2009-08-06-2008-07-01-2008-08-01

Purchased interests in 2 Athabasca oil-sands leases, gaining 244 MMB bitumen resource potential.

Ivanhoe Energy Inc., Calgary, (Nasdaq: IVAN; Toronto: IE) has completed its acquisition of interests in two leases in the Athabasca oil-sands region of Alberta from Talisman Energy Canada, an affiliate of Talisman Energy Inc. (Toronto: TLM; NYSE: TLM) for C$90 million. Ivanhoe values the deal at approximately C$0.37 per barrel of contingent bitumen resource measured on a best-estimate basis, with a range of approximately C$0.29 per barrel on a high-estimate basis to approximately C$0.48 per barrel on a low-estimate basis. The primary asset is a 100% interest in Lease 10, a block of 6,880 contiguous acres near Fort McMurray. It is capable of producing between 30,000 and 50,000 barrels of oil per day for approximately 25 years using Ivanhoe's HTL heavy-oil upgrading technology, according to the company. Ivanhoe intends to integrate established SAGD (steam-assisted gravity drainage) thermal recovery techniques with its HTL upgrading process, producing a light, synthetic sour crude. Independent reservoir engineers Sproule Associates Ltd. estimates Lease 10 to contain, on a best-estimate basis, approximately 244 million barrels of contingent bitumen resources with low and high estimates of approximately 188 million and 313 million barrels, respectively. Lease 6 is a small, undelineated, 680-acre block 1.6 kilometer south of Lease 10. The holder of the 25% working interest in Lease 50, included in the original agreement, exercised its right of first refusal to acquire Talisman's 75% working interest. The deal was funded with C$22.5 million cash at closing; a C$12.5-million note with interest at prime plus 2% to be paid by Dec. 31; a C$40-million, three-year convertible note with interest at prime plus 2% with principal convertible at C$3.13, a 25% premium to Ivanhoe's share price based on the average closing price for the 10 business days prior to May 29; and C$15 million cash based on Ivanhoe receiving government and other approvals to develop the northern border of Lease 10, subject to a mineral surface lease. Talisman will retain back-in rights of up to 20% in all of the acquired leases for three years. During this period, Talisman will also have the right of first offer to acquire any participation interests in heavy oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases. Ivanhoe chief executive Robert Friedland says, "We are anchoring the roll-out of our HTL heavy-oil upgrading process with a first-class, high-quality resource asset in the center of the Athabasca oil-sands region. We will now proceed full speed ahead with preparations for an integrated HTL heavy oil project on Lease 10, while at the same time progressing discussions relating to additional heavy oil opportunities in Canada and internationally." Tristone Capital Inc. was advisor to Ivanhoe.