Ivanhoe Energy 2007 Second Quarter Results and Operations Update

    VANCOUVER, Aug. 9 /CNW/ - Ivanhoe Energy Inc. (NASDAQ:   IVAN and TSX: IE)
will today file its Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007.

    HTL(TM) Highlights

    The second quarter was marked by significant progress towards full
commercial deployment of our proprietary, patented heavy oil upgrading 

    -  We successfully fulfilled the primary technical objectives for the
       HTL Commercial Demonstration Facility (CDF) in California and have
       generated sufficient data for the design of full-scale, commercial
    -  We successfully completed a key Athabasca bitumen test run at the
       CDF pursuant to a long standing technology development agreement with
       ConocoPhillips Canada Resources Corp., confirming our value
       proposition for the application of HTL in the Western Canadian
    -  We strengthened our technical and commercial teams with the addition
       of Dr. Michael Silverman as Vice President, Technology, who joined us
       from KBR, Inc., and Edward Koshka as Vice President, Business
       Development, Western Canada, who joined us from Synenco Energy Inc.
    -  We progressed discussions with AMEC, our Tier One engineering
       contractor, regarding the design of full-scale commercial facilities.
    -  Business development discussions in Western Canada and Latin America

    Financial Highlights

    In the second quarter, US$9 million was received under the terms of our
agreement with INPEX CORPORATION of Japan. In addition, cash flow from
operating activities remained positive for the eleventh consecutive quarter,
generating US$0.2 million of cash.

    HTL(TM) Developments

    Ivanhoe Energy made significant progress in the second quarter towards
full-scale commercial HTL deployment. Progress took place across all key
fronts, technical, staffing, and business initiatives.
    Technical developments were led by two important test runs at the CDF: a
High Quality configuration was demonstrated on California vacuum tower bottoms
(VTBs) and a key test was successfully completed, processing Athabasca bitumen
pursuant to a long standing technology development agreement with
ConocoPhillips Canada. These two key tests are the capstones of the CDF test
program and we have now fulfilled the primary technical objectives of the CDF.
The goals of the test program were: (1) to confirm the key processing results
generated in the over 90 pilot plant runs of heavy oil and bitumen from
Athabasca and the U.S. in a large facility, and (2) to provide sufficient data
for the design and construction of full-scale, commercial HTL plants.
    The Athabasca bitumen test, in addition to providing important technical
information related to the design of full-scale HTL facilities, confirmed
operating parameters and processing results previously generated in the
smaller pilot plant, and as such confirmed the value proposition of this
technology for applications in the Athabasca oilsands. This provides
additional support to Ivanhoe Energy as it intensifies business discussions
with resource owners in Western Canada and other key markets.
    In the second quarter we added significant strength to our technical
team, with the addition of Dr. Michael Silverman as Vice President, Technology
and Edward Koshka as Vice President, Business Development, Western Canada. Dr.
Silverman joined Ivanhoe Energy from KBR, Inc. and brings significant
experience in technology implementation and management, in particular with
respect to Fluid Catalytic Crackers, a close commercial analogue to Ivanhoe
Energy's HTL technology. Mr. Koshka joined Ivanhoe Energy from Synenco Energy
Inc. in Calgary, and brings a wealth of downstream experience including
oilsands development, crude oil marketing, logistics and refinery operations
and optimization. This experience is complimentary to Ivanhoe Energy's
management skill sets and will be of increasing importance as Ivanhoe Energy
moves into commercial operations.
    Our strengthened technical team has also made significant progress in
developing an execution plan with AMEC, our Tier One engineering contractor,
for the design and construction of full-scale commercial HTL facilities.
Ivanhoe Energy is proceeding with preliminary, non site-specific engineering
related to the first fully commercial HTL facility, supported by the recent
successful CDF runs.
    Business development activities were intensified in the second quarter,
with a focus on Western Canada and Latin America. Advancement of these
discussions was supported by the significant progress made with HTL technical
development, including CDF testing, the strengthening of the technology team,
and progress with our engineering contractor. Ivanhoe Energy continues to
believe that its HTL technology provides a unique competitive advantage in the
development of heavy oil resources in Western Canada and around the world.
    Ivanhoe Energy has selected a site and is in the final stages of
negotiating an agreement to locate its HTL Feedstock Test Facility (FTF) in
the U.S. The FTF is a small, highly flexible state-of-the-art HTL facility
that will permit more cost-effective screening of feedstock crudes for current
and potential partners in smaller volumes and at lower costs than required at
the CDF.
    The FTF will be built by Zeton Inc. With a focus on the innovation stage
through early market development, Zeton designs and manufactures
state-of-the-art lab-scale reactor systems, pilot plants, demonstration plants
and small scale commercial plants for oil refining, petrochemicals,
synfuels/GTL, polymers, fine/specialty chemicals, (bio-) pharmaceuticals and
food additives, as well as nuclear, mineral upgrading and environmental

