Ivanhoe Energy Initiates Major Restructuring in Preparation for Multiple, Commercial HTL Heavy-Oil Projects
CALGARY, March 17 /PRNewswire-FirstCall/ — Robert Friedland is assuming the leadership of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN) and will serve as Executive Chairman and Chief Executive Officer to guide the company through a major corporate and management restructuring in preparation for the implementation of multiple, full-scale, commercial HTL(TM) heavy-oil projects in Canada and internationally.
Mr. Friedland’s appointment as Executive Chairman and Chief Executive Officer is expected to become effective at the company’s Annual General Meeting on May 29, 2008. Robert Abboud, a former President and Chief Operating Officer of Occidental Petroleum Corporation, will continue to serve as Ivanhoe Energy’s Co-Chairman.
The restructuring is planned to enhance Ivanhoe Energy’s pursuit of its central mission to develop heavy-oil assets using its proprietary, HTL (Heavy-to-Light) oil-upgrading technology.
“The successful conclusion of the HTL testing phase and the growing global focus on the utilization of heavy-oil reserves has resulted in numerous opportunities for the commercial application of HTL in Canada, South America, the Middle East, North Africa and elsewhere,” Mr. Friedland said. “These significant opportunities require a corporate structure that will facilitate the implementation of HTL projects and maximize returns for Ivanhoe Energy.”
As part of the reorganization, Ivanhoe Energy will establish a number of geographically focused, self-funding entities. The parent company Ivanhoe Energy Inc. will aggressively pursue HTL opportunities in the Athabasca Oil Sands of Western Canada and will hold and manage the core HTL technology. Two new subsidiaries will be established, one for Latin America and one for the Middle East & North Africa, complementing Sunwing Energy Ltd., Ivanhoe Energy’s existing, wholly owned company for China. David Martin will lead the subsidiary for Latin America as Chairman and CEO, and Leon Daniel will lead the subsidiary for the Middle East & North Africa as Chairman and CEO. Ivanhoe Energy Inc. initially will own 100% of each of these subsidiaries, although the percentages would be expected to decline as they develop their respective businesses and independently raise capital.
This structure will allow the development and financing of multiple HTL projects around the world, while minimizing dilution of Ivanhoe Energy’s existing shareholders. This is in response to very significant heavy-oil opportunities Ivanhoe Energy has identified in Latin America, the Middle East and North Africa. Ivanhoe Energy’s senior management believes this approach enhances Ivanhoe’s ability to organize and focus its existing resources and to build the dedicated teams required to execute these large projects. In addition, the geographical alignment will facilitate financing from region-specific strategic investors, some of which already have been identified, and also will enhance flexibility in accessing global capital markets.
Mr. Friedland will focus his efforts on corporate restructuring, finance and the closing of commercial transactions. Mr. Friedland, the founding Chairman of Ivanhoe Energy, most recently has been serving as Deputy Chairman of the parent company and Co-Chairman of its China-focused subsidiary, Sunwing Energy.
In addition to the establishment of the new regional business units for Latin America and the Middle East and North Africa, Ivanhoe Energy will continue to build its HTL capabilities around two centres: Houston, Texas, and Calgary, Alberta.
Houston, a world centre of excellence for petroleum refining and processing technologies, is Ivanhoe Energy’s HTL technology base. Dr. Mike Silverman, formerly VP Petrochemicals at KBR (formerly Kellogg Brown & Root) and currently Ivanhoe Energy’s Chief Technology Officer, will lead the HTL technology group from Houston. Dr. Silverman’s team will provide HTL support and services to the upstream and project development groups within Ivanhoe Energy, as well as within the regional subsidiary companies.
Calgary is Ivanhoe Energy’s base for Canadian oil sands project development. Selected key technical heavy-oil experts are expected to relocate to Calgary from Ivanhoe’s office in Bakersfield, California, and additional upstream heavy-oil experts in Calgary are being recruited.
Further details on Ivanhoe Energy’s senior management structure will be announced in due course.
Ivanhoe Energy’s Board of Directors also is being restructured to more closely align management experience with the goals of the various business units. As part of this process, a number of directors will retire from the Ivanhoe Energy Board to assume directorships in the subsidiary companies. The number of directors on the Ivanhoe Energy Board is expected to be reduced from 12 to seven members.
