Latin America

Ivanhoe Energy's Latin American activities are carried out under Ivanhoe Energy Latin America Inc., the parent company of Ivanhoe Energy's Latin America corporate group.

The first project to be undertaken by Ivanhoe Energy Latin America is the development of Block 20 in Ecuador, named the Pungarayacu Project. Block 20 is an area of approximately 426-square-miles (1103.34-square-kilometers) located approximately 125 miles (201.17 kilometers) southeast of Quito, and contains the massive 250-square-mile (647.5-square-kilometer) Pungarayacu oil field.

Pungarayacu was discovered and partially delineated approximately 30 years ago. The quality of the oil was not fully determined at that time. Ivanhoe intends to apply its proprietary HTL upgrading technology to the development of Pungarayacu reservoirs containing heavier crudes. There are certain indications that Block 20 may contain lighter oil as well as heavy oil. Ivanhoe Energy Ecuador has the right to develop and produce all hydrocarbons found in the Block, including lighter oil.

Petroproduccion, Ecuador's state oil company, drilled 26 wells (core holes) in the Pungarayacu field during the 1980s. The field has been studied and evaluated by Petroproduccion, ARCO and other major oil companies. These third-party studies estimated that the 250-square-mile (647.5-square-kilometer) Pungarayacu field contains between 4.5 billion barrels (Petroecuador-ARCO) and 7.0 billion barrels (Petroecuador) of oil-in-place. Ivanhoe believes that the larger 426-square-mile (1103.34-square-kilometer) Block 20 may contain up to 20 billion barrels of oil-in-place.

Confirmation of these resources would make the Pungarayacu field the largest accumulation of heavy oil in Ecuador and one of the largest in Latin America.