##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 _____ 
to
 _____
 Commission file number 000-30586
 
 IVANHOE ENERGY INC.
 (Exact name of registrant as specified in its charter)
 Yukon, Canada
    
    98-0372413(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)Suite 654  999 Canada PlaceVancouver, British Columbia, Canada
    
    V6C 3E1(Address of principal executive office)
    
    (zip code)
 (604) 688-8323  (registrants telephone number, including area code)
 No Changes  (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART IFinancial InformationItem 1 Financial StatementsUnaudited Condensed Consolidated Balance Sheets as at March 31, 2009 and December 31, 2008
    
    
    3Unaudited Condensed Consolidated Statements of Operations, Comprehensive Loss and Accumulated Deficit for the Three-Month Periods Ended March 31, 2009 and 2008
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2009 and 2008
    
    
    5Notes to the Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART IIOther InformationItem 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    34EX-31.1EX-31.2EX-32.1EX-32.2
   2




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##### Table of Contents



Part I  Financial Information
 
 Item 1 Financial Statements
 IVANHOE ENERGY INC.
 
 Unaudited Condensed Consolidated Balance Sheets
  March 31, 2009
    
    
    December 31, 2008AssetsCurrent Assets:Cash and cash equivalents
    
    $
    28,364
    
    
    $
    39,265Accounts receivable
    
    
    5,790
    
    
    
    4,870Prepaid and other current assets
    
    
    1,631
    
    
    
    1,658Derivative instruments
    
    
    1,167
    
    
    
    2,15936,952
    
    
    
    47,952Oil and gas properties and development costs, net
    
    
    174,684
    
    
    
    176,550Intangible assets  HTLTM technology
    
    
    92,153
    
    
    
    92,153Long term assets
    
    
    671
    
    
    
    620$
    304,460
    
    
    $
    317,275Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable and accrued liabilities
    
    $
    8,481
    
    
    $
    10,093Income tax payable
    
    
    2,286
    
    
    
    650Debt  current portion
    
    
    5,200
    
    
    
    5,61215,967
    
    
    
    16,355Long term debt
    
    
    37,007
    
    
    
    37,855Asset retirement obligations
    
    
    3,972
    
    
    
    3,738Long term obligation
    
    
    1,900
    
    
    
    1,90058,846
    
    
    
    59,848Commitments and contingencies (Note 7)Going concern and basis of presentation (Note 2)Shareholders Equity:Share capital, issued 279,381,187 common
shares
    
    
    413,857
    
    
    
    413,857Purchase warrants
    
    
    18,805
    
    
    
    18,805Contributed surplus
    
    
    17,323
    
    
    
    16,862Convertible note
    
    
    2,086
    
    
    
    2,086Accumulated deficit
    
    
    (206,457
    )
    
    
    (194,183
    )245,614
    
    
    
    257,427$
    304,460
    
    
    $
    317,275
   3




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##### Table of Contents



IVANHOE ENERGY INC.
 
 Unaudited Consolidated Statements of Operations,
 Comprehensive Loss and Accumulated Deficit
  Three MonthsEnded March 31,2009
    
    
    2008RevenueOil and gas revenue
    
    $
    7,699
    
    
    $
    15,043Gain (loss) on derivative instruments
    
    
    268
    
    
    
    (3,946
    )Interest income
    
    
    13
    
    
    
    727,980
    
    
    
    11,169ExpensesOperating costs
    
    
    3,727
    
    
    
    5,392General and administrative
    
    
    4,954
    
    
    
    3,946Business and technology development
    
    
    2,037
    
    
    
    1,476Depletion and depreciation
    
    
    7,632
    
    
    
    8,366Interest expense and financing costs
    
    
    259
    
    
    
    53318,609
    
    
    
    19,713Loss before Income Taxes
    
    
    (10,629
    )
    
    
    (8,544
    )Current provision for income taxes
    
    
    (1,645
    )
    
    
    Net Loss and Comprehensive Loss
    
    
    (12,274
    )
    
    
    (8,544
    )Accumulated Deficit, beginning of period
    
    
    (194,183
    )
    
    
    (159,990
    )Accumulated Deficit, end of period
    
    $
    (206,457
    )
    
    $
    (168,534
    )Net Loss per share  Basic and Diluted
    
    $
    (0.04
    )
    
    $
    (0.03
    )Weighted Average Number of Shares (in
thousands)Basic and Diluted
    
    
    279,381
    
    
    
    244,873
   4




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##### Table of Contents



IVANHOE ENERGY INC.
 
 Unaudited Condensed Consolidated Statements of Cash Flows
  Three MonthsEnded March 31,2009
    
    
    2008Operating ActivitiesNet loss and comprehensive loss
    
    $
    (12,274
    )
    
    $
    (8,544
    )Items not requiring use of cash:Depletion and depreciation
    
    
    7,632
    
    
    
    8,366Stock based compensation
    
    
    461
    
    
    
    1,118Unrealized loss on derivative instruments
    
    
    992
    
    
    
    1,998Unrealized foreign exchange gain
    
    
    (974
    )
    
    
    Other
    
    
    134
    
    
    
    191Changes in non-cash working capital items
    
    
    (59
    )
    
    
    (112
    )(4,088
    )
    
    
    3,017Investing ActivitiesCapital investments
    
    
    (5,452
    )
    
    
    (5,323
    )Other
    
    
    
    
    
    
    (30
    )Changes in non-cash working capital items
    
    
    (816
    )
    
    
    (1,130
    )(6,268
    )
    
    
    (6,483
    )Financing ActivitiesPayments of debt obligations
    
    
    (416
    )
    
    
    (615
    )Other
    
    
    (75
    )
    
    
    (584
    )Changes in non-cash working capital items
    
    
    (23
    )
    
    
    (514
    )
    
    
    (1,199
    )Foreign Exchange Loss on Cash and CashEquivalents Held in a Foreign Currency
    
    
    (31
    )
    
    
    Decrease in Cash and Cash Equivalents, for the
period
    
    
    (10,901
    )
    
    
    (4,665
    )Cash and cash equivalents, beginning of period
    
    
    39,265
    
    
    
    11,356Cash and Cash Equivalents, end of period
    
    $
    28,364
    
    
    $
    6,691
   5




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements
 March 31, 2009
   1. GOING CONCERN AND BASIS OF PRESENTATION
 Company Ivanhoe Energy GAAP
  2. CHANGES IN ACCOUNTING POLICIES
 2009 Accounting Changes
 CICA S.3064 S.3062
    6




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##### Table of Contents



3.
    
