Ivanhoe Energy Temporarily Suspends Well at Sichuan Gas Project in China

Ivanhoe Energy's subsidiary, Sunwing, has temporarily suspended its first natural gas exploration well on the company's Zitong Block in China's Sichuan Basin, pending further evaluation.

The well reached a total depth of 9,022 feet. Based on log analysis, no commercial volumes of hydrocarbons were conclusively detected. Initial evaluation indicates that the well penetrated porous sands contained in a Jurassic fluvial channel formation and considerable data has been obtained, which will assist with future drilling in the block. Selective cement plugs have been set in the wellbore to allow use of the surface location and wellbore for a potential directional hole following the second exploration well in the Sichuan Basin, which is planned for later this year.

Sunwing, through its wholly-owned subsidiary Pan-China Resources Ltd., has a 100% working interest in a 30-year production-sharing contract with China National Petroleum Corporation (CNPC), signed in September 2002, to commercially develop the Zitong Block. Sunwing will receive approximately 75% of the net project revenues before payout and approximately 45% after payout. PetroChina Company Limited, a subsidiary of CNPC, may elect to participate, through a working interest of up to 51%, in any development of the project. Sunwing has committed to drilling 7,000 meters (22,966 feet) in the first phase of the Zitong Block exploration program.


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