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

                            ----------------------------- -------------------
                                 Three Months Ended        Six Months Ended
                            ----------------------------- -------------------
                             June 30   March 31  June 30   June 30   June 30
                               2007      2007      2006      2007      2006
                            --------- --------- --------- --------- ---------
    Revenue                 $  2,522  $  2,274  $  3,120  $  4,796  $  6,125
    Depletion and
     depreciation           $  1,482  $  1,614  $  1,273  $  3,096  $  2,461
    Capital investments     $    981  $    812  $    788  $  1,793  $  2,065
    Identifiable assets
     (at end of period)     $ 40,308  $ 40,996  $ 43,920

    Net production (after
      Barrel of oil
       equivalent (BOE)       50,014    56,845    51,931   106,859   109,601
      BOE/day for the
       period                    550       632       570       590       605

    South Midway

    We have 67 wells in the 1,400-acre South Midway heavy oil field in
California, with a working interest of 100%. Production from this field, which
makes up the majority of our U.S. production, fell in the second quarter due
to lack of steam generation at this cyclic steam heavy oil operation for part
of the quarter. We did not renew a contract for one steam generator and a
second generator was taken out of service for maintenance part way through the
quarter. The latter generator was back in service in June and a second
generator has been purchased and is currently forecast to be in service in the
fall of 2007. Due to the backlog of wells awaiting steam at this field, we
have decided to defer our 2007 drilling program until 2008, in order to
maximize the value of the program. The field is currently producing
approximately 460 barrels of oil per day.

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

                            ----------------------------- -------------------
                                 Three Months Ended        Six Months Ended
                            ----------------------------- -------------------
                             June 30   March 31  June 30   June 30   June 30
                               2007      2007      2006      2007      2006
                            --------- --------- --------- --------- ---------
    Revenue                 $  6,998  $  6,896  $  9,759  $ 13,894  $ 16,596
    Depletion and
     depreciation           $  4,328  $  4,726  $  6,239  $  9,054  $ 11,663
    Capital investments     $  6,516  $  3,802  $  1,934  $ 10,318  $  4,651
    Identifiable assets
     (at end of period)     $ 72,213  $ 70,883  $ 87,577

    Net production (after
      Barrel of oil
       equivalent (BOE)      115,937   126,316   155,588   242,253   279,083
      BOE/day for the
       period                  1,274     1,403     1,710     1,339     1,542


    The gross production rate at the end of the second quarter of 2007 at the
Dagang project was 1,591 barrels of oil per day, from 40 wells, compared to
1,670 barrels per day at the end of the first quarter. Production for the
quarter was lower due to both the natural decline rates of this project and
unplanned downtime related to the failure of sub-surface equipment. On
July 21, 2007 we spudded the fourth well in our five well drilling program. We
are currently production testing the first well drilled under this program,
with current test production of 160 barrels of oil per day. We will
concentrate future activities in this field on our successful fracture
stimulation and water flooding programs.


