UNITED
    STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form
    10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to   Commission
    file number 000-30586
  
  IVANHOE ENERGY INC.
 (Exact name of registrant as
    specified in its charter)
  Yukon, Canada(State or other jurisdiction
    of
    incorporation or organization)

98-0372413(I.R.S. Employer
    Identification No.)Suite 654  999 Canada Place
    Vancouver, British Columbia, Canada(Address of principal
    executive office)

V6C 3E1(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
  12b-2
  Large accelerated
    filer o

Accelerated
    filer þNon-accelerated
    filer o (Do
    not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2
  o þ




---



##### 



TABLE OF
    CONTENTS
  
  PagePART I Financial InformationItem 1

Financial StatementsUnaudited Condensed Consolidated Balance Sheets
    as at March 31, 2008 and December 31, 2007


3Unaudited Condensed Consolidated Statements of
    Operations, Comprehensive Loss and Accumulated Deficit for the
    Three-Month Periods Ended March 31, 2008 and 2007


4Unaudited Condensed Consolidated Statements of
    Cash Flows for the Three-Month Periods Ended March 31, 2008
    and 2007


5Notes to the Unaudited Condensed Consolidated
    Financial Statements


6Item 2.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


29Item 4.

Controls and Procedures


30PART II Other InformationItem 1.

Legal Proceedings


31Item 1A.

Risk Factors


31Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


31Item 3.

Defaults Upon Senior Securities


31Item 4.

Submission of Matters to a Vote of Security
    Holders


31Item 5.

Other Information


31Item 6.

Exhibits


31    2




---



##### 



Part I 
    Financial Information Item 1  Financial
    Statements  IVANHOE
    ENERGY INC.
  Unaudited Condensed Consolidated Balance
    Sheets
   March 31,


December 31,2008


2007ASSETSCurrent Assets:Cash and cash equivalents

$
6,691


$
11,356Accounts receivable


10,523



9,376Advance


825



825Prepaid and other current assets


515



60218,554



22,159Oil and gas properties and development costs, net


109,031



111,853Intangible assets  technology


102,153



102,153Long term assets


1,338



751$
231,076


$
236,916LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued liabilities

$
9,356


$
9,538Debt  current portion


6,612



6,729Derivative instruments


11,430



9,43227,398



25,699Long term debt


9,448



9,812Asset retirement obligations


2,469



2,218Long term obligation


1,900



1,90041,215



39,629Commitments and contingenciesGoing concern and basis of presentationShareholders Equity:Share capital, issued and oustanding 244,873,349 common shares


324,262



324,262Purchase warrants


23,078



23,078Contributed surplus


11,055



9,937Accumulated deficit


(168,534
)


(159,990
)189,861



197,287$
231,076


$
236,916   (See accompanying notes)
 3




---



##### 



IVANHOE
    ENERGY INC.
  Unaudited Condensed Consolidated Statements of
    Operations,
 Comprehensive Loss and Accumulated Deficit
   Three MonthsEnded March 31,2008


2007RevenueOil and gas revenue

$
15,043


$
9,596Loss on derivative instruments


(3,946
)


(459
)Interest income


72



12011,169



9,257ExpensesOperating costs


5,392



3,685General and administrative


3,665



2,872Business and technology development


1,757



2,162Depletion and depreciation


8,366



6,892Interest expense and financing costs


533



19319,713



15,804Net Loss and Comprehensive Loss


(8,544
)


(6,547
)Accumulated Deficit, beginning of period


(159,990
)


(120,783
)Accumulated Deficit, end of period

$
(168,534
)

$
(127,330
)Net Loss per share  Basic and Diluted

$
(0.03
)

$
(0.03
)Weighted Average Number of Shares (in thousands)


244,873



241,231   (See accompanying notes)
 4




---



##### 



IVANHOE
    ENERGY INC.
  Unaudited Condensed Consolidated Statements of
    Cash Flows
   Three MonthsEnded March 31,2008


2007Operating ActivitiesNet loss and comprehensive loss

$
(8,544
)

$
(6,547
)Items not requiring use of cash:Depletion and depreciation


8,366



6,892Stock based compensation


1,118



802Unrealized loss on derivative instruments


1,998



666Other


191



169Changes in non-cash working capital items


(112
)


6123,017



2,594Investing ActivitiesCapital investments


(5,323
)


(5,334
)Proceeds from sale of assets






1,000Advance repayments






200Other


(30
)


75Changes in non-cash working capital items


(1,130
)


(1,006
)(6,483
)


(5,065
)Financing ActivitiesPayments of debt obligations


(615
)


(615
)Other


(584
)


(1,199
)


(615
)Decrease in cash and cash equivalents, for the period


(4,665
)


