• Robert Friedland will become Executive Chairman & CEO of Ivanhoe Energy
• New regional subsidiaries for Latin America and the Middle East & North Africa will be led by David Martin and Leon Daniel as Chairmen and CEOs
Robert Friedland is assuming the leadership of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN) and will serve as Executive Chairman and Chief Executive Officer to guide the company through a major corporate and management restructuring in preparation for the implementation of multiple, full-scale, commercial HTL(TM) heavy-oil projects in Canada and internationally.
Mr. Friedland's appointment as Executive Chairman and Chief Executive Officer is expected to become effective at the company's Annual General Meeting on May 29, 2008. Robert Abboud, a former President and Chief Operating Officer of Occidental Petroleum Corporation, will continue to serve as Ivanhoe Energy's Co-Chairman.
The restructuring is planned to enhance Ivanhoe Energy's pursuit of its central mission to develop heavy-oil assets using its proprietary, HTL (Heavy-to-Light) oil-upgrading technology.
"The successful conclusion of the HTL testing phase and the growing global focus on the utilization of heavy-oil reserves has resulted in numerous opportunities for the commercial application of HTL in Canada, South America, the Middle East, North Africa and elsewhere," Mr. Friedland said. "These significant opportunities require a corporate structure that will facilitate the implementation of HTL projects and maximize returns for Ivanhoe Energy."
As part of the reorganization, Ivanhoe Energy will establish a number of geographically focused, self-funding entities. The parent company Ivanhoe Energy Inc. will aggressively pursue HTL opportunities in the Athabasca Oil Sands of Western Canada and will hold and manage the core HTL technology. Two new subsidiaries will be established, one for Latin America and one for the Middle East & North Africa, complementing Sunwing Energy Ltd., Ivanhoe Energy's existing, wholly owned company for China. David Martin will lead the subsidiary for Latin America as Chairman and CEO, and Leon Daniel will lead the subsidiary for the Middle East & North Africa as Chairman and CEO. Ivanhoe Energy Inc. initially will own 100% of each of these subsidiaries, although the percentages would be expected to decline as they develop their respective businesses and independently raise capital.
This structure will allow the development and financing of multiple HTL projects around the world, while minimizing dilution of Ivanhoe Energy's existing shareholders. This is in response to very significant heavy-oil opportunities Ivanhoe Energy has identified in Latin America, the Middle East and North Africa. Ivanhoe Energy's senior management believes this approach enhances Ivanhoe's ability to organize and focus its existing resources and to build the dedicated teams required to execute these large projects. In addition, the geographical alignment will facilitate financing from region-specific strategic investors, some of which already have been identified, and also will enhance flexibility in accessing global capital markets.
Mr. Friedland will focus his efforts on corporate restructuring, finance and the closing of commercial transactions. Mr. Friedland, the founding Chairman of Ivanhoe Energy, most recently has been serving as Deputy Chairman of the parent company and Co-Chairman of its China-focused subsidiary, Sunwing Energy.
In addition to the establishment of the new regional business units for Latin America and the Middle East and North Africa, Ivanhoe Energy will continue to build its HTL capabilities around two centres: Houston, Texas, and Calgary, Alberta.
Houston, a world centre of excellence for petroleum refining and processing technologies, is Ivanhoe Energy's HTL technology base. Dr. Mike Silverman, formerly VP Petrochemicals at KBR (formerly Kellogg Brown & Root) and currently Ivanhoe Energy's Chief Technology Officer, will lead the HTL technology group from Houston. Dr. Silverman's team will provide HTL support and services to the upstream and project development groups within Ivanhoe Energy, as well as within the regional subsidiary companies.
Calgary is Ivanhoe Energy's base for Canadian oil sands project development. Selected key technical heavy-oil experts are expected to relocate to Calgary from Ivanhoe's office in Bakersfield, California, and additional upstream heavy-oil experts in Calgary are being recruited.
Ivanhoe Energy's Board of Directors also is being restructured to more closely align management experience with the goals of the various business units. As part of this process, a number of directors will retire from the Ivanhoe Energy Board to assume directorships in the subsidiary companies. The number of directors on the Ivanhoe Energy Board is expected to be reduced from 12 to seven members.