    OIL AND GAS PROPERTIES AND DEVELOPMENT COSTS
  As at March 31, 2009Oil and Gas
    
    
    Business andIntegrated
    
    
    Conventional
    
    
    TechnologyCanada
    
    
    Ecuador
    
    
    China
    
    
    U.S.
    
    
    Development
    
    
    TotalOil and Gas Properties:Proved
    
    $
    
    
    
    $
    
    
    
    $
    142,554
    
    
    $
    113,278
    
    
    $
    
    
    
    $
    255,832Unproved
    
    
    83,288
    
    
    
    2,066
    
    
    
    4,924
    
    
    
    3,088
    
    
    
    
    
    
    
    93,36683,288
    
    
    
    2,066
    
    
    
    147,478
    
    
    
    116,366
    
    
    
    
    
    
    
    349,198Accumulated depletion
    
    
    
    
    
    
    
    
    
    
    (86,991
    )
    
    
    (34,874
    )
    
    
    
    
    
    
    (121,865
    )Accumulated provision for impairment
    
    
    
    
    
    
    
    
    
    
    (16,550
    )
    
    
    (50,350
    )
    
    
    
    
    
    
    (66,900
    )83,288
    
    
    
    2,066
    
    
    
    43,937
    
    
    
    31,142
    
    
    
    
    
    
    
    160,433Development Costs:Feasibility studies and other deferred costs:HTLTM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    948
    
    
    
    948GTL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,054
    
    
    
    5,054Accumulated provision for impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,054
    )
    
    
    (5,054
    )Feedstock test facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,879
    
    
    
    9,879Commercial demonstration facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,222
    
    
    
    11,222Accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,341
    )
    
    
    (8,341
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,708
    
    
    
    13,708Furniture and equipment
    
    
    13
    
    
    
    133
    
    
    
    120
    
    
    
    904
    
    
    
    43
    
    
    
    1,213Accumulated depreciation
    
    
    (5
    )
    
    
    (14
    )
    
    
    (80
    )
    
    
    (534
    )
    
    
    (37
    )
    
    
    (670
    )8
    
    
    
    119
    
    
    
    40
    
    
    
    370
    
    
    
    6
    
    
    
    543$
    83,296
    
    
    $
    2,185
    
    
    $
    43,977
    
    
    $
    31,512
    
    
    $
    13,714
    
    
    $
    174,684
 As at December 31, 2008Oil and Gas
    
    
    Business andIntegrated
    
    
    Conventional
    
    
    TechnologyCanada
    
    
    Ecuador
    
    
    China
    
    
    U.S.
    
    
    Development
    
    
    TotalOil and Gas Properties:Proved
    
    $
    
    
    
    $
    
    
    
    $
    141,089
    
    
    $
    113,002
    
    
    $
    
    
    
    $
    254,091Unproved
    
    
    81,090
    
    
    
    1,454
    
    
    
    5,233
    
    
    
    3,067
    
    
    
    
    
    
    
    90,84481,090
    
    
    
    1,454
    
    
    
    146,322
    
    
    
    116,069
    
    
    
    
    
    
    
    344,935Accumulated depletion
    
    
    
    
    
    
    
    
    
    
    (81,717
    )
    
    
    (33,197
    )
    
    
    
    
    
    
    (114,914
    )Accumulated provision for impairment
    
    
    
    
    
    
    
    
    
    
    (16,550
    )
    
    
    (50,350
    )
    
    
    
    
    
    
    (66,900
    )81,090
    
    
    
    1,454
    
    
    
    48,055
    
    
    
    32,522
    
    
    
    
    
    
    
    163,121Development Costs:Feasibility studies and other deferred
costs:HTLTM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    801
    
    
    
    801GTL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,054
    
    
    
    5,054Accumulated provision for impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,054
    )
    
    
    (5,054
    )Feedstock test facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,770
    
    
    
    8,770Commercial demonstration facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,036
    
    
    
    11,036Accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,713
    )
    
    
    (7,713
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,894
    
    
    
    12,894Furniture and equipment
    
    
    20
    
    
    
    90
    
    
    
    120
    
    
    
    538
    
    
    
    406
    
    
    
    1,174Accumulated depreciation
    
    
    (6
    )
    
    
    
    
    
    
    (80
    )
    
    
    (476
    )
    
    
    (77
    )
    
    
    (639
    )14
    
    
    
    90
    
    
    
    40
    
    
    
    62
    
    
    
    329
    
    
    
    535$
    81,104
    
    
    $
    1,544
    
    
    $
    48,095
    
    
    $
    32,584
    
    
    $
    13,223
    
    
    $
    176,550
  7




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##### Table of Contents



4. INTANGIBLE ASSETS  HTL TM TECHNOLOGY
 Ensyn RTP TM Process TM TM HTL TM Technology HTL TM TM TM
 TM
 5. LONG TERM DEBT
  March 31,
    
    
    December 31,2009
    
    
    2008Variable rate bank note, (4.29% at March 31, 2009), due May 2009
    
    $
    5,200
    
    
    $
    5,200Variable rate bank note (5.05% at March 31, 2009) due September
2010
    
    
    7,000
    
    
    
    7,000Non-interest bearing promissory note, final payment February 2009
    
    
    
    
    
    
    416Convertible note (4.50% at March 31, 2009) due July 2011
    
    
    31,701
    
    
    
    32,78743,901
    
    
    
    45,403Less:Unamortized discount
    
    
    (1,302
    )
    
    
    (1,484
    )Unamortized deferred financing costs
    
    
    (392
    )
    
    
    (452
    )Current maturities
    
    
    (5,200
    )
    
    
    (5,612
    )(6,894
    )
    
    
    (7,548
    )$
    37,007
    
    
    $
    37,855
  2009
    
    $
    5,2002010
    
    
    7,0002011
    
    
    31,701$
    43,901
  8




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##### Table of Contents



6. ASSET RETIREMENT OBLIGATIONS
 TM CDF TM FTF
 As at
    
    
    As atMarch 31,
    
    
    December, 312009
    
    
    2008Carrying balance, beginning of year
    
    $
    3,738
    
    
    $
    2,218Liabilities incurred
    
    
    185
    
    
    
