Ivanhoe to Snag Canadian Oil Sands Blocks from Talisman

Deputy Chairman of Ivanhoe Energy Inc. announced that the company has signed a preliminary agreement with Talisman Energy Canada to acquire all of Talisman's interests in three leases located in the heart of the Athabasca oil sands region in the Province of Alberta, Canada. Talisman Energy Canada is an affiliate of Talisman Energy Inc.

The total purchase price is C$105 million, of which C$30 million is payable at closing. The transaction will see the first commercial application of Ivanhoe Energy's proprietary HTL(TM) heavy-oil upgrading technology in a major, integrated heavy-oil project.

Based on the most recent evaluations of the Talisman leases conducted by Sproule Associates Limited, independent reservoir engineers, two of the three leases are estimated to contain, on a best estimate basis, approximately 294 million barrels of contingent bitumen resources (with low and high estimates of approximately 216 million and 394 million barrels, respectively) out of approximately 752 million barrels of discovered petroleum initially-in-place.

The proposed home for Ivanhoe Energy's initial, integrated HTL heavy-oil project will be Lease 10, near Fort McMurray. Based on estimates by Sproule of contingent bitumen resources, Lease 10 - the principal block being acquired would be capable of producing between 30,000 and 50,000 barrels of oil per day.

Talisman will retain back in rights of up to 20% in all of the acquired leases for a period of three years. During this period, Talisman will also have the right of first offer to acquire any participation interests in heavy oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases, on mutually agreeable terms. In addition, in order to allow Talisman to effectively monitor the commercial effectiveness of Ivanhoe's HTL technology, Ivanhoe and Talisman will sign an HTL Data Monitoring Agreement.

"We now have achieved our initial objective," said Mr. Friedland. "We are anchoring the roll-out of our HTL heavy-oil upgrading process with a first-class, high-quality resource asset in the centre of the Athabasca oil sands region. We will now proceed full speed ahead with preparations for an integrated HTL heavy oil project on Lease 10, while at the same time progressing discussions relating to additional heavy oil opportunities in Canada and internationally".