##### 



UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q

|   |  |                                                                                              
|-- |  | ---------------------------------------------------------------------------------------------
|x  |  | Quarterly Report Pursuant to Section 13 or
    15(d) of the Securities Exchange Act of 1934. 
|   |  | For the quarterly period ended March 31, 2002                                                
|   |  |                                                                                              
|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                                                      |  | Not applicable                          
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

Suite 654  999 Canada
Place

Vancouver, British Columbia, Canada


V6C 3E1


(Address of principal executive
office)


(604) 688-8323

(registrants telephone number, including
area code)


Former Name, Former Address and Former Fiscal
Year, if Change Since Last Report:

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for
the past 90 days.

Yes     x               No     o

The number of shares of the registrants
capital stock outstanding as of March 31, 2002 was 139,517,708
Common Shares, no par value.

Page 1 of 12



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TABLE OF CONTENTS

|        |         |                                                                                                                                   |                                                                                           |      |   |    | 
|------- | ------- | --------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---- | - | -- | 
|        |         |                                                                                                                                   |                                                                                           | Page
|        |         |                                                                                                                                   |                                                                                           |     
|PART I  |         | Financial Information                                                                                                             |                                                                                           |      |   |   
|        | Item 1. |                                                                                                                                   | Financial Statements                                                                      |      |   |    | 
|        |         | Consolidated Condensed Balance Sheets at
    March 31, 2002 (unaudited) and December 31, 2001                                     |                                                                                           |      | 3 |   
|        |         | Unaudited Consolidated Condensed Statements of
    Loss and Deficit for the Three Month Periods Ended
    March 31, 2002 and 2001 |                                                                                           |      | 4 |   
|        |         | Unaudited Consolidated Condensed Statements of
    Cash Flow for the Three Month Periods Ended March 31, 2002
    and 2001        |                                                                                           |      | 5 |   
|        |         | Notes to the Unaudited Consolidated Condensed
    Financial Statements                                                            |                                                                                           |      | 6 |   
|        | Item 2. |                                                                                                                                   | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |      |   | 8  | 
|PART II |         | Other Information                                                                                                                 |                                                                                           |      |   |   
|        | Item 1. |                                                                                                                                   | Legal Proceedings                                                                         |      |   | 12 | 
|        | Item 2. |                                                                                                                                   | Changes in Securities and Use of Proceeds                                                 |      |   | 12 | 
|        | Item 3. |                                                                                                                                   | Defaults Upon Senior Securities                                                           |      |   | 12 | 
|        | Item 4. |                                                                                                                                   | Submission of Matters To a Vote of Securityholders                                        |      |   | 12 | 
|        | Item 5. |                                                                                                                                   | Other Information                                                                         |      |   | 12 | 
|        | Item 6. |                                                                                                                                   | Exhibits and Reports on Form 8-K                                                          |      |   | 12 | 

Page 2 of 12



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Part I  Financial
Information

Item 1.     Financial
Statements

IVANHOE ENERGY INC.

Consolidated Condensed Balance
Sheets


(stated in thousands of U.S. Dollars)


