering and Design (FEED) for the HTL facility to be able to generate a Class III (+25/-20%) capital cost estimate. It is expected that AMEC and AMEC-BDR will complete this work in the second quarter of 2010.

Pungarayacu Project - Ecuador

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 of oil 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.

The Company's initial well in Block 20, IP-15, was drilled to a total depth of 1,343 feet. The top of the Hollin, the primary formation of interest in Block 20, was reached at a depth of 946 feet and it is approximately 300 feet thick. The Hollin Formation includes three separate sandstone bodies, each consisting of clean, high-quality sands bearing oil. Cores and logs indicate high oil saturation and API gravities between 13.5 degrees and 15.8 degrees. Average porosity was 28% and permeability, in the multi-Darcy range, was excellent. These results indicate a top-tier reservoir and suggest the Hollin would be an excellent candidate for thermal development.

Steaming and soaking operations have been completed at the IP-15 well and production testing, utilizing a jet pump, has commenced and will continue for approximately two to three weeks to determine the oil flow rate of the well.

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 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.

At the end of April 2010, Ivanhoe Energy Ecuador signed an agreement that will help to fulfill the Company's corporate citizenship commitment to provide support and strengthen existing relationships during meetings with representatives of Block 20 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.

HTL business development and financing initiatives

During the first quarter of 2010, the Company significantly progressed discussions related to additional projects, including projects that would involve the application of Ivanhoe Energy's HTL process. These initiatives include opportunities in the Middle East, Latin America and Africa.

In conjunction with project and business development activities, the Company is in discussion or negotiation with numerous potential strategic partners related to partnership and financing of its principal projects. During the first quarter these discussions and negotiations were advanced and are on track.

Sunwing Energy

Sunwing has a 15-year history of oil and gas exploration and production in China. Sunwing produces approximately 1,800 barrels of light oil per day in Dagang, in China's Hebei province, in a production sharing agreement with Petrochina in which Sunwing is the operator. Sunwing is also the operator in a gas exploration block in Zitong, in Sichuan province, with its 10 percent partner, Mitsubishi Gas Chemical Company. In November 2009, through a merger between a subsidiary of Ivanhoe Energy and PanAsian Petroleum Inc., the Company acquired a Production Sharing Contract for the Nyalga Block XVI in Mongolia. The block covers an area of approximately 16,839 square kilometres and provides the Company with the exclusive rights to explore, develop and produce oil or gas within the block.

The Company's 2010 activities in China and Mongolia offer significant growth potential for Sunwing Energy, whose Asian capabilities constitute a core competency. Ivanhoe Energy intends to build on this platform to develop a major, Asia-focused oil and gas business with the resources and support to secure a public-market listing on a major Asian stock exchange.

Dagang - China At the Dagang field, production was 72,396 net barrels of oil after royalties in the first quarter of 2010 compared to 131,078 net barrels of oil after royalties during the first quarter of 2009. The Dagang field reached cost recovery in September 2009, thereby reducing the Company's working interest revenue from 82 percent to 49 percent. The exit rate at March 31, 2010 was 1,270 barrels per day from 35 producing wells compared to 1,840 barrels per day from 37 wells at March 31, 2009.

Zitong - China Two rigs have been mobilized to the Zitong Block, and Zitong 1 and Yixin 2 are expected to spud in June and July 2010, respectively. These wells will be drilled to a depth of approximately 4,500 metres and 4,200 metres, with each prospect targeting 0.3 to 0.5 trillion cubic feet of gas. Drilling, completion and evaluation of both prospects is expected to be completed in late 2010.

Block XVI - Mongolia In late 2009 and the first quarter of 2010, the Company acquired 465 kilometres of 2-D seismic over Block XVI, resulting in a total of 925 kilometres of 2-D seismic data over the Kherulen sub-basin within the Nyalga basin. The Company is currently processing the seismic data, and following interpretation, locations for its exploratory wells will be selected, with the first well expected to spud in the last quarter of 2010.

    
    Ivanhoe Energy - Consolidated Financial Highlights
    (unaudited; thousands of U.S. dollars except per share amounts)

                                           ----------------------------------
                                                   Three Months Ended
                                           ----------------------------------
                                             Mar. 31     Dec. 31     Mar. 31
                                                2010        2009        2009
                                           ----------  ----------  ----------
    Financial
    ---------
      Net loss from continuing operations  $  (2,567)  $ (11,915)  $ (11,575)
      Net loss from discontinued operations        -           -        (698)
                                           ----------  ----------  ----------
      Net loss and comprehensive loss      $  (2,567)  $ (11,915)  $ (12,273)
                                           ----------  ----------  ----------
                                           ----------  ----------  ----------

      Net loss per share:
      Loss from continuing operations,
       basic and diluted                   $   (0.01)  $   (0.04)  $   (0.04)
      Income (loss) from discontinued
       operations, basic and diluted               -           -           -
                                           ----------  ----------  ----------
      Net loss per share, basic and
       diluted                             $   (0.01)  $   (0.04)  $   (0.04)
                                           ----------  ----------  ----------
                                           ----------  ----------  ----------

      Net cash provided (used) by
       operating activities from
       continuing operations               $  (3,994)  $  (4,130)  $  (4,985)
      Net cash provided (used) by
       operating activities from
       discontinued operations                     -           -         897
                                           ----------  ----------  ----------
      Net cash provided (used) by
       operating activities                $  (3,994)  $  (4,130)  $  (4,088)
                                           ----------  ----------  ----------
                                           ----------  ----------  ----------

    Highlights - Continuing Operations
    ----------------------------------
      Oil revenue - gross                  $   5,330   $   5,309   $   5,733
      Total revenue - after derivative
       gain (loss)                         $   5,349   $   4,999   $   5,826
      Depletion and depreciation           $   2,083   $   2,560   $   5,955
      Capital investments                  $  25,337   $   8,650   $   5,209
      Total assets (at end of period)      $ 420,418   $ 281,763   $ 268,319
      Cash and cash equivalents (at end
       of period)                          $ 136,385   $  21,512   $  26,115
    

Summary of First Quarter

Oil revenue totalled $5.3 million in the first quarter of 2010, unchanged from the fourth quarter of 2009. Cash flow used in operating activities was $4.0 million during the first quarter of 2010, compared to $4.1 million in the fourth quarter of 2009. In the first quarter of 2010, capital investments increased to $25.3 million compared to $8.7 million in the fourth quarter of 2009. This increase was due to higher capital spending in Ecuador on the Pungarayacu Project and in Canada on the Tamarack Project.

Liquidity and Capital Resources

Ivanhoe Energy's cash and cash equivalents were $136.4 million at March 31, 2010 compared to $21.5 million at December 31, 2009, representing an increase of $114.9 million. This increase was primarily due to the completion of the private placement which provided $136.3 million, after fees and other associated expenses.

This news release summarizes our 2010 first quarter results of operations and financial condition and should be read in conjunction with our Quarterly Report on Form 10-Q for the period ended March 31, 2010, which contains financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. The Form 10-Q was filed on May 10, 2010. 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 Canada, Ecuador, China and Mongolia, 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.

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 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 2009 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: For further information: David Dyck: (403) 817-1138; Ian Barnett: (647) 203-6588; Dorreen Miller: (403) 817-1108; info@ivanhoeenergy.com

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