(3,086
)Cash and cash equivalents, beginning of period


11,356



13,879Cash and cash equivalents, end of period

$
6,691


$
10,793   (See accompanying notes)
  5




---



##### 



IVANHOE
    ENERGY INC.Notes to the Condensed Consolidated Financial
    StatementsMarch 31, 2008 (all
    tabular amounts are expressed in thousands of U.S. dollars
    except per share amounts)
    (Unaudited)
  1.
    GOING
    CONCERN AND BASIS OF PRESENTATION  Company Ivanhoe Energy GAAP
  tm
  2.
    CHANGES
    IN ACCOUNTING POLICIES  2008
    Accounting Changes  CICA S.1535 S.3862 S.3863
  Impact
    of New and Pending Canadian GAAP Accounting
    Standards  S.3064 S.3062
  Convergence
    of Canadian GAAP with International Financial Reporting
    Standards  AcSB IFRS
 6




---



##### 



3.
    OIL AND
    GAS PROPERTIES AND DEVELOPMENT COSTS    As at March 31, 2008Oil and GasU.S.


China


HTLtm


GTL


TotalOil and Gas Properties:Proved

$
109,718


$
136,220


$



$



$
245,938Unproved


4,386



3,851











8,237114,104



140,071











254,175Accumulated depletion


(28,539
)


(64,788
)










(93,327
)Accumulated provision for impairment


(50,350
)


(16,550
)










(66,900
)35,215



58,733











93,948HTLtm
and GTL Development Costs:Feasibility studies and other deferred costs










399



5,054



5,453Feedstock test facility










5,408







5,408Commercial demonstration facility










9,924







9,924Accumulated depreciation










(5,850
)






(5,850
)







9,881



5,054



14,935Furniture and equipment


534



119



108







761Accumulated depreciation


(455
)


(79
)


(79
)






(613
)79



40



29







148$
35,294


$
58,773


$
9,910


$
5,054


$
109,031
   As at December 31, 2007Oil and GasU.S.


China


HTLtm


GTL


TotalOil and Gas Properties:Proved

$
107,040


$
134,648


$



$



$
241,688Unproved


4,373



3,297











7,670111,413



137,945











249,358Accumulated depletion


(27,091
)


(58,583
)










(85,674
)Accumulated provision for impairment


(50,350
)


(16,550
)










(66,900
)33,972



62,812











96,784HTLtm
and GTL Development Costs:Feasibility studies and other deferred costs










389



5,054



5,443Feedstock test facility










4,724







4,724Commercial demonstration facility










9,903







9,903Accumulated depreciation










(5,159
)






(5,159
)







9,857



5,054



14,911Furniture and equipment


529



119



107







755Accumulated depreciation


(449
)


(77
)


(71
)






(597
)80



42



36







158$
34,052


$
62,854


$
9,893


$
5,054


$
111,853
       4.
    INTANGIBLE
    ASSETS  TECHNOLOGY    HTLtmTechnology  RTPtm
    Process tm
 7




---



##### 



value of the
    RTPtm Process for heavy oil upgrading
    (HTLtm Technology or
    HTLtm )
    as at March 31, 2008 and December 31, 2007 was
    $92.2 million. Since the Company acquired the technology,
    it has continued to expand its patent coverage to project
    innovations to the HTL
    Technologytm as they are developed and to significantly extend the
    Companys portfolio of HTL intellectual property. The
    Company has had two patents granted and has more than
    20 patents pending in its name.
  Syntroleum
    Master License  Syntroleum gas-to-liquids GTL Technology GTL
  tm
  5.
    LONG TERM
    DEBT    March 31,


December 31,2008


2007Variable rate bank note, (5.85%  7.83% at
    March 31, 2008), due 2008

$
4,500


$
4,500Variable rate bank note (9.338% at March 31, 2008) due
    2010


10,000



10,000Non-interest bearing promissory note, due 2006 through 2009


2,261



2,87616,761



17,376Less:Unamortized discount


(88
)


(139
)Unamortized deferred financing costs


(613
)


(696
)Current maturities


(6,612
)


(6,729
)(7,313
)


(7,564
)$
9,448


$
9,812
   Bank
    Loans  LIBOR
    Promissory
    Notes  Sunwing
  Demand
    Loan   8




---



##### 



2008

$
6,3452009


4162010


10,000$
16,761
   6.
    ASSET
    RETIREMENT OBLIGATIONS  tm CDF
  Carrying balance, beginning of period

$
2,218Liabilities incurred


218Accretion expense


33Carrying balance, end of period

$
2,469
   7.
    COMMITMENTS
    AND CONTINGENCIES  Zitong
    Block Exploration Commitment  CNPC Mitsubishi
  Zitong
    Partners Phase 2
  Long
    Term Obligation  tm
  Income
    Taxes    Other
    Commitments  Zeton FTF state-of-the-art tm
   9




