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Press release from CNW Group

Ivanhoe Energy commences drilling at Yixin-2 in China and provides update on Zitong-1

Wednesday, August 25, 2010

Ivanhoe Energy commences drilling at Yixin-2 in China and provides update on Zitong-108:30 EDT Wednesday, August 25, 2010CALGARY, Aug. 25 /CNW/ - Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN) today announced that Sunwing Energy Ltd., the company's wholly-owned subsidiary, has started drilling Yixin-2, located in its Zitong gas exploration block in the Sichuan Province of China. This well follows the commencement of drilling of the Zitong-1 well in mid-June 2010.Yixin-2 is being drilled as a twin well of Yixin-1, a well drilled by Sunwing in 2007 that generated significant preliminary gas flow rates. These rates, however, could not be confirmed before the well was shut-in due to a surface equipment failure during the initial hours of the testing program. Yixin-2 will be directionally drilled to allow the second wellbore to be located within 100 metres of the Yixin-1 at total depth. Yixin-2 is targeting gas in fractured reservoir formations similar to those that have led to enormous gas developments in various tight gas projects in North America.Total depth of the Yixin-2 well is planned to be approximately 4,200 metres and it is expected to take up to six months to drill and test the well. Yixin-2 is expected to cost approximately US$8.5 million. Design of any stimulation of the well using fracing technologies will be determined following evaluation of the test results.Progress update on Zitong-1 wellAt the Zitong-1 well, the rig has run and cemented the 9 5/8 inch intermediate casing to a depth of 3,018 metres. Following pressure testing of the casing and blow-out preventers, drilling will continue to move ahead to a planned total depth of approximately 4,500 metres.The Zitong-1 and Yixin-2 wells are targeting structures with natural gas potential in the range of 0.3 to 0.5 trillion cubic feet."These two natural gas wells have the ability to be company makers in their own right," said David Dyck, President and Chief Operating Officer. "There is tremendous potential on this large block of land which could add significant value to Ivanhoe with the addition of natural gas reserves, production and near term cash flow.""Drilling success would also unlock the remaining structures on the block for further exploration, exploitation and development. This asset has the potential to dramatically change the growth profile of Ivanhoe and it is representative of the types of projects we are pursuing around the world."Sichuan is the oldest and one of the most prolific gas producing regions of China. Sinopec and Petrochina have made significant gas discoveries from the Xu2, Xu4 and Permian formations in blocks adjacent to Sunwing's Zitong Block. Any gas produced in the Zitong block would be tied into an existing local and regional gathering and sales distribution system.Sunwing is the operator of the 659,840-acre (1,031 square miles) gas exploration block in Sichuan, and it holds a 90 percent Contractor Interest in a Petroleum Contract with PetroChina Company Limited. Mitsubishi Gas Chemical Company of Japan holds the remaining 10 percent Contractor Interest.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 estimated quantities of gas in each target in the Guan structure, the planned total depth of the Zitong-1 well, the anticipated amount of time required for, and the estimated cost of, drilling, testing and casing the well, the schedule for commencement of drilling the Yinxin-2 well 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 Sunwing Energy 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 results 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, 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 associated 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.For further information: David Dyck: 1 (403) 817-1138; Ian Barnett: 1 (647) 203-6588; Dorreen Miller: 1 (403) 817-1108; info@ivanhoeenergy.com