Ivanhoe Energy issues operational update on major development and exploration projects

Focus on execution remains key priority

Calgary, June 15, 2011 – David Dyck, President and Chief Operating Officer of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN), today issued an operational update on the company’s major initiatives and outlined the company’s priorities to advance domestic and international projects toward production.”Ivanhoe Energy is well positioned to take advantage of current economic conditions and continue to advance the development of our heavy oil and conventional oil and gas projects in key resource regions around the world,” Mr. Dyck said.

“We have a diverse portfolio of high-quality assets and can report some very positive developments. Our primary approach to financing our ongoing activities is focussed on identifying and securing joint-venture partners to join us in our projects. Where applicable, we also are considering financing at the subsidiary company level for specific projects, which would establish a significant level of self-sufficiency within the subsidiaries for financing and to fund ongoing capital expenditures.”

Notable gas exploration achievements in China’s Zitong Block

Sunwing Energy, Ivanhoe Energy’s 100%-owned Asia-focussed subsidiary, successfully completed two hydraulic-fracture stimulation programs on the Yixin-2 and Zitong-1 wells in China’s Sichuan Province. The results of these treatments, and subsequent flow testing, have confirmed that stimulation of these high-pressure reservoirs can be achieved and that multi-stage stimulation technology, combined with horizontal drilling technology, can be applied in the Zitong Block.

The company’s drilling and stimulation activities have resulted in positive achievements in the evaluation of the reservoirs in the Zitong Block. The company has successfully produced gas at measurable rates in both the Xu-4 and the Xu-5 formations. We have demonstrated our ability to successfully conduct a high-pressure hydraulic fracture in both reservoirs and place proppant in these fractures, providing valuable information for the design and execution of future fracture treatments in horizontal wellbores. The data recorded to date in the vertical wellbores provide sufficient information to model expected production performance in a horizontal wellbore. While permeabilities of the reservoirs result in rapidly declining flow rates and pressures in the pre-stimulation testing, these rates of decline are consistent with pre-stimulation flows in most tight sands. In fact, the actual recovery of gas in all of Sunwing’s tests exceeded results of pre-stimulation testing in many tight-gas projects in North America. The company is confident that the results of the current testing will allow successful design and implementation of horizontal wellbores with subsequent stimulation using the latest technology for multi-stage fracture stimulations.

Sunwing is planning a 150-square-kilometre, 3-D seismic program to cover certain areas of the Guan Structure, the Guan East Structure and part of the Wen Structure to help plan and design a horizontal well-path for two horizontal wells – one each in the Guan and Wen structures. The company also will review the potential to drill a Guan East well with a horizontal leg as a first-stage test of the regional gas play, or re-enter the Zitong-1 wellbore to complete a horizontal section in the Xu-4 Zone. This program will be carried out over the next 24 months and will provide the groundwork for development of the Zitong Block.

Results of the work carried out to date have reinforced Sunwing’s original resource estimates for the Zitong Block and the company is working toward implementing its onward program as soon as possible.

Gerald Moench, President of Sunwing, said the company believes that the Zitong Block contains between 0.3 (P90) and 1.7 (P10) trillion cubic feet of total gas initially-in-place, with a best estimate (P50) of 0.75 trillion cubic feet. “The successful development of this block will have a dramatic impact on the value attributable to Ivanhoe Energy and we are working towards implementing a development program as soon as possible.”

Sunwing is the operator of the 659,840-acre (1,031-square-mile) Zitong exploration block in Sichuan and holds a 90% contractor interest in a Petroleum Contract with PetroChina Company Limited. Mitsubishi Gas Chemical Company, of Japan, holds the remaining 10% interest. Sunwing is currently conducting further evaluation to permit classification of the resource numbers quoted into more specific categories pursuant to National Instrument 51-101, to estimate the recoverable portion of these in-place volumes and to determine their commerciality. In the meantime, there is no certainty that it will be commercially viable to produce any portion of these resources

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