SOURCE: Xcite Energy Ltd

August 19, 2010 15:42 ET

Xcite Announces Fundraising for Enhanced Bentley Work Programme

LONDON--(Marketwire - August 19, 2010) -  THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES

Xcite Energy Limited ("Xcite" or the "Company") (TSX-V: XEL) (LSE: XEL) (AIM: XEL) notes the recent press comments in relation to a potential placing of shares in the Company. Xcite, a developer of heavy oil assets in the UK North Sea, is pleased to announce an enhanced 9/3b-R well work programme which it believes will provide greater certainty of outcome from the planned horizontal flow test, significant additional data and an acceleration of the planned first stage production ("FSP") programme. To fund the increase in cost for the enhanced programme, the Company has engaged Arbuthnot Securities Limited and FirstEnergy Capital LLP who have received indicative commitments in excess of C$8.5 million (the "Placing").

The Placing is subject to completion of normal final documentation.

The enhanced scope of work on the previously announced 9/3b-R well is now intended to include a slant pilot well section, which will enable Xcite to collect additional data to expand its understanding of the field and, in particular, the upside reservoir parameters. The Company intends to suspend the well as a future production well.

Many of the programme changes are possible because of the Company's decision to drill the well using the Ocean Nomad, a semi-submersible drilling rig contracted from Diamond Offshore Drilling (UK) Limited ("Diamond"), which has significant operating advantages over the originally planned jack-up rig.

The Company intends to include the following key elements in the enhanced work programme:

  • Drilling a slant pilot well through the reservoir to optimise the placement of the horizontal well section and to enable the collection of a range of data to assist with the planning of the FSP programme. The pilot well will be logged and a core sample collected to allow enhanced analysis of reservoir permeability and fluid flow characteristics. The core will also help to identify the existence of a tar mat at the base of the reservoir.

  • Suspending the 9/3b-R well for re-use at a later date within the FSP programme expected to commence in 2011. This would potentially enable the Company to re-enter the well at the start of the FSP programme, providing for early oil revenues and reducing the funding required for the FSP programme.

  • Given the environmental sensitivities surrounding flaring of crude oil produced offshore and the risk of consequential operational shutdown, the crude offtake from the planned well test will be transferred to a vessel moored in the field and shipped to shore. The crude oil collected will be sold by the Company, recouping a portion of the additional cost and, more importantly, will enable BP, the Company's offtake partner, to conduct blending and refinery tests.

  • The partial 'turnkey' programme for the low risk drilling portion of the 9/3b-R well will be moved to a day rate basis, with a material consequent cost saving.

The Company expects to be ready to commence drilling the well in September, 2010 and anticipates being in receipt of any outstanding, ordinary course regulatory consents at that time.

Application will be made to London Stock Exchange plc, and has been made to the TSX Venture Exchange for shares issued under the Placing to be admitted to trading on AIM and for conditional approval of the Placing by the TSX Venture Exchange.

Richard Smith, Xcite Energy Chief Executive Officer, commented:

"We are very pleased with the support of existing and new investors for our enhanced drilling programme for 9/3b-R well. With drilling planned to commence next month, we look forward to moving ahead rapidly with the next steps to bring the Bentley Field into production and maximise its commercial value."

Stephen Kew has reviewed and approved the technical information contained within this press release in his capacity as a competent 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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 risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. Additional information identifying risks and uncertainties are contained in the Company's annual information form dated December 8, 2009 and in the annual Management's Discussion and Analysis for Xcite Energy dated March 24, 2010 filed with the Canadian securities regulatory authorities and available at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

This information is provided by RNS
The company news service from the London Stock Exchange

Contact Information

  • ENQUIRIES:

    Xcite Energy Limited
    +44 (0) 1330 826740

    Richard Smith
    Chief Executive Officer

    Rupert Cole
    Chief Financial Officer

    Arbuthnot Securities Limited
    (Nomad and Broker)
    +44 (0) 207 012 2000

    Antonio Bossi
    Director

    Nick Tulloch
    Director

    Ben Wells
    Associate Director

    First Energy Capital LLP
    +44 (0) 207 448 0200

    Hugh Sanderson
    Managing Director

    Derek Smith
    Associate

    Pelham Bell Pottinger
    +44 (0) 207 861 3232

    Mark Antelme
    Director

    Paradox Public Relations
    +1 514 341 0408

    Jean-Francois Meilleur
    Consultant