Stock Alert for Ivanhoe Energy Inc. (IVAN)
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    Top Energy Stock; Ivanhoe Poised to Benefit from China’s Soaring Appetite for Energy

    Ivanhoe Energy Inc.’s (Nasdaq: IVAN) recent announcement that it discovered natural gas at two wells in its Zitong block in China sent the company’s shares soaring. The company gained 11.4% during December 21 and closed the trading session at $2.83. As a result, Ivanhoe’s shares recovered from an 18% plunge last November on progress it made with Zitong block drilling and solid initial flow rates.

    Ivanhoe is an independent, international heavy-oil development and production company focused on pursuing long-term growth in its reserves and production using advanced technologies, including its proprietary, patented heavy to light upgrading process. Core operations are in Canada, Ecuador, China and Mongolia.

    Gas from the company’s two gas wells in China, Zitong-1 and Yixin-2 flowed at rates of up to 13 million cubic feet per day, and averaged 9 million to 10 million cubic feet per day during the initial test period. The rates recorded from the Xu-4 Formation, a well established gas-producing formation in the region, demonstrate the discovery’s strong potential and are motivating Ivanhoe to continue with further development of other structures in the Zitong Block Xu-4 Formation.

    Accordingly, the company announced better-than-expected reservoir characteristics at the Zitong-1 gas well, increasing its opinion on the upside natural gas potential to approximately 0.8 trillion to 1.0 trillion cubic feet. Natural gas sales are regulated in China and current prices are approximately $5.00 per thousand cubic feet at the wellhead.  This translates into a reserve gross value of $4 billion – $5 billion.

    Besides the significant progress the company made in China, Ivanhoe continues the preparation of the regulatory application for the Tamarack Project in Canada. The project is estimated to have a contingent resource of 441 million barrels of bitumen, which could be explored using the company’s proprietary HTL technology in 2012. The regulatory application submitted by Ivanhoe in November proposes developing an integrated in-situ heavy-oil project with ultimate production capacity of approximately 40,000 barrels per day (bitumen basis).

    Despite the significant exploration activities, the company’s revenue run rate is still modest. Ivanhoe’s oil revenues in the third quarter of 2010 were $4.2 million compared to $7.9 million in the third quarter of 2009. The decrease was due to the reduction in lower production volume in the Dagang field in China as a result of production quotas.

    The net loss from continuing operations for the third quarter of 2010 was $7.2 million compared to a net loss of $2.8 million for the third quarter of 2009. General and administrative (G&A) expenses were $6.1 million in the third quarter of 2010 compared to $4.4 million in the third quarter of 2009. The increase in G&A was primarily the result of higher staff and office expenses associated with the Company’s growing commitments to its core projects.

    Ivanhoe’s cash and cash equivalents balance of $90.2 million at September 30, 2010, should be sufficient for further advancement of the company’s core projects and selected engineering and development costs related to the enhancement of its proprietary HTL upgrading process.

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