Sunwing Energy Inc

Carrying out Oil and Gas Operations in Asia

Sunwing Energy is Ivanhoe's 100%-owned subsidiary for oil and gas operations in Asia. Sunwing has a 15-year history of oil and gas exploration and production in China and has signed three production-sharing agreements with Petrochina. Sunwing currently produces approximately 1,800 barrels of light oil per day in Dagang, in China's Hebei province, in a production-sharing agreement with Petrochina in which Sunwing is the operator. In addition, Sunwing is the operator in a 650,000-acre gas exploration block in Zitong, Sichuan Province, with its 10% partner, Mitsubishi Gas Chemical Company.

Sichuan is the oldest and one of the most prolific gas producing regions of China. Sunwing plans to begin drilling in its Zitong Block in Sichuan province in the first quarter of 2010, targeting the Xu2 formation in the Guan structure, the largest structure on the block. This well will take up to six months to drill and test, and will include a 750-metre horizontal section.

Sinopec and Petrochina have made significant discoveries of gas from the Xu2 formation in blocks adjacent to Sunwing's Zitong Block. Any gas produced in Zitong will be able to be fed directly into an existing regional gathering and sales distribution system.

The addition of Block XVI in Mongolia to Sunwing's portfolio of projects will build critical mass as Sunwing contemplates a listing on a major Asian stock exchange.

Block XVI - Mongolia

In late November 2009 an Ivanhoe subsidiary completed a merger with PanAsian Petroleum Inc., an Alberta company that holds oil and gas exploration and production rights to Block XVI, a large, highly prospective block in central Mongolia.
Ivanhoe Energy intends to combine PanAsian's Mongolian interests with Sunwing Energy Ltd., Ivanhoe's 100%-owned subsidiary for oil and gas operations in Asia.

The Block XVI Production Sharing Contract (PSC) provides Ivanhoe with the exclusive right to explore, develop and produce oil or gas within Block XVI in Mongolia's Nyalga Basin. Block XVI, covering 16,839 square kilometres, contains four significant sub-basins and is approximately 100 kilometres southeast of the capital, Ulaanbaatar. The Trans-Mongolian Railway, linking railway networks and markets in Russia, to the north, and China, to the south, runs through the western end of Block XVI, closely following Mongolia's main north-south highway.

The target on Block XVI is light oil, consistent with discoveries by Petrochina and Sinopec in Mongolia and other similar discoveries in China's adjacent Inner Mongolia region.