    236Accretion expense
    
    
    49
    
    
    
    171Revisions in estimated cash flows
    
    
    
    
    
    
    1,113Carrying balance, end of period
    
    $
    3,972
    
    
    $
    3,738
 7. COMMITMENTS AND CONTINGENCIES
 Zitong Block Exploration Commitment
 CNPC Mitsubishi
 Zitong Partners" Phase 2
 Long Term Obligation
 TM
 Income Taxes
  Pan-China
  9




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##### Table of Contents



Other Commitments
  Talisman Contingent
Payment
  8. SHARE CAPITAL AND WARRANTS
  Common Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock OptionsWtd. AvgNumber
    
    
    
    
    
    
    Purchase
    
    
    Contributed
    
    
    Convertible
    
    
    Number
    
    
    Exercise Price(thousands)
    
    
    Amount
    
    
    Warrants
    
    
    Surplus
    
    
    Note
    
    
    (thousands)
    
    
    Cdn.$Balance December 31, 2008
    
    
    279,381
    
    
    $
    413,857
    
    
    $
    18,805
    
    
    $
    16,862
    
    
    $
    2,086
    
    
    
    11,913
    
    
    $
    2.32Options:Cancelled/forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (167
    )
    
    $
    2.16Compensation calculated
for stock option grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461
    
    
    
    
    
    
    
    Balance March 31, 2009
    
    
    279,381
    
    
    $
    413,857
    
    
    $
    18,805
    
    
    $
    17,323
    
    
    $
    2,086
    
    
    
    11,746
    
    
    $
    2.32
   10




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##### Table of Contents



Purchase WarrantsPrice per
    
    
    
    
    
    
    
    
    
    
    Common
    
    
    
    
    
    
    
    
    
    
    Exercise
    
    
    CashSpecial
    
    
    
    
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    
    
    
    
    Price per
    
    
    Value onYear of Issue
    
    Warrant
    
    
    Issued
    
    
    Exercisable
    
    
    Issuable
    
    
    Value
    
    
    Expiry Date
    
    
    Share
    
    
    Exercise(thousands)
    
    
    ($U.S. 000)
    
    
    
    
    
    
    
    
    
    
    ($U.S. 000)2006
    
    
    U.S.$2.23
    
    
    
    11,400
    
    
    
    11,400
    
    
    
    11,400
    
    
    
    18,805
    
    
    May 2011
    
    Cdn. $2.93 (1)
    
    
    26,472
 (1)
    
    Each common share purchase warrant originally entitled the holder to purchase one common share
at a price of $2.63 per share until the fifth anniversary date of the closing of the transaction.
In September 2006, these warrants were listed on the Toronto Stock Exchange and the exercise price
was changed to Cdn.$2.93. 9. SEGMENT INFORMATION
  Oil and Gas
 Integrated
 TM
 Conventional
  Business and Technology Development
 MOU
  Corporate
 ,
  11




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##### Table of Contents



Three Month Period Ended March 31, 2009Oil and Gas
    
    
    Business andIntegrated
    
    
    Conventional
    
    
    TechnologyCanada
    
    
    Ecuador
    
    
    China
    
    
    U.S.
    
    
    Development
    
    
    Corporate
    
    
    TotalRevenueOil and gas revenue
    
    $
    
    
    
    $
    
    
    
    $
    5,733
    
    
    $
    1,966
    
    
    $
    
    
    
    $
    
    
    
    $
    7,699Gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    82
    
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    268Interest income
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    10
    
    
    
    13
    
    
    
    
    
    
    
    5,816
    
    
    
    2,154
    
    
    
    
    
    
    
    10
    
    
    
    7,980ExpensesOperating costs
    
    
    
    
    
    
    
    
    
    
    2,701
    
    
    
    1,026
    
    
    
    
    
    
    
    
    
    
    
    3,727General and administrative
    
    
    139
    
    
    
    518
    
    
    
    418
    
    
    
    125
    
    
    
    
    
    
    
    3,754
    
    
    
    4,954Business and technology development
    
    
    294
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,743
    
    
    
    
    
    
    
    2,037Depletion and depreciation
    
    
    1
    
    
    
    14
    
    
    
    5,274
    
    
    
    1,713
    
    
    
    629
    
    
    
    1
    
    
    
    7,632Interest expense and financing costs
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    82
    
    
    
    25
    
    
    
    4
    
    
    
    259434
    
    
    
    532
    
    
    
    8,541
    
    
    
    2,946
    
    
    
    2,397
    
    
    
    3,759
    
    
    
    18,609Loss before Income Taxes
    
    
    (434
    )
    
    
    (532
    )
    
    
    (2,725
    )
    
    
    (792
    )
    
    
    (2,397
    )
    
    
    (3,749
    )
    
    
    (10,629
    )Current provision for income taxes
    
    
    
    
    
    
    
    
    
    
    (1,636
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (1,645
    )Net Loss and Comprehensive
Loss
    
    $
    (434
    )
    
    $
    (532
    )
    
    $
    (4,361
    )
    
    $
    (801
    )
    
    $
    (2,397
    )
    
    $
    (3,749
    )
    
    $
    (12,274
    )Capital Investments
    
    $
    2,068
    
    
    $
    656
    
    
    $
    1,156
    
    
    $
    298
    
    
    $
    1,274
    
    
    $
    
    
    
    $
    5,452Identifiable Assets:As at March 31, 2009
    
    $
    83,370
    
    
    $
    2,520
    
    
    $
    59,165
    
    
    $
    36,141
    
    
    $
    106,145
    
    
    $
    17,119
    
    
    $
    304,460As at December 31, 2008
    
    $
    81,126
    
    
    $
    1,766
    
    
    $
    64,901
    
    
    $
    37,480
    
    
    $
    105,587
    
    
    $
    26,415
    
    
    $
    317,275
 Three-Month Period Ended March 31, 2008Oil and Gas
    
    
    Business andIntegrated
    
    
    Conventional
    
    
    TechnologyCanada
    
    
    Ecuador
    
    
    China
    
    
    U.S.
    
