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Ivanhoe Energy's interest in San Joaquin Valley
Ivanhoe Energy Inc
IE
Shares issued 89,727,767
1999-09-03 close $4.17
Tuesday Sep 7 1999
Mr. Leon Daniel reports
Ivanhoe Energy Inc., has acquired a significant portfolio of royalty interests on
properties in the southern San Joaquin Valley, Calif., an area that is becoming the
focus of extensive deep-gas exploration activity.
The portfolio will form the nucleus of an operating subsidiary within Ivanhoe
Energy. The subsidiary will also hold previously acquired royalty interests on
future production from lands in the San Joaquin Valley, and will pursue additional
royalty acquisitions.
The portfolio includes overriding royalty interests ranging from 1.375 per cent to
6.883 per cent on prospects within an area of more than 80,000 acres in the San
Joaquin Valley. Ivanhoe Energy holds working interests on many of the properties
in the portfolio and the royalties significantly increase the company's commercial
stake in the holdings.
Ivanhoe Energy purchased royalty interests for $860,000 (U.S.) in cash and
1,561,352 Ivanhoe shares and obtained an option to acquire royalty interests for
$1.5-million (U.S.), payable in cash or shares, at the company's option, on or
before March 1, 2000.
"The key characteristic of overriding royalties is that they are calculated as a
percentage of gross production. There are no deductions for production, transport
or storage costs, and the royalty rights exist for as long as there is economic
production," Mr. Martin said.
Leon Daniel, president of Ivanhoe Energy, welcomed the vendors of the royalties
as significant shareholders of the company. "Our new shareholders had the
foresight to acquire an important package of royalty rights over a period of years,
starting long before investors paid attention to the area's deep-gas potential. They
have been working in the San Joaquin Valley for 35 years, developing a
professional knowledge of the geology and establishing personal contacts with
landowners and the firms engaged in exploration and production. Ivanhoe
Energy's expanded group has a sustainable competitive advantage in its drive to
acquire further royalties."
Ivanhoe Energy and its partners are gathering supplementary seismic data on
acreage at Lost Hills in preparation for the drilling of an initial well as part of a
scheduled exploration program targeting selected prospects in the San Joaquin
Valley. Ivanhoe Energy plans to release additional information on its exploration
and development programs later in the current fiscal quarter.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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