Ivanhoe Energy's Interest In China's Zitong Block To Be Sold To Royal Dutch Shell Subsidiary For Cash Proceeds Of Up To US$160 Million

Transaction will enable Ivanhoe Energy to finance and advance its core heavy oil business

CALGARY, Jan. 11, 2012 /PRNewswire/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that its wholly owned subsidiary, Sunwing Zitong Energy (SZE), has signed a binding Memorandum of Understanding to sell 100% of its participating interest in the Production Sharing Contract for the Zitong block in China's Sichuan Basin to Shell China Exploration and Production Company Limited, a subsidiary of Royal Dutch Shell. The transaction is subject to government approvals and other prescribed conditions.

"Our strategy is very straight forward," said Robert Friedland, an Ivanhoe Energy Executive Co-Chairman. " Ivanhoe Energy, through Sunwing, has been active in China for more than 10 years. We have made an important discovery of natural gas and we have an understanding of the potential of the block. However, this opportunity arose at an appropriate decision point and we have opted to focus our energy and resources on the commercialization of our Heavy-to-Light (HTL) heavy oil upgrading process and the development of our attractive oil projects. This means we will sell our Zitong asset to a company that has the financial and technical resources to fully develop the potential of the block for the benefit of the people of China."

Key Transaction Terms

In exchange for SZE's interest in the Zitong block, Ivanhoe will receive a payment of up to US$85 million as reimbursement for past qualified and recoverable costs incurred. In addition, Ivanhoe will receive a further payment upon closing of up to US$75 million, contingent on the timing of the receipt of full government approvals and third-party consents and waivers for the transaction.

Following completion of the transaction, Shell will assume the US$20 million performance bond that Ivanhoe Energy was required to recently post as part of the completion and signing of the Supplementary Agreement with the China National Petroleum Corporation (CNPC). The security underlying the performance bond is expected to be released back to Ivanhoe Energy subsequent to the close of the transaction.

UBS has been retained as financial advisor to Ivanhoe Energy and to provide the company with an opinion, from a financial point of view, on the consideration to be received.

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