    
    Development
    
    
    Corporate
    
    
    TotalRevenueOil and gas revenue
    
    $
    
    
    
    $
    
    
    
    $
    10,888
    
    
    $
    4,155
    
    
    $
    
    
    
    $
    
    
    
    $
    15,043Loss on derivative instruments
    
    
    
    
    
    
    
    
    
    
    (2,682
    )
    
    
    (1,264
    )
    
    
    
    
    
    
    
    
    
    
    (3,946
    )Interest income
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    44
    
    
    
    
    
    
    
    14
    
    
    
    72
    
    
    
    
    
    
    
    8,220
    
    
    
    2,935
    
    
    
    
    
    
    
    14
    
    
    
    11,169ExpensesOperating costs
    
    
    
    
    
    
    
    
    
    
    4,310
    
    
    
    1,082
    
    
    
    
    
    
    
    
    
    
    
    5,392General and administrative
    
    
    280
    
    
    
    1
    
    
    
    566
    
    
    
    362
    
    
    
    
    
    
    
    2,737
    
    
    
    3,946Business and technology development
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,445
    
    
    
    
    
    
    
    1,476Depletion and depreciation
    
    
    
    
    
    
    
    
    
    
    6,206
    
    
    
    1,456
    
    
    
    703
    
    
    
    1
    
    
    
    8,366Interest expense and financing costs
    
    
    
    
    
    
    
    
    
    
    324
    
    
    
    148
    
    
    
    10
    
    
    
    51
    
    
    
    533311
    
    
    
    1
    
    
    
    11,406
    
    
    
    3,048
    
    
    
    2,158
    
    
    
    2,789
    
    
    
    19,713Net Loss and Comprehensive Loss
    
    $
    (311
    )
    
    $
    (1
    )
    
    $
    (3,186
    )
    
    $
    (113
    )
    
    $
    (2,158
    )
    
    $
    (2,775
    )
    
    $
    (8,544
    )Capital Investments
    
    $
    
    
    
    $
    
    
    
    $
    2,125
    
    
    $
    2,483
    
    
    $
    715
    
    
    $
    
    
    
    $
    5,323
  12




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##### Table of Contents



10. FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS
  As at March 31, 2009FinancialAvailable-for-
    
    
    
    
    
    
    liabilitiesLoans and
    
    
    sale financial
    
    
    Held-for-
    
    
    measured at
    
    
    Total carryingreceivables
    
    
    assets
    
    
    trading
    
    
    amortized cost
    
    
    amountFinancial Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    28,364
    
    
    $
    
    
    
    $
    28,364Accounts receivable
    
    
    5,790
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,790Derivative instruments
    
    
    
    
    
    
    
    
    
    
    1,167
    
    
    
    
    
    
    
    1,167Financial Liabilities:Accounts payable and
accrued liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,481
    )
    
    
    (8,481
    )Long term obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,900
    )
    
    
    (1,900
    )Long term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,207
    )
    
    
    (42,207
    )$
    5,790
    
    
    $
    
    
    
    $
    29,531
    
    
    $
    (52,588
    )
    
    $
    (17,267
    )
 As at December 31, 2008FinancialAvailable-for-
    
    
    
    
    
    
    liabilitiesLoans and
    
    
    sale financial
    
    
    Held-for-
    
    
    measured at
    
    
    Total carryingreceivables
    
    
    assets
    
    
    trading
    
    
    amortized cost
    
    
    amountFinancial Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    39,265
    
    
    $
    
    
    
    $
    39,265Accounts receivable
    
    
    4,870
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,870Derivative instruments
    
    
    
    
    
    
    
    
    
    
    2,159
    
    
    
    
    
    
    
    2,159Financial Liabilities:Accounts payable and
accrued liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,093
    )
    
    
    (10,093
    )Long term obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,900
    )
    
    
    (1,900
    )Long term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,467
    )
    
    
    (43,467
    )$
    4,870
    
    
    $
    
    
    
    $
    41,424
    
    
    $
    (55,460
    )
    
    $
    (9,166
    )
 Financial Risk Factors
  11. CAPITAL MANAGEMENT
   13




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##### Table of Contents



12. SUPPLEMENTAL CASH FLOW INFORMATION
  Three MonthsEnded March 31,2009
    
    
    2008Cash paid during the period forIncome taxes
    
    $
    
    
    
    $
    6Interest
    
    $
    1,929
    
    
    $
    366Changes in non-cash working capital itemsOperating ActivitiesAccounts receivable
    
    $
    (999
    )
    
    $
    (1,184
    )Prepaid and other current assets
    
    
    (42
    )
    
    
    108Accounts payable and accrued liabilities
    
    
    (654
    )
    
    
    964Income tax payable
    
    
    1,636
    
    
    
    (59
    )
    
    
    (112
    )Investing ActivitiesAccounts receivable
    
    
    80
    
    
    
    37Prepaid and other current assets
    
    
    69
    
    
    
    (21
    )Accounts payable and accrued liabilities
    
    
    (965
    )
    
    
    (1,146
    )(816
    )
    
    
    (1,130
    )Financing ActivitiesAccounts payable and accrued liabilities
    
    
    (23
    )
    
    
    $
    (898
    )
    
    $
    (1,242
    )
  13. INCOME TAXES
 Circular
  14




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##### Table of Contents



14. ADDITIONAL DISCLOSURE REQUIRED UNDER U.S. GAAP
  Condensed Consolidated Balance Sheets
  As at March 31, 2009
    
    
    As at December 31, 2008Canadian
    
    
    Increase
    
    
    
    
    
    
    U.S.
    
    
    Canadian
    
    
    Increase
    
    
    
    
    
    
    U.S.GAAP
    
    
    (Decrease)
    
    
    Notes
    
    
    GAAP
    
    
    GAAP
    
    
    (Decrease)
    
    
    Notes
    
    
    GAAPAssetsCurrent Assets:Cash and cash equivalents
    
    $
    28,364
    
    
    $
    
    
    
    
    
    
    
    $
    28,364
    
    
    $
    39,265
    
    
    $
    
    
    
    
    
    
    
    $
    39,265Accounts receivable
    
    
    5,790
    
    
    
    
    
    
    
    
    
    
    
    5,790
    
    
    
    4,870
    
    
    
    
    
    
    
    
    
    
    
    4,870Prepaid and other current
assets
    
    
    1,631
    
    
    
    
    
    
    
    
    
    
    
    1,631
    
    
    
    1,658
    
    
    
    
    
    
    
    
    
    
    
    1,658Derivative instruments
    
    
    1,167
    
    
    
