Ivanhoe Energy Makes Two Discoveries in California

David Martin, Chairman of Ivanhoe Energy Inc., revealed that the company has encountered significant oil and gas shows in two separate exploration wells in California. Drilling on the two wells, Sledge Hamar 1-7 and Citrus No. 1, has been completed and testing operations will begin soon. The two prospects are eight miles apart and are adjacent to separate, large oil fields.

Sledge Hamar 1-7 Well
The Sledge Hamar Prospect exploration well is located in a 900-acre block in the southern San Joaquin Basin, in central California. The well is near the southern extension of the giant South Belridge Field, which produces from several zones. The Sledge Hamar 1-7 well has been drilled to a depth of 5,704 feet and logged. It encountered strong shows of oil and gas in several intervals of the Stevens sand, which is a major oil-producing formation in the San Joaquin Valley. The joint venture is running casing to test and evaluate the potential productive zones.

Participants in the Sledge Hamar Prospect are Hamar Associates, LLC as operator with 50%; Ivanhoe Energy (USA) Inc. with 40%; and Orchard Petroleum Inc. with the remaining10%.

Citrus No. 1 Well
Drilling operations have been completed at Citrus No. 1 - Ivanhoe's first horizontal well at the Citrus prospect area that is adjacent to existing production at the large Lost Hills field. A total horizontal section of more than 1,900 feet was drilled at a vertical depth of 7,750 feet in the Antelope Shale formation, an important producing zone in the offsetting wells. A four-inch liner containing six hydraulic fracturing nozzles was installed in preparation for the completion. The drilling rig has been released and fracture stimulation and testing will commence in mid-January after initial production facilities are installed.

The Citrus prospect is located in the southern extension of the currently producing Lost Hills field, which is unrelated to Ivanhoe's deep-gas prospect at Northwest Lost Hills, 15 miles to the north. The company has acquired an interest in more than 1,700 potentially productive acres offsetting the Lost Hills field, where there has been recent development drilling. Ivanhoe is the operator and owns interests ranging between 83% and 100% in the prospect leases.

The horizontal-drilling technique used at Citrus is similar to that used successfully to develop other Antelope Shale reservoirs in the nearby North Shafter and Rose fields. If the testing results from the Citrus No. 1 are favorable, the company estimates that there could be as many as 20 additional horizontal-drilling locations at the Citrus Prospect. Ivanhoe also may plan future wells to test deeper formations.