|                                                                                   |  |                |         |                   |  |   |         |  
|---------------------------------------------------------------------------------- |  | -------------- | ------- | ----------------- |  | - | ------- | -
|                                                                                   |  | March 31, 2002 |         | December 31, 2001
|                                                                                   |  |                |         |                  
|                                                                                   |  | (unaudited)    |         | (audited)        
|Assets                                                                             |  |                |         |                   |  |   |         |  
|Current Assets Cash                                                                |  | $              | 3,403   |                   |  | $ | 9,697   |  
|Accounts receivable                                                                |  |                | 2,867   |                   |  |   | 1,938   |  
|Other                                                                              |  |                | 369     |                   |  |   | 375     |  
|                                                                                   |  |                |         |                   |  |   |         |  
|                                                                                   |  |                | 6,639   |                   |  |   | 12,010  |  
|                                                                                  
|Long Term Assets                                                                   |  |                | 509     |                   |  |   | 397     |  
|Oil and gas properties, equipment and GTL
    investments                          |  |                | 95,025  |                   |  |   | 91,596  |  
|                                                                                   |  |                |         |                   |  |   |         |  
|                                                                                   |  | $              | 102,173 |                   |  | $ | 104,003 |  
|                                                                                   |  |                |         |                   |  |   |         |  
|Liabilities and Stockholders
    Equity                                           |  |                |         |                   |  |   |         |  
|Current Liabilities                                                                |  |                |         |                   |  |   |         |  
|Accounts payable and accrued liabilities                                           |  | $              | 5,186   |                   |  | $ | 5,974   |  
|Convertible debenture                                                              |  |                | 1,000   |                   |  |   | 1,000   |  
|                                                                                   |  |                |         |                   |  |   |         |  
|                                                                                   |  |                | 6,186   |                   |  |   | 6,974   |  
|                                                                                   |  |                |         |                   |  |   |         |  
|Provision for site restoration                                                     |  |                | 155     |                   |  |   | 132     |  
|                                                                                   |  |                |         |                   |  |   |         |  
|Shareholders Equity                                                               |  |                |         |                   |  |   |         |  
|Share capital, issued 139,518,000 common shares;
    December 31, 2001 139,267,000 |  |                | 120,848 |                   |  |   | 120,392 |  
|Deficit                                                                            |  |                | (25,016 | )                 |  |   | (23,495 | )
|                                                                                   |  |                |         |                   |  |   |         |  
|                                                                                   |  |                | 95,832  |                   |  |   | 96,897  |  
|                                                                                   |  |                |         |                   |  |   |         |  
|                                                                                   |  | $              | 102,173 |                   |  | $ | 104,003 |  
|                                                                                   |  |                |         |                   |  |   |         |  

(see accompanying notes)

Page 3 of 12



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IVANHOE ENERGY INC.

Unaudited Consolidated Condensed Statements of
Loss and Deficit


Three Month Periods Ended
March 31


(stated in thousands of U.S. Dollars except
per share data)


|                                                                  |  |      |         |      |  |   |         | 
|----------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                                                  |  | 2002 |         | 2001
|                                                                  |  |      |         |     
|Revenue                                                           |  |      |         |      |  |   |         | 
|Petroleum and natural gas revenue                                 |  | $    | 1,663   |      |  | $ | 2,155   | 
|Interest income                                                   |  |      | 29      |      |  |   | 348     | 
|                                                                  |  |      |         |      |  |   |         | 
|                                                                  |  |      | 1,692   |      |  |   | 2,503   | 
|                                                                  |  |      |         |      |  |   |         | 
|Expenses                                                          |  |      |         |      |  |   |         | 
|Operating costs                                                   |  |      | 856     |      |  |   | 942     | 
|General and administrative (including Project
    Identification) |  |      | 1,587   |      |  |   | 1,971   | 
|Depletion and depreciation                                        |  |      | 770     |      |  |   | 483     | 
|                                                                  |  |      |         |      |  |   |         | 
|                                                                  |  |      | 3,213   |      |  |   | 3,396   | 
|                                                                  |  |      |         |      |  |   |         | 
|                                                                 
|Net loss                                                          |  |      | 1,521   |      |  |   | 893     | 
|Deficit, beginning of period                                      |  |      | 23,495  |      |  |   | 2,373   | 
|                                                                  |  |      |         |      |  |   |         | 
|Deficit, end of period                                            |  | $    | 25,016  |      |  | $ | 3,266   | 
|                                                                  |  |      |         |      |  |   |         | 
|Net Loss per share                                                |  | $    | 0.01    |      |  | $ | 0.01    | 
|                                                                  |  |      |         |      |  |   |         | 
|Weighted Average Number of Shares (in
    thousands)              |  |      | 139,458 |      |  |   | 126,998 | 
|                                                                  |  |      |         |      |  |   |         | 

(see accompanying notes)

Page 4 of 12



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##### 



IVANHOE ENERGY INC.

Unaudited Consolidated Condensed Statements of
Cash Flow


Three Month Periods Ended
March 31


(stated in thousands of U.S. Dollars)


