Ivanhoe Energy to Evaluate Qaiyarah Field in Iraq

Ivanhoe Energy (Middle East) Inc., a subsidiary of Ivanhoe Energy, and the Ministry of Oil of the Government of Iraq have signed a memorandum of understanding (MOU) for Ivanhoe to study and evaluate the shallow Qaiyarah Oil Field in northern Iraq. The field's reservoirs contain a large proven accumulation of 17.1 degree API heavy oil at a depth of about 1,000 feet.

Ivanhoe will evaluate the potential response of the Qaiyarah Field to the latest in Enhanced Oil Recovery (EOR) techniques, along with the potential value that could be added using Ensyn Petroleum International Ltd.'s heavy-to-light (HTL) oil RTP(TM) conversion technology to produce higher quality, more valuable crude oil. Ivanhoe has the exclusive rights to use Ensyn's technology in Iraq. The work will include an assessment of the oil-in-place in the reservoirs, and the optimum EOR/HTL methods to establish economically recoverable reserves at Qaiyarah.

Ivanhoe President and CEO Leon Daniel said the company expects to complete the study within a few months of receiving the required data from the Iraq Ministry of Oil. "The Qaiyarah Field holds significant potential and may be an excellent candidate for the application of the Ensyn HTL oil technology," he said. "We are very pleased that the Government of Iraq has given Ivanhoe this key role in evaluating the reservoir at Qaiyarah."

If the evaluation studies indicate development of the field is economically viable, Ivanhoe will present a development plan and offer a commercial proposal to implement an enhanced oil recovery program for Qaiyarah. The Ministry of Oil is under no obligation to execute the project or to enter into formal commercial negotiations at the completion of Ivanhoe's study.