Wednesday, November 21, 2012

Ivanhoe Energy, Inc. (IVAN) Sells Pan-China, Shifts to Focus on Core Heavy Oil Assets Supporting HTL Technology Commercialization

Ivanhoe Energy, the independent international heavy oil E&P with primary operations in Canada and the U.S., as well as Ecuador, China, and Mongolia, focused on pushing the envelope through their patented heavy oil upgrading HTL Process (heavy-to-light), reported today that the company has signed an important share purchase and sale agreement with MIE Holdings for all outstanding shares of the company’s indirect, wholly-owned Pan-China Resources Ltd. subsidiary, for a total of $45M in cash (effective Sept 30).

This deal is a huge win for IVAN and is perfectly in-line with the company’s renewed strategy, a strategy that includes priorities like the divestiture of Zitong Block assets. Such moves clear the way so that IVAN can focus on exciting developments up in the prolific Athabasca region of Canada, where the company is currently working hard to secure regulatory approval for their Tamarack project and establish the relevant/necessary development partnerships.

Much needed time, energy, and resources will also be shifted to the company’s Block 20 (Pungarayacu) project in Ecuador, where similar efforts are currently underway as at Tamarack, with IVAN diligently engineering a partnership framework that will ensure shareholders get the most out of this promising 250 sq mile oil field. In addition to these development vectors, IVAN is pushing hard in the mid-stream partnership area to fully capitalize on the commercialization of their HTL technology.

This is a solid deal for MIE as well, with the Hong Kong-based oil and gas E&P picking up some much needed production footprint in the heart of the world’s most energy hungry economy, a position which adds substantially to MIE’s existing assets in China, as well as the U.S. and Kazakhstan. This freeing up of momentum by IVAN to focus on core assets with high-growth metrics that more ideally assist the HTL commercialization goals should please shareholders and investors alike, as IVAN is clearly trimming the fat here in preparation for the big HTL push.

The deal is expected to close in the next 30 days and is subject to customary closing conditions and fees, including a $5M hold-back of the total consideration (due within six months of closing). Ivanhoe Energy is clearly leaning hard into their HTL technology as a massive competitive edge which could place the company in the pole position for quite some time in the heavy oil race, with associated expertise in advanced heavy oil extraction further increasing their lead.

The baseline logistics for the sector are as plain as day and this kind of advanced heavy oil tech, based on long proven thermal cracking and carbon rejection concepts, has tremendous, obvious potential as the domestic hydrocarbon window continues to open up. The potential for this kind of heavy oil upgrading technology in Athabasca alone should whet investor’s whistles, as there is a vast hydrocarbon crop all but ready to be harvested.

For more information on Ivanhoe Energy, visit www.IvanhoeEnergy.com

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