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New independent report assigns 220 million barrels of 3P reserves to Ivanhoe Energy's Tamarack Project
Feb 7, 2011
18% increase in total resources at Tamarack sets stage for future shareholder value
CALGARY, Feb. 7 /CNW/ - David Dyck, President and Chief Operating Officer of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN) is pleased to announce today that probable (2P) and probable plus possible (3P) reserves have been recognized for the Tamarack Project located in the Athabasca region of northern Alberta. The reclassification to 2P and 3P reserves is a result of the successful completion of Ivanhoe Energy's 2010 core hole drilling program on the Tamarack lands, further technical evaluation, and the submission of its regulatory application to the Government of Alberta in November 2010.
GLJ Petroleum Consultants of Calgary (GLJ) has assigned estimated probable plus possible bitumen reserves of 220 million barrels and probable bitumen reserves of 176 million barrels to Tamarack. Along with the reserves additions, the independent 2010 evaluation recognized 345 million barrels of best estimate contingent resource. Ivanhoe Energy holds a 100% working interest in this Project which is expected to produce at approximately 40,000 barrels per day for at least 30 years.
"On the heels of the submission of our regulatory application for the Tamarack Project, we've reached another milestone with the reclassification of a significant portion of contingent resources to the reserves category," said Mr. Dyck.
"We added 176 million barrels of 2P probable reserves and, on a combined basis, the 2P reserves plus best estimate contingent resource rose 18% compared to our previous report. This significant increase validates our view that Tamarack is a world class heavy oil project that will ultimately provide significant value to our shareholders as we move forward with development and production."
As Tamarack continues to gain greater project definition, the process involves the migration of contingent resources to reserves. The following table summarizes the results of the GLJ report.
100% Working Interest
Dec. 31, 2008
Dec. 31 2010
Net Present Value before Tax
8% 10% 12%
|Probable Reserves (2P)||-||175.7||1,282||925||663|
|Probable + Possible Reserves (3P)||-||219.5||1,577||1,136||823|
|Best Estimate (P50)||440.6||345.0||1,571||1,001||650|
See statement concerning reserves and resources.
GLJ's report is effective as of December 31, 2010, and was prepared in accordance with National Instrument 51-101 (NI 51-101) using the assumptions and methodology outlined in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook). Under GLJ's interpretation of the COGE Handbook guidelines, the Tamarack Project has achieved critical milestones, including the submission of its regulatory application to the Government of Alberta. As a result of the submission of the application, a significant portion of the estimated recoverable bitumen within the applied for project area has been reclassified as 2P and 3P reserves. Under GLJ's application of the COGEH guidelines, proved reserves will be assigned when GLJ is satisfied that regulatory approvals have been obtained and the project has been sanctioned by Ivanhoe Energy. These approvals are expected in 2012.
Ivanhoe Energy Inc.
Ivanhoe Energy Inc. 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 (HTL™). Core operations are in Canada, China, Mongolia and Ecuador, with business development opportunities worldwide. Ivanhoe's shares trade on the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock Exchange under the symbol IE.
STATEMENTS CONCERNING RESERVES AND RESOURCES. Cautionary Note to U.S. Investors: The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this news release, such as contingent resources, which the SEC's guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to also consider closely the disclosure in our Form 10-K for the fiscal year ended December 31, 2010, available from the Company's website. You also can obtain this form from the SEC website at www.sec.gov.
The determination of oil and gas resources involves the preparation of estimates that have an inherent degree of associated risk and uncertainty. The estimation and classification of resources requires the application of professional judgment combined with geological and engineering knowledge to assess whether specific classification criteria have been satisfied. Statements in this news release concerning "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, of the ability to produce in the future the resources described. Actual resources and, if commenced, future production will differ from the estimates provided herein, and the difference may be significant.
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are further classified according to the level of certainty associated with the estimates and may be subclassified based on development and production status. [Reserves are further defined below].
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.
Certain of the resource volumes referred to in this news release have been classified as "contingent resources" within the meaning of the COGE Handbook. The term "contingent resources" is defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.
Contingent resources are further classified in accordance with the level of uncertainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status. Estimates of resources, which always involve uncertainty, are quoted herein as a range according to the level of confidence associated with the estimates. The "best estimate" is considered to be the best estimate of the quantity of bitumen resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. The "low estimate" is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. The "high estimate" is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate.
The contingencies that currently prevent the contingent resources referred to herein from being classified as reserves are a lack of regulatory approval, the absence of a firm development plan, and the uncertainty of funding approval for development. There is no certainty that it will be commercially viable to produce any portion of the contingent resources referred to in this press release.
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 that the Tamarack project is expected to have an estimated capacity of approximately 40,000 barrels per day over 30 years, that regulatory approvals for the Tamarack Project are expected to be received in 2012 and other statements which are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "anticipate", "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 possibility that the company will be unable to raise financing in the future for any of its projects or to repay acquisition financing interest or principal, the possibility that required regulatory approvals will be denied or delayed, 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, samples from the Athabasca bitumen test may not have the product qualities anticipated, market acceptance of the HTL technology may not be as anticipated, Ivanhoe Energy's lack of history in developing commercial HTL opportunities, 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 the reserves, the risk associated with doing business in foreign countries, environmental risks, changes in product prices, our availability to generate cash flow and 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.
The net present value estimates in the Report were based on GLJ's January 1, 2011 price forecast. A summary of selected price forecasts is provided in the table below.
Bank of Canada
Average Noon Rate
WTI Crude Oil at
Light, Sweet Crude Oil
(40 API, 0.3%S) at
For further information:
Please visit our web site at www.ivanhoeenergy.com.
|Ivanhoe Energy Contacts: ||David Dyck: 1 (403) 817-1138|
Dorreen Miller: 1 (403) 817-1108