Ivanhoe Energy says that its subsidiary will merge with PanAsian Petroleum Inc., which holds oil and gas exploration and production rights to 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, as Sunwing Energy contemplates a listing on a major Asian stock exchange.

PanAsian Petroleum is a private company based in Alberta, Canada. The company's key asset is a production-sharing contract - held through subsidiary PanAsian Energy Ltd. - with the Petroleum Authority of Mongolia, a state agency. The contract provides PanAsian Energy 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.

The PanAsian merger transaction will involve the issuance of up to three million shares of Ivanhoe Energy's common stock. It will not involve the payment of any cash to PanAsian's principals. PanAsian Energy's corporate structure and its contractual relationship with the Petroleum Authority of Mongolia will not be altered by the merger.

Tags: Ivanhoe Energy Inc.