UPDATE 1-Ivanhoe Energy starts drilling at Yixin-2 well in China

* Plans to test the well in next six months

* To spend $8.5 mln on drilling

Aug 25 (Reuters) - Canadian heavy oil producer Ivanhoe Energy Inc (IE.TO) said it started drilling at a natural gas well located in the Zitong gas exploration block in China and plans to test the well in six months.

Ivanhoe, which is also drilling Zitong-1 well in the same block in Sichuan province, said it plans to reach total depth of 4,200 metres for the new Yixin-2 well and spend about $8.5 million on it.

"Yixin-2 is targeting gas in fractured reservoir formations similar to those that have led to enormous gas developments in various tight gas projects in North America," the company said in a statement.

Ivanhoe, which is drilling these wells through its unit Sunwing Energy Ltd, said the Zitong-1 and Yixin-2 wells are targeting structures with natural gas potential in the range of 0.3-0.5 trillion cubic feet.

Shares of the Calgary, Alberta-based company have fallen about 60 percent in the past five months, after reaching a 52-week high of C$3.94 in March. They closed at C$1.60 Tuesday on the Toronto Stock Exchange. (Reporting by Ashutosh Joshi in Bangalore; Editing by Maju Samuel)