History
Ivanhoe Energy built a heavy-oil upgrading business across China, Canada and Ecuador, sold its China assets for about US$150M in 2012, then slid into bankruptcy in June 2015.
2004-2007: Buying a technology and a failed spin-out
Ivanhoe's story starts with a technology purchase. In December 2004 it agreed to buy Ensyn Group for US$10M cash plus about 30M shares, valued at roughly US$75M. The deal gave Ivanhoe Ensyn's patented heavy-oil upgrading technology, which became the company's core HTL (heavy-to-light) process. It closed in April 2005, with the cash paid and 30M shares issued. Ensyn's separate biomass and renewables business was spun out to its old shareholders beforehand.
In February 2006 Ivanhoe bought back the 40% of its Dagang enhanced-oil-recovery project in China that it had sold to CITIC Resources' Richfirst unit in 2004. It paid in shares plus a US$7.4M loan and took the project to 100%. In May 2006 it then agreed to combine its Sunwing China subsidiary with a blank-check company, China Mineral Acquisition Corporation, leaving Ivanhoe with about 80% of a separately listed China vehicle. That deal collapsed in September 2006 when the blank-check company missed its deadline and had to liquidate. The record for 2007 is quiet.
2008-2011: Oil sands, Ecuador and a convertible bond
In 2008 the company widened its focus. In June it agreed to buy Talisman Energy's interests in three Athabasca oil sands leases for about Cdn$105M. In July it closed a Cdn$88M special-warrant placement, largely to fund the purchase. It completed the deal that month, taking 100% of Leases 10 and 6 near Fort McMurray. It lost the third lease, Lease 50, when a third party exercised a right of first refusal. In October its Ecuadorian subsidiary signed a 30-year service contract with Petroecuador to develop the Pungarayacu heavy-oil field in Block 20 using the HTL technology.
In July 2009 Ivanhoe sold all its US exploration and production assets in California and Texas to Seneca Resources and Seneca South Midway for US$39.2M, keeping cash, certain receivables and the Bakersfield office. In January 2010 it raised up to Cdn$150M in its largest special-warrant placement to date, at Cdn$3.00 per warrant.
In June 2011 it sold 5.75% convertible debentures due 2016, mainly to repay a US$40M convertible note owed to Talisman. The offering raised just over Cdn$73M, including more than Cdn$23M from directors, officers and insiders.
2012-2013: Leaving China
In January 2012 Ivanhoe agreed in principle to sell its Zitong gas interest in China to Shell for up to US$160M. In March it took out a US$50M short-term secured loan from UBS, at 9-10%+ interest that rose each month, secured on its Tamarack oil sands leases. In May it received its first NASDAQ notice for trading below the US$1.00 minimum bid price. Its shares continued to trade in Toronto.
In October the Shell deal was signed at a reduced US$105M, made up of US$85M of cost reimbursement and US$20M on closing. In November Ivanhoe agreed to sell Pan-China Resources, which held the Dagang project, to MIE Holdings for US$45M cash. That sale closed in December 2012, less a US$4M holdback, and the Zitong sale closed ten days later. Together the two sales brought in roughly US$150M and ended Ivanhoe's presence in China. In September 2013 NASDAQ issued a second bid-price deficiency notice. The record for the rest of 2013 and most of 2014 is quiet.
2014-2015: Insider loans and bankruptcy
In October 2014 founder Robert Friedland, the largest shareholder, lent Ivanhoe US$2.2M, secured against nearly all its assets. He resigned from the board the same day to avoid a conflict of interest. A further US$540,000 followed in January 2015, and NASDAQ issued a third bid-price notice that month.
In February 2015 Ivanhoe and Petroamazonas mutually ended the Block 20 contract, after the company had scaled back Ecuador activity. The company also fell out of compliance with NASDAQ's audit committee rule after a director resigned. It missed the December 31, 2014 interest payment on its Cdn$73.3M debentures, and trustee Bank of New York Mellon declared an Event of Default and demanded the roughly Cdn$2.1M owed. Friedland lent another US$2.37M, bringing his secured loans to US$5.11M.
On February 26 Ivanhoe filed a notice of intention to make a proposal to creditors under Canada's Bankruptcy and Insolvency Act, with Ernst & Young as trustee. NASDAQ moved to delist the stock the same day. In March an Alberta court approved US$1M in debtor-in-possession financing from Friedland, taking his secured loans to US$6.11M. In May the court extended the deadline for a proposal to June 1, and the CFO announced his resignation.
No viable proposal was agreed by the deadline. As of June 2, 2015, Ivanhoe was deemed bankrupt as of 11:59pm on June 1, 2015.
Written from the 33 story beats below (2004 to 2 June 2015), which come from the company's own announcements and filings.