Ivanhoe Sells U.S. Assets, Secures Financing for Heavy Oil Projects
Ivanhoe Energy has sold its U.S. oil and gas operations to Seneca South Midway LLC, a subsidiary of Seneca Resources Corporation, for total proceeds of approximately US $40 million. Seneca Resources Corporation is the Exploration and Production segment of National Fuel Gas Company. This sale is consistent with Ivanhoe Energy's goal of focusing its financial and human resources on its HTL (Heavy-to-Light) heavy-oil projects, including the Tamarack Project in Western Canada and the Pungarayacu project in Ecuador.
The sale includes all of Ivanhoe Energy's oil and gas exploration and production operations in the United States. As of June, 2009, these assets produced approximately 645 gross (595 net) barrels per day of oil in California and Texas. The sale also includes certain exploration acreage in California.
The net proceeds from the sale, after repayment of debt and transaction expenses, are estimated at approximately US $34 million. These proceeds will be used to advance the initial stages of the Tamarack and Pungarayacu projects and for general corporate purposes. Ivanhoe Energy's key heavy-oil experts based in Ivanhoe Energy's US operations will be redeployed to work on the company's Tamarack or Pungarayacu projects.
Ivanhoe Energy's operations now will be concentrated on the development of its first two HTL heavy-oil projects, Tamarack in Canada and Pungarayacu in Ecuador, and the pursuit of additional heavy-oil opportunities in Canada, South America, the Middle East and North Africa. In addition, Ivanhoe Energy will continue with oil and gas operations in China under its wholly-owned subsidiary, Sunwing Energy Ltd.
"This sale allows Ivanhoe Energy to focus our financial and human resources on our true competitive strengths," said Friedland. "We currently have two world-class heavy-oil projects underway driven by the application of our game-changing HTL technology, and we have significant additional opportunities in our sights."
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