|                                                          |  |      |        |      |  |   |         |  
|--------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------- | -
|                                                          |  | 2002 |        | 2001
|                                                          |  |      |        |     
|Operating Activities                                      |  |      |        |      |  |   |         |  
|Net (loss)                                                |  | $    | (1,521 | )    |  | $ | (893    | )
|Items not requiring use of cash                           |  |      |        |      |  |   |         |  
|Depletion and depreciation                                |  |      | 770    |      |  |   | 483     |  
|                                                          |  |      |        |      |  |   |         |  
|                                                          |  |      | (751   | )    |  |   | (410    | )
|Changes in non-cash working capital items                 |  |      | (124   | )    |  |   | (262    | )
|                                                          |  |      |        |      |  |   |         |  
|                                                          |  |      | (875   | )    |  |   | (672    | )
|                                                          |  |      |        |      |  |   |         |  
|Investing Activities                                      |  |      |        |      |  |   |         |  
|Capital spending                                          |  |      | (6,688 | )    |  |   | (12,109 | )
|Proceeds from sale of Daqing project                      |  |      | 1,200  |      |  |   |        |  
|                                                          |  |      |        |      |  |   |         |  
|                                                          |  |      | (5,488 | )    |  |   | (12,109 | )
|                                                          |  |      |        |      |  |   |         |  
|Financing Activities                                      |  |      |        |      |  |   |         |  
|Shares issued on exercise of options                      |  |      | 69     |      |  |   | 187     |  
|                                                          |  |      |        |      |  |   |         |  
|                                                          |  |      | 69     |      |  |   | 187     |  
|                                                          |  |      |        |      |  |   |         |  
|                                                         
|(Decrease) in cash for the period                         |  |      | (6,294 | )    |  |   | (12,594 | )
|Cash, beginning of period                                 |  |      | 9,697  |      |  |   | 29,694  |  
|                                                          |  |      |        |      |  |   |         |  
|Cash, end of period                                       |  | $    | 3,403  |      |  | $ | 17,100  |  
|                                                          |  |      |        |      |  |   |         |  
|Included in the above are the
    following:              |  |      |        |      |  |   |         |  
|Interest paid                                             |  | $    | 18     |      |  | $ | 31      |  
|                                                          |  |      |        |      |  |   |         |  
|Decrease (increase) in non-cash working
    capital items |  |      |        |      |  |   |         |  
|Accounts receivable                                       |  | $    | 271    |      |  | $ | 1,605   |  
|Other current assets                                      |  |      | 6      |      |  |   | (1,022  | )
|Accounts and note payable                                 |  |      | (401   | )    |  |   | (845    | )
|                                                          |  |      |        |      |  |   |         |  
|                                                          |  | $    | (124   | )    |  | $ | (262    | )
|                                                          |  |      |        |      |  |   |         |  

(see accompanying notes)

Page 5 of 12



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Notes to the Consolidated Condensed Financial
Statements

March 31, 2002


(all tabular amounts are expressed in thousands
of United States dollars except per share data)


(Unaudited)




|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The unaudited consolidated condensed financial
    statements have been prepared on a basis consistent with the
    accounting principles and policies reflected in the
    December 31, 2001 consolidated financial statements and
    should be read in conjunction therewith. The December 31,
    2001 balance sheet was derived from the audited consolidated
    financial statements, but does not include all disclosures
    required by accounting principles generally accepted in Canada
    and in the U.S. All adjustments which are, in the opinion
    of management, necessary for a fair presentation of the
    Companys financial position as at March 31, 2002 and
    December 31, 2001 and the results of operations and cash
    flows for the quarters ended March 31, 2002 and 2001 have been
    included. The results of operations and cash flows are not
    necessarily indicative of the results for a full year.



| |                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The preparation of financial statements requires
    management to make estimates and assumptions that affect the
    reported amounts and other disclosure in these condensed
    consolidated financial statements. Actual results may differ
    from those estimates.



|   |                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | The consolidated condensed financial statements
    have been prepared in accordance with generally accepted
    accounting principles (GAAP) in Canada which conform
    to GAAP in the U.S. except as detailed below:

