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Log evaluation results increase upside potential of Zitong Block

November 1, 2010

Guan structure now believed to have potential of up to 1 trillion cubic
feet of gas

CALGARY, Nov. 1 /PRNewswire/ – David Dyck, President and Chief Operating
Officer of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN) and Gerald
Moench
, President of Sunwing Energy Ltd., today announced
better-than-expected reservoir characteristics at Sunwing’s Zitong-1
gas well in Southwest China based on an analysis of logs from the Xu5
and Xu4 shallower target formations. 

“The results of this evaluation significantly increase the upside
natural gas potential in the 70-square-kilometre Guan structure to
approximately 0.8 to 1.0 trillion cubic feet, double our previous view
of 0.3 to 0.6 trillion cubic feet, Mr. Dyck said. “This is also very
encouraging information relative to our view of the entire Zitong block
where we see the potential for several trillion cubic feet or more of
natural gas. As we proceed with drilling, logging and testing
operations, we aim to demonstrate this upside potential.”

The Xu5 and Xu4 formations, originally considered as secondary targets
to the deeper Xu2 formation, were encountered at depths between
approximately 3,500 metres and 3,800 metres. The two formations were
logged and casing has been successfully cemented in place. Drilling has
resumed towards the deeper Xu2 formation at approximately 4,150 metres.

Guan is the largest known structure on Sunwing’s 2,669-square-kilometre
block located in the heart of the prolific Sichuan gas basin. 

Log data on Xu5 and Xu4 formations at Zitong-1

Data from the open-hole logs indicate the Xu5 and Xu4 formations most
likely share the same pressure regime, with a total sand shale sequence
of 357 metres, from 3,445 metres to 3,802 metres. Within this sequence,
up to 58 metres (190 feet) of primary sand package has been identified
in four sand packages between 3,841 metres and 3,564 metres in the
lower Xu5 formation with porosity ranging up to 13%, and an additional
22 metres (72 feet) of secondary reservoir sand in three sand packages
between 3,592 metres and 3,801 metres in the Xu4 formation with
porosity up to 8.5%.

Log data indicate that gas shows were present throughout the Xu5 and Xu4
formations. Gas also was observed in the mud at surface while drilling
through these formations. As indicated in the company’s October 5, 2010
news release, Sunwing encountered significant pressures while drilling
through the Xu5 and Xu4 formations. High pressures potentially are a
very positive characteristic of the reservoir, increasing flow rates
and reserve quantities of any potential gas discovery.

Next steps at Zitong-1 well

Drilling at Zitong-1 will continue to a planned total depth of
approximately 4,500 metres (14,764 feet). Horizontal drilling options
will be determined after testing of the vertical wellbore is completed.
Sunwing expects to reach total depth by the end of November.

Progress update on the Yixin-2 well

The Yixin-2 well is drilling ahead and has reached a depth of 3,700
metres (11,781 feet).  Increased gas readings have been recorded in the
drilling mud as drilling as progressed into and through the top of the
Xu4 formation. The well is expected to reach total depth of 3,950
metres within the next week, when open hole logs will be run.

The Yixin-2 well is being drilled as a twin of Yixin-1, which was
drilled by Sunwing in 2007, and generated significant, but unverified,
gas flow rates, before being shut-in due to surface equipment
complications.

Applying leading-edge technologies in Zitong

Sunwing’s development program in the Zitong gas block represents the
application of leading-edge technologies that have been dramatically
successful in similar fractures reservoirs in tight gas projects in
North America. These include horizontal drilling to improve the chances
of intersecting the natural vertical fractures, as well as multi-stage
fraccing.

Sichuan is the oldest and one of the most productive gas producing
regions of China. Sinopec and PetroChina have made significant gas
discoveries from the Xu2, Xu4 and Permian formations in blocks adjacent
to Sunwing’s Zitong Block. Any gas produced in Zitong would be tied
into an established local and regional gathering and sales distribution
system.

Sunwing is the operator of the 659,840-acre (1,031 square miles) gas
exploration block in Sichuan, and it holds a 90% Contractor Interest in
a Petroleum Contract with PetroChina Company Limited. Mitsubishi Gas
Chemical Company of Japan holds the remaining 10% Contractor Interest.

Ivanhoe Energy Inc. 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, patented heavy to light upgrading process (HTL(TM)). Core
operations are in Canada, Ecuador, China and Mongolia, with business
development opportunities worldwide. Ivanhoe’s shares trade on the
NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto
Stock Exchange under the symbol IE.

For more information about Ivanhoe Energy Inc. please visit our web site
at 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 estimated quantities of
gas in each target in the Guan structure, the planned total depth of
the Zitong-1 well, the anticipated amount of time required for, and the
estimated cost of, drilling, testing and casing the well, the schedule
for commencement of drilling the Yinxin-2 well and other statements
which are not historical facts. When used in this document, the words
such as “could”, “plan”, “estimate”, “anticipate”, “intend”, “may”,
“potential”, “should”, and similar expressions relating to matters that
are not historical facts are forward-looking statements. Although
Ivanhoe Energy and Sunwing Energy believe that their 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 possibility that the
company will be unable to raise financing, the potential that the
company’s projects will experience technological and mechanical
problems, 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 the reserves, the risk associates with doing business in
foreign countries, environmental risks, changes in product prices, our
availability 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 files with the U.S. Securities and Exchange
Commission on EDGAR and the Canadian Securities Commissions on SEDAR.

SOURCE Ivanhoe Energy Inc.


Source: newswire



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