"HTL Heavy Oil Production"
IVAN H O E Energy HTL Heavy Oil Production Insight Oilsands Conference Ed Koshka VP Business Development Canada January 16-17 2008 FORWARD-LOOKING STATEMENTS This document includes forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements relating to the potential for future application, commercialization, costs, performance and the economics of Ivanhoe Energy’s HTL technology and other statements which are not historical facts. When used in this document, the words such as “could,” “plan,” “estimate,” “expect,” “intend,” “may,” “potential,” “should,” and similar expressions relating to matters that are not historical facts are forward- looking statements. Although Ivanhoe Energy believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward- looking statements include the potential that commercial installations of the HTL technology will experience technological and mechanical problems or delays in receiving equipment and services from suppliers, Ivanhoe Energy’s process to upgrade bitumen and heavy oil may not be commercially viable, assumptions applied in drawing the conclusions in the comparative cost analyses may be materially different from future market conditions, including the assumptions made around Ivanhoe Energy’s anticipated capital and operating costs for and HTL facility, environmental regulation could change resulting in design changes or increased capital and operating costs, our ability to raise capital as and when required to complete a commercial HTL facility, competition from emerging technologies and other risks disclosed in Ivanhoe Energy’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR. IVAN H O E Energy Ivanhoe Energy Inc. Stock Exchange Listings: TSX (IE) & NASDAQ (IVAN) Market Capitalization: Approx US$400 million Shares Outstanding: 243 million Bd. & Mgmt Ownership: 26% Oil & Gas Reserves: 3.1 million bbls proved IVAN H O E Energy Ivanhoe Energy - Focus Growth in production and reserves through use of HTL upgrading technology Key focus: Western Canada Stranded heavy oil globally How will we accomplish this? Establish joint ventures / production sharing agreements Acquisitions of heavy oil assets IVAN H O E Energy HTL Value Proposition: Oilsands On site energy supports SAGD operations (SOR=3) Elimination of diluent for transportation Capture the majority of heavy to light price differential Significantly lower capital costs than conventional upgrading Dramatically lower minimum scale for economic operations 10,000 - 30,000 bpd Approximately 5% IRR improvement in SAGD economics IVAN H O E Energy HTL Petroleum Focus Technology developed in 1980’s by Ensyn for biomass processing Petroleum pilot built in 1998 with over 90 tests of heavy crude December 2004: 1000 bbl/day demonstration plant (CDF) commissioned 2006/2007: Process Design Package for full-scale plants completed for bitumen June 2007: Athabasca Bitumen run successfully completed at CDF confirming pilot plant data IVAN H O E Energy Commercial Demonstration Facility (CDF) IVAN H O E Energy HTL Core Technology Products Energy Feed Air IVAN H O E Energy HTL Technology: Hybrid of Existing Refining/Upgrading Processes Similar to Fluid Catalytic Cracking used in most refineries and Fluid Coking IVAN H O E Energy Balance of Plant Design IVAN H O E Energy HTL HQ Upgraded Product Captures large part of light Hardisty HTL heavy price differentials Light HQ API 28.8 19 Valued at 12% discount to WTI, similar to Hardisty Light % Sulfur 1.6 3.6 Crude. % Naphtha 18.9 16.2 Reduction in metals of up to 90% % Distillate 29.0 30.8 Reduction of TAN to less than 0.5 mg KOH/g % VGO 31.1 53.0 % Resid 21.0 0 IVAN H O E Energy Cost Estimate for Commercial Plant Capex for High Quality Basis: U$26,550 per daily barrel, Ft McMurray Basis, for 30,000B/D bitumen feed (Q3, 2007 update) Principal factors: location, configuration, oil quality, FGDSU Includes all upgrading facilities and associated offsites and utilities Does not include SAGD facilities Opex US $4.30 /bbl bitumen (Fixed, Variable & Sustaining Capital) Principal factors: oil quality, location, configuration, FGDSU Location : Ft McMurray Brownfield basis (+/- 40%) Updated to Q3 2007 Source: AMEC and Ivanhoe Energy IVAN H O E Energy HTL Advantage over DilBit Full Cost Basis WTI = $70.00/bbl Nat. Gas = $8.75 MMBtu (8:1) HTL = 12% Disc to WTI DilBit = 68% WTI Diluent = 108% WTI SOR = 2.8 FX = 0.95 : 1 45.00 40.00 $4.30 US$ / bbl (Bitumen Basis) 35.00 $11.67 $2.80 30.00 $10.28 25.00 20.00 $13.65 $11.09 15.00 10.00 $14.00 5.00 $10.85 0.00 Differential Diluent Natural Gas HTL Return of 12% AT Liquid Yield HTL Capture Avoidance Avoidance OPEX Capital ROC Loss Benefit IVAN H O E Energy Significant Cash Flow Improvement 30,000 BPD WTI = $70.00/bbl Nat. Gas = $8.75 MMBtu (8:1) HTL = 12% Disc to WTI DilBit = 68% WTI Diluent = 108% WTI SOR = 2.8 FX = 0.95 : 1 Integrated HTL Standalone SAGD 1,600 1,400 1,200 AT PV 8% 1,000 800 600 400 200 0 -200 $60 $65 $70 $75 $80 $85 WTI (US $ / bbl) IVAN H O E Energy Summary Value proposition compelling Market need Competitive advantage Key technology milestones completed Implementation team in place Securing financial partners Resource acquisition and partnering IVAN H O E Energy HTL Maximizing Value in the Oilsands IVAN H O E Energy