Consolidated Condensed Balance
Sheets

|                                                                             |  |                      |         |                         |  |             |         |               |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------- |  | -------------------- | ------- | ----------------------- |  | ----------- | ------- | ------------- |  | - | ------- | - |  | - | ------- | -
|                                                                             |  |                      |         |                        
|                                                                             |  | As at March 31, 2002 |         | As at December 31, 2001
|                                                                             |  |                      |         |                        
|                                                                             |  | Oil and Gas          |         | Shareholders           |  | Oil and Gas |         | Shareholders
|                                                                             |  | Properties           |         | Equity                  |  | Properties  |         | Equity       
|                                                                             |  |                      |         |                         |  |             |         |              
|As reported under Canadian GAAP                                              |  | $                    | 95,025  |                         |  | $           | 95,832  |               |  | $ | 91,596  |   |  | $ | 96,897  |  
|Adjustment to ascribed value of shares issued for
         royalty interests |  |                      | 1,358   |                         |  |             | 1,358   |               |  |   | 1,358   |   |  |   | 1,358   |  
|Impairment provision for China properties                                    |  |                      | (10,000 | )                       |  |             | (10,000 | )             |  |   | (10,000 | ) |  |   | (10,000 | )
|Depletion adjustment  China                                                 |  |                      | 20      |                         |  |             | 20      |               |  |   |        |   |  |   |        |  
|GTL development costs written off                                            |  |                      | (5,772  | )                       |  |             | (5,772  | )             |  |   | (5,142  | ) |  |   | (5,142  | )
|                                                                             |  |                      |         |                         |  |             |         |               |  |   |         |   |  |   |         |  
|U.S. GAAP                                                                    |  | $                    | 80,631  |                         |  | $           | 81,438  |               |  | $ | 77,812  |   |  | $ | 83,113  |  
|                                                                             |  |                      |         |                         |  |             |         |               |  |   |         |   |  |   |         |  

Under U.S. GAAP, the transfer of deficit to
share capital, which occurred during the year ended
December 31, 1999, would not be recognized. As a result,
shareholders equity under U.S. GAAP would comprise
the following:

|                                            |  |          |          |             |  |   |          |  
|------------------------------------------- |  | -------- | -------- | ----------- |  | - | -------- | -
|                                            |  | March 31 |          | December 31
|                                            |  | 2002     |          | 2001       
|                                            |  |          |          |            
|Share capital (including adjustments above) |  | $        | 196,661  |             |  | $ | 196,205  |  
|Deficit (Including adjustments above)       |  |          | (115,223 | )           |  |   | (113,092 | )
|                                            |  |          |          |             |  |   |          |  
|                                            |  | $        | 81,438   |             |  | $ | 83,113   |  
|                                            |  |          |          |             |  |   |          |  

Page 6 of 12



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##### 



Consolidated Condensed Statements of Loss and
Deficit

|                                |                                   |                                    |       |           |   |      |      |           |  |   |       |       |  |   |      |      | 
|------------------------------- | --------------------------------- | ---------------------------------- | ----- | --------- | - | ---- | ---- | --------- |  | - | ----- | ----- |  | - | ---- | ---- | 
|                                |                                   |                                   
|                                |                                   | Three Month Periods Ended March 31
|                                |                                   |                                   
|                                |                                   |                                    |       |          
|                                |                                   | 2002                               |       | 2001     
|                                |                                   |                                    |       |          
|                                |                                   | Net                                |       | Net Loss  |   | Net  |      | Net Loss 
|                                |                                   | Loss                               |       | Per Share |   | Loss |      | Per Share
|                                |                                   |                                    |       |           |   |      |      |          
|As reported under Canadian GAAP |                                   | $                                  | 1,521 |           |   | $    | 0.01 |           |  | $ | 893   |       |  | $ | 0.01 |     
|                                | Depletion adjustment  China      |                                    |       | (20       | ) |      |      |          |  |   |       |      |  |   |      |     | 
|                                | GTL development costs written off |                                    |       | 630       |   |      |      | 0.01      |  |   |       | 1,033 |  |   |      | 0.01 | 
|                                |                                   |                                    |       |           |   |      |      |           |  |   |       |       |  |   |      |     
|U.S. GAAP                       |                                   | $                                  | 2,131 |           |   | $    | 0.02 |           |  | $ | 1,926 |       |  | $ | 0.02 |     
|                                |                                   |                                    |       |           |   |      |      |           |  |   |       |       |  |   |      |     

