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Press release from CNW Group

/C O R R E C T I O N from Source -- Ivanhoe Energy Inc./

Wednesday, August 10, 2011

/C O R R E C T I O N from Source -- Ivanhoe Energy Inc./08:17 EDT Wednesday, August 10, 2011In c2791 transmitted at 08:17e today, a clerical error occurred in the "Second quarter financial summary" section. The table's header should have read: "2011" above the first and third columns and "2010" above the second and fourth columns. Corrected copy follows:Ivanhoe Energy reports second quarter 2011 financial results and operating highlightsFocuses on execution, HTLTM patent extensions, convertible debt financing Note:  All figures are quoted in U.S. dollars unless otherwise noted.CALGARY, Aug. 10, 2011 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) today reported financial results and operating highlights for the second quarter of 2011. Ivanhoe Energy has filed its quarterly financial report on Form 10-Q with the United States Securities and Exchange Commission and its Interim Financial Statements with the Canadian Securities Administrators for the period ended June 30, 2011.Highlights In June the Company obtained broader and more extensive patent protection for its HTLTM intellectual property in Canada. This patent builds on and complements other issued and/or filed patents related to the core HTLTM technology and its petroleum applications. The portfolio includes the core patent, issued in the first quarter of 2011 related to the underlying HTLTM technology, which expires in 2028.The Company announced that heavy crude oil extracted from its IP-5B well in the Pungarayacu field in Block 20 in Ecuador was successfully upgraded to local pipeline specifications using the Company's proprietary HTL upgrading process.The Company issued Cdn$73.3 million of convertible unsecured subordinated debentures, maturing on June 30, 2016.  A portion of the proceeds were used to repay a promissory note due to Talisman Energy Canada. The remaining balance of the funds raised will be used for ongoing capital and operating expenditures.Revenues were $9.5 million in the second quarter of 2011 compared to $6.1 million in the second quarter of 2010 due to a combination of stronger realized commodity prices and increased production. Higher volumes were allocated to Ivanhoe Energy for reimbursement of capital expenditures incurred at Dagang.In the second quarter of 2011, $6.5 million in cash flow was used in operations, consistent with $6.3 million of cash flow used in operations during the second quarter of 2010.The net loss for the second quarter of 2011 was $4.1 million compared to net income of $9.3 million for the second quarter of 2010, as a result of higher operating and general administrative expenses as well as lower non-cash foreign currency exchange and derivative instrument gains.General and administrative expenses were $11.7 million in the second quarter of 2011 compared with $9.1 million in the second quarter of 2010. The year-over-year increase stemmed from higher staff numbers associated with the Quito office build-out and our drilling operations in Sunwing, contract engineering work related to Ivanhoe's HTL technology and financing fees incurred in the recent Convertible Debentures issuance.The Company's cash and cash equivalents balance at June 30, 2011 was $133.3 million, which will be used to continue advancing Ivanhoe's ongoing projects in Canada, Ecuador, China and Mongolia."During the quarter we continued to prudently position Ivanhoe Energy to advance our heavy oil and conventional oil and gas projects," said President and Chief Operating Officer, David Dyck."In particular, the Company enhanced the intrinsic value of our heavy-to-light (HTL) upgrading technology by successfully testing it on Ecuadorian heavy crude and by securing patent protection to 2028 in key jurisdictions.  We also put in place attractive new convertible debt financing to underwrite our operations and business development efforts."Second quarter financial summary      (US$000s, except per share amounts)(unaudited)Three months endedJune 30, Six months ended June 30,20112010 20112010      Net income (loss)(4,111)9,259 (15,237)2,454Net income (loss) per share, basic(0.01)0.03 (0.04)0.01Net income (loss) per share, diluted(0.01)0.01 (0.04)(0.05)      Cash and cash equivalents (end of period)133,308116,667 133,308116,667Cash flow used in operating activities(6,455)(6,276) (13,464)(11,707)      Oil revenue9,3896,047 17,50811,377Capital expenditures17,42012,877 31,23536,375Oil revenue totalled $9.4 million in the second quarter of 2011 compared with $8.1 million in the first quarter of 2011. This increase was due to a combination of higher production volumes and stronger realized prices.  