VANCOUVER, Aug. 10 /CNW/ - Ivanhoe Energy Inc. (NASDAQ: IVAN and TSX: IE)

will file its Quarterly Report on Form 10-Q today for the quarter ended June

30, 2009.

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Highlights of the Second Quarter

- US oil and gas operations sold for approximately $40 million (closed

in July, 2009).

- Ivanhoe Energy Ecuador received authority to initiate operations on

the Pungarayacu field in Ecuador.

- Engineering work continued on a Phase I, 20,000-barrel-per-day Heavy-

to-Light (HTL) upgrading facility for the Tamarack project in Canada.

Front End Engineering & Design (FEED) is planned for completion in

the fourth quarter of 2009.

- Discussions and due diligence with potential strategic partners

accelerated during the second quarter.

- Cash flow used in operations during the second quarter was

$2.9 million, reduced from the $4.1 million used in the first quarter

of 2009, mainly due to higher oil prices.

- Capital spending in the second quarter was $6.7 million, up from

$5.2 million in the first quarter of 2009.

Message from Robert Friedland,

President and Chief Executive Officer of Ivanhoe Energy Inc.

>>

"Management is very pleased with our progress and with our current

position at this stage of the emerging global economic recovery. We have

consolidated and focused our energies on our core heavy-oil business and the

development of our two world-class heavy-oil assets: Tamarack in Canada and

Pungarayacu in Ecuador. Our HTL upgrading technology is ready for commercial

implementation. The initial engineering and design of a 20,000-barrel-per-day

HTL facility, being carried out by AMEC of London, England, is scheduled to be

completed by the end of this year. Recognition of the strategic value of HTL

in unlocking the value of heavy oil is growing rapidly. We are evaluating

various additional HTL opportunities around the world and we are actively

engaged in partnership discussions with numerous leading oil groups. The

proceeds from the recent sale of our US oil and gas operations has provided us

with added financial flexibility, giving us the time to select the appropriate

partners that will help us achieve our objectives."

Sale of US oil and gas operations

In July 2009, Ivanhoe Energy closed the sale of its US oil and gas

operations to Seneca South Midway LLC, a subsidiary of Seneca Resources

Corporation. Seneca Resources is the exploration and production segment of

National Fuel Gas Company (NYSE: NFG). This sale is consistent with Ivanhoe

Energy's goal of focusing its financial and human resources on its HTL

heavy-oil projects.

The sale included 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 included certain exploration acreage in

California.

Key heavy-oil experts presently based in Ivanhoe Energy's US operations

have been redeployed to work on the company's Tamarack project in Canada or

the Pungarayacu project in Ecuador.

The sale price paid by Seneca was $39.2 million. This price was net of

surplus working capital of approximately $1 million that was withdrawn by

Ivanhoe before closing, indicating an enterprise value of approximately $40

million.

An amount of $37.2 million was paid in cash at closing and $2 million was

placed in a contractual escrow for one year. From total cash proceeds, a loan

owing to Bank of America of approximately $5 million was retired, and closing

fees were paid. The net cash proceeds of the sale, net of the escrow,

retirement of the bank loan and payment of closing expenses was approximately

$32 million, with an additional $2 million due to Ivanhoe from the escrow one

year from closing.

Projects Update

During the second quarter, Ivanhoe Energy Ecuador Inc. received authority

to assume control of Block 20 and initiate operations on the Pungarayacu

field. This followed the Ecuadorean government's issuance of a key

environmental licence to Ivanhoe Energy Ecuador. Ivanhoe Energy Ecuador is

finalizing the geotechnical work required for the initial drilling program and

has retained drilling contractors to carry out this work.

Pungarayacu is considered by the Government of Ecuador to be the

country's largest known, single accumulation of hydrocarbon resource. The

Pungarayacu oil field, covering 250 square miles (647 square kilometres), was

discovered and partly delineated approximately 30 years ago by Petroecuador.

The field was found to include a substantial resource of heavy oil, but

development was held back due to the challenges associated with heavy-oil

production. Ivanhoe Energy's unique and patented HTL heavy-oil upgrading

process provides a solution to these challenges, enabling the field to be

developed and placed into production.

The permits received by Ivanhoe Energy Ecuador cover the drilling of a

limited number of appraisal wells. These early wells, proposed to be drilled

before the end of 2009, will help to more fully characterize the oil and the

reservoir in what Ivanhoe Energy Ecuador believes to be the more prospective

regions of the massive 426-square-mile Block 20.

Progress on the Tamarack project in Canada during the second quarter was

focused on supporting the engineering related to the integrated Phase I,

20,000-barrel-per-day HTL facility being carried out by AMEC in London, in

conjunction with the upstream engineering being carried out by AMEC-BDR in

Calgary.

