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Ivanhoe Energy discovers natural gas near Antelope Hills, California

Ivanhoe Energy Inc. (NASDAQ:IVAN and TSX:IE, IE.U) has discovered natural gas at the Peach prospect in the North Antelope Hills area in Kern County, California. The prospect is 50 miles west of Bakersfield, in a major hydrocarbon producing region along the west side of the San Joaquin Valley.

A 4,590-foot exploratory well was drilled and flow testing has been completed. A 41-hour multi-rate gas test of the well was conducted at rates of up to 800 Mcf per day on a 9/16-inch choke. During the test, the well produced natural gas and condensate with no water. Analysis indicates the gas is rich with natural gas liquids and has a heating content of 1,070 Btu.

"The initial evaluation of this gas discovery is encouraging," said Leon Daniel, Ivanhoe Energy's President and CEO. "The discovery is close to existing natural gas-gathering facilities and markets. We will follow up the testing with an estimate of commercial potential, drilling of an appraisal well and discussions with gas buyers."

Ivanhoe Energy farmed out part of its 1,800-acre Peach prospect in November, 2004. The operator paid 100% of the drilling and associated costs of the well to earn a 50% interest in the prospect. Ivanhoe Energy will retain a 50% interest in this well after payout and will retain a 50% working interest in the prospect.

Ivanhoe Energy is an independent international oil and gas exploration and development company building long-term growth in its reserve base and production. Core operations are in the United States and China, with business development opportunities worldwide. Ivanhoe Energy is a leader in the application of technologically innovative methods designed to significantly improve the company's reserve base and production, including the upgrading of heavy oil to light oil (HTL), state-of-the-art drilling techniques, enhanced oil recovery (EOR) and the conversion of natural gas to liquids (GTL).

Ivanhoe Energy trades on the NASDAQ SmallCap market with the ticker symbol IVAN and on the Toronto Stock Exchange (TSX) with the symbol IE. On the TSX, Ivanhoe Energy is listed and traded in both Canadian and U.S. dollars. The U.S. dollar trading symbol on the TSX is IE.U.