David Dyck, President and Chief Operating Officer of Ivanhoe Energy, and Gerald Moench, President of Ivanhoe's wholly-owned subsidiary Sunwing Energy, have reported that Ivanhoe has successfully finished drilling the company's second exploration well on the Nyalga Block in east-central Mongolia and have prepared the well for completion and testing early next year.

'Drilling and open-hole logging operations on the second Nyalga well have been completed to a total depth of 2,300 metres and the well has been cased and secured,' said Mr. Moench. 'Oil staining, fluorescence and increases in background gas were observed in several sand sections, which are positive indicators of the presence of oil. The log results will be reviewed and analyzed to provide guidance on the best approach to completing the well once weather conditions permit, likely in the spring of 2012.'

The well, N16-2E-B, was drilled on schedule and on budget, on an 8 sq km structure approx. 12 kms from the first well drilled earlier this year. Like the first well, the second well has provided vital information that will be correlated with existing and future seismic data to help guide the ongoing drilling program. The drill rig will now return to China and appropriate equipment will be arranged to conduct the next phase of work. Ivanhoe Energy has invested US$11.7 million on all exploration activities to date on the block, fulfilling its obligations in the exploration phase of the Production-Sharing Contract.

'We look forward to testing the well and to beginning the next phase of exploration in Mongolia, including further seismic and drilling,' said Mr. Dyck. 'Mongolia is in the early days of oil exploration. Since it does not have the oil field operations infrastructure to enable continued operation through the harsh winter months, we will take time during the winter to correlate data and determine the best way to proceed.'

Sunwing Energy is party to a Production-Sharing Contract with the Mongolian Government for Block XVI, a 12,679-sq-km area that encompasses the Nyalga Basin and is adjacent to the north-south Trans-Mongolian Railway.

Tags: Ivanhoe Energy Inc.