Ivanhoe Energy reports 2012 financial results

Monday, March 18, 2013
  • In 2012, Ivanhoe Energy restructured and right-sized the organization to strengthen the balance sheet and better organize the Company to leverage expertise and resources and build long-term shareholder value.
  • Ivanhoe Energy filed its year-end financial report on Form 10-K with the United States Securities and Exchange Commission for the year ended December 31, 2012.
  • At the end of 2012, Ivanhoe Energy had approximately $83 million in cash and cash equivalents (inclusive of the restricted cash balance).
  • General and administrative (G&A) expenses mainly consist of staff, office, legal and other contract services costs.

Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) is reporting today its 2012 financial results and 2013 business plan.

In 2012, Ivanhoe Energy restructured and right-sized the organization to strengthen the balance sheet and better organize the Company to leverage expertise and resources and build long-term shareholder value.

The Company divested non-core assets including the Zitong Block contract, which was transferred to Shell China Exploration and Production Company, and the wholly-owned subsidiary Pan-China Resources Ltd., which was sold to MIE Holdings Corporation. Both transactions were completed in December 2012.

Ivanhoe Energy is focused on maintaining financial flexibility, commercializing its patented and proprietary Heavy-to-Light heavy oil upgrading technology and achieving project milestones at its two world-class assets: the Tamarack oil sands project inCanada and Block 20 in Ecuador.

Year End Financial Summary

Ivanhoe Energy filed its year-end financial report on Form 10-K with the United States Securities and Exchange Commission for the year ended December 31, 2012.

The divestitures of the Zitong Block and the Pan-China Resources subsidiary strengthened the balance sheet by providing an initial cash infusion of $131.8 million, allowing the Company to retire its short-term debt. The remaining pre-tax proceeds of just over $14 million, less any additional adjustments, are expected by mid-year 2013.

The Company posted a net loss from continuing operations of $64 million, which represents a year-over-year increase of $37.2 million. This increase was driven by $20.2 million more in exploration and evaluation expenses, the majority of which was related to the drilling of IP-17 in Ecuador, as well as a lower gain on derivative instruments in 2012 than that experienced in 2011.

The Company's capital investments amounted to $47.4 million in 2012, which is slightly less than the $51 million invested in 2011. This amount included $12.4 million for a seismic program at Zitong, $7.3 million for drilling two wells at Dagang and$23.4 million to drill IP-17, which was later reclassified as an expense because non-commercial quantities of oil were found.

(US$000s, except per share amounts)
(unaudited)
Three months
ended Dec. 31,
Year ended
Dec. 31,
2012 2011 2012 2011
Net loss from continuing operations (12,820) (8,758) (64,018) (26,761)
Net loss per share, from continuing operations* (0.04) (0.03) (0.19) (0.08)
Net income (loss)** 35,538 (5,882) (14,374) (25,276)
Net income (loss) per share, basic and diluted 0.10 (0.02) (0.05) (0.07)
Net cash used in operating activities (12,895) (7,567) (27,060) (26,245)
Capital investments (4,073) (2,982) (47,444) (51,060)
Cash and cash equivalents (end of period) 62,819 16,890 62,819 16,890
Restricted cash 20,500 20,500 20,500 20,500


* Basic and diluted
** Including discontinued operations

Liquidity and Capital Resources

At the end of 2012, Ivanhoe Energy had approximately $83 million in cash and cash equivalents (inclusive of the restricted cash balance). The majority of this balance relates to the receipt of proceeds associated with the divestiture of the Zitong and Dagang assets.

  • As a result of the transfer of interest in the Zitong Block to Shell China, Ivanhoe Energy will receive $105 million in total. Initial pre-tax proceeds of approximately $96.2 million were received on closing. The remaining proceeds will be received by mid-year, with ultimate values dependent on audit and post-closing adjustments.
  • As consideration for the sale of Pan-China Resources to MIE Holdings, the Company received $45 million in cash, less$5.4 million in adjustments and a $4.0 million holdback. The Company will receive the holdback amount six months after closing, assuming no claims from MIE Holdings.
  • Subsequent to December 31, 2012, Shell assumed the obligations under the Zitong Supplementary Agreement and replaced Ivanhoe's performance bond with its own. The collateral for Ivanhoe's performance bond, presented as restricted cash on the Company's balance sheet at December 31, 2012, was released and received by the Company onFebruary 1, 2013.

General and Administrative Expenses

General and administrative (G&A) expenses mainly consist of staff, office, legal and other contract services costs. In 2012, the Company incurred G&A expenses of $31.1 million, which was a decrease of $7.5 million compared to costs of $38.6 million in 2011. G&A expenses were primarily lower in 2012 due to lower staff costs related to the Company's compensation and share-based payment programs. Additionally, legal costs decreased due to a favorable ruling on an outstanding legal claim that allowed the Company to recover approximately $500,000 of its past legal expenses. The Company anticipates even greater G&A savings in 2013 as it winds up its Asian subsidiary, Sunwing Energy. Ivanhoe's total number of employees is estimated to decrease by 100 people as a result of this initiative.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

Related News

Join 70,000 other oil and gas professionals

Network with others, build your profile, and receive the latest oil and gas news in your inbox. It's free!

Your details are never shared or sold. We hate spam too.

» More Jobs       » Upload a free Job       » Upload your CV

More Europe Jobs

More Global Jobs

Opinion & Commentary

  • Oil decline: Price makes the story
    So oft in theologic wars, The disputants, I ween, Rail on in utter ignorance Of what each other mean, And prate about an Elephant Not one of them has seen! -- The B ...

» More Opinion & Commentary         » Write for us             RSS RSS

Oil & Gas Training

Mastering 4D Seismic
Ian Jack, London, 06 Nov 2014

Petroleum Geology of West Africa
Duncan Macgregor, London, 12 Nov 2014

Introduction to Contingency Planning: The value to oil and gas companies in high-risk areas
Mark Theobald, London, 18 Nov 2014

All Upcoming Training


Opinions & Commentary

Flash blog, Oil price, BG

by Malcolm Graham-Wood

Read More »