Ivanhoe Energy Reports Second Quarter 2012 Financial Results
Ecuador IP-17 Drilling Activity Completed Successfully
Note: All figures are quoted in U.S. dollars unless otherwise noted.
CALGARY, Aug. 9, 2012 /PRNewswire/ – Ivanhoe Energy Inc. (TSX: IE; NASDAQ:
IVAN) is reporting today its financial results for the second quarter
of 2012 and an update regarding its Ecuador operations.
Second Quarter Financial Summary
Ivanhoe Energy 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, 2012.
Three months Six months ended June 30, ended June 30, (US$000s, except per share amounts) (unaudited) 2012 2011 2012 2011 Oil revenue 11,292 9,389 19,200 17,508 Net loss (4,703) (4,111) (15,365) (15,237) Net loss per share, basic and (0.01) (0.01) (0.04) (0.04) diluted Net cash used in operating (4,184) (6,455) (11,076) (13,464) activities Capital investments 24,619 17,420 33,544 31,235 Cash and cash equivalents (end of 27,416 133,308 27,416 133,308 period) Restricted cash 20,500 - 20,500 -
In the second quarter of 2012, the Company had a net loss of $4.7
million, as compared to $4.1 million net loss in the same period of
2011. This net loss is larger because unrealized derivative instrument
gains were larger in the second quarter of 2011 than they were in the
second quarter of 2012; a difference partially offset by higher revenue
and lower general and administrative expenses.
Ivanhoe Energy’s oil revenue in the three months ended June 30, 2012
increased from the same period in 2011. This was due to a combination
of increased net volumes and higher pricing. Oil production from the
Dagang field in China was relatively constant; however, due to the
terms of the production sharing contract with China National Petroleum
Corporation (CNPC), higher capital activity resulted in more oil
production being allocated to Ivanhoe Energy.
Capital Expenditures, Operating Costs, General and Administrative (G&A)
Capital expenditures for the Company totalled $24.6 million in the
second quarter of 2012. These expenditures were primarily incurred in
China and Ecuador.
-- In China, the Company spent $9.5 million for the 160 square kilometer 3-D seismic acquisition program at Zitong, in compliance with the terms of its Supplementary Agreement with CNPC and $5.1 million to drill two production wells, completing one of those wells and continuing the fracture stimulation program at Dagang. The second well will be completed during the third quarter of 2012. -- In Ecuador, the Company spent $9.4 million on drilling activities associated with IP-17, the exploration well in the southern part of Block 20.
Field operating costs per barrel in China were lower in the second
quarter of 2012 mainly due to fewer maintenance work-overs than in the
prior year period. Operating costs at the Heavy to Light (HTL) Feedstock Test Facility in San Antonio, Texas in the second
quarter were lower than in the comparable period of 2011 due to greater
efficiencies in collection and analysis activities.
G&A expenses were $1.3 million lower in the second quarter of 2012. The
reduction is primarily attributable to reduced activity in the
Company’s Asian projects, streamlined operations in Latin America,
decreased expenses in Canada and reduced contract costs.
Liquidity and Capital Resources
In March 2012, the Company signed a credit agreement for a $50 million
loan with UBS Securities. The UBS loan included an initial tranche of
$30 million and in July 2012, subsequent to the end of the second
quarter, the Company elected to draw the additional $20 million of
principal. The full $50 million loan will mature on March 23, 2013.
Ivanhoe Energy intends to use its working capital to meet its
commitments; however, the Company is in the process of securing
additional financial partnerships to advance each of the major projects
and fully develop its oil properties.
Ecuador – Block 20
Ivanhoe Energy’s contract to develop Block 20 with the Ecuadorian
Government consists of three stages; the first two stages are appraisal
and evaluation of the field´s production potential. The Company’s
IP-17 well was drilled to evaluate the potential of the southern part
of the Pungarayacu field. It was successfully drilled to a depth of
13,594 feet, where it was cased and suspended. The well confirmed the
presence of hydrocarbons in the Hollin and Napo formations and
evaluated the potential of the deeper, pre-cretaceous structures. While
hydrocarbons were found in the Hollin and Napo formations, the
reservoir in the immediate vicinity of the well was not suitable for
commercial exploitation. Additional work is required to explain the
Hollin and Napo reservoir characteristics south of the Napo River.
Using specialized tools the Company drilled through a sequence of
extremely hard volcanic rocks, known as the Chapiza formation, with a
thickness of approximately 5,400 feet. Following this stage, a
sequence of pre-cretaceous sedimentary rocks was found. The sequence
contained black shales with high organic content, significant
thicknesses of limestones and sandstones and an increase in gas
readings was observed at some intervals. The organic material is the
precursor of hydrocarbon generation and limestones and sandstones are
the principal reservoir rocks in an oil bearing basin. The well did
not have commercial quantities of hydrocarbons, but the evaluation does
show good indications that the formations have the potential of
generating and storing hydrocarbons.
These results are a significant step in the exploration of the Oriente
Basin. All of this data, together with future 2D and 3D seismic work,
will be used to determine the planning and development of Block 20.
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(TM) 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.