3.   Segmented information for the
quarters ended March 31 is as follows:

|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|----------------------------------------------------------------- |  | ---- | ----- | ----- |  | ----- | --- | ---- |  | ----- | ----- | ----- |  | - | ----- |  |  | - | --- |  |  | - | ----- | 
|                                                                  |  |      |       |      
|                                                                  |  | 2002 |       | 2001 
|                                                                  |  |      |       |      
|                                                                  |  | U.S. |       | China |  | Total |     | U.S. |  | China |       | Total
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |      
|Petroleum and natural gas revenue                                 |  | $    | 1,032 |       |  | $     | 631 |      |  | $     | 1,663 |       |  | $ | 1,261 |  |  | $ | 894 |  |  | $ | 2,155 | 
|Interest income                                                   |  |      | 29    |       |  |       |    |      |  |       | 29    |       |  |   | 347   |  |  |   | 1   |  |  |   | 348   | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|                                                                  |  |      | 1,061 |       |  |       | 631 |      |  |       | 1,692 |       |  |   | 1,608 |  |  |   | 895 |  |  |   | 2,503 | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|                                                                 
|Operating costs                                                   |  |      | 530   |       |  |       | 326 |      |  |       | 856   |       |  |   | 489   |  |  |   | 453 |  |  |   | 942   | 
|Depletion and depreciation                                        |  |      | 458   |       |  |       | 312 |      |  |       | 770   |       |  |   | 442   |  |  |   | 41  |  |  |   | 483   | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|                                                                  |  |      | 988   |       |  |       | 638 |      |  |       | 1,626 |       |  |   | 931   |  |  |   | 494 |  |  |   | 1,425 | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|Segmented Income (loss) before the
    following                  |  | $    | 73    |       |  | $     | (7  | )    |  |       | 66    |       |  | $ | 677   |  |  | $ | 401 |  |  |   | 1,078 | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|General and administrative (including Project
    Identification) |  |      |       |       |  |       |     |      |  |       | 1,587 |       |  |   |       |  |  |   |     |  |  |   | 1,971 | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 
|Net loss                                                          |  |      |       |       |  |       |     |      |  | $     | 1,521 |       |  |   |       |  |  |   |     |  |  | $ | 893   | 
|                                                                  |  |      |       |       |  |       |     |      |  |       |       |       |  |   |       |  |  |   |     |  |  |   |       | 

|                    |  |                      |        |                         |  |   |        |  |  |   |         |  |  |   |        |  |  |   |        |  |  |   |         | 
|------------------- |  | -------------------- | ------ | ----------------------- |  | - | ------ |  |  | - | ------- |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                    |  |                      |        |                         |  |   |        | 
|                    |  | As at March 31, 2002 |        | As at December 31, 2001
|                    |  |                      |        |                        
|Identifiable Assets |  |                      |        |                         |  |   |        |  |  |   |         |  |  |   |        |  |  |   |        |  |  |   |         | 
|Oil & Gas           |  | $                    | 59,063 |                         |  | $ | 25,251 |  |  | $ | 84,314  |  |  | $ | 61,750 |  |  | $ | 25,067 |  |  | $ | 86,817  | 
|                    |  |                      |        |                         |  |   |        |  |  |   |         |  |  |   |        |  |  |   |        |  |  |   |         | 
|Gas-to-liquids      |  |                      |        |                         |  |   |        |  |  |   | 17,859  |  |  |   |        |  |  |   |        |  |  |   | 17,186  | 
|                    |  |                      |        |                         |  |   |        |  |  |   |         |  |  |   |        |  |  |   |        |  |  |   |         | 
|                    |  |                      |        |                         |  |   |        |  |  | $ | 102,173 |  |  |   |        |  |  |   |        |  |  | $ | 104,003 | 
|                    |  |                      |        |                         |  |   |        |  |  |   |         |  |  |   |        |  |  |   |        |  |  |   |         | 

4.   Share Capital



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | Following is a summary of the changes in share
    capital and stock options outstanding for the three month period
    ended March 31, 2002:

|                          |                                      |               |         |               |  |                  |         |                |  |  |       |      |   |   |      |      | 
|------------------------- | ------------------------------------ | ------------- | ------- | ------------- |  | ---------------- | ------- | -------------- |  |  | ----- | ---- | - | - | ---- | ---- | 
|                          |                                      |               |         |              
|                          |                                      | Common Shares |         | Stock Options
|                          |                                      |               |         |              
|                          |                                      |               |         |               |  | Weighted Average
|                          |                                      | Number        |         |               |  | Number           |         | Exercise Price
|                          |                                      | (thousands)   |         | Amount        |  | (thousands)      |         | Cdn.$         
|                          |                                      |               |         |               |  |                  |         |               
|Balance December 31, 2001 |                                      |               | 139,267 |               |  | $                | 120,392 |                |  |  | 8,635 |      |   | $ | 2.66 |     
|                          | Shares issued on exercise of options |               |         | 50            |  |                  |         | 69             |  |  |       | (50  | ) |   |      | 2.21 | 
|                          | Shares issued for service            |               |         | 201           |  |                  |         | 387            |  |  |       |      |   |   |      |      | 
|                          | Options granted                      |               |         |               |  |                  |         |                |  |  |       | 200  |   |   | $    | 3.25 | 
|                          | Options cancelled/forfeited          |               |         |               |  |                  |         |                |  |  |       | (145 | ) |   |      | 3.40 | 
|                          |                                      |               |         |               |  |                  |         |                |  |  |       |      |   |   |      |     
|Balance March 31, 2002    |                                      |               | 139,518 |               |  | $                | 120,848 |                |  |  | 8,640 |      |   | $ | 2.66 |     
|                          |                                      |               |         |               |  |                  |         |                |  |  |       |      |   |   |      |     

