Ivanhoe Energy Completes California Natural Gas Well

Ivanhoe Energy says that the Aera Energy LLC Northwest Lost Hills 1-22 deep well has been successfully completed to a depth of 20,870 feet in preparation for testing potential natural gas formations starting in early January. Ivanhoe Energy has a 28% working interest in the project, but is fully carried for the cost of the test phase.

"Completion activities on this deep well, in a highly over pressured formation, were handled extremely well by Aera," said Leon Daniel, Ivanhoe Energy's President and CEO. "Natural gas shows were encountered in three different zones when the well was originally drilled and indications from the completion activities are very encouraging. Natural gas was encountered and flared during clean out of the well and the pressure, both downhole and at the surface, is extremely high. Now that the downhole equipment has been successfully run, we expect testing to commence early in the New Year, once all of the surface testing equipment is hooked up."

Completion activities were resumed in September 2005 on the NWLH 1-22 well. The open hole interval below 19,620 feet was cleaned out and a perforated production liner was successfully run to a depth of 20,870 feet. A production tubing string has been placed in the well. With the high mud weights required to control the well, the pressure in the reservoir is indicated to be extremely high. The drilling rig has moved off and a tree with a 15,000 pound per square inch pressure rating has been installed at the surface.

Ivanhoe Energy originally had a 42% interest in the 9,600-acre block, but farmed out a portion of its ownership in exchange for testing of the well. Ivanhoe Energy's costs are being carried through the initial completion and testing phase by other partners in the venture. If the test, which could take up to one month, indicates commercial quantities of natural gas and/or natural gas liquids, Ivanhoe Energy will participate with its 28% working interest.

The well is in Kern County, California and is operated by Aera Energy LLC. This well, designed to evaluate the natural gas and condensate reserve potential of the deep Temblor formation, began drilling in August 2001 and reached a depth of 21,000 feet in August 2002 after substantial delays and cost overruns resulting from difficult drilling conditions. While drilling, several high-pressure intervals which indicated the presence of natural gas were encountered. Casing was set to 19,620 feet in preparation for testing; however, operations were suspended by the operator in 2002 while a partner was sought to share the costs of the testing program.