Dec. 21 (Bloomberg) -- Ivanhoe Energy Inc., a Canada-based oil producer, rose 11 percent after announcing what it called a “significant” natural-gas discovery in southwestern China.
Ivanhoe, based in Calgary, rose 29 cents to $2.83 at 4 p.m. on the Nasdaq Stock Market. The shares rose as much as 21 percent, the biggest intraday increase since Nov. 21, 2008.
The Yixin-2 test well flowed gas at rates up to 13 million cubic feet a day and averaged as much as 10 million cubic feet a day during the first 24 hours, the company said in a statement today. Ivanhoe’s Sunwing Energy subsidiary, under a contract with PetroChina Co., has a 90 percent stake in the 659,840-acre Zitong Block where it drilled the well.
“Demand for natural gas in China is continuing to outpace supply,” Sunwing Co-Chairman Robert Friedland said in today’s statement. “Now Sunwing Energy is in an excellent position to help supply this burgeoning market on very favorable commercial terms through an established collection and distribution system.”
A regional pipeline system reaches within four kilometers (2.5 miles) of the well and gas sells at a regulated price of about $5 per thousand cubic feet at the wellhead in China, Ivanhoe said in a Dec. 3 statement.
A successful test would be “transformative” and allow access to the rest of the block, Sunwing President Gerald Moench said in that statement.
The well was shut off while Sunwing and PetroChina evaluate the find, Ivanhoe said today.
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