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The company accounts for its stock-based
    compensation plans using the intrinsic-value method. Under this
    method, compensation costs are not recognized in the financial
    statements for share options granted to employees and directors
    when issued at market value.                                                                                                                                                          
|
| | Effective January 1, 2002, Canadian
    accounting standards require disclosure on a pro forma basis of
    the impact on net income of using the fair value method for
    stock options issued on or after January 1, 2002. If the
    fair-value method had been used, the effect on the
    Companys 2002 net loss and net loss per share would have
    been immaterial based on the number of stock options granted in
    this period.

5.   Subsequent Event



| |                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Subsequent to March 31 2002, the Company
    raised $10.0 million through the issuance of 5 million
    Special Warrants, exchangeable into 5 million common shares
    no later than four months from the date of issuance.



|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of
    Financial Condition and Results of Operations

The following should be read in conjunction with
the Companys consolidated financial statements contained
herein and in the Form 10-K for the year ended
December 31, 2001, along with Managements Discussion
and Analysis of Financial Condition and Results of Operations
contained in such Form 10-K. Any terms used but not defined
in the following discussion have the same meaning given to them
in the Form 10-K.

Operations

Revenues for the quarter ended March 31,
2002 were $1.7 million. While production volumes increased
in 2002, the decline in oil and gas prices was the prime
contributor to the $0.5 million decrease from the revenues
reported for the quarter ended March 31, 2001. For the
quarter ended March 31, 2002 the net loss was
$1.5 million ($0.01 per share) compared to a loss of
$0.9 million ($0.01 per share) for the first quarter of
2001.

Production

In the U.S., net production increased
approximately 22% primarily attributed to increased production
at South Midway Sunset as a result of additional wells and our
pilot steam program. This program undertaken late in 2001 on
five wells has been so successful that utilizing steam injection
will be a major component in future field development. Overall
production on the five test wells tripled at peak and we believe
that the cyclical steam program will ultimately double oil
recovery. Facilities are currently under construction and on
schedule to initiate full-scale steaming shortly.

In China, primarily at Dagang, net production
from our pilot wells increased 7% due to our regaining an
additional 20% interest in the field in mid 2001 from Nippon Oil.

Operating costs continue to improve as the
projects mature. Depletion cost per barrel in the U.S. has
decreased due to the impairment write-offs recorded in 2001. The
decline has been somewhat mitigated by the loss in proved
undeveloped reserves at our Spraberry project in Texas due to a
cut back in our activities. For each of the quarters presented
in 2001 future development costs for China were inadvertently
excluded from the depletion calculation. Depletion for the first
quarter of 2002 of $8.43 has increased $1.64 per barrel,
compared to 2001, primarily as a result of anticipated increases
in Dagang future development costs.

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Production and operating information for the
first quarter of 2002 and 2001 are detailed below:

|                |                       |      |  |        |  |       |  |        |  |       |  |        |  |  |  |        |  |  |  |        |  |  |  |        | 
|--------------- | --------------------- | ---- |  | ------ |  | ----- |  | ------ |  | ----- |  | ------ |  |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                |                       |      |  |       
|                |                       | 2002 |  | 2001  
|                |                       |      |  |       
|                |                       | U.S. |  | China  |  | Total |  | U.S.   |  | China |  | Total 
|                |                       |      |  |        |  |       |  |        |  |       |  |       
|Net Production: |                       |      |  |        |  |       |  |        |  |       |  |        |  |  |  |        |  |  |  |        |  |  |  |       
|                | BOE                   |      |  | 57,621 |  |       |  | 36,958 |  |       |  | 94,579 |  |  |  | 47,056 |  |  |  | 34,840 |  |  |  | 81,896 | 
|                | BOE/day during period |      |  | 640    |  |       |  | 411    |  |       |  | 1,051  |  |  |  | 523    |  |  |  | 387    |  |  |  | 910    | 