---



##### 



8.
    SHARE
    CAPITAL AND WARRANTS    Common Shares





Stock OptionsWeighted AverageNumber





Contributed


Number


Exercise Price(thousands)


Amount


Surplus


(thousands)


Cdn.$Balance December 31, 2007


244,873


$
324,262


$
9,937



12,945


$
2.37Options:Granted










1,118



3,119


$
1.62Expired














(85
)

$
1.78Balance March 31, 2008


244,873


$
324,262


$
11,055



15,979


$
2.23
   Purchase
    Warrants      Purchase WarrantsPrice per







Common







ExerciseYear of


Special







Shares







Price per


Value onIssue


Warrant

Issued


Exercisable


Issuable


Value


Expiry Date

Share


Exercise(thousands)


($U.S. 000)







($U.S. 000)2005


Cdn. $3.10


4,100



4,100



4,100


$
2,412


(1)

Cdn. $
3.50


$
14,0882005


U.S. $1.63


10,996



10,996



10,996



1,861


(2)

U.S. $
2.50



27,4902006


U.S. $2.23


11,400



11,400



11,400



18,805


May 2011

Cdn. $
2.93
(3)


32,79226,496



26,496



26,496


$
23,078








$
74,370
     (1)
    In March 2007, the Company agreed that the warrants, which were
    to have expired on April 15, 2007, would be extended until
    the earlier of: (i) April 15, 2008; and
    (ii) thirty days following the date the closing trading
    price of the common shares of the Company on the Toronto Stock
    Exchange exceeds the exercise price of the warrants for a period
    of five consecutive trading days. These warrants expired
    unexercised on April 15, 2008.(2)
    In October 2007, the Company agreed that these warrants, which
    were to have expired in November 2007, would be extended until
    the earlier of: (i) six months from their original expiry
    date; and (ii) thirty days following the date the closing
    trading price of the common shares of the Company on the Toronto
    Stock Exchange exceeds the exercise price of the warrants for a
    period of five consecutive trading days. On
    May 4th,
    2008, 7,208,599 of these warrants expired unexercised and on
    May 9th,
    2008, 3,480,982 of these warrants expired unexercised. The
    remaining 306,749 warrants will expire on
    May 14th,
    2008 if not exercised by then.(3)
    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. 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  tm
  Oil
    and Gas   10




---



##### 



HTLtm  tm tm
  GTL    Corporate  .
    Three-Month Period Ended March 31, 2008Oil and GasU.S.


China


HTLtm


GTL


Corporate


TotalOil and gas revenue

$
4,155


$
10,888


$



$



$



$
15,043Loss on derivative instruments


(1,264
)


(2,682
)














(3,946
)Interest income


44



14











14



722,935



8,220











14



11,169Operating costs


1,082



4,310















5,392General and administrative


362



566











2,737



3,665Business and technology development










1,720



37







1,757Depletion and depreciation


1,456



6,206



700



3



1



8,366Interest expense and financing costs


148



324



10







51



5333,048



11,406



2,430



40



2,789



19,713Net Loss

$
(113
)

$
(3,186
)

$
(2,430
)

$
(40
)

$
(2,775
)

$
(8,544
)Capital Investments

$
2,483


$
2,125


$
715


$



$



$
5,323Identifiable Assets (As at March 31, 2008)

$
40,527


$
70,725


$
102,653


$
15,073


$
2,098


$
231,076Identifiable Assets (As at December 31, 2007)

$
40,726


$
73,298


$
102,456


$
15,073


$
5,363


$
236,916
   Three-Month Period Ended March 31, 2007Oil and GasU.S.


China


HTLtm


GTL


Corporate


TotalOil and gas revenue

$
2,711


$
6,885


$



$



$



$
9,596Loss on derivative instruments


(459
)


















(459
)Interest income


22



11











87



1202,274



6,896











87



9,257Operating costs


1,202



2,483















3,685General and administrative


388



407











2,077



2,872Business and technology development










2,017



145







2,162Depletion and depreciation


1,614



4,726



548



3



1



6,892Interest expense and financing costs


87



5



7







94



1933,291



7,621



2,572



148



2,172



15,804Net Loss

$
(1,017
)

$
(725
)

$
(2,572
)

$
(148
)

$
(2,085
)

$
(6,547
)Capital Investments

$
812


$
3,802


$
720


$



$



$
5,334
  11




---



##### 



10.
    FINANCIAL
    INSTRUMENTS AND FINANCIAL RISK FACTORS    As at March 31, 2008FinancialAvailable-for-





liabilitiesLoans and


sale financial


Held-for-


measured at


Total carryingreceivables


assets


trading


amortized cost


amountFinancial Assets:Cash and cash equivalents

$



$



$
6,691


$



$
6,691Accounts receivable


10,523















10,523Advance


825















825Financial Liabilities:Accounts payable and accrued liabilities














(9,356
)