    
    
    
    
    
    
    
    
    1,167
    
    
    
    2,159
    
    
    
    
    
    
    
    
    
    
    
    2,159Total Current Assets
    
    
    36,952
    
    
    
    
    
    
    
    
    
    
    
    36,952
    
    
    
    47,952
    
    
    
    
    
    
    
    
    
    
    
    47,952Oil and gas properties
and development costs, net
    
    
    174,684
    
    
    
    1,358
    
    
    (iv)
    
    
    124,044
    
    
    
    176,550
    
    
    
    1,358
    
    
    (iv)
    
    
    122,071(67,850
    )
    
    (v)
    
    
    
    
    
    
    
    
    
    
    (67,850
    )
    
    (v)17,408
    
    
    (vi)
    
    
    
    
    
    
    
    
    
    
    13,031
    
    
    (vi)(1,164
    )
    
    (vii)
    
    
    
    
    
    
    
    
    
    
    (1,018
    )
    
    (vii)(392
    )
    
    (viii)Intangible assets  technology
    
    
    92,153
    
    
    
    
    
    
    
    
    
    
    
    92,153
    
    
    
    92,153
    
    
    
    
    
    
    
    
    
    
    
    92,153Long term assets
    
    
    671
    
    
    
    392
    
    
    (xi)
    
    
    1,063
    
    
    
    620
    
    
    
    451
    
    
    (xi)
    
    
    1,071Total Assets
    
    $
    304,460
    
    
    $
    (50,248
    )
    
    
    
    
    
    $
    254,212
    
    
    $
    317,275
    
    
    $
    (54,028
    )
    
    
    
    
    
    $
    263,247Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
and accrued liabilities
    
    $
    8,481
    
    
    $
    
    
    
    
    
    
    
    $
    8,481
    
    
    $
    10,093
    
    
    $
    
    
    
    
    
    
    
    $
    10,093Income tax payable
    
    
    2,286
    
    
    
    
    
    
    
    
    
    
    
    2,286
    
    
    
    650
    
    
    
    
    
    
    
    
    
    
    
    650Debt  current portion
    
    
    5,200
    
    
    
    
    
    
    
    
    
    
    
    5,200
    
    
    
    5,612
    
    
    
    
    
    
    
    
    
    
    
    5,612Derivative instruments
    
    
    
    
    
    
    3,162
    
    
    (iii)
    
    
    3,162
    
    
    
    
    
    
    
    1,121
    
    
    (iii)
    
    
    1,121Total Current Liabilities
    
    
    15,967
    
    
    
    3,162
    
    
    
    
    
    
    
    19,129
    
    
    
    16,355
    
    
    
    1,121
    
    
    
    
    
    
    
    17,476Long term debt
    
    
    37,007
    
    
    
    392
    
    
    (xi)
    
    
    38,701
    
    
    
    37,855
    
    
    
    451
    
    
    (xi)
    
    
    40,3921,694
    
    
    (viii)
    
    
    
    
    
    
    
    
    
    
    2,086
    
    
    (viii)(392
    )
    
    (viii)Asset retirement obligations
    
    
    3,972
    
    
    
    
    
    
    
    
    
    
    
    3,972
    
    
    
    3,738
    
    
    
    
    
    
    
    
    
    
    
    3,738Long term obligation
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    1,900
    
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    1,900Total Liabilities
    
    
    58,846
    
    
    
    4,856
    
    
    
    
    
    
    
    63,702
    
    
    
    59,848
    
    
    
    3,658
    
    
    
    
    
    
    
    63,506Shareholders Equity:Share capital
    
    
    413,857
    
    
    
    74,455
    
    
    (i)
    
    
    502,372
    
    
    
    413,857
    
    
    
    74,455
    
    
    (i)
    
    
    502,372(498
    )
    
    (ii)
    
    
    
    
    
    
    
    
    
    
    (498
    )
    
    (ii)1,358
    
    
    (iv)
    
    
    
    
    
    
    
    
    
    
    1,358
    
    
    (iv)13,200
    
    
    (iii)
    
    
    
    
    
    
    
    
    
    
    13,200
    
    
    (iii)Purchase warrants
    
    
    18,805
    
    
    
    (18,805
    )
    
    (iii)
    
    
    
    
    
    
    18,805
    
    
    
    (18,805
    )
    
    (iii)
    
    
    Contributed surplus
    
    
    17,323
    
    
    
    (3,250
    )
    
    (ii)
    
    
    11,126
    
    
    
    16,862
    
    
    
    (3,250
    )
    
    (ii)
    
    
    10,665(2,947
    )
    
    (iii)
    
    
    
    
    
    
    
    
    
    
    (2,947
    )
    
    (iii)Convertible note
    
    
    2,086
    
    
    
    (2,086
    )
    
    (viii)
    
    
    
    
    
    
    2,086
    
    
    
    (2,086
    )
    
    (viii)
    
    
    Accumulated deficit
    
    
    (206,457
    )
    
    
    (116,531
    )
    
    
    
    
    
    
    (322,988
    )
    
    
    (194,183
    )
    
    
    (119,113
    )
    
    
    
    
    
    
    (313,296
    )Total Shareholders Equity
    
    
    245,614
    
    
    
    (55,104
    )
    
    
    
    
    
    
    190,510
    
    
    
    257,427
    
    
    
    (57,686
    )
    
    
    
    
    
    
    199,741Total Liabilities
and Shareholders Equity
    
    $
    304,460
    
    
    $
    (50,248
    )
    
    
    
    
    
    $
    254,212
    
    
    $
    317,275
    
    
    $
    (54,028
    )
    
    
    
    
    
    $
    263,247
  15




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##### Table of Contents



Shareholders Equity
  APB FASB SFAS
 SFAS No. 133
 Oil and Gas Properties and Development Costs
      16




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##### Table of Contents



Deferred Financing Costs
  Condensed Consolidated Statements of Operations
  Three Months Ended March 31, 2009
    
    
    Three Months Ended March 31, 2008Canadian
    
    
    Increase
    
    
    
    
    
    
    U.S.
    