|                                  |  |         |       |         |  |   |       |   |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|--------------------------------- |  | ------- | ----- | ------- |  | - | ----- | - |  | - | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                  |  |         |       |        
|                                  |  | Per BOE |       | Per BOE
|                                  |  |         |       |        
|                                  |  |         |       |         |  |   |       |  
|Petroleum and natural gas revenue |  | $       | 17.92 |         |  | $ | 17.08 |   |  | $ | 17.59 |  |  | $ | 26.80 |  |  | $ | 25.66 |  |  | $ | 26.31 | 
|                                  |  |         |       |         |  |   |       |   |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|Operating costs                   |  |         | 5.95  |         |  |   | 4.85  |   |  |   | 5.52  |  |  |   | 7.29  |  |  |   | 9.36  |  |  |   | 8.17  | 
|Production taxes                  |  |         | 0.68  |         |  |   |      |   |  |   | 0.41  |  |  |   | 0.85  |  |  |   |      |  |  |   | 0.49  | 
|Engineering support               |  |         | 2.57  |         |  |   | 3.98  |   |  |   | 3.12  |  |  |   | 2.25  |  |  |   | 3.65  |  |  |   | 2.85  | 
|                                  |  |         |       |         |  |   |       |   |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|                                  |  |         | 9.20  |         |  |   | 8.83  |   |  |   | 9.05  |  |  |   | 10.39 |  |  |   | 13.01 |  |  |   | 11.51 | 
|                                  |  |         |       |         |  |   |       |   |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|Net Revenue before depletion      |  |         | 8.72  |         |  |   | 8.25  |   |  |   | 8.54  |  |  |   | 16.41 |  |  |   | 12.65 |  |  |   | 14.80 | 
|Depletion                         |  |         | 7.53  |         |  |   | 8.43  |   |  |   | 7.88  |  |  |   | 8.67  |  |  |   | 0.98  |  |  |   | 5.40  | 
|                                  |  |         |       |         |  |   |       |   |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|Net Revenue from operations       |  | $       | 1.19  |         |  | $ | (0.18 | ) |  | $ | 0.66  |  |  | $ | 7.74  |  |  | $ | 11.67 |  |  | $ | 9.40  | 
|                                  |  |         |       |         |  |   |       |   |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 

General and Administrative Costs

General and administrative costs include project
identification costs, which are costs associated with pursuing
and investigating new international projects and the cost of
investment banking services. General and administrative costs
for the first quarter of 2002 were $1.6 million, down
$0.4 million from the same quarter in 2001, as a result of
a reduction in new project identification activities.

Exploration and Development
Activities

Spending on exploration and development
activities during the first quarter of 2002 was
$6.0 million, a decrease of $5.0 million over the
$11.0 million spent during the same quarter in 2001.
U.S. spending was down $4.2 million in the current
quarter due to a reduction in the drilling program in Spraberry
and the completion of our significant acreage acquisition
program in the Bossier Trend at the end of 2001. This is
partially offset by an increase in spending in California due to
the drilling of our deep gas well, Northwest Lost Hills
#122. Spending in China was down $0.8 million for the
first quarter of 2002 as a result of the pilot test in Dagang
being completed in February 2001.

In the Bossier Trend, we completed two wells in
the Creslenn Ranch prospect during the current quarter which
were funded by Unocal as part of a joint venture agreement. Both
wells were drilled to a total depth of approximately 12,000 feet
and encountered Bossier sands. Production tests on the Bossier
reservoir in the second well are currently underway after which
the first well will be evaluated. In addition to gas shows in
the Bossier sand, shows were encountered in shallower secondary
objectives in both wells and these are being evaluated for
future tests. A third well drilled in the Lone Star prospect of
the Bossier Trend, also funded by Unocal, commenced on
March 25, 2002. The well is currently drilling toward a
proposed total depth of 11,800 feet. We have a 50% working
interest in East Texas.