(9,356
)Derivative instruments










(11,430
)






(11,430
)Long term debt














(16,060
)


(16,060
)$
11,348


$



$
(4,739
)

$
(25,416
)

$
(18,807
)
   As at December 31, 2007FinancialAvailable-for-





liabilitiesLoans and


sale financial


Held-for-


measured at


Total carryingreceivables


assets


trading


amortized cost


amountFinancial Assets:Cash and cash equivalents

$



$



$
11,356


$



$
11,356Accounts receivable


9,376















9,376Advance


825















825Financial Liabilities:Accounts payable and accrued liabilities














(9,538
)


(9,538
)Derivative instruments










(9,432
)






(9,432
)Long term debt














(16,541
)


(16,541
)$
10,201


$



$
1,924


$
(26,079
)

$
(13,954
)
   Financial
    Risk Factors    Market
    Risk    Commodity
    Price Risk         12




---



##### 



reduce the fair value, and
    consequently reduce the net loss, by approximately
    $4.4 million. The fair value change assumes volatility
    based on prevailing market parameters at March 31, 2008.
  Foreign
    Currency Exchange Rate Risk    Interest
    Rate Risk    Credit
    Risk  tm
  March 31,


December 31,2008


2007Accounts Receivable:Neither impaired nor past due

$
9,369


$
8,259Impaired (net of valuation allowance)






Not impaired and past due in the following periods:within 30 days


175



34731 to 60 days


243



61 to 90 days


19



4over 90 days


717



76610,523



9,376AdvanceNot impaired and past due over 90 days


825



825$
11,348


$
10,201
     Liquidity
    Risk   13




---



##### 



As at March 31, 2008


As at December 31, 2007Contractual Maturity


Contractual Maturity(Nominal Cash Flows)


(Nominal Cash Flows)Less than


1 to 2


2 to 5


Over 5


Less than


1 to 2


2 to 5


Over 51 year


years


years


years


1 year


years


years


yearsDerivative financial liabilities:Costless Collars  oil price commodity


8,250



3,180











7,156



2,276







Non derivative financial liabilities:Trade accounts payable


6,236















6,897











Accruals


3,120















2,641











Long term debt


7,740



1,130



10,325







8,240



1,541



10,277




     (i)
    Net amounts for costless collars for which net cash flows are
    exchanged.(ii)
    For floating rate instruments, the amount disclosed is
    determined by reference to the interest rate at the last
    re-pricing date.  11.
    CAPITAL
    MANAGEMENT  tm
        12.
    SUPPLEMENTAL
    CASH FLOW INFORMATION    2008


2007Supplemental Cash Flow Information:Cash paid during the period for:Income taxes

$
6


$
5Interest

$
366


$
34Changes in non-cash working capital itemsOperating Activities:Accounts receivable

$
(1,184
)

$
1,009Prepaid and other current assets


108



175Accounts payable and accrued liabilities


964



(572
)(112
)


612Investing ActivitiesAccounts receivable


37



(115
)Prepaid and other current assets


(21
)


50Accounts payable and accrued liabilities


(1,146
)


(941
)(1,130
)


(1,006
)$
(1,242
)

$
(394
)
    14




---



##### 



13.
    ADDITIONAL
    DISCLOSURE REQUIRED UNDER U.S. GAAP    Condensed
    Consolidated Balance Sheets  Shareholders
    Equity and Oil and Gas Properties and Development
    Costs  As at March 31, 2008Assets


Liabilities


Shareholders EquityOil and GasProperties and





ShareDevelopment


Derivative


Capital and


Contributed


AccumulatedCosts


Instruments


Warrants


Surplus


Deficit


TotalCanadian GAAP

$
109,031


$
11,430


$
347,340


$
11,055


$
(168,534
)

$
189,861Adjustments for:Reduction in stated
    capital (i)










74,455







(74,455
)


Accounting for stock based compensation
    (ii)










(396
)


(3,352
)


3,748



Fair value adjustment of warrants
    (iii)






8,953



(7,988
)


(564
)


(401
)


(8,953
)Ascribed value of shares issued for U.S. royalty interests, net
    (iv)


1,358







1,358











1,358Provision for
    impairment (v)


(25,990
)














(25,990
)


(25,990
)Depletion adjustments due to differences in provision for
    impairment
    (vi)


10,560















10,560



10,560HTLtm
and GTL development costs expensed,
(vii)


(5,667
)














(5,667
)


(5,667
)U.S. GAAP

$
89,292


$
20,383


$
414,769


$
7,139


$
(260,739
)

$
161,169
   As at December 31, 2007Assets


Liabilities


Shareholders EquityOil and GasProperties and





ShareDevelopment


Derivative


Capital and


Contributed


AccumulatedCosts


Instruments


Warrants


Surplus


Deficit


TotalCanadian GAAP

$
111,853


$
9,432


$
347,340


$
9,937


$
(159,990
)

