Ivanhoe said oil and gas production had commenced at their Citrus #1 well in Lost Hills with production rates at 210 barrels of 34 degree API oil per day and 195 Mcf of gas per day from an Antelope Shale formation of Upper Miocene age, an important producing zone in offsetting wells.

The Ivanhoe discovery extends the southern productive area of the large Lost Hills field into Orchard's prospect area. Orchard and Nahabedian Exploration Group each hold a 50% interest in over 5,000 acres immediately adjacent to the Ivanhoe Energy discovery.

A new well site is currently being planned and it is anticipated the first well on the Lost Hills acreage will spud early in the second quarter 2004.

The Lost Hills field is in California's prolific San Joaquin Basin where Chevron Texaco has approximately 800 active producers on over 3,100 acres of the Lost Hills field with 16,000 bopd production and 156 million barrels of cumulative oil recovery to date.

Besides Ivanhoe's production from the one important producing zone at Citrus #1, the discovery also identified the presence of five multiple oil zones, all potentially productive intervals that do produce in offsetting wells.

Orchard's prospect also has a secondary objective in the Stevens Sandstone that is quite large but higher risk. This objective with reserves potential in the tens of millions of barrels will also be tested in the planned exploration well.

"The Ivanhoe discovery is highly significant for our soon to be drilled Lost Hills well. The productive trends of the large Lost Hills field have clearly been extended right up to our acreage position," Orchard executive director Stephen Warrener.