Ivanhoe Energy reports 2011 financial results
Year of exploration sets the stage for progress in 2012
Note: All figures are quoted in U.S. dollars unless otherwise noted.
CALGARY, March 15, 2012 /PRNewswire/ – Ivanhoe Energy Inc. (TSX: IE; NASDAQ:
IVAN) is reporting today its 2011 financial results and an update on
the Tamarack and Ecuador projects.
Ivanhoe Energy is a heavy oil exploration and development company with a
portfolio of early-stage assets that have significant potential but
require more investment before they can achieve production and
sustained cash flow.
In 2011 the Company initiated a number of exploration activities,
including a seismic program in the southern part of the Ecuador block,
the drilling of two wells in Mongolia, and testing of two natural gas
wells in the Zitong block in China. The Company will build on these
important investments in 2012.
Year End Financial Summary
Ivanhoe Energy has filed its year-end financial report on Form 10-K with
the United States Securities and Exchange Commission for the year ended
December 31, 2011.
Three months Year ended ended Dec. 31, Dec. 31, (US$000s, except per share amounts) 2011 2010 2011 2010 Financial Net loss (5,882) (19,431) (25,276) (26,582) Net loss per share, basic and (0.02) (0.06) (0.07) (0.08) diluted Net cash used in operating (7,567) (11,670) (26,245) (31,290) activities Continuing Operations Oil revenue 9,126 6,166 37,403 21,720 Capital expenditures 2,982 17,130 51,060 70,980 Total assets 413,710 394,418 413,710 394,418 Cash and cash equivalents 16,890 68,317 16,890 68,317 Restricted cash 20,500 - 20,500 -
Overall, in 2011 the Company posted a net loss of $25.3 million, which
is down from the $26.6 million loss posted in 2010. The Company closed
the year with $16.9 million in cash and cash equivalents. Our cash was
impacted both by our ongoing operations and investments and by a
requirement to post a $20 million performance bond at the end of 2011
to secure our Supplemental Agreement for the Zitong acreage.
Capital Expenditures, Operating Costs and General and Administrative
Capital expenditures totaled $51.1 million in 2011. These expenditures
went to various Ivanhoe Energy projects.
-- At the Zitong Block in China, the Yixin-2 and Zitong-1 gas wells were tested and fracture stimulated. -- At the Dagang oil field, four wells were drilled and completed in 2011. One additional well started in 2010 was completed in 2011. -- In the Nyalga Basin of Mongolia two exploration wells were drilled. -- In Ecuador the Company completed a 190-km 2-D seismic survey of Block 20.
In 2011, China-based expenses rose by $6.0 million, primarily due to the
windfall profits tax administered by the People’s Republic of China,
which rises with higher oil prices. Additionally, greater human
resources were required to operate the Dagang oil field, conduct
testing on the Zitong block and drill wells in Mongolia.
The Company also continued to improve our Heavy to Light (HTL(TM)) technology. Operating costs increased due to successfully upgrading
the heavy oil recovered from the IP-5B well in Ecuador, and planned
maintenance associated with enhancements to the HTL Feedstock Test
Facility. Additionally, professional fees were incurred to provide
engineering for the possibility of placing an HTL facility in an
General and administrative expenses in 2011 were $5.6 million higher as
compared to 2010. These expenses were largely due to increased human
resources to complete the work achieved at each project, in addition to
professional fees associated with various financing and corporate
Liquidity and Capital Resources
Ivanhoe Energy’s continued focus is to establish long-term financing at
the project level. However, in 2011 and early 2012 the Company took a
number of other steps to support liquidity.
-- On June 9, 2011 Ivanhoe Energy announced that it issued Cdn$73.3 million of unsecured convertible debentures which will mature on June 30, 2016. The convertible debentures have an annual interest rate of 5.75%, which is payable semi-annually on the last day of June and December of each year, which commenced on December 31, 2011. -- On December 30, 2011 the Company entered into an unsecured loan agreement for $10.0 million with Ivanhoe Capital Finance Ltd. The funds were advanced on January 3, 2012 and will incur an annual interest rate of 13.3%. -- Today, Ivanhoe Energy also announced that it established a $50 million short-term secured credit agreement consisting of an initial tranche of $30 million that is fully underwritten by UBS AG, Canada Branch. The loan will mature after 12 months and includes an accordion feature which allows the Company to increase the total amount by up to an additional $20 million, should that be required. The loan involves customary terms and covenants for a transaction of this nature.
Tamarack – Canada
The regulatory approval process for the Tamarack project continues to
progress. Regulators have reviewed the responses to the first round of
Supplemental Information Requests (SIR’s) and as is customary in the
review process, the Company expects to receive a complete set of second
round SIR’s in the second quarter 2012. Although the Company is
anticipating receiving approval of the application by the end of 2012,
timing is subject to the pace of the regulatory process.
Following regulatory approval, finalization of a comprehensive financing
plan and subsequent project sanctioning by Ivanhoe Energy’s Board of
Directors, the engineering, construction, commissioning and start-up
phase of the project will span a timeframe of approximately 36 months.
This timeline is based on projects of similar size and scope.
Pungarayacu – Ecuador
At the end of February 2012 the Company began drilling the exploration
well (IP-17) to test both the Hollin and pre-cretaceous structures in
the southern part of Block 20, which were identified in the seismic
program completed in 2011.
The well will be drilled to a total depth of approximately 8,500 ft.,
testing the potential of lighter oil resources which could prove
beneficial for blending purposes and overall project economics.
Drilling results are anticipated by mid-2012.
Ivanhoe Energy is an independent international heavy oil exploration and
development 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 Canada, United States, Ecuador, China and
Mongolia, with business development opportunities worldwide. Ivanhoe
Energy trades on The Toronto Stock Exchange with the ticker symbol IE
and on the NASDAQ Capital Market with the ticker symbol IVAN.
For more information about Ivanhoe Energy Inc. 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 2011 Annual Report on Form 10-K filed with the U.S. Securities
and Exchange Commission on EDGAR and the Canadian Securities
Commissions on SEDAR.
SOURCE Ivanhoe Energy Inc.