Four key components of the Ivanhoe Energy Group
The restructuring will create four geographically focused entities:
Ivanhoe Energy Inc. TSX, NASDAQ
Sunwing Energy, China
Ivanhoe Energy, Latin America
Ivanhoe Energy, Middle East & North Africa
Ivanhoe Energy Inc. will focus on Canada, the United States and other areas not addressed by its subsidiaries. The primary emphasis will be on HTL heavy-oil opportunities in the Athabasca Oil Sands. This company will incorporate the core HTL technology team and will hold the HTL intellectual property on behalf of the organization. Ivanhoe Energy will pursue joint ventures with heavy-oil asset owners and the outright acquisition of heavy-oil assets. Ivanhoe Energy also will include Ivanhoe's existing US conventional oil and gas activities.
Sunwing Energy Ltd., Ivanhoe's wholly-owned company with existing conventional operations in China, will focus on HTL heavy-oil opportunities as well as conventional oil and gas opportunities in China and Southeast Asia, including the significant heavy-oil deposits in Indonesia. Sunwing's management will continue to be led by Co-Chairmen Mr. Friedland and Patrick Chua, and President Gerry Moench.
Ivanhoe Energy Latin America will focus on HTL heavy-oil opportunities in Latin America. Management will be led by Mr. Martin as Chairman and CEO, and is expected to include selected Ivanhoe Energy personnel currently based in Bakersfield, California, who have extensive Latin American experience. Mr. Martin currently is Executive Co-Chairman of Ivanhoe Energy Inc. Mr. Martin and Mr. Daniel, who is Deputy Chairman of Ivanhoe Energy Inc. and is expected to be on the Board of Directors of this subsidiary, have more than 50 years of combined experience in negotiating and executing major oil and gas projects in Latin America, primarily during their careers with Occidental Petroleum. This includes the 1.2-billion-barrel Cano Limon field in Colombia, with the associated 500-kilometre pipeline across the Andes, the 30,000-barrel per day Alturitas field in Venezuela, and various projects in Ecuador and Peru.
Ivanhoe Energy Middle East & North Africa (MENA) will focus on HTL opportunities in those regions. In addition, this company will incorporate Ivanhoe Energy's Gas-to-Liquids (GTL) technology team and GTL intellectual property, and will continue to advance the GTL project in Egypt. Management will be led by Mr. Daniel as Chairman and CEO and is expected to include existing Ivanhoe personnel based in London, England. Mr. Daniel currently is Deputy Chairman of Ivanhoe Energy. Mr. Daniel and Mr. Martin, who is expected to be on the Board of Directors of this company, have more than 50 years of combined experience in negotiating and executing oil and gas projects in the Middle East and North Africa, primarily while with Occidental Petroleum. This includes the 100,000-barrel per day Idd El Shargi North dome in Qatar, the giant 2.4-billion-barrel Intisar and Augila Nafoora fields in Libya, and the 200,000-barrel per day Masila field in Yemen.
Strategic discussions for Ivanhoe Energy Middle East & North Africa have been initiated with investors based in the United Arab Emirates and other Middle Eastern countries, and potential projects have been identified across the region, including in Egypt, Libya, Iraq, Oman, Kuwait, Bahrain and Syria.
HTL technology rights
Ivanhoe Energy's patents and other intellectual property related to HTL heavy-oil upgrading, and the core HTL technology team led by Dr. Silverman, will remain with Ivanhoe Energy Inc. Agreements will be established between Ivanhoe Energy and the subsidiary companies for site licenses for HTL projects identified outside Canada and the US, and for HTL technology support.
Restructuring schedule
A new Board of Directors for Ivanhoe Energy will be elected at the Annual General Meeting on May 29. It is expected that Mr. Friedland will assume responsibilities as Executive Chairman and CEO immediately following the meeting. The new entities for Latin America and the Middle East & North Africa will be established in coming weeks, together with the necessary inter-company agreements covering technology and inter-company finances.