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 June 30, 2001                        
|
| | or   
|
| | [   ] |  | 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(State or other jurisdiction of
incorporation or organization) |  | Not applicable(I.R.S. Employer
Identification No.)

9th Floor Waterfront Centre
200 Burrard Street
Vancouver, British Columbia, Canada
V6C 3L6(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: None

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    [   ]

The number of shares of the registrants capital stock outstanding as of June
30, 2001 was 127,881,029 Common Shares, no par value.

Page 1 of 11



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TABLE OF CONTENTS

| |                              |  |                                                                                                                                        |                                                                                       |                     |  |   |    |  | 
| | ---------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------- |  | - | -- |  | 
| |                              |  |                                                                                                                                        |                                                                                       | Page               
| |                              |  |                                                                                                                                        |                                                                                       |                    
| | PART I Financial Information
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| | Item 1                       |  |                                                                                                                                        |                                                                                       | Financial Statement | 
|
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| |                              |  | Condensed Consolidated Balance Sheets at June 30, 2001 (unaudited) and December 31, 2000                                               |                                                                                       |                     |  | 3 |   
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| |                              |  | Unaudited Condensed Consolidated Statements of Loss and Deficit for the Three Month and Six Month Periods Ended June 30, 2001 and 2000 |                                                                                       |                     |  | 4 |   
|
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| |                              |  | Unaudited Condensed Consolidated Statements of Cash Flow for the Three Month and Six Month Periods Ended June 30, 2001 and 2000        |                                                                                       |                     |  | 5 |   
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| |                              |  | Notes to the Unaudited Condensed Consolidated Financial Statements                                                                     |                                                                                       |                     |  | 6 |   
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| | Item 2                       |  |                                                                                                                                        | Management's Discussion and Analysis of Financial Condition and Results of Operations |                     |  |   | 7  | 
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| | PART II Other Information    | 
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| | Item 1                       |  |                                                                                                                                        | Legal Proceedings                                                                     |                     |  |   | 11 | 
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| | Item 2                       |  |                                                                                                                                        | Changes in Securities and Use of Proceeds                                             |                     |  |   | 11 | 
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| | Item 3                       |  |                                                                                                                                        | Defaults Upon Senior Securities                                                       |                     |  |   | 11 | 
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| | Item 4                       |  |                                                                                                                                        | Submission of Matters To a Vote of Securityholders                                    |                     |  |   | 11 | 
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| | Item 5                       |  |                                                                                                                                        | Other Information                                                                     |                     |  |   | 11 | 
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| | Item 6                       |  |                                                                                                                                        | Exhibits and Reports on Form 8-K                                                      |                     |  |   | 11 | 

Page 2 of 11



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Part I  Financial Information

Item 1 Financial Statements

IVANHOE ENERGY INC.
Condensed Consolidated Balance Sheets
(stated in thousands of U.S. Dollars)

|                                                                                                    |  |               |         |                   |  |   |        |  
|--------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- |  | - | ------ | -
|                                                                                                    |  | June 30, 2001 |         | December 31, 2000
|                                                                                                    |  |               |         |                  
|                                                                                                    |  | (unaudited)   |         | (audited)        
|Assets                                                                                             
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Current Assets
Cash                                                                                 |  | $             | 5,442   |                   |  | $ | 29,694 |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Accounts receivable                                                                                 |  |               | 3,137   |                   |  |   | 4,532  |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Other current assets                                                                                |  |               | 821     |                   |  |   | 872    |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|                                                                                                    |  |               | 9,400   |                   |  |   | 35,098 |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Long term assets                                                                                    |  |               | 198     |                   |  |   | 242    |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Property, Plant and Equipment                                                                       |  |               | 87,348  |                   |  |   | 64,460 |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|                                                                                                    |  | $             | 96,946  |                   |  | $ | 99,800 |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|Liabilities and Shareholders Equity                                                               
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Current Liabilities
Accounts payable and accrued liabilities                                        |  | $             | 4,497   |                   |  | $ | 2,951  |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Convertible debentures                                                                              |  |               | 1,000   |                   |  |   | 1,000  |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|                                                                                                    |  |               | 5,497   |                   |  |   | 3,951  |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|Provision for site restoration                                                                      |  |               | 60      |                   |  |   | 11     |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|Shareholders Equity
Share capital, issued 127,881,000
common shares; December 31, 2000 126,874,000 |  |               | 101,618 |                   |  |   | 98,211 |  
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Deficit                                                                                             |  |               | (10,229 | )                 |  |   | (2,373 | )
|                                                                                                    |  |               |         |                   |  |   |        |  
|                                                                                                    |  |               | 91,389  |                   |  |   | 95,838 |  
|                                                                                                    |  |               |         |                   |  |   |        |  
|                                                                                                    |  | $             | 96,946  |                   |  | $ | 99,800 |  
|                                                                                                    |  |               |         |                   |  |   |        |  

