Ivanhoe Energy Sells China Block to MIE for $45m

Canadian heavy oil explorer Ivanhoe Energy has agreed to sell its Chinese subsidiary Pan-China Resources to Hong Kong explorer MIE for $45 million cash.

Hong Kong-listed MIE, which holds assets in China, the United States and Kazakhstan, will gain 100% of the foreign contractor's rights at Petrochina's Dagang production sharing contract in Hebei province, eastern China under the deal.

The block held 2.5 million barrels of proven and probable reserves as of 31 December 2011, according to GLJ Petroleum Consultants, with production running to between 800 and 900 barrels per day.

Toronto- and Nasdaq-listed, Calgary-based Ivanhoe Energy said it was offloading the asset as part of a drive to focus resources on patented technologies and high-growth potential heavy oil assets like its domestic Tamarack project and Block 20 in Ecuador.

It also wants to sell its other Chinese block Zitong in Sichuan province, which it gained in 2009 in a merger with PanAsian Petroleum.

MIE said it was buying a low-risk, oil-producing asset that would add to its China-focused portfolio which it claims is the largest independent onshore asset base in the country.

Wednesday's deal is expected to close within a month's time.