Ivanhoe Restates GAAP Disclosure

Ivanhoe Energy Inc. is restating its United States Generally Accepted Accounting Principles (U.S. GAAP) reconciliation note of previously issued financial statements.

The move follows a recent interpretation by the United States regulatory authorities of the U.S. accounting rules contained in the Statement of Financial Accounting Standards (SFAS) #133, Accounting for Derivative Instruments and Hedging Activities, which determines the current U.S. accounting treatment of Ivanhoe Energy's share purchase warrants.

Ivanhoe Energy reports in accordance with Canadian generally accepted accounting principles (Canadian GAAP) and provides note disclosure in its financial statements with respect to a reconciliation of Canadian GAAP to U.S. GAAP. Under Canadian GAAP, share purchase warrants are accounted for as equity and recorded at their historical cost. The interpretation under U.S. GAAP requires that Ivanhoe's share purchase warrants that are priced in Canadian dollars must be classified as liabilities at their fair value with any resulting gains or losses being included in the calculation of U.S. GAAP earnings. In these circumstances, a loss (gain) would be recorded by the company when the fair value of the share purchase warrants increases (decreases).

As a result of this interpretation, Ivanhoe Energy will restate the U.S. GAAP note included in its financial statements for the year ended December 31, 2005 and the affected quarters in 2005 and 2006.

This restatement only pertains to Ivanhoe Energy's U.S. GAAP reconciliation note disclosure, due to changes in fair value of these share purchase warrants, and results in a reduction of approximately US$2.9 million in the previously reported loss for U.S. GAAP for the year ended December 31, 2005 and an increase of $0.9 million for the third quarter of 2006. At the time that Ivanhoe Energy's share purchase warrants are exercised, the value of the warrants will be reclassified to shareholders' equity within the U.S. GAAP note.

The Financial Accounting Standards Board (FASB) has initiated a project to determine the accounting treatment for convertible debt with elements of foreign currency risk. This project is expected to provide further U.S. GAAP guidance in respect of accounting for share purchase warrants.

"Ivanhoe Energy's previously reported financial results under Canadian GAAP remain unchanged. These are non-cash charges for U.S. GAAP purposes only, that do not impact our operations or cash flows," said Gordon Lancaster, Ivanhoe Energy CFO. "The U.S. regulatory authorities have recently provided their interpretation of some very complex U.S. accounting rules affecting the U.S. GAAP note disclosure in our previously reported financial statements. Reflecting our commitment to responsible financial reporting, we are providing that restatement of information to the market."

Ivanhoe Energy is an independent international oil and gas 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.


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