(see accompanying notes)

Page 3 of 11



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IVANHOE ENERGY INC.

Unaudited Condensed Consolidated Statements of
Loss and Deficit
(stated in thousands of U.S. Dollars)

|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|------------------------------------------------ |  | -------------- | ------- | -------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                 |  | Three Months   |         | Six Months    
|                                                 |  | Ended June 30, |         | Ended June 30,
|                                                 |  |                |         |               
|                                                 |  | 2001           |         | 2000           |  | 2001 |         | 2000
|                                                 |  |                |         |                |  |      |         |     
|Revenue                                         
|                                                
|                                                
|                                                
|                                                
|Petroleum revenue                                |  | $              | 2,278   |                |  | $    |        |      |  | $ | 4,433   |  |  | $ |        | 
|                                                
|                                                
|                                                
|                                                
|Interest income                                  |  |                | 138     |                |  |      | 66      |      |  |   | 486     |  |  |   | 185     | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|                                                 |  |                | 2,416   |                |  |      | 66      |      |  |   | 4,919   |  |  |   | 185     | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|Expenses                                        
|                                                
|                                                
|                                                
|                                                
|Operating costs                                  |  |                | 1,073   |                |  |      |        |      |  |   | 2,015   |  |  |   |        | 
|                                                
|                                                
|                                                
|                                                
|Project identification costs                     |  |                | 2,065   |                |  |      | 1,015   |      |  |   | 3,452   |  |  |   | 1,698   | 
|                                                
|                                                
|                                                
|                                                
|General and administrative                       |  |                | 805     |                |  |      | 1,214   |      |  |   | 1,389   |  |  |   | 2,490   | 
|                                                
|                                                
|                                                
|                                                
|Depletion and depreciation                       |  |                | 436     |                |  |      | 7       |      |  |   | 919     |  |  |   | 22      | 
|                                                
|                                                
|                                                
|                                                
|Provision for impairment                         |  |                | 5,000   |                |  |      |        |      |  |   | 5,000   |  |  |   |        | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|                                                 |  |                | 9,379   |                |  |      | 2,236   |      |  |   | 12,775  |  |  |   | 4,210   | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|Net Loss                                         |  |                | 6,963   |                |  |      | 2,170   |      |  |   | 7,856   |  |  |   | 4,025   | 
|                                                
|                                                
|                                                
|                                                
|Deficit, beginning of period                     |  |                | 3,266   |                |  |      | 9,657   |      |  |   | 2,373   |  |  |   | 7,802   | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|Deficit, end of period                           |  | $              | 10,229  |                |  | $    | 11,827  |      |  | $ | 10,229  |  |  | $ | 11,827  | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|Net Loss per Share                               |  | $              | 0.05    |                |  | $    | 0.02    |      |  | $ | 0.06    |  |  | $ | 0.03    | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 
|Weighted Average Number of Shares (in thousands) |  |                | 127,319 |                |  |      | 117,690 |      |  |   | 127,159 |  |  |   | 116,241 | 
|                                                 |  |                |         |                |  |      |         |      |  |   |         |  |  |   |         | 

(see accompanying notes)

Page 4 of 11



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IVANHOE ENERGY INC.