Four key components of the Ivanhoe Energy Group ———————————————– The restructuring will create four geographically focused entities: ——————— Ivanhoe Energy Inc. TSX, NASDAQ ——————— ——————————————————— —————– —————– —————– Sunwing Energy, Ivanhoe Energy, Ivanhoe Energy, China Latin America Middle East & North Africa —————– —————– —————– 1) Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) will focus on Canada, the United States and other areas not addressed by its subsidiaries. The primary emphasis will be on HTL heavy-oil opportunities in the Athabasca Oil Sands. This company will incorporate the core HTL technology team and will hold the HTL intellectual property on behalf of the organization. Ivanhoe Energy will pursue joint ventures with heavy-oil asset owners and the outright acquisition of heavy-oil assets. Ivanhoe Energy also will include Ivanhoe’s existing US conventional oil and gas activities. 2) Sunwing Energy Ltd., Ivanhoe’s wholly-owned company with existing conventional operations in China, will focus on HTL heavy-oil opportunities as well as conventional oil and gas opportunities in China and Southeast Asia, including the significant heavy-oil deposits in Indonesia. Sunwing’s management will continue to be led by Co-Chairmen Mr. Friedland and Patrick Chua, and President Gerry Moench. 3) Ivanhoe Energy Latin America will focus on HTL heavy-oil opportunities in Latin America. Management will be led by Mr. Martin as Chairman and CEO, and is expected to include selected Ivanhoe Energy personnel currently based in Bakersfield, California, who have extensive Latin American experience. Mr. Martin currently is Executive Co-Chairman of Ivanhoe Energy Inc. Mr. Martin and Mr. Daniel, who is Deputy Chairman of Ivanhoe Energy Inc. and is expected to be on the Board of Directors of this subsidiary, have more than 50 years of combined experience in negotiating and executing major oil and gas projects in Latin America, primarily during their careers with Occidental Petroleum. This includes the 1.2-billion-barrel Cano Limon field in Colombia, with the associated 500-kilometre pipeline across the Andes, the 30,000-barrel per day Alturitas field in Venezuela, and various projects in Ecuador and Peru. 4) Ivanhoe Energy Middle East & North Africa (MENA) will focus on HTL opportunities in those regions. In addition, this company will incorporate Ivanhoe Energy’s Gas-to-Liquids (GTL) technology team and GTL intellectual property, and will continue to advance the GTL project in Egypt. Management will be led by Mr. Daniel as Chairman and CEO and is expected to include existing Ivanhoe personnel based in London, England. Mr. Daniel currently is Deputy Chairman of Ivanhoe Energy. Mr. Daniel and Mr. Martin, who is expected to be on the Board of Directors of this company, have more than 50 years of combined experience in negotiating and executing oil and gas projects in the Middle East and North Africa, primarily while with Occidental Petroleum. This includes the 100,000-barrel per day Idd El Shargi North dome in Qatar, the giant 2.4-billion-barrel Intisar and Augila Nafoora fields in Libya, and the 200,000-barrel per day Masila field in Yemen. Strategic discussions for Ivanhoe Energy Middle East & North Africa have been initiated with investors based in the United Arab Emirates and other Middle Eastern countries, and potential projects have been identified across the region, including in Egypt, Libya, Iraq, Oman, Kuwait, Bahrain and Syria. HTL technology rights ———————
Ivanhoe Energy’s patents and other intellectual property related to HTL heavy-oil upgrading, and the core HTL technology team led by Dr. Silverman, will remain with Ivanhoe Energy Inc. Agreements will be established between Ivanhoe Energy and the subsidiary companies for site licenses for HTL projects identified outside Canada and the US, and for HTL technology support.
Restructuring schedule ———————-
A new Board of Directors for Ivanhoe Energy will be elected at the Annual General Meeting on May 29. It is expected that Mr. Friedland will assume responsibilities as Executive Chairman and CEO immediately following the meeting. The new entities for Latin America and the Middle East & North Africa will be established in coming weeks, together with the necessary inter-company agreements covering technology and inter-company finances.
Conference call
Ivanhoe Energy will host a conference call today, Monday , March 17, for investors and analysts at 4:30 p.m. EST (1:30 p.m. PST) to discuss 2007 fourth quarter and year-end results and provide an update on operations. The conference call may be accessed by dialing toll-free 1-866-540-8136 in Canada and the United States, or 1-416-340-8010 in the Toronto area and internationally. A simultaneous webcast of the conference call will be provided through http://www.ivanhoeenergy.com/. The call will be archived for later playback by dialing 1-416-695-5800 and entering the pass code 3252629 followed by the number sign, or via http://www.ivanhoeenergy.com/. The archived playback will be available until April 18, 2008.
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 (HTL). Core operations are in the United States and China, with business development opportunities worldwide.
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, samples from the Athabasca bitumen test may not have the product qualities anticipated, market acceptance of the HTL technology may not be as anticipated, Ivanhoe Energy’s lack of history in developing commercial HTL and GTL opportunities, 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 generate cash flow and raise capital as and when required, competition and other risks disclosed in Ivanhoe Energy’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR.
CONTACT: Investors Contact: Ian Barnett, (416) 792-3308; Bill Trenaman (604) 688-8323; Media Contact: Bob Williamson, (604) 608-8323; Website: http://www.ivanhoeenergy.com/
Ivanhoe Energy Inc.
CONTACT: Investors Contact: Ian Barnett, (416) 792-3308; Bill Trenaman(604) 688-8323; Media Contact: Bob Williamson, (604) 608-8323; Website:http://www.ivanhoeenergy.com/