$
197,287Adjustments for:Reduction in stated
    capital (i)










74,455







(74,455
)


Accounting for stock based compensation
    (ii)










(396
)


(3,352
)


3,748



Fair value adjustment of warrants
    (iii)






5,786



(7,988
)


(564
)


2,766



(5,786
)Ascribed value of shares issued for U.S. royalty interests, net
    (iv)


1,358







1,358











1,358Provision for
    impairment (v)


(25,990
)














(25,990
)


(25,990
)Depletion adjustments due to differences in provision for
    impairment
    (vi)


9,334















9,334



9,334HTLtm
and GTL development costs






















expensed,
    (vii)


(5,658
)














(5,658
)


(5,658
)U.S. GAAP

$
90,897


$
15,218


$
414,769


$
6,021


$
(250,245
)

$
170,545
   Shareholders
    Equity
  (i)
    In June 1999, the shareholders approved a reduction of stated
    capital in respect of the common shares by an amount of
    $74.5 million being equal to the accumulated deficit as at
    December 31, 1998. Under U.S. GAAP, a reduction of the
    accumulated deficit such as this is not recognized except in the
    case of a quasi reorganization. The effect of this is that under
    U.S. GAAP, share capital and accumulated deficit are increased
    by $74.5 million as at March 31, 2008 and
    December 31, 2007.(ii)
    For Canadian GAAP, the Company accounts for all stock options
    granted to employees and directors since January 1, 2002
    using the fair value based method of accounting. Under this
    method, compensation costs are recognized in the financial
    statements over the stock options vesting period using an
    option-pricing model for determining the fair value of the stock
    options at the grant date. For U.S. GAAP, prior to
    January 1, 2006 the Company applied APB Opinion
    No. 25, as interpreted by FASB Interpretation No. 44,
    in accounting for its stock option 15




---



##### 



plan and did not recognize
    compensation costs in its financial statements for stock options
    issued to employees and directors. This resulted in a reduction
    of $3.7 million in the accumulated deficit as at
    March 31, 2008, and December 31, 2007, equal to accumulated
    stock based compensation for stock options granted to employees
    and directors since January 1, 2002 and expensed through
    December 31, 2005 under Canadian GAAP.  FASB SFAS No. 123(R)
  (iii)
    The Company accounts for purchase warrants as equity under
    Canadian GAAP. As more fully described in our financial
    statements in Item 8 of our 2007 Annual Report filed on
    Form 10-K,
    in 2006, the accounting treatment of warrants under U.S. GAAP
    reflects the application of Statement of Financial Accounting
    Standard No. 133 Accounting for Derivative
    Instruments and Hedging Activities
    (SFAS No. 133). Under
    SFAS No. 133, share purchase warrants with an exercise
    price denominated in a currency other than a companys
    functional currency are accounted for as derivative liabilities.
    Changes in the fair value of the warrants are required to be
    recognized in the statement of operations each reporting period
    for U.S. GAAP purposes. At the time that the Companys
    share purchase warrants are exercised, the value of the warrants
    will be reclassified to shareholders equity for U.S. GAAP
    purposes. Under Canadian GAAP, the fair value of the warrants on
    the issue date is recorded as a reduction to the proceeds from
    the issuance of common shares, with the offset to the warrant
    component of equity. The warrants are not revalued to fair value
    under Canadian GAAP. This GAAP difference resulted in an
    increase in derivative instruments of $9.0 million and
    $5.8 million, a decrease in share capital and warrants of
    $8.0 million and a decrease in contributed surplus of
    $0.6 million at March 31, 2008 and December 2007.  Oil
    and Gas Properties and Investments  (iv)
    For U.S. GAAP purposes, the aggregate value attributed to the
    acquisition of U.S. royalty rights during 1999 and 2000 was
    $1.4 million higher, due to the difference between Canadian
    and U.S. GAAP in the value ascribed to the shares issued,
    primarily resulting from differences in the recognition of
    effective dates of the transactions.(v)
    There are certain differences between the full cost method of
    accounting for oil and gas properties as applied in Canada and
    as applied in the U.S. The principal difference is in the method
    of performing ceiling test evaluations under the full cost
    method of accounting rules. In the ceiling test evaluation for
    U.S. GAAP purposes, the Company limits, on a
    country-by-country
    basis, the capitalized costs of oil and gas properties, net of
    accumulated depletion, depreciation and amortization and
    deferred income taxes, to (a) the estimated future net cash
    flows from proved oil and gas reserves using period-end,
    non-escalated prices and costs, discounted to present value at
    10% per annum, plus (b) the cost of properties not being
    amortized (e.g. major development projects) and (c) the
    lower of cost or fair value of unproved properties included in
    the costs being amortized less (c) income tax effects
    related to the difference between the book and tax basis of the
    properties referred to in (b) and (c) above. If
    capitalized costs exceed this limit, the excess is charged as a
    provision for impairment. Unproved properties and major
    development projects are assessed on a quarterly basis for
    possible impairments or reductions in value. If a reduction in
    value has occurred, the impairment is transferred to the
    carrying value of proved oil and gas properties. The Company
    performed the ceiling test in accordance with U.S. GAAP and
    determined that for the three-month period ended March 31,
    2008 no impairment provision was required and no impairment
    provision was required under Canadian GAAP. The cumulative
    differences in the amount of impairment provisions between U.S.
    and Canadian GAAP were $26.0 million at March 31, 2008
    and December 31, 2007.(vi)
    The cumulative differences in the amount of impairment
    provisions between U.S. and Canadian GAAP resulted in a
    reduction in accumulated depletion of $10.6 million and
    $9.3 million as at March 31, 2008 and
    December 31, 2007.(vii)
    As more fully described in our financial statements in
    Item 8 of our 2007 Annual Report filed on
    Form 10-K,
    for Canadian GAAP, the Company capitalizes certain costs
    incurred for
    HTLtm
    and GTL projects subsequent to executing a memorandum of
    understanding to determine the technical and commercial
    feasibility of a project, including studies for the
    marketability for the projects products. If no definitive
    agreement is reached, then the projects capitalized costs,
    which are deemed to have no future value, are written down and
    charged to the results of operations with a corresponding
    reduction in
    HTLtm
    and GTL development costs. For U.S. GAAP, feasibility, marketing
    and related costs incurred prior to executing an
    HTLtm
    or GTL definitive agreement are considered to be research and
    development and are expensed as incurred. As at March 31,
    2008 and December 31, 2007, the Company capitalized
    $5.7 million for Canadian GAAP, which was expensed for U.S.
    GAAP purposes.  Deferred
    Financing Costs  Form 10-K,
 16