Unaudited Condensed Consolidated Statements of
Cash Flow
(stated in thousands of U.S. Dollars)

|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|----------------------------------------------------- |  | -------------- | ------- | -------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                      |  | Three Months   |         | Six Months    
|                                                      |  | Ended June 30, |         | Ended June 30,
|                                                      |  |                |         |               
|                                                      |  | 2001           |         | 2000           |  | 2001 |        | 2000
|                                                      |  |                |         |                |  |      |        |     
|Operating Activities                                 
|                                                     
|                                                     
|                                                     
|                                                     
|Net loss                                              |  | $              | (6,963  | )              |  | $    | (2,170 | )    |  | $ | (7,856  | ) |  | $ | (4,025  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Items not requiring use of cash                      
|                                                     
|                                                     
|                                                     
|                                                     
|Gain on sale of equipment                             |  |                |        |                |  |      | (15    | )    |  |   |        |   |  |   | (15     | )
|                                                     
|                                                     
|                                                     
|                                                     
|Depletion and depreciation                            |  |                | 436     |                |  |      | 7      |      |  |   | 919     |   |  |   | 22      |  
|                                                     
|                                                     
|                                                     
|                                                     
|Provision for impairment                              |  |                | 5,000   |                |  |      |        |      |  |   | 5,000   |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                      |  |                | (1,527  | )              |  |      | (2,178 | )    |  |   | (1,937  | ) |  |   | (4,018  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Changes in non-cash working capital items             |  |                | 3,455   |                |  |      | (439   | )    |  |   | 3,192   |   |  |   | 1,044   |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                      |  |                | 1,928   |                |  |      | (2,617 | )    |  |   | 1,255   |   |  |   | (2,974  | )
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|Investing Activities                                 
|                                                     
|                                                     
|                                                     
|                                                     
|Capital expenditures                                  |  |                | (13,627 | )              |  |      | (8,272 | )    |  |   | (25,779 | ) |  |   | (13,086 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Recovery from Tura                                    |  |                |        |                |  |      | 476    |      |  |   |        |   |  |   | 766     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Change in long term assets                            |  |                |        |                |  |      |       |      |  |   | 44      |   |  |   | 2       |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                      |  |                | (13,627 | )              |  |      | (7,796 | )    |  |   | (25,735 | ) |  |   | (12,318 | )
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|Financing Activities                                 
|                                                     
|                                                     
|                                                     
|                                                     
|Shares issued on private placements                   |  |                |        |                |  |      | (36    | )    |  |   |        |   |  |   | 14,014  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Shares issued on exercise of warrants and options     |  |                | 41      |                |  |      | 8,229  |      |  |   | 228     |   |  |   | 8,300   |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                      |  |                | 41      |                |  |      | 8,193  |      |  |   | 228     |   |  |   | 22,314  |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|Increase (decrease) in cash for the period            |  |                | (11,658 | )              |  |      | (2,220 | )    |  |   | (24,252 | ) |  |   | 7,022   |  
|                                                     
|                                                     
|                                                     
|                                                     
|Cash, beginning of period                             |  |                | 17,100  |                |  |      | 11,879 |      |  |   | 29,694  |   |  |   | 2,637   |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|Cash, end of period                                   |  | $              | 5,442   |                |  | $    | 9,659  |      |  | $ | 5,442   |   |  | $ | 9,659   |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|Supplementary Information                            
|                                                     
|                                                     
|                                                     
|                                                     
|Regarding Non-Cash Transactions                      
|                                                     
|                                                     
|                                                     
|                                                     
|Investing Activities                                 
|                                                     
|                                                     
|                                                     
|                                                     
|Overriding Royalty Rights                             |  | $              | 2,978   |                |  | $    |       |      |  | $ | 2,978   |   |  | $ | 917     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Accounts Receivable                                   |  |                | 200     |                |  |      |       |      |  |   | 200     |   |  |   |        |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                      |  | $              | 3,178   |                |  | $    |       |      |  | $ | 3,178   |   |  | $ | 917     |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|Financing Activities                                 
|                                                     
|                                                     
|                                                     
|                                                     
|Share capital issued                                  |  | $              | 3,178   |                |  | $    |       |      |  | $ | 3,178   |   |  | $ | 917     |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|Included in the above are the following:             
|                                                     
|                                                     
|                                                     
|                                                     
|Interest paid                                         |  | $              | 8       |                |  | $    | 28     |      |  | $ | 16      |   |  | $ | 59      |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|Decrease (increase) in non-cash working capital items
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Accounts Receivable                                   |  | $              | (9      | )              |  | $    | (440   | )    |  | $ | 1,595   |   |  | $ | 267     |  
|Other current assets                                  |  |                | 1,073   |                |  |      | 259    |      |  |   | 51      |   |  |   | 119     |  
|Accounts payable and accrued liabilities              |  |                | 2,391   |                |  |      | (258   | )    |  |   | 1,546   |   |  |   | 658     |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  
|                                                      |  | $              | 3,455   |                |  | $    | (439   | )    |  | $ | 3,192   |   |  | $ | 1,044   |  
|                                                      |  |                |         |                |  |      |        |      |  |   |         |   |  |   |         |  