    
    Canadian
    
    
    Increase
    
    
    
    
    
    
    U.S.GAAP
    
    
    (Decrease)
    
    
    Notes
    
    
    GAAP
    
    
    GAAP
    
    
    (Decrease)
    
    
    Notes
    
    
    GAAPRevenueOil and gas revenue
    
    $
    7,699
    
    
    
    
    
    
    
    
    
    
    $
    7,699
    
    
    $
    15,043
    
    
    
    
    
    
    
    
    
    
    $
    15,043Gain (loss) on derivative instruments
    
    
    268
    
    
    
    (2,041
    )
    
    (iii)
    
    
    (1,773
    )
    
    
    (3,946
    )
    
    
    (3,167
    )
    
    (iii)
    
    
    (7,113
    )Interest income
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    72Total Revenue
    
    
    7,980
    
    
    
    (2,041
    )
    
    
    
    
    
    
    5,939
    
    
    
    11,169
    
    
    
    (3,167
    )
    
    
    
    
    
    
    8,002ExpensesOperating costs
    
    
    3,727
    
    
    
    
    
    
    
    
    
    
    
    3,727
    
    
    
    5,392
    
    
    
    
    
    
    
    
    
    
    
    5,392General and administrative
    
    
    4,954
    
    
    
    (392
    )
    
    (viii)
    
    
    4,562
    
    
    
    3,946
    
    
    
    
    
    
    
    
    
    
    
    3,946Business and technology development
    
    
    2,037
    
    
    
    
    
    
    
    
    
    
    
    2,037
    
    
    
    1,476
    
    
    
    
    
    
    
    
    
    
    
    1,476Depletion and depreciation
    
    
    7,632
    
    
    
    (4,377
    )
    
    (ix)
    
    
    3,255
    
    
    
    8,366
    
    
    
    (1,226
    )
    
    (ix)
    
    
    7,140Interest expense and financing costs
    
    
    259
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    533
    
    
    
    
    
    
    
    
    
    
    
    533Provision for impairment
of HTLTM development costs
    
    
    
    
    
    
    146
    
    
    (x)
    
    
    146
    
    
    
    
    
    
    
    9
    
    
    (x)
    
    
    9Total Expenses
    
    
    18,609
    
    
    
    (4,623
    )
    
    
    
    
    
    
    13,986
    
    
    
    19,713
    
    
    
    (1,217
    )
    
    
    
    
    
    
    18,496Loss before Income Taxes
    
    
    (10,629
    )
    
    
    2,582
    
    
    
    
    
    
    
    (8,047
    )
    
    
    (8,544
    )
    
    
    (1,950
    )
    
    
    
    
    
    
    (10,494
    )Current provision for income taxes
    
    
    (1,645
    )
    
    
    
    
    
    
    
    
    
    
    (1,645
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss and Comprehensive Loss
    
    
    (12,274
    )
    
    
    2,582
    
    
    
    
    
    
    
    (9,692
    )
    
    
    (8,544
    )
    
    
    (1,950
    )
    
    
    
    
    
    
    (10,494
    )Accumulated Deficit, beginning of year
    
    
    (194,183
    )
    
    
    (119,113
    )
    
    
    
    
    
    
    (313,296
    )
    
    
    (159,990
    )
    
    
    (90,255
    )
    
    
    
    
    
    
    (250,245
    )Accumulated Deficit, end of year
    
    $
    (206,457
    )
    
    $
    (116,531
    )
    
    
    
    
    
    $
    (322,988
    )
    
    $
    (168,534
    )
    
    $
    (92,205
    )
    
    
    
    
    
    $
    (260,739
    )Net Loss per share -
Basic and Diluted
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    
    
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    
    
    
    
    $
    (0.04
    )Weighted Average Number
of Shares (in thousands)Basic and Diluted
    
    
    279,381
    
    
    
    
    
    
    
    
    
    
    
    279,381
    
    
    
    244,873
    
    
    
    
    
    
    
    
    
    
    
    244,873
  17




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##### Table of Contents



Condensed Consolidated Statement of Cash Flow
 TM
 Additional U.S. GAAP Disclosures
  Level 1:
 Level 2:
 Level 3:
   As at March 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalDerivative instruments assets
    
    $
    
    
    
    $
    1,167
    
    
    $
    
    
    
    $
    1,167Derivative instruments liabilities
    
    $
    3,162
    
    
    $
    
    
    
    $
    
    
    
    $
    3,162
   18




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##### Table of Contents



Impact of New and Pending U.S. GAAP Accounting Standards
 SFAS No. 161
    Three-Month Periods Ended March 31,2009
    
    
    2008Realized gains (losses) on derivative transactions
    
    $
    1,260
    
    
    $
    (1,948
    )Unrealized losses on derivative transactions
    
    
    (992
    )
    
    
    (1,998
    )$
    268
    
    
    $
    (3,946
    )
   FSP
    19




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##### Table of Contents



FASB Accounting Standards
Codification
     20




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
 TM TM TM
   SPECIAL NOTE TO CANADIAN INVESTORS
 SEC CSA National Instrument 51-101  Standards of
Disclosure for Oil and Gas Activities Special Note to Canadian
Investors
   Bbl
    
    = barrel
    
    Mboe/d
    
    = thousands of barrels of oil equivalent per dayBbls/d
    
    = barrels per day
    
    MMBbl
    
    = million barrelsBopd
    
    = barrels of oil per day
    
    MMBls/d
    
    = million barrels per dayBoe
    
    = barrel of oil equivalent
    
    Mcf
    
    = thousand cubic feetBoe/d
    
    = barrels of oil equivalent per day
    
    Mcf/d
    
    = thousand cubic feet per dayMBbl
    
    = thousand barrels
    
    MMBtu
    
    = million British thermal unitsMBbls/d
    
    = thousand barrels per day
    
    MMcf
    
    = million cubic feetMboe
    
    = thousands of barrels of oil equivalent
    
    MMcf/d
    
    = million cubic feet per day
  21




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##### Table of Contents



www.ivanhoeenergy.com www.sec.gov www.sedar.com
 Ivanhoe Energys Business
 TM
  TM TM
 TM
  Oil and Gas
 Integrated
 TM
 Conventional
   22




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##### Table of Contents



Business and Technology Development
   Corporate
 ,
    Corporate Strategy
 Importance of the Heavy Oil Segment of the Oil and Gas Industry
       23




---



##### Table of Contents



Ivanhoes Value Proposition
 TM
   1.
    
    Virtual elimination of external energy requirements for steam generation and/or power
for upstream operations.
 2.
    
    Elimination of the need for diluent or blend oils for transport.
 3.
    