---



##### 



Condensed
    Consolidated Statements of Operations    Three-Month Periods Ended March 31,2008


2007Net


Net Loss


Net


Net LossLoss


Per Share


Loss


Per ShareCanadian GAAP

$
(8,544
)

$
(0.03
)

$
(6,547
)

$
(0.03
)Fair value adjustment of warrants
    (iii)


(3,167
)


(0.01
)


(2,192
)


(0.01
)Depletion adjustments due to differences in provision for
    impairment
    (viii)


1,226







1,303



0.01HTLtm
and GTL development costs expensed, net of write downs,
(ix)


(9
)










U.S. GAAP

$
(10,494
)

$
(0.04
)

$
(7,436
)

$
(0.03
)Weighted Average Number of Shares under U.S. GAAP (in thousands)






244,873







241,231
   (viii)
    As discussed under Oil and Gas Properties and
    Investments in this note, there is a difference in
    performing the ceiling test evaluation under the full cost
    method of the accounting rules between U.S. and Canadian GAAP.
    Application of the ceiling test evaluation under U.S. GAAP has
    resulted in an accumulated net increase in impairment provisions
    on the Companys U.S. and China oil and gas properties of
    $26.0 million as at March 31, 2008 and
    December 31, 2007. This net increase in U.S. GAAP
    impairment provisions has resulted in lower depletion rates for
    U.S. GAAP purposes and a reduction of $1.2 million and
    $1.3 million in the net losses for the three-month periods
    ended March 31, 2008 and 2007.(ix)
    As more fully described under Oil and Gas Properties and
    Investments in this note, for Canadian GAAP, feasibility,
    marketing and related costs incurred prior to executing an
    HTLtm
    or GTL definitive agreement are capitalized and are subsequently
    written down upon determination that a projects future
    value has been impaired. For U.S. GAAP, such costs are
    considered to be research and development and are expensed as
    incurred. For the three-month periods ended March 31, 2008
    and 2007, the Company expensed nil in excess of the Canadian
    GAAP write-downs during those corresponding periods.  Condensed
    Consolidated Statements of Cash Flow    Impact
    of New and Pending U.S. GAAP Accounting Standards  FASB SFAS No. 161
  SFAS No. 141(R) SFAS No. 160
  SFAS No. 157
    Level 1:
    Values based on unadjusted quoted prices in active markets that
    are accessible at the measurement date for identical assets or
    liabilities.Level 2:
    Values based on quoted prices in markets that are not active or
    model inputs that are observable either directly or indirectly
    for substantially the full term of the asset or liability. 17




---



##### 



Level 3:
    Values based on prices or valuation techniques that require
    inputs that are both unobservable and significant to the overall
    fair value measurement.      As at March 31, 2008Level 1


