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Press release from CNW Group

Ivanhoe Energy reports third quarter 2011 financial results and operating highlights

Wednesday, November 09, 2011

Ivanhoe Energy reports third quarter 2011 financial results and operating highlights08:05 EST Wednesday, November 09, 2011Project advancement remains priority to reach value milestones Note:  All figures are quoted in U.S. dollars unless otherwise noted.CALGARY, Nov. 9, 2011 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) today reported financial results and operating highlights for the third 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 September 30, 2011."Our management team continues to make progress in each of our projects," said President and Chief Operating Officer, David Dyck. "Dagang is producing, conversations with potential Heavy-to-Light (HTLTM) partners are advancing and we are taking thoughtful steps in Ecuador, Mongolia, China and with the Tamarack project in Canada."Third quarter financial summary       (US$000s, except per share amounts)(unaudited)Three months ended Sept. 30,  Nine months ended Sept. 30,20112010  20112010       Net loss(4,157)(9,605)  (19,394)(7,151)Net loss per share, basic and diluted(0.01)(0.03)  (0.06)(0.02)       Cash and cash equivalents (end of period)58,16893,098  58,16893,098Cash flow used in operating activities(5,214)(7,913)  (18,678)(19,620)       Oil revenue10,7694,177  28,27715,554Capital expenditures16,84317,475  48,07853,850Oil revenues were $10.8 million in the third quarter of 2011 compared to $9.4 million in the second quarter.  This increase was due to higher production volumes at Dagang and stronger realized prices. The net loss in the nine months ended September 30, 2011 was $19.4 million compared to a $7.2 million net loss in the comparative period of 2010.  Although oil revenue has increased in 2011, net income was impacted by higher operating and general and administrative expenses.  Operating expenses were $5.5 million during the third quarter of 2011, compared to $5.3 million in the second quarter of 2011.  These expenses were primarily from China and included an increased windfall levy, administered by the People's Republic of China, following the rise in oil prices. General and administrative expenses in the nine months of 2011 were $37.4 million, compared to $28.4 million in the same period of 2010.  This increase was due to greater professional fees (legal and engineering) and additional staff, office and travel costs required to advance the various projects.Capital investments in the third quarter of 2011 were $16.8 million compared to $17.4 million in the second quarter of 2011.  The third quarter expenditures were primarily from activities in China, including flow testing and the running of down-hole recorders at the Yixin-2 and Zitong-1 gas wells, and ongoing drilling and fracture stimulation activities at Dagang."With $58 million in cash heading into the fourth quarter, we will end the year in a comfortable working capital position providing some degree of flexibility into early 2012, until more concrete financing plans can be implemented.  Our focus is to continue advancing our projects by analyzing all scenarios and diligently managing our working capital to achieve valuation milestones," said Dyck.Subsequent eventsTamarack - CanadaAlberta Environment and the Energy Resources Conservation Board have completed their initial review of Ivanhoe Energy's Application for the Tamarack integrated oil sands project, which is comprised of a two-phased 40,000 bbl/d steam-assisted gravity drainage (SAGD) thermal recovery and HTL facility. The first round of Supplementary Information Requests (SIRs) was received from the regulators in the third quarter of 2011 and the Company will submit responses to these SIRs in the fourth quarter of 2011.  It is anticipated that the regulatory approval process will be complete later in 2012. Project advancement, as currently envisaged, is subject to regulatory approval and financing.Pungarayacu - Ecuador Following the analysis of the seismic program, Ivanhoe Energy will be proceeding in late 2011 with one exploration well into the deeper Hollin and pre-cretaceous horizons in the southern part of the Pungarayacu Block.  This well will test the potential of lighter oil resources, which would prove beneficial for blending purposes and overall project economics. Drilling results are anticipated within the first quarter of 2012.Nyalga - Mongolia On October 27 the Company announced the successful drilling of its second exploration well on the Nyalga block in east-central Mongolia, on schedule and on budget. Oil staining, fluorescence and increases in background gas were observed in several sand sections, which are positive indicators of the presence of oil. The logs are currently being reviewed, with results expected before the end of 2011. The well will be tested in the first half of 2012.Zitong - ChinaIvanhoe Energy reached agreement with PetroChina and will be signing a Supplemental Agreement to complete an appraisal program by the end of June 2014.  The work program consists of 160 sq. km of 3D seismic, and drilling and completing three horizontal wells on the Guan and Wen structures.  The seismic work will be completed in the first half of 2012.This news release summarizes the Company's 2011 third 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 September 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 November 9, 2011. 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 (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 please visit 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 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 President and Chief Operating Officer 1 (403) 817 1155 info@ivanhoeenergy.com Greg Phaneuf Executive Vice President, Corporate Development 1 (403) 817 1155 info@ivanhoeenergy.com                     For media enquiries contact:                                       Hilary McMeekin Manager, Corporate Communications 1 (403) 817 1108 hmcmeekin@ivanhoeenergy.com