Ivanhoe Energy says that the merger between PanAsian Petroleum Inc. and an Ivanhoe Energy subsidiary has been completed. This merger, announced on November 18, 2009, provides Ivanhoe Energy with the exclusive right to explore, develop and produce oil or gas within Block XVI in Mongolia's Nyalga Basin.

Ivanhoe Energy intends to combine the Block XVI development rights with Sunwing Energy Ltd., Ivanhoe's 100%-owned subsidiary for oil and gas operations in Asia.

Block XVI covers 16,839 square kilometres and is located approximately 100 kilometres southeast of the capital of Mongolia, 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.

Block XVI was partially explored in the 1950s by Russian interests and was included in a regional appraisal conducted by BP International for the Mongolian Government in 1990. This work demonstrated that Nyalga has hydrocarbons and the potential to become a significant oil producer. The Russian drilling program reportedly encountered oil shows in 20 of approximately 40 wells drilled to depths of 700 to 1,800 metres; one well flowed oil. The 1990 BP appraisal of central Mongolia's hydrocarbon potential concluded that the Nyalga Basin had the best potential for an active petroleum system among the sites evaluated in the region. In addition, Block XVI contains a large, visible, surface bitumen deposit that is evidence of hydrocarbon generation and migration and requires further evaluation.

Exploration to date has established that the Nyalga Basin possesses many of the characteristics of interior rift basins that produce light oil in Mongolia, east and south of Nyalga, and in northern China. These include: Petrochina's Tamsag project in eastern Mongolia; Sinopec's Zuunbayan project in southeastern Mongolia; and a 980-million-barrel discovery of light, sweet crude oil in the Bameng region of China's Inner Mongolia, announced by a Sinopec subsidiary last August.

Tags: Ivanhoe Energy Inc.