(see accompanying notes)

Page 5 of 11



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Notes to the Condensed Consolidated Financial Statements
June 30, 2001
(all amounts expressed in thousands of United States dollars)
(Unaudited)



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The unaudited condensed consolidated financial statements have been
prepared on a basis consistent with the accounting principles and policies
reflected in the December 31, 2000 consolidated financial statements. The
December 31, 2000 Form 10-K should be read in conjunction herewith. The
December 31, 2000 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 June 30, 2001 and
December 31, 2000 and the results of operations and cash flows for the
three month and six month periods ended June 30, 2001 and 2000 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 condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) in
Canada which conform in all material respects to GAAP in the U.S. except:



| |  | The amount reported for property, plant and equipment and
share capital, as at June 30, 2001 and December 31, 2000, would each
be increased by $1,358 to reflect the ascribed value, under U.S.
GAAP, placed on shares issued to acquire royalty rights. This
adjustment has no impact on operations or cash flows presented.                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Deficit and share capital, as presented at June 30, 2001 and
December 31, 2000, would each be increased by $74,455 to reflect a
transfer of deficit to share capital in 1999, which is not
recognized under U.S. GAAP.                                                                                                                                                                                                                                                                                                    
|
| |  | The weighted average number of shares outstanding for the
three month and six month periods ended June 30, 2000 would be
decreased to 109,394,000 and 106,850,000 respectively, to reflect
the balance of shares held in escrow, during that period, in
connection with the Companys IPO in 1997. There is no material
change in the earnings per share, under US GAAP, from that reported
for the three month and six month periods ended June 30, 2000. The
balance of shares held in escrow was released in June 2000.

Page 6 of 11



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3. Segmented information is as follows:

|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|-------------------------------------------- |  | ------------------------------ | ------ | ----- |  | ----- | ------ |  |  | - | ------ | -
|                                             |  | Six
Months Ended June 30, 2001
|                                             |  |                               
|                                             |  | United                        
|                                             |  | States                         |        | China |  | Total
|                                             |  |                                |        |       |  |      
|Petroleum revenue                            |  | $                              | 2,517  |       |  | $     | 1,916  |  |  | $ | 4,433  |  
|                                            
|                                            
|                                            
|                                            
|Interest income                              |  |                                | 486    |       |  |       |       |  |  |   | 486    |  
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|                                             |  |                                | 3,003  |       |  |       | 1,916  |  |  |   | 4,919  |  
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|Operating costs                              |  |                                | 1,013  |       |  |       | 1,002  |  |  |   | 2,015  |  
|                                            
|                                            
|                                            
|                                            
|Depletion and depreciation                   |  |                                | 851    |       |  |       | 68     |  |  |   | 919    |  
|                                            
|                                            
|                                            
|                                            
|Provision for impairment                     |  |                                | 5,000  |       |  |       |       |  |  |   | 5,000  |  
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|                                             |  |                                | 6,864  |       |  |       | 1,070  |  |  |   | 7,934  |  
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|Segmented income (loss) before the following |  | $                              | (3,861 | )     |  | $     | 846    |  |  |   | (3,015 | )
|                                             |  |                                |        |       |  |       |        | 
|Project identification costs                 |  |                                |        |       |  |       |        |  |  |   | (3,452 | )
|                                            
|                                            
|                                            
|                                            
|General and administrative                   |  |                                |        |       |  |       |        |  |  |   | (1,389 | )
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|                                            
|                                            
|                                            
|                                            
|Net Loss                                     |  |                                |        |       |  |       |        |  |  | $ | (7,856 | )
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|Identifiable Assets                         
|                                            
|                                            
|                                            
|                                            
|Oil & Gas                                    |  | $                              | 56,128 |       |  | $     | 25,214 |  |  | $ | 81,343 |  
|                                             |  |                                |        |       |  |       |        | 
|Gas-to-liquids                               |  |                                |        |       |  |       |        |  |  |   | 15,603 |  
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  
|                                             |  |                                |        |       |  |       |        |  |  | $ | 96,946 |  
|                                             |  |                                |        |       |  |       |        |  |  |   |        |  

