Ivory Energy Inc.
TSX VENTURE : IV

Ivory Energy Inc.

May 20, 2008 09:30 ET

Ivory Energy Inc.: Corporate Update of Operations

CALGARY, ALBERTA--(Marketwire - May 20, 2008) - Ivory Energy Inc. (TSX VENTURE:IV) announces its corporate update of operations. During 2007 and the first quarter of 2008, Ivory accomplished the following key goals:

Financing & Acquisitions: Ivory completed a $28.5 million convertible debenture financing in July, 2007 and purchased two private, heavy oil companies with operations in west-central Saskatchewan for $21.1 million in cash, 1.293 million common shares at $0.75 per share and 2.083 million units at $0.75 per unit. Total value of the proved plus probable reserves of the two companies was $35.759 million (net present value discounted at 10 percent, before tax). These producing properties included significant opportunities for further development and increases in both proved reserves and production rates.

Recompletions & Drilling results: Since July 2007, 28 wells were recompleted and/or reactivated while 19 wells underwent workovers with a 96 per cent success rate. After completing its work program in 2007, Ivory operated 82 wells capable of production of which 56 are currently oil producers and 26 are waiting to be restarted after spring break up. During December and January, Ivory participated in the drilling of an exploration well in west central Alberta. The well was cased. A gas zone tested commercial gas rates of 11.3 Mmcf over a 48 hour test period through various choke sizes. Ivory has a 10 per cent interest in this gas well and the section and a 20 per cent interest in two adjacent sections of land. The well is expected to be placed on production during the third quarter 2008.

Infrastructure construction: In order to commence secondary recovery in section 31-48-27W3M, Ivory initiated extending the existing pipeline and water injection system in section 6-49-27W3M to section 31-48-27W3M. Construction of this pipeline and water injection project was completed during March 2008. Ivory anticipates an increase in oil production over the next several months from both section 6 and 31, and in addition, significant savings in field operating expenses.

Reserves Report & Net Asset Value: Ivory increased its reserves on a proved plus probable basis, from 2.937 million barrels of oil equivalent evaluated at March 1, 2007 to 3.419 million barrels of oil equivalent evaluated at December 31, 2007. Proved reserves were increased from 1.944 million barrels of oil equivalent to 2.009 million barrels of oil equivalent. The independent reserve report by AJM Petroleum Consultants at December 31, 2007 assigned a reserve value of $64.77 million (net present value discounted at 10 per cent, before tax), an increase from $35.759 million at March 1, 2007 reserve reports. The increase in the value of reserves is attributable to well reactivation adding new reserves, expanding the Silverdale water flood area, and the increased forecasted oil price used in the reserve reports. The March 1, 2007 reports used a $40.55 per barrel price and the December 31, 2007 report used a $54.59 per barrel price. Ivory is presently receiving approximately $90 per barrel for its crude oil. Ivory's net asset value is $0.71 per share (basic), assuming debt of $33.14 million, undeveloped land of 5,580 net acres at an acquired cost of $834,000, $1.5 million value for 3-D seismic and 47.68 million basic shares outstanding.

Production results: Ivory's oil sales peaked during November 2007 at 850 boepd and declined to approximately 500 boepd during April due to water handling limitations and restriction of routine well maintenance as a result of spring break-up. In particular, there are 26 shut in oil wells waiting to be restarted and the previous water handling restrictions have been alleviated.

Outlook: Ivory's business plan contemplates significantly increasing production and reserves through recompletions, new drilling and water flooding on its Saskatchewan properties in 2008. Ivory has an inventory of 50 drilling locations and an additional 19 wells to be recompleted. Based on available capital, new oil production as a result of planned recompletions and new drilling, optimization and the newly completed water flood at Silverdale and new gas production from the west central Alberta gas well, Ivory's revised forecast for exit 2008 is 1,200 to 1,400 boepd. Ivory did not achieve the previously advised forecast due to capital being reallocated to infrastructure such as the pipeline, Silverdale 3-D seismic and the west central Alberta gas well which caused capital restraints for developing the Saskatchewan oil properties. Although these three projects prevented Ivory from achieving its original forecast, their long term effect on the growth of Ivory will be positive and accretive. Management remains committed to achieving the previously announced forecast but this will now take longer than first anticipated.

Boe or Boepd are barrels of oil equivalent or barrels of oil equivalent per day. Boes may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This news release contains statements concerning anticipated development activities on Ivory's properties. Although the Company believes that these forward-looking statements are reasonable, undue reliance should not be placed on them. The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of this release.

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