Cash flow used in operating activities was $6.5 million during the second quarter of 2011, consistent with $6.5 million in the first quarter of 2011. In the second quarter of 2011, capital investments increased to $17.4 million compared to $14.3 million in the first quarter of 2011.Liquidity and Capital Resources Ivanhoe Energy's cash and cash equivalents were $133.3 million at June 30, 2011. These funds will be allocated to both capital and operating activities that advance Ivanhoe's project initiatives as well as business development efforts to the point where appreciative valuation milestones are recognized by independent parties.CDN$73 million convertible debt financingOn June 9, 2011, the Company issued Cdn$73.3 million in 5.75% convertible unsecured subordinated debentures ("the Debentures") at a price of $1,000 per debenture. At the holder's option, the debentures may be converted into common shares of Ivanhoe Energy prior to June 30, 2016, the maturity date, and the business day immediately preceding the date specified by Ivanhoe Energy for redemption of the debentures. The conversion price will be Cdn$3.36 per share, subject to adjustment in certain circumstances. The proceeds were used to repay a Cdn$40 million promissory note to Talisman Energy Canada with the balance to be used for ongoing capital and operating expenditures.Subsequent eventsZitong BlockIvanhoe's wholly-owned subsidiary, Sunwing Energy, submitted the Provisional Overall Development Plan to the Joint Management Committee and PetroChina on June 30, 2011.  As communicated in Ivanhoe's press release on June 15, 2011, this plan includes the acquisition of 3D seismic and the drilling of horizontal wells on the Block that will include multistage fracture stimulation. The Company is currently in discussions with PetroChina on final details of the Plan.   This plan is to be conducted over the next 24 months.Both the Yixin 2 and Zitong 1 wells have completed their respective long term built up tests and the down hole recorders have been recovered and the wells shut-in and secured.  Data collected from these recorders has been delivered to contracted third-party tight gas experts to conduct detailed analysis and modeling of reservoir parameters and potential completion and stimulation techniques to assist the Company in developing exploitation programs on the Zitong Block.Mongolia Block XVI Sunwing is currently mobilizing the drilling equipment and supplies to N16-1E, its first exploratory drill site on Nyalga block XVI, which will be drilled on a structure approximately 32 sq km in size and to an approximate depth of 2500m. As of this date, the drilling rig is more than 75 percent assembled.  Remaining minor drilling preparations will continue over the next few weeks, followed by the spud of Sunwing's first exploration well in Mongolia. Drilling of the well will take approximately 30 days, with completion and testing to be carried out as required.  The Company intends to drill two wells initially, with the option to drill up to three additional wells, and remains optimistic of the potential to find oil resources in Mongolia.Ecuador Seismic ProgramAs communicated in Ivanhoe's June 15, 2011 news release, Ivanhoe's wholly-owned Ecuadorian subsidiary commissioned a seismic program over the southern part of the Pungarayacu Block.  The first phase of this program is now complete and analysis is still underway.  Early interpretation is encouraging as it indicates deeper faulting, with the potential to trap lighter oil resources which could prove beneficial for blending purposes and overall project economics. Additionally, initial internal interpretations may also suggest an extension of the field beyond what was originally estimated.This news release summarizes the Company's 2011 second quarter results of operations and financial condition and should be read in conjunction with its Quarterly Report on Form 10-Q for the period ended June 30, 2011, which contains its unaudited condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. The Form 10-Q was filed on August 9, 2011. Copies may be obtained from the Ivanhoe Energy website at, on EDGAR at or SEDAR at 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 (HTLTM). Core operations are in Canada, United States, Ecuador, China and Mongolia, with business development opportunities worldwide. Ivanhoe Energy trades on The Toronto Stock Exchange with the symbol IE and on the NASDAQ Capital Market with the ticker symbol IVAN.For more information about Ivanhoe Energy Inc. please visit 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 2010 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: David Dyck Greg Phaneuf President and Chief Operating Officer Executive Vice President, Corporate Development 1 (403) 817 1138 1 (403) 817 1131     For media enquiries contact:   Hilary McMeekin   Manager, Corporate Communications   1 (403) 817 1108