The Northwest Lost Hills #1-22 well is drilling
ahead towards a total depth of 20,000 feet. The estimated cost
to drill and complete this well is $33 million. The higher
cost versus the original estimate is primarily attributable to
the additional cost of sidetracking

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##### 



the well and costs associated with a mechanical
problem that occurred while setting casing. We have a 42%
working interest in this well.

One well was drilled in the first quarter of 2002
in an area known as Apache Flats of the Spraberry field. This
well has been completed and started producing oil. This brings
our total producing wells in the Spraberry field to 31.

In the Dagang project we submitted for approval
our Overall Development Program and expect approvals during the
first half of 2002. The development program, as submitted,
involves drilling 115 new wells and reworking approximately 29
of the 82 existing wells.

During the first quarter of 2002 we continued our
assessment of the Zitong and Yudong blocks within the Sichuan
Basin of China, under the joint feasibility studies entered into
in 2001 with PetroChina.. These blocks, located in Sichuan
Province approximately 930 miles southwest of Beijing, cover an
area of approximately 2.2 million acres. We began
negotiating a petroleum sharing agreement for Zitong in March
2002.

During the first quarter we sold our interest in
the Daqing project for $2.4 million, retaining an overriding
royalty on future production. Proceeds of $1.2 million were
received in January, 2002 with the balance due on or before
September, 2002.

Gas-to-Liquids Activities

Spending on GTL projects during the first quarter
of 2002 was $0.6 million, a decrease of $0.4 million
over the $1.0 million spent during the first quarter of
2001. This decrease is due to the completion of technical and
commercial feasibility studies for both the Qatar and Egypt GTL
projects.

Technical and financial due diligence findings
have been presented to Qatar Petroleum and we are awaiting final
approval of our proposal by the Ministry of Energy and Industry
before commercial negotiations can commence. In Egypt, we are
currently developing a proposal to be presented to the Ministry
of Petroleum.

We have undertaken a commercialization study in
Japan to investigate the optimum commercial structure for
utilization of GTL and natural gas liquids products produced in
our planned Qatar project. The study will include identifying
the role that Japanese companies can play as purchasers of the
products, and suppliers of equipment, materials, services and
financing of the project.

Liquidity and Capital Resources:

Our 2002 capital expenditure budget is currently
$45.0 million, of which $25.0 million is allocated to our
exploration and development activities and an additional
$20.0 million is allocated to furthering our GTL
activities. Actual exploration and development expenditures in
California and Texas will be contingent upon our continued
drilling success at Northwest Lost Hills and Bossier as well as
the approval of our Overall Development Plan in Dagang. Actual
GTL expenditures will be contingent upon the successful outcome
of our negotiations in Qatar and Egypt.

Subsequent to quarter end we raised
$10.0 million through the issuance of Special Warrants.
Additional funding will be required to complete our planned 2002
capital program through a combination of equity, debt and joint
venture partner participation. We cannot assure you that we will
be successful in raising the additional funds necessary or
securing joint venture partners to complete our capital
programs. If we are unsuccessful, we will have to prioritize our
capital programs, which may result in delaying and potentially
losing some valuable business opportunities.

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Forward-Looking Statements

With the exception of historical information,
certain matters discussed in this Form 10-Q are forward
looking statements that involve risks and uncertainties.
Although the company believes that its expectations are based on
reasonable assumptions, it can give no assurance that its goals
will be achieved. Important factors that could cause actual
results to differ materially from those in the forward-looking
statements herein include, but are not limited to, the timing
and extent of changes in commodity prices for oil, gas and
electricity, competition, environmental risks, drilling and
operating risks, uncertainties about the estimates of reserves
and the potential success of gas-to-liquids technology, the
prices of goods and services, the availability of drilling rigs
and other support services, legislative and/or California Public
Utilities Commission decisions and government regulations.

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Part II.  Other
Information

Item 1.     Legal
Proceedings:None

Item 2.     Changes
in Securities and Use of Proceeds:None

Item 3.     Defaults
Upon Senior Securities:None

Item 4.     Submission
of Matters To a Vote of Securityholders:None

Item 5.     Other
Information:None

Item 6.     Exhibits
and Reports on Form 8-K:None







SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereto duly
authorized.



IVANHOE ENERGY INC.



By: /s/ John
OKeefe


Name: John OKeefe


|       |                                                         
|------ | --------------------------------------------------------
|Title: | Executive Vice-President and Chief Financial
    Officer



Dated: May 6, 2002

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