    Testing operations on the Xu 4 formation at the 4,045 meter (13,270 foot)
second exploratory well, Yixin No. 1, on the Zitong natural gas exploration
block commenced in the second quarter of 2007 and are continuing. Test results
of the well were originally expected in the second quarter; however surface
equipment requirements and testing procedures have delayed results until the
third quarter. Following the Xu 4 zone test, the Xu 5, located just above the
Xu 4, will be tested.
    After completion of the testing of the Yixin No. 1 well, we will evaluate
the results and make an election, along with our partner Mitsubishi Gas
Chemical Company Inc., whether to enter into the next three-year exploration
phase. We have a 90% working interest in this project and are the operator.

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

                            ----------------------------- -------------------
                                 Three Months Ended        Six Months Ended
                            ----------------------------- -------------------
                             June 30   March 31  June 30   June 30   June 30
                               2007      2007      2006      2007      2006
                            --------- --------- --------- --------- ---------
    Net loss                $ (6,579) $ (6,547) $ (4,405) $(13,126) $ (9,781)
    Net loss per share -
     basic and diluted      $  (0.03) $  (0.03) $  (0.02) $  (0.05) $  (0.04)
    Cash flow from
     operating activities   $    199  $  2,594  $  3,622  $  2,800  $  5,702
    Revenue                 $  9,589  $  9,257  $ 13,084  $ 18,846  $ 22,948
    Depletion and
     depreciation           $  6,024  $  6,892  $  9,189  $ 12,916  $ 17,036
    Capital investments     $  8,123  $  5,334  $  3,710  $ 13,457  $  8,602
    Total assets (at end
     of period)             $235,761  $241,474  $271,774
    Cash and cash
     equivalents (at end
     of period)             $ 11,076  $ 10,793  $ 25,808

    Net production (after
      Barrel of oil
       equivalent (BOE)      165,951   183,161   207,519   349,112   388,684
      BOE/day for the
       period                  1,824     2,035     2,280     1,929     2,147

    Summary of Second Quarter

    Cash flow from operating activities remained positive for the eleventh
consecutive quarter, generating US$0.2 million. Our existing production in the
U.S. and China continued to fund the business and technology development
expenses associated with the planned deployment of our HTL technology. Revenue
rose from the first quarter due to higher oil prices, but was largely offset
by lower production volumes and increased expenses as we continue to ramp up
in preparation for HTL commercial deployment.

    Liquidity and Capital Resources

    On June 30, 2007, our cash position was US$11.1 million. Capital
investments of US$8.1 million for the second quarter of 2007 were $2.8 million
higher than the first quarter, primarily as a result of exploration and
drilling activities in China.

    Conference Call

    Ivanhoe Energy will host a conference call today, August 9, 2007, for
investors and analysts at 4:30 p.m. EDT (1:30 p.m. PDT) to discuss 2007 second
quarter 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. If you are unable to participate in the call it will be
archived for later playback by dialing 1-416-695-5800 and entering the pass
code 3230566 followed by the number sign, or via www.ivanhoeenergy.com. The
archived playback will be available until September 10, 2007.

    This news release summarizes our 2007 second quarter results of
operations and financial condition and should be read in conjunction with our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, which
contains condensed financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations. The Form 10-Q is
expected to be filed today and copies may be obtained from the Ivanhoe Energy
website at www.ivanhoeenergy.com, on EDGAR at www.sec.gov or SEDAR at

    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)). 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, 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, 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, samples from the Athabasca bitumen test
may not have the product qualities anticipated, market acceptance of the HTL
technology may not be as 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, the risk associated
with doing business in foreign countries, environmental risks, changes in
product prices, our ability 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 filed with the U.S. Securities and Exchange
Commission on EDGAR and the Canadian Securities Commissions on SEDAR.

disclosure of reserves data and other oil and gas information 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.
    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: Cindy Burnett, (604) 331-9830, Website:

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