SOURCE: Xcite Energy Ltd

January 28, 2010 02:03 ET

Xcite Energy Limited ("Xcite Energy" or the "Company") Supply and Offtake Agreement With BP Oil International Limited

LONDON--(Marketwire - January 28, 2010) - Xcite Energy Limited ("Xcite Energy" or the "Company") (TSX-V: XEL) (LSE: XE)


Xcite Energy, a developer of heavy oil assets in the UK North Sea, today announces that Xcite Energy Resources Limited ("XER"), the 100% subsidiary of the Company and the 100% owner of the Bentley field, has concluded an agreement with BP Oil International Limited ("BPOI"), a wholly owned subsidiary of BP plc ("BP"), whereby BPOI will provide the offtake services to market and sell the Bentley crude oil in return for an incentive-based fee per barrel.

The offtake fee is directly related to the realised price achieved by BPOI for the Bentley crude oil in relation to the prevailing Brent crude price, incentivising BPOI to maximise the price per barrel achieved for XER by minimising the discount to Brent crude.

In addition, BPOI have undertaken that, subject to certain conditions, when Xcite Energy move to full field development, an associated BP company will procure $20m of financing from a commercial bank for Xcite Energy with credit support from BP, for the purpose of assisting with the full field development of the Bentley field, the terms of which will be negotiated in due course.

Richard Smith, Xcite Energy Chief Executive Officer commented:

"We are delighted to welcome BP Oil International as our offtake partner in the Bentley field. This is a relationship that brings the global resources and expertise of the BP oil trading organisation to manage the marketing and selling of the Bentley crude, together with assistance in financing the work programme as we move towards first oil on the field. This is another watershed for the Company, which underpins the value of Bentley crude through field life and significantly progresses the plan for development."

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 26, 2009 filed with the Canadian securities regulatory authorities and available at The Company disclaims any intention or obligation to update or revise any forward-looking statements

Contact Information

    Xcite Energy Limited
    Richard Smith
    Chief Executive Officer
    Rupert Cole
    Chief Financial Officer
    +44 (0) 1330 826740

    Strand Hanson Limited (Nomad)
    James Harris
    Rory Murphy
    +44 (0) 20 7409 3494

    Arbuthnot Securities Limited (Broker)
    Andrew Fairclough
    Ed Burbidge
    +44 (0)20 7012 2000

    Pelham Public Relations
    Mark Antelme
    +44 (0) 20 7337 1500

    Paradox Public Relations
    Jean-Francois Meilleur
    Karl Mansour
    +1 514 341 0408