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, 2000, 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

Petroleum revenues for the three month and six month periods ended June 30,
2001 were $2.3 million and $4.4 million respectively. No petroleum revenue was
recorded during the comparable periods in 2000. For the quarter ended June 30,
2001 the loss was $7.0 million ($0.05 per share) compared to a loss of $2.2
million ($0.02) for the second quarter of 2000. Our net loss for the six
months ended June 30, 2001 amounted to $7.9 million ($0.06 per share), compared
to a net loss of $4.0 million ($0.03 per share) during the same period of 2000.
The loss for the three month and six month periods ended June 30, 2001 include
a provision for impairment resulting from a comparison of depletable
capitalized oil and gas costs, which include costs associated with drilling
non-commercial wells, with the recoverable value of proved reserves for our US
properties.

Production

In the U.S. we commenced production at South Midway Sunset and Spraberry during
the latter half of 2000. In China during 2000 our projects were still in the
evaluation stage and as a consequence all revenue earned was credited to our
project costs. With the decision in 2001 to proceed to the overall development
on both Chinese projects, all

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revenue earned on our pilot wells is now recorded as income, at Dagang
effective January 1, 2001, and at Daqing, effective March 1, 2001.

Production and operating information for the three month and six month periods
ended June 30, 2001 is detailed below. Operating costs, engineering support
costs and depletion continue to be high due to the early development stage in
all the properties. BOE represents barrels of oil equivalent.

|                             |  |               |        |       |  |       |        |  |                  |   |         |  |  |   |        | 
|---------------------------- |  | ------------- | ------ | ----- |  | ----- | ------ |  | ---------------- | - | ------- |  |  | - | ------ | 
|                             |  | Six Months   
|                             |  |              
|                             |  | United States |        | China |  | Total |        |  | ThreeMonthsTotal |  
|                             |  |               |        |       |  |       |        | 
|Net Production:             
|                            
|                            
|                            
|                            
|BOE                          |  |               | 97,100 |       |  |       | 76,341 |  |                  |   | 173,441 |  |  |   | 91,221 | 
|                            
|                            
|                            
|                            
|BOE/day                      |  |               | 536    |       |  |       | 422    |  |                  |   | 958     |  |  |   | 1,002  | 
|                            
|                            
|                            
|                            
|                            
|                             |  | Per BOE      
|                             |  |              
|Petroleum revenue            |  | $             | 25.92  |       |  | $     | 25.09  |  |                  | $ | 25.56   |  |  | $ | 24.97  | 
|                             |  |               |        |       |  |       |        |  |                  |   |         |  |  |   |        | 
|Operating costs              |  |               | 6.85   |       |  |       | 9.62   |  |                  |   | 8.06    |  |  |   | 8.00   | 
|                            
|                            
|                            
|                            
|Production taxes             |  |               | 1.39   |       |  |       |       |  |                  |   | 0.78    |  |  |   | 1.04   | 
|                            
|                            
|                            
|                            
|Engineering support          |  |               | 2.19   |       |  |       | 3.51   |  |                  |   | 2.77    |  |  |   | 2.72   | 
|                             |  |               |        |       |  |       |        |  |                  |   |         |  |  |   |        | 
|                             |  |               | 10.43  |       |  |       | 13.13  |  |                  |   | 11.62   |  |  |   | 11.76  | 
|                             |  |               |        |       |  |       |        |  |                  |   |         |  |  |   |        | 
|Net Revenue before depletion |  |               | 15.49  |       |  |       | 11.97  |  |                  |   | 13.94   |  |  |   | 13.21  | 
|                            
|                            
|                            
|                            
|Depletion                    |  |               | 8.26   |       |  |       | 0.89   |  |                  |   | 5.02    |  |  |   | 4.62   | 
|                             |  |               |        |       |  |       |        |  |                  |   |         |  |  |   |        | 
|Net Revenue from operations  |  | $             | 7.23   |       |  | $     | 11.08  |  |                  | $ | 8.92    |  |  | $ | 8.59   | 
|                             |  |               |        |       |  |       |        |  |                  |   |         |  |  |   |        | 

Provision for Impairment

We follow the full cost method of accounting for oil and gas operations whereby
all exploration and development expenditures are capitalized on a
country-by-country cost center basis.

In our US cost center, Spraberry and South Midway Sunset are the only projects
where we presently have proved reserves. Both projects commenced in late 2000
and with the passage of time we continue to learn additional information as to
the reservoirs and their production capabilities.

South Midway Sunset continues to perform as anticipated and we are optimistic
that through the application of cyclic steam injection technology we will add
substantial recoverable reserves, which we currently have classified as
probable.

At Spraberry, since the beginning of the year, the developed wells have been
producing at rates lower than was originally anticipated. It is estimated that
these lower production levels, when factored over the life of the Spraberry
project, will result in lower estimated reserves. Production netbacks are also
very sensitive to both commodity prices and operating costs. The decline in proved reserves and
natural gas prices during the second quarter of 2001 has reduced the estimated
value of the recoverable reserves.

Both projects continue to provide positive returns. However, the estimated
recoverable value of our proved reserves, at current unescalated prices, will
not recover the costs associated with our evaluated prospects in our US cost
center. As a consequence, we have recorded a $5 million impairment provision
during the second quarter, which is

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primarily attributable to the costs
associated with our unsuccessful exploration wells drilled in the US in 2000
and 2001. This includes non-commercial test results for wells drilled at Magic
Mountain, Belgian Anticline and Oro Fino, in California, and our Flaugher #1
well, in Eastern Kentucky.

Project Identification Costs

We incurred $3.5 million pursuing and investigating new projects during the
first six months of 2001, an increase of $1.8 million over the same period in
2000. Expenditures increased during the latter half of 2000 and are continuing
in to 2001 with our increased activity in China and investigation of new
opportunities in the US and internationally, and the search for potential
gas-to-liquids (GTL) project sites.

General and Administrative Costs

General and administrative costs during the six months ended June 30, 2001
amounted to $1.4 million down $1.1 million from the $2.5 million incurred
during the same period in 2000. In 2000, substantial legal costs were incurred
associated with preparation for litigation on our Russian properties dispute.
This dispute was satisfactorily resolved in August 2000.

Exploration and Development Activities

Exploration and development spending during the six month period ended June 30,
2001 was $25.8 million, an increase of $12.7 million over the $13.1 million
spent during the first half of 2000. Of our expenditures for the six month
period ended June 30, 2001, $20.1 million was expended in the US, $3.7 million
in China and $2.0 million for GTL.

This expended amount in the US includes our continuing development of our
Spraberry and South Midway Sunset fields, preparation and evaluation for our
announced well at North West Lost Hills, costs associated with our gas plays in
East Texas, and Kentucky, and exploration drilling. Drilling in the US
included 15 successful development wells and 6 exploration wells. Of the six
exploration wells, two are potential gas discoveries and are currently being
tested, the remaining four were tested non-commercial and abandoned.

In China our final pilot test well at Dagang was completed during early 2001
and preparation of our development plan has commenced. Late in the first
quarter we entered into agreements with Petro-China to begin evaluating a major
natural gas project in Chinas, southwest, Sichuan Province, for the purposes
of entering into production sharing contracts. Evaluation on three exploration
and development blocks, covering more than 2.2 million acres, commenced during
the second quarter.

Gas-to-Liquids

Approximately $2.0 million was expended during the first six months of 2001
finalizing feasibility studies and plans for two large GTL projects, which are
currently under negotiation.

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Liquidity and Capital Resources:

In 2001, we commenced an aggressive capital expenditure program. For the six
months ended June 30, 2001 we expended $24 million for property acquisition,
drilling and development of our oil and gas programs and $1.8 million for GTL
activities. During 2001, we have been successful in acquiring the rights to
significant exploration acreage in the US, continued our development of our
properties at Spraberry, South Midway Sunset and in China, and identified and
commenced negotiations on two major GTL projects. Additional funding required
during 2001, to continue our capital program, is scheduled to be raised through
a combination of financing 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 carry out our entire program. If we are
unsuccessful, we will have to prioritize our activities, which may result in
delaying and potentially losing some valuable business opportunities.

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.

Page 10 of 11



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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:



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | May 7, 2001, News Release  announcing scheduling of
high-profile California gas well in the San Joaquin Basin.



| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | June 25, 2001  update on exploration and production
initiatives in the San Joaquin Basin.

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:  August 13, 2001

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