VANCOUVER, March 9 /CNW/ - Ivanhoe Energy Inc. (NASDAQ: IVAN and TSX: IE)
is restating its United States Generally Accepted Accounting Principles (U.S.
GAAP) reconciliation note of previously issued financial statements. This is
due to a recent interpretation by the United States regulatory authorities of
the U.S. accounting rules contained in the Statement of Financial Accounting
Standards (SFAS) No.133, Accounting for Derivative Instruments and Hedging
Activities, which determines the current U.S. accounting treatment of Ivanhoe
Energy's share purchase warrants.
Ivanhoe Energy reports in accordance with Canadian generally accepted
accounting principles (Canadian GAAP) and provides note disclosure in its
financial statements with respect to a reconciliation of Canadian GAAP to U.S.
GAAP. Under Canadian GAAP, share purchase warrants are accounted for as equity
and recorded at their historical cost. The interpretation under U.S. GAAP
requires that Ivanhoe's share purchase warrants that are priced in Canadian
dollars must be classified as liabilities at their fair value with any
resulting gains or losses being included in the calculation of U.S. GAAP
earnings. In these circumstances, a loss (gain) would be recorded by the
company when the fair value of the share purchase warrants increases
As a result of this interpretation, Ivanhoe Energy will restate the U.S.
GAAP note included in its financial statements for the year ended December 31,
2005 and the affected quarters in 2005 and 2006.
This restatement only pertains to Ivanhoe Energy's U.S. GAAP
reconciliation note disclosure, due to changes in fair value of these share
purchase warrants, and results in a reduction of approximately US$2.9 million
in the previously reported loss for U.S. GAAP for the year ended December 31,
2005 and an increase of $0.9 million for the third quarter of 2006. At the
time that Ivanhoe Energy's share purchase warrants are exercised, the value of
the warrants will be reclassified to shareholders' equity within the U.S. GAAP
The Financial Accounting Standards Board (FASB) has initiated a project
to determine the accounting treatment for convertible debt with elements of
foreign currency risk. This project is expected to provide further U.S. GAAP
guidance in respect of accounting for share purchase warrants.
"Ivanhoe Energy's previously reported financial results under Canadian
GAAP remain unchanged. These are non-cash charges for U.S. GAAP purposes only,
that do not impact our operations or cash flows," said Gordon Lancaster,
Ivanhoe Energy CFO. "The U.S. regulatory authorities have recently provided
their interpretation of some very complex U.S. accounting rules affecting the
U.S. GAAP note disclosure in our previously reported financial statements.
Reflecting our commitment to responsible financial reporting, we are providing
that restatement of information to the market."
Ivanhoe Energy is an independent international oil and gas 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 interpretation of
U.S. and Canadian accounting rules, expected further U.S. GAAP guidance in
respect of accounting for share purchase warrants 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 there will be revisions
to the interpretation of U.S. and Canadian accounting rules, further U.S. GAAP
guidance in respect of accounting for share purchase warrants may not be as
expected 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.
For further information:
For further information: Cindy Burnett, (604) 331-9830, Website: