THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES Xcite Energy Limited ("Xcite Energy" or the "Company") (
1. Analysis of the pressure build up indicates a high permeability
formation of greater than 5 Darcies, with a reservoir pressure of
1630 psi at 3730 ft MDRT.
2. The well, as anticipated, demonstrated a high "skin" of 29,
consistent with an appraisal well with drilling damage, limited entry
perforations and a thick cemented zone due to bore hole washout
during drilling. This high skin value significantly impaired the
productivity of this vertical appraisal well.
3. Adjusting the "skin" to 5 for production well conditions, assuming
the use of a gravel packed 3000ft horizontal well 15ft from the top
of the formation and using a kv/kh ratio of 1, the forecast flow rate
from such a well in the reservoir would be circa 4,400 bopd with zero
water cut. This low skin value, which is achievable for a production
well using current technologies, demonstrates the expected
productivity in reservoir conditions.
Future Activities
Based on these well test results and the Schlumberger data review and
interpretation work, the Company believes that commercially viable
production rates are achievable through the application of horizontal well
technology coupled with appropriate artificial lift techniques, including
submersible pumps. The Company is now planning for the next phase of the
development process for the Bentley field, which will utilise EOR
techniques consistent with the qualities of the reservoir and
characteristics of the crude oil.
Following the success of the 9/3b-5 appraisal well, the Company is
re-processing the 3D seismic data over the Block to confirm the results of
its recent 3D interpretation, which indicated a material increase in STOIIP
compared to the 2D seismic.
In addition, the Company has commenced the planning and identification of
the optimum methodology for the future commercial development of the
Bentley field. As part of this work programme, the Company has commissioned
RPS Energy Canada Ltd to provide a revised Competent Person's Report.
Richard Smith, Chief Executive Officer of Xcite Energy, commented:
"The Company was extremely pleased with the outstanding success of the
9/3b-5 appraisal well and the work that has now been completed by
Schlumberger confirms our belief in the commercial potential of the Bentley
field, one of the largest undeveloped heavy oil fields in the North Sea.
"The forecast flow rate of over 4,000 bopd from a single production well
using current technologies means that we can proceed with the next phase of
the Bentley development within the Company's expected timescale. We look
forward to continued progress during the course of 2008."
Stephen Kew has reviewed and approved the technical information contained
within this press release in his capacity as a qualified person, as
required under the AIM rules. Stephen Kew is Head of Exploration and
Development at Xcite Energy and is an associate of the Institution of
Chemical Engineers and a member of the Society of Petroleum Engineers.
The TSX Venture Exchange does not accept responsibility for the adequacy or
accuracy of this release.
Editors' Notes
The Bentley heavy oil field is located on Block 9/3b (Licence P. 1078),
approximately 160km east of the Shetland Isles, in which Xcite Energy holds
100% working interest. Bentley has been drilled by three of the four
previous wells on Block 9/3b, being wells 9/3-1 (Amoco, 1977), 9/3-2A
(Conoco, 1983) and 9/3-4 (Conoco, 1986). The 9/3b-5 well is the fifth well
on the Block.
Glossary
"bopd" means barrels of oil per day.
"crude oil" means a mixture that consists mainly of pentanes and heavier
hydrocarbons, which may contain sulphur and other non-hydrocarbon
compounds, that is recoverable at a well from an underground reservoir and
that is liquid at the conditions that is recoverable at a well from an
underground reservoir and that is liquid at the conditions under which its
volume is measured or estimated. It does not include solution gas or
natural gas liquids.
"discovered resources" means those quantities of oil and gas estimated on a
given date to be remaining in, plus those quantities already produced from,
known accumulations. Discovered resources are divided into economic and
uneconomic categories, with the estimated future recoverable portion
classified as reserves and contingent resources, respectively.
"drill stem test" means a procedure for testing the surrounding geological
formation using specialised tubing.
"EOR" means enhanced oil recovery.
"field" means an area consisting of a single reservoir or multiple
reservoirs all grouped on or related to the same individual geological
structural feature and/or stratigraphic condition.
"heavy oil" means oil with API gravity of less than 22 degrees and
reservoir viscosity greater than 5 centipoise.
"kv/kh" means the relative permeability of the reservoir based on the
vertical permeability (kv) and the horizontal permeability (kh).
"MDRT" means measured depth (from the) rotary table.
"mmbbls" means million barrels.
"psi" means pounds per square inch pressure.
"reservoir" means a porous and permeable underground formation containing a
natural accumulation of producible oil or gas that is confined by
impermeable rock or water barriers and is individual and separate from
other reservoirs.
"skin" has no unit, but represents a measure of the inhibiting factor to
the flow of oil into the well bore compared with the flow of oil through
the reservoir under natural conditions, thereby directly affecting the
productivity of the well.
"STOIIP" means stock tank volume of oil initially-in-place.
"water cut" means the relative volume of water contained within the total
volume of fluids produced from the reservoir during production at any given
point in time.
Forward-Looking Statements
Certain statements contained in this announcement constitute
forward-looking information within the meaning of securities laws.
Forward-looking information may relate to the Company's future outlook and
anticipated events or results and, in some cases, can be identified by
terminology such as "may," "will," "should," "expect," "plan,"
"anticipate," "believe," "intend," "estimate," "predict," "target,"
"potential," "continue" or other similar expressions concerning matters
that are not historical facts. These statements are based on certain
factors and assumptions including expected growth, results of operations,
performance and business prospects and opportunities. While the Company
considers these assumptions to be reasonable based on information currently
available to us, they may prove to be incorrect. Forward-looking
information is also subject to certain factors, including risks and
uncertainties that could cause actual results to differ materially from
what we currently expect. These factors include changes in market and
competition, governmental or regulatory developments and general economic
conditions. Additional information identifying risks and uncertainties are
contained in Xcite Energy' prospectus filed with the Canadian securities
regulatory authorities, available at www.sedar.com. The Company does not
intend and does not assume any obligation to update these forward-looking
statements to reflect new information, subsequent events or otherwise,
except as required by law.
Contact Information: Enquiries: Xcite Energy +44 (0) 1330 826 740 Richard Smith Chief Executive Officer Rupert Cole Chief Financial Officer Thomas Weisel Partners (UK) Limited +44 (0) 20 7877 4472 Paul Colucci Managing Director Paul Newman Managing Director Strand Partners Ltd. +44 (0) 20 7409 3494 James Harris Director Warren Pearce Associate Director Pelham Public Relations +44 (0) 20 7743 6676 Alisdair Haythornthwaite Director Katherine Stewart Account Executive Lucy Frankland Account Executive