Ivanhoe Energy plans to have the Front End Engineering & Design completed

on the Tamarack Phase I HTL facility in the fourth quarter of 2009.

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China Oil and Gas Operations

(unaudited; thousands of U.S. dollars except per share and production

amounts)

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Three Months Ended Six Months Ended

-------------------------------- ---------------------

Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30

2009 2009 2008 2009 2008

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Financial

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Oil revenue -

gross $ 6,009 $ 5,733 $ 11,746 $ 11,742 $ 22,635

Total revenue -

after derivative

gain (loss) $ 4,838 $ 5,816 $ (3,252) $ 10,654 $ 4,969

Depletion and

depreciation $ 5,242 $ 5,274 $ 5,794 $ 10,516 $ 12,000

Capital

investments $ 1,368 $ 1,156 $ 1,646 $ 2,524 $ 3,771

Identifiable

assets (at end

of period) $ 54,417 $ 59,165 $ 72,530

Operating

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Net production

(after royalties):

Barrel of oil

equivalent (BOE) 127,881 131,078 116,507 258,959 241,478

BOE/day for

the period 1,405 1,456 1,280 1,431 1,327

Dagang

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>>

The gross production rate at the Dagang Project in China at the end of

June 2009 was 1,681 gross barrels of oil per day from 39 wells, compared to

1,840 gross barrels of oil per day from 37 wells at the end of March 2009. Two

well stimulations were performed during the second quarter; the company

intends to continue this fracture program during the remainder of 2009 to

offset normal field decline.

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Zitong

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Two exploration-well locations were selected on the Zitong block acreage

in China during the second quarter and drilling is planned to commence in late

2009. Drilling, completion and evaluation of this prospect is expected to be

finalized in 2010.

<<

Consolidated Financial Highlights

(unaudited; thousands of U.S. dollars except per share and production

amounts)

-------------------------------- ---------------------

Three Months Ended Six Months Ended

-------------------------------- ---------------------

Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30

2009 2009 2008 2009 2008

---------- ---------- ---------- ---------- ----------

Financial

---------

Net loss from

continuing

operations $ (11,444) $ (11,577) $ (18,547) $ (23,021) $ (26,977)

Net income (loss)

from discontinued

operations $ 66 $ (697) $ (3,184) $ (631) $ (3,298)

---------- ---------- ---------- ---------- ----------

Net loss and

comprehensive

loss $ (11,378) $ (12,274) $ (21,731) $ (23,652) $ (30,275)

---------- ---------- ---------- ---------- ----------

---------- ---------- ---------- ---------- ----------

Net income (loss)

per share

Loss from

continuing

operations, basic

and diluted $ (0.04) $ (0.04) $ (0.08) $ (0.08) $ (0.11)

Income (loss)

from discontinued

operations, basic

and diluted $ 0.00 $ (0.00) $ (0.01) $ (0.00) $ (0.01)

---------- ---------- ---------- ---------- ----------

Net loss per

share, basic

and diluted $ (0.04) $ (0.04) $ (0.09) $ (0.08) $ (0.12)

---------- ---------- ---------- ---------- ----------

---------- ---------- ---------- ---------- ----------

Net cash

provided (used)

by operating

activities from

continuing

operations $ (4,917) $ (4,880) $ 726 $ (9,797) $ 2,396

Net cash

provided (used)

by operating

activities from

discontinued

operations $ 2,031 $ 792 $ 1,900 $ 2,823 $ 3,247

---------- ---------- ---------- ---------- ----------

Net cash used

in operating

activities $ (2,886) $ (4,088) $ 2,626 $ (6,974) $ 5,643

---------- ---------- ---------- ---------- ----------

---------- ---------- ---------- ---------- ----------

Oil revenue -

gross $ 6,009 $ 5,733 $ 11,746 $ 11,742 $ 22,635

Total revenue -

after derivative

gain (loss) $ 4,844 $ 5,824 $ (3,249) $ 10,668 $ 4,986

Depletion and

depreciation $ 6,045 $ 5,955 $ 6,431 $ 12,000 $ 13,340

Capital

investments $ 6,692 $ 5,208 $ 1,880 $ 11,900 $ 4,720

Total assets (at

end of period) $ 323,063 $ 304,460 $ 235,157

Cash and cash

equivalents (at

end of period) $ 16,135 $ 27,709 $ 8,732

Summary of Second Quarter

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Oil revenue in the second quarter of 2009 increased by 5% compared to the

previous quarter, reflecting higher benchmark crude oil prices.

