Ivanhoe Energy & Derek Oil Begin Continuous Steaming Ops at LAK Ranch

Ivanhoe Energy and Derek Oil & Gas Corporation have commenced continuous steaming operations at the enhanced oil recovery pilot program at the LAK Ranch field in Weston County, Wyoming. Oil production from the pilot producing well has increased from 10 barrels per day to 60 barrels per day during the initial six days of continuous operations. The oil is currently being sold for approximately US$57/barrel.

Three vertical steam injection wells were drilled in late August and September. The new wells were completed in order to provide continuous steam injection above the existing horizontal wells. Profiles of steam through the pay section will be measured as part of the evaluation of the effectiveness of the process, with volumes and quality of steam monitored and adjusted as necessary. Production improvements will be monitored over the next several months.

Derek Oil & Gas holds a 53% interest in the 7,500-acre field in the Powder River Basin. Ivanhoe Energy currently holds 42% and 5% is held by another party. Following the pilot phase, Ivanhoe Energy has the option to increase its working interest to 60% by providing additional capital toward the initial development phase for a total of US$5 million, including the amounts spent on the pilot phase. Should Ivanhoe Energy elect not to proceed beyond the pilot phase, its working interest will be reduced to 15% and Derek Oil & Gas will become the operator.