    Capture of the majority of the heavy versus light oil value differential.
 4.
    
    Relatively small minimum economic scale of operations suited for field upgrading and
for smaller field developments.
 TM
 TM
 Implementation Strategy
   1. Execute . TM
 2. Additional projects . TM
 3. Advance the technology . TM TM FTF
 4. Finance initial projects.
 5. Build internal capabilities. TM TM
  24




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##### Table of Contents



Executive Overview of 2009 Results
  Three-Month Periods ended March 31,2009
    
    
    2008Oil and gas revenue
    
    $
    7,699
    
    
    $
    15,043Net loss
    
    $
    (12,274
    )
    
    $
    (8,544
    )Net loss per share  basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.03
    )Average production (Boe/d)
    
    
    2,095
    
    
    
    1,907Net operating revenue per Boe
    
    $
    21.06
    
    
    $
    55.60Cash flow provided (used) by operating activities
    
    $
    (4,088
    )
    
    $
    3,017Capital investments
    
    $
    (5,452
    )
    
    $
    (5,323
    )
 Financial Results  Change in Net Loss
  Three-Month Periods Ended March 31,Favorable(Unfavorable)2009
    
    
    
    Variances
    
    
    
    2008Summary of Net Loss by Significant Components:Oil and Gas Revenues:
    
    $
    7,699
    
    
    
    
    
    
    
    
    $
    15,043Production volumes
    
    
    
    
    
    
    $
    1,263Oil and gas prices
    
    
    
    
    
    
    
    (8,607
    )Realized gain (loss) on derivative instruments
    
    
    1,260
    
    
    
    
    3,208
    
    
    
    
    (1,948
    )Operating costs
    
    
    (3,727
    )
    
    
    
    1,665
    
    
    
    
    (5,392
    )General and administrative, less
stock based compensation
    
    
    (4,520
    )
    
    
    
    (1,481
    )
    
    
    
    (3,039
    )Business and technology development,
less stock based compensation
    
    
    (2,009
    )
    
    
    
    (744
    )
    
    
    
    (1,265
    )Net interest
    
    
    (138
    )
    
    
    
    208
    
    
    
    
    (346
    )Current income tax provision
    
    
    (1,645
    )
    
    
    
    (1,645
    )
    
    
    
    Unrealized loss on derivative instruments
    
    
    (992
    )
    
    
    
    1,006
    
    
    
    
    (1,998
    )Depletion and depreciation
    
    
    (7,632
    )
    
    
    
    734
    
    
    
    
    (8,366
    )Stock based compensation
    
    
    (461
    )
    
    
    
    657
    
    
    
    
    (1,118
    )Other
    
    
    (109
    )
    
    
    
    6
    
    
    
    
    (115
    )Net Loss
    
    $
    (12,274
    )
    
    
    $
    (3,730
    )
    
    
    $
    (8,544
    )
   25




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##### Table of Contents



Revenues and Operating Costs
  Three-Month Periods Ended March 31,Net Boes
    
    
    Percentage2009
    
    
    2008
    
    
    ChangeChina:Dagang
    
    
    128,478
    
    
    
    119,828
    
    
    
    7
    %Daqing
    
    
    2,600
    
    
    
    5,143
    
    
    
    -49
    %131,078
    
    
    
    124,971
    
    
    
    5
    %U.S.:South Midway
    
    
    54,877
    
    
    
    43,677
    
    
    
    26
    %Spraberry
    
    
    2,376
    
    
    
    4,509
    
    
    
    -47
    %Others
    
    
    246
    
    
    
    415
    
    
    
    -41
    %57,499
    
    
    
    48,601
    
    
    
    18
    %188,577
    
    
    
    173,572
    
    
    
    9
    %
    Three Months Ended
    
    
    Favorable
    
    
    Three Months EndedMarch 31,
    
    
    (Unfavorable)
    
    
    March 31,2009
    
    
    Variances
    
    
    2008China
    
    $
    536
    
    
    $
    1,259
    
    
    $
    (723
    )U.S.
    
    
    724
    
    
    
    1,949
    
    
    
    (1,225
    )$
    1,260
    
    
    $
    3,208
    
    
    $
    (1,948
    )
 Windfall Levy
  26




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##### Table of Contents



China
 
    
    Production Volumes
  
    
    Operating Costs
  U.S.
 
    
    Production Volumes
  
    
    Operating Costs
    27




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008China
    
    
    U.S.
    
    
    Total
    
    
    China
    
    
    U.S.
    
    
    TotalNet Production:Boe
    
    
    131,078
    
    
    
    57,499
    
    
    
    188,577
    
    
    
    124,971
    
    
    
    48,601
    
    
    
    173,572Boe/day for the period
    
    
    1,456
    
    
    
    639
    
    
    
    2,095
    
    
    
    1,373
    
    
    
    534
    
    
    
    1,907
 Per Boe
    
    
    Per BoeOil and gas revenue
    
    $
    43.74
    
    
    $
    34.19
    
    
    $
    40.83
    
    
    $
    87.12
    
    
    $
    85.49
    
    
    $
    86.67Field operating costs
    
    
    18.95
    
    
    
    14.33
    
    
    
    17.54
    
    
    
    16.95
    
    
    
    16.06
    
    
    
    16.71Windfall Levy (China) and
Production tax (U.S.)
    
    
    0.95
    
    
    
    0.82
    
    
    
    0.91
    
    
    
    16.49
    
    
    
    1.50
    
    
    
    12.29Engineering and
support costs
    
    
    0.71
    
    
    
    2.70
    
    
    
    1.32
    
    
    
    1.04
    
    
    
    4.71
    
    
    
    2.0720.61
    
    
    
    17.85
    
    
    
    19.77
    
    
    
    34.48
    
    
    
    22.27
    
    
    
    31.07Net operating revenue
    
    
    23.13
    
    
    
    16.34
    
    
    
    21.06
    
    
    
    52.64
    
    
    
    63.22
    
    
    
    55.60Depletion
    
    
    40.23
    
    
    
    29.17
    
    
    
    36.86
    
    
    
    49.66
    
    
    
    29.79
    
    
    
    44.10Net revenue (loss) from operations
    
    $
    (17.10
    )
    
    $
    (12.83
    )
    
    $
    (15.80
    )
    
    $
    2.98
    
    
    $
    33.43
    
    
    $
    11.50
 General and Administrative
  2009 vs.2008Favorable (unfavorable) variances:Oil and Gas Activities:Canada
    
    $
    141Ecuador
    
    
    (517
    )China
    
    
    148U.S.
    