Level 2


Level 3


TotalDerivative instruments liabilities

$
8,953


$
11,430


$



$
20,383
    18




---



##### 



Item 2.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements
  Form 10-Q, Form 10-Q, tm gas-to-liquids
  Form 10-K.
  Form 10-K Form 10-K. Form 10-Q
  SPECIAL
    NOTE TO CANADIAN INVESTORS
  SEC Form 10-K, Form 10-Q CSA National Instrument
    51-101  Standards of Disclosure for Oil and Gas
    Activities Special Note
    to Canadian Investors Form 10-K.
   19




---



##### 



Form 10-Q,
  Boe

= barrel of oil equivalentBbl

= barrelMBbl

= thousand barrelsMMBbl

= million barrelsMboe

= thousands of barrels of oil equivalentBopd

= barrels of oil per dayBbls/d

= barrels per dayBoe/d

= barrels of oil equivalent per dayMboe/d

= thousands of barrels of oil equivalent per dayMBbls/d

= thousand barrels per dayMMBls/d

= million barrels per dayMMBtu

= million British thermal unitsMcf

= thousand cubic feetMMcf

= million cubic feetMcf/d

= thousand cubic feet per dayMMcf/d

= million cubic feet per day   equivalents
  www.ivanhoeenergy.com (604) 688-8323.
  Ivanhoe
    Energys Business
  RTPtm
    Process HTLtm
    Technology HTLtm EOR E&P gas-to-liquids GTL Technology GTL
  tm on-site tm tm tm
  tm tm
 20




---



##### 



tm .
  Corporate
    Strategy
  Importance
    of the Heavy Oil Segment of the Oil and Gas
    Industry
            Ivanhoes
    Value Proposition
  tm
  tm tm tm tm
  tm 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-light oil value
    differential.4.
    Relatively small minimum economic scale of operations suited for
    field upgrading and for smaller field developments.  tm
 21




---



##### 



tm
  Implementation
    Strategy
    tm CDF tm tm tm
    1.
    Build a portfolio of major
    HTLtm
    projects.  We will continue to deploy our
    personnel and our financial resources in support of our goal to
    capture opportunities for development projects utilizing our
    HTLtm
    Technology.2.
    Advance the technology.  Additional
    development work will continue as we advance the technology
    through the first commercial application and beyond.3.
    Enhance our financial position in anticipation of major
    projects.  Implementation of large projects
    requires significant capital outlays. We are refining our
    financing plans and establishing the relationships required for
    the development activities that we see ahead.4.
    Build internal capabilities in advance of major
    projects.  The
    HTLtm
    technical team, which includes our own staff and specialized
    consultants, including the inventors of the technology, has been
    expanded to add additional expertise in areas such as
    engineering, project management and business and project
    analysis and we are currently actively recruiting other new team
    members.5.
    Build the relationships that we will need for the
    future.  Commercialization of our technologies
    demands close alignment with partners, suppliers, host
    governments and financiers.  MENA Sunwing
  tm tm
 22




---



##### 



tm tm
  Executive
    Overview of 2008 Results
    Three-Month Periods Ended March 31,2008


2007Oil and gas revenue

$
15,043


$
9,596Net loss

$
(8,544
)

$
(6,547
)Net loss per share

$
(0.03
)

$
(0.03
)Average production (Boe/d)


1,907



2,035Net operating revenue per Boe

$
55.60


$
32.27Cash flow from operating activities

$
3,017


$
2,594Capital investments

$
5,323


$
5,334   Financial
    Results  Change in Net Loss
    Three-Month Periods Ended March 31,Favorable(Unfavorable)2008



Variances



2007Summary of Net Loss by Significant Components:Oil and Gas Revenues:

$
15,043








$
9,596Production volumes






$
(473
)Oil and gas prices







5,920Realized gain (loss) on derivative instruments


(1,948
)



(2,155
)



207Operating costs


(5,392
)



(1,707
)



(3,685
)General and administrative, less stock based compensation


(2,758
)



(599
)



(2,159
)Business and technology development, less stock based
    compensation


(1,546
)



527




(2,073
)Net interest


(346
)



(327
)



(19
)Unrealized loss on derivative instruments


(1,998
)



(1,332
)



(666
)Depletion and depreciation


(8,366
)



(1,474
)



(6,892
)Stock based compensation


(1,118
)



(316
)



(802
)Other


(115
)



(61
)



(54
)Net Loss

$
(8,544
)


$
(1,997
)


$
(6,547
)      23




---



##### 



Revenues and Operating Costs
    Three-Month Periods Ended March 31,Net Boes


Percentage2008


2007


ChangeChina:Dagang


119,828



120,676



(1
)%Daqing


5,143



5,640



(9
)%124,971



126,316



(1
)%U.S.:South Midway


43,677



51,773



(16
)%Spraberry


4,508



4,694



(4
)%Others


416



378



10
%48,601



56,845



(15
)%173,572



183,161



(5
)%           China
  
    Production Volumes    
    Operating Costs   24




---



##### 



Windfall Levy
  U.S.
  