The company utilises costless collar derivatives in conjunction with its

banking arrangements in order to reduce cash flow volatility. During the

second quarter these derivatives provided realised gains of approximately

$76,000. Due to higher oil prices at the end of the second quarter compared

with the end of the first quarter, valuation of open positions on these

derivatives at the end of the second quarter declined and led to an unrealised

loss of approximately $1.2 million during the quarter. As a result total

revenue after derivative gains and losses declined approximately 17%.

Cash flow used in operating activities was $2.9 million during the second

quarter, compared to $4.1 million in the previous quarter; capital investments

for the second quarter increased to $6.7 million, compared to $5.2 million in

the first quarter of 2009.

Liquidity and Capital Resources

Our operating activities used $2.9 million in cash for the first quarter

of 2009 and capital investments during the quarter were $6.7 million.

Our cash and cash equivalents as at June 30, 2009, were $16.1 million.

However, in July, after the end of the quarter, we closed the sale of our US

operations, providing an additional $32 million in cash after repayment of a

bank loan, fees and a contractual escrow.

Our two initial HTL heavy-oil projects will require significant capital

for full development. Our strategy is to finance the development of these two

projects primarily with funding from strategic partners. As discussed

elsewhere in this release, we are engaged in various discussions and due

diligence efforts related to the establishment of strategic and financing

arrangements. The pace of development of our projects will be determined by

the progress we make with our strategic partnership discussions.

This news release summarizes our 2009 second quarter results of

operations and financial condition and should be read in conjunction with our

Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, which

contains financial statements and Management's Discussion and Analysis of

Financial Condition and Results of Operations. The Form 10-Q is expected to be

filed on August 10, 2009 and copies may be obtained from the Ivanhoe Energy

website at www.ivanhoeenergy.com, on EDGAR at www.sec.gov or SEDAR at

www.sedar.com.

Ivanhoe Energy 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 heavy oil

upgrading process (HTL). Core operations are in Canada, Ecuador and China,

with business development opportunities worldwide. Ivanhoe Energy trades on

the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock

Exchange with the symbol IE.

FORWARD-LOOKING STATEMENTS: This document includes forward-looking

statements, including forward-looking statements within the meaning of the

Private Securities Litigation Reform Act of 1995. Forward-looking statements

include, but are not limited to, statements concerning the potential benefits

of Ivanhoe Energy's heavy oil upgrading technology, the potential for

commercialization and future application of the heavy oil upgrading technology

and other technologies, statements relating to the continued advancement of

Ivanhoe Energy's projects, the potential for successful exploration and

development drilling, dependence on new product development and associated

costs, statements relating to anticipated capital expenditures, the necessity

to seek additional funding, statements relating to increases in production and

other statements which are not historical facts. When used in this document,

the words such as "could," "plan," "estimate," "expect," "intend," "may,"

"potential," "should," and similar expressions relating to matters that are

not historical facts are forward-looking statements. Although Ivanhoe Energy

believes that its expectations reflected in these forward-looking statements

are reasonable, such statements involve risks and uncertainties and no

assurance can be given that actual results will be consistent with these

forward-looking statements. Important factors that could cause actual results

to differ from these forward-looking statements include the potential that the

company's projects will experience technological and mechanical problems, new

product development will not proceed as planned, the HTL technology to upgrade

bitumen and heavy oil may not be commercially viable, geological conditions in

reservoirs may not result in commercial levels of oil and gas production, the

availability of drilling rigs and other support services, uncertainties about

the estimates of reserves, the risk associated with doing business in foreign

countries, environmental risks, changes in product prices, our ability to

raise capital as and when required, competition and other risks disclosed in

Ivanhoe Energy's Annual Report on Form 10-K filed with the U.S. Securities and

Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR.

RESERVES DATA AND OTHER OIL AND GAS INFORMATION: Ivanhoe Energy's

disclosure of reserves data and other oil and gas information in the Annual

Report on Form 10-K is made in reliance on an exemption granted to Ivanhoe

Energy by Canadian securities regulatory authorities, which permits Ivanhoe

Energy to provide disclosure in accordance with U.S. disclosure requirements

rather than in accordance with the requirements of Form 51-101F1. Reports on

Form 51-101F2 and Form 51-101F3 will be filed in Canada concurrently with the

Annual Report on Form 10-K and copies may be obtained at www.sedar.com.

The information provided by Ivanhoe Energy may differ from the

corresponding information prepared in accordance with Canadian disclosure

standards under National Instrument 51-101 (NI 51-101). Further information

about the differences between the U.S. requirements and the NI 51-101

requirements is set forth under the heading "Reserves, Production and Related

Information" in Ivanhoe Energy's Annual Report on Form 10-K.

-30-

/For further information: Investors Contact: Ian Barnett, (416) 792-3308,

Bill Trenaman, (604) 688-8323; Media Contact: Bob Williamson, (604) 331-9880;

Website: www.ivanhoeenergy.com/