    
    237Corporate
    
    
    (1,017
    )(1,008
    )Less: stock based compensation
    
    
    (473
    )$
    (1,481
    )
 Canada
  Ecuador
  China
   28




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##### Table of Contents



U.S.
  Corporate
  Business and Technology Development
  Net Interest
  Unrealized Gain (Loss) on Derivative Instruments
   Three Months Ended
    
    
    Favorable
    
    
    Three Months EndedMarch 31,
    
    
    (Unfavorable)
    
    
    March 31,2009
    
    
    Variances
    
    
    2008China
    
    $
    (455
    )
    
    $
    1,503
    
    
    $
    (1,958
    )U.S.
    
    
    (537
    )
    
    
    (497
    )
    
    
    (40
    )$
    (992
    )
    
    $
    1,006
    
    
    $
    (1,998
    )
  29




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##### Table of Contents



Depletion and Depreciation
  China
  Financial Condition, Liquidity and Capital Resources
 Sources and Uses of Cash
  Operating Activities
  Investing Activities
   Three-Month Periods EndedMarch 31,(Increase)2009
    
    
    2008
    
    
    DecreaseOil and Gas Activities:Canada
    
    $
    2,068
    
    
    $
    
    
    
    $
    (2,068
    )Ecuador
    
    
    656
    
    
    
    
    
    
    
    (656
    )China
    
    
    1,156
    
    
    
    2,125
    
    
    
    969U.S.
    
    
    298
    
    
    
    2,483
    
    
    
    2,185Business and Technology Development
    
    
    1,274
    
    
    
    715
    
    
    
    (559
    )$
    5,452
    
    
    $
    5,323
    
    
    $
    (129
    )
 
    
    Canada
  
    
    Ecuador
 TM
  30




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##### Table of Contents




    
    China
  
    
    U.S.
  
    
    Business and Technology Development
  Financing Activities
  Outlook for balance of 2009
       31




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##### Table of Contents



Contractual Obligations
  Payments Due by Year(stated in thousands of U.S. dollars)Total
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    After 2012Consolidated Balance Sheets:Note payable  current portion
    
    $
    5,200
    
    
    $
    5,200
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Long term debt
    
    
    37,007
    
    
    
    
    
    
    
    6,609
    
    
    
    30,398
    
    
    
    
    
    
    
    Asset retirement obligation
    
    
    3,972
    
    
    
    
    
    
    
    1,966
    
    
    
    
    
    
    
    
    
    
    
    2,006Long term obligation
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,900
    
    
    
    Other Commitments:Interest payable
    
    
    5,535
    
    
    
    1,979
    
    
    
    2,488
    
    
    
    1,068
    
    
    
    
    
    
    
    Lease commitments
    
    
    2,990
    
    
    
    878
    
    
    
    994
    
    
    
    665
    
    
    
    327
    
    
    
    126Zitong exploration commitment
    
    
    24,694
    
    
    
    13,123
    
    
    
    11,571
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    81,298
    
    
    $
    21,180
    
    
    $
    23,628
    
    
    $
    32,131
    
    
    $
    2,227
    
    
    $
    2,132
 Off Balance Sheet Arrangements
  Outstanding Share Data
  Quarterly Financial Data In Accordance With Canadian and U.S. GAAP (Unaudited)
 QUARTER ENDED2009
    
    
    2008
    
    
    20071st Qtr
    
    
    4th Qtr
    
    
    3rd Qtr
    
    
    2nd Qtr
    
    
    1st Qtr
    
    
    4th Qtr
    
    
    3rd Qtr
    
    
    2nd QtrTotal revenueCanadian GAAP
    
    $
    7,980
    
    
    $
    25,143
    
    
    $
    35,626
    
    
    $
    (2,772
    )
    
    $
    11,169
    
    
    $
    5,848
    
    
    $
    8,823
    
    
    $
    9,589U.S. GAAP
    
    $
    5,939
    
    
    $
    30,538
    
    
    $
    50,267
    
    
    $
    (14,975
    )
    
    $
    8,001
    
    
    $
    6,966
    
    
    $
    12,393
    
    
    $
    7,685Net income (loss):Canadian GAAP
    
    $
    (12,274
    )
    
    $
    (13,980
    )
    
    $
    10,062
    
    
    $
    (21,731
    )
    
    $
    (8,544
    )
    
    $
    (18,849
    )
    
    $
    (7,232
    )
    
    $
    (6,579
    )U.S. GAAP
    
    $
    (9,692
    )
    
    $
    (45,399
    )
    
    $
    25,824
    
    
    $
    (32,981
    )
    
    $
    (10,495
    )
    
    $
    (16,094
    )
    
    $
    (2,551
    )
    
    $
    (1,211
    )Net income (loss) per share:Canadian GAAP
    
    $
    (0.04
    )
    
    $
    (0.05
    )
    
    $
    0.04
    
    
    $
    (0.09
    )
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.03
    )
    
    $
    (0.03
    )U.S. GAAP
    
    $
    (0.03
    )
    
    $
    (0.17
    )
    
    $
    0.10
    
    
    $
    (0.13
    )
    
    $
    (0.04
    )
    
    $
    (0.07
    )
    
    $
    (0.01
    )
    
    $
    
 TM
  32




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##### Table of Contents



Transition to International Financial Reporting Standards (IFRS)
 IFRS
  IASB
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Form 10-K.
 
 Item 4. Controls and Procedures
     33




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##### Table of Contents



Part
II  Other Information
 
 Item 1. Legal Proceedings:
  
 Item 1A. Risk Factors:
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds:
 
 Item 3. Defaults Upon Senior Securities:
 
 Item 4. Submission of Matters To a Vote of Security Holders:
 
 Item 5. Other Information:
 
 Item 6. Exhibits
 EXHIBITNUMBER
    
    DESCRIPTION31.1
    
    
    Certification by the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification by the Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  34




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##### Table of Contents



IVANHOE ENERGY INC.By:
    
    /s/ W. Gordon LancasterName:
    
    W. Gordon LancasterTitle:
    
    Chief Financial Officer
   35




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description31.1
    
    
    Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  36