Ivanhoe Energy to Test California Deep Gas Well

Ivanhoe Energy reports that rigging up of testing equipment on the Aera Energy LLC Northwest Lost Hills 1-22 deep well has begun. Aera has confirmed that the production test of potential natural gas formations is expected to start next week. Ivanhoe Energy has a 28% working interest in the project and is carried for the cost of the test phase.

A series of measurements of natural gas and condensate rates and pressures will be recorded once the well is flowing. As part of the testing program, the well is scheduled to be shut in for extended pressure build ups. The test information will be used to further increase understanding of the characteristics of the reservoir and establish the production capacity of the well. The series of flow tests and pressure build ups is expected to take approximately one month.

The well is in Kern County, California and is operated by Aera Energy LLC. It was designed to evaluate the natural gas and condensate reserve potential of the deep Temblor formation and began drilling in August 2001, reaching a depth of 21,000 feet in August 2002. Several high-pressure sandstone formations were penetrated during the drilling, indicating the presence of natural gas. Operations were suspended by the operator in 2002 while a partner was sought to share the costs of the testing program. Completion activities were resumed in September 2005. During clean out of the well natural gas was encountered and flared and the pressure, both downhole and at the surface, was extremely high.

If the test indicates commercial quantities of natural gas and/or condensate, Ivanhoe Energy will participate with its 28% working interest. 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.