    Production Volumes    
    Operating Costs    * *
    *
    Three-Month Periods Ended March 31,2008


2007China


U.S.


Total


China


U.S.


TotalNet Production:Boe


124,971



48,601



173,572



126,316



56,845



183,161Boe/day for the period


1,373



534



1,907



1,403



632



2,035Per Boe


Per BoeOil and gas revenue

$
87.12


$
85.49


$
86.67


$
54.51


$
47.69


$
52.39Field operating costs


16.95



16.06



16.71



14.78



14.72



14.76Production tax (U.S.) and Windfall Levy (China)


16.49



1.50



12.29



3.75



1.21



2.96Engineering and support costs


1.04



4.71



2.07



1.14



5.21



2.4034.48



22.27



31.07



19.67



21.14



20.12Net operating revenue


52.64



63.22



55.60



34.84



26.55



32.27Depletion


49.66



29.79



44.10



37.41



28.19



34.55Net revenue (loss) from operations

$
2.98


$
33.43


$
11.50


$
(2.57
)

$
(1.64
)

$
(2.28
)  25




---



##### 



General
    and Administrative
    2008 vs.2007Favorable (unfavorable) variances:Oil and Gas Activities:China

$
(159
)U.S.


26Corporate


(660
)(793
)Less: stock based compensation


194$
(599
)   China
    Corporate
    Business
    and Technology Development
    2008 vs.2007Favorable (unfavorable) variances:HTLtm

$
297GTL


108405Less: stock based compensation


122$
527     Net
    Interest
   26




---



##### 



Unrealized
    Loss on Derivative Instruments
    mark-to-market
  Depletion
    and Depreciation
    China
    Financial
    Condition, Liquidity and Capital Resources
  Sources
    and Uses of Cash
    Operating
    Activities
    Investing
    Activities
    tm
 27




---



##### 



Financing
    Activities
    Outlook
    for balance of 2008
  tm
  Contractual
    Obligations
    Payments Due by YearTotal


2008


2009


2010


2011


After 2011(stated in thousands of U.S. dollars)Consolidated Balance Sheets:Note payable  current portion


6,612



6,612















Long term debt


9,448











9,448







Asset retirement obligation


2,469







763











1,706Long term obligation


1,900







1,900











Other Commitments:






















Interest payable


3,136



1,129



1,130



877







Lease commitments


3,225



884



890



770



546



135Zitong exploration commitment


22,500



4,500



9,000



9,000







Total

$
49,290


$
13,125


$
13,683


$
20,095


$
546


$
1,841   Off
    Balance Sheet Arrangements
    Outstanding
    Share Data
   28




---



##### 



Quarterly
    Financial Data In Accordance With Canadian and U.S. GAAP
    (Unaudited)
  QUARTER ENDED2008


2007


20061st Qtr


4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr


2nd QtrTotal revenue

$
11,169


$
5,848


$
8,823


$
9,589


$
9,257


$
11,137


$
14,015


$
13,084Net loss:Canadian GAAP

$
(8,544
)

$
(18,849
)

$
(7,232
)

$
(6,579
)

$
(6,547
)

$
(11,323
)

$
(4,388
)

$
(4,405
)U.S. GAAP

$
(10,495
)

$
(16,094
)

$
(8,387
)

$
(1,211
)

$
(7,536
)

$
(18,255
)

$
(5,422
)

$
(2,329
)Net loss per share:Canadian GAAP

$
(0.03
)

$
(0.07
)

$
(0.03
)

$
(0.03
)

$
(0.03
)

$
(0.05
)

$
(0.02
)

$
(0.02
)U.S. GAAP

$
(0.04
)

$
(0.07
)

$
(0.01
)

$



$
(0.03
)

$
(0.08
)

$
(0.03
)

$
(0.01
)   tm
 Item 3.  Quantitative
    and Qualitative Disclosures About Market Risk  Commodity
    Price Risk
          Foreign
    Currency Exchange Rate Risk
   29




---



##### 



Interest
    Rate Risk
   Item 4.  Controls
    and Procedures  Rules 13a-15(e)
     30




---



##### 



Part II 
    Other Information Item 1.  Legal
    Proceedings:None Item 1A.  Risk
    Factors:As at March 31, 2008, there were no additional material
    risks and no material changes to the risk factors disclosed in
    our Annual Report on
    Form 10-K
    for the year ended December 31, 2007. Item 2.  Unregistered
    Sales of Equity Securities and Use of Proceeds:None Item 3.  Defaults
    Upon Senior Securities:None Item 4.  Submission
    of Matters To a Vote of Security Holders:None Item 5.  Other
    Information:None 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  31




---



##### 



SIGNATURE
      By:
    /s/  W.
    Gordon Lancaster      32




---



##### 



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  33