ABERDEENSHIRE, UNITED KINGDOM--(Marketwire - May 10, 2011) -
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR
INTO THE UNITED STATES
TSX-V, LSE-AIM: XEL
10 May 2011
Xcite Energy Limited
("Xcite Energy" or the "Company")
Bentley Upgrade to Reserves Status
Xcite Energy, a developer of heavy oil assets in the UK North Sea, is
pleased to announce the results of an evaluation of the Company's oil
and gas properties in which it holds an interest, pursuant to
which"reserves" have been assigned. The Company, through its wholly owned
subsidiary Xcite Energy Resources Limited ("XER"), holds a 100% working
interest in Block 9/3b, which contains the Bentley field (the "Field")
and a 100% working interest in Blocks 9/3c and 9/3d (both adjacent to
the Field). These Blocks are located in the North Sea in the United
Kingdom (collectively, the "Company's Assets").
The Company has recently drilled and tested the 9/3b-6 and 6Z wells in
the northern part of the Field, which demonstrated commercial flow
rates and, on this basis, XER commissioned TRACS International
Consultancy Ltd ("TRACS"), an independent qualified reserves auditor,
to prepare an independent audit of reserves and resources for the
Company's Assets. That audit by TRACS is set out in the Reserves
Assessment Report ("RAR") dated 9 May 2011 and effective 30 April 2011,
prepared using guidelines outlined in the Canadian Oil and Gas
Evaluation Handbook and in accordance with National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities.
This assignment of reserves to the Field is a key milestone to enable
the Field to be developed, commencing with the First Stage Production
("FSP") currently being planned by the Company in the Core Area (as
defined below). The Company intends to submit the Field Development
Plan for the FSP to DECC (as defined below) shortly.
Highlights of the RAR
* Oil reserves of the type 1P, 2P and 3P in the FSP of approximately 22
MMstb, 28 MMstb and 35 MMstb, respectively.
* NPV10 (after tax) for the FSP oil reserves types 1P, 2P and 3P of
approximately $229 MM, $396 MM and $558 MM, respectively.
* Contingent resources for the remaining Core Area of the Field in the
Second Stage Production ("SSP") (i.e. in addition to the reserves
stated above) of approximately 73 MMstb of oil, 87 MMstb of oil and 101
MMstb of oil on a "low estimate", "best estimate" and "high estimate"
basis, respectively.
* Conversion of contingent resources to reserves anticipated on project
sanction and deliverability of the SSP. No technical contingencies
remain.
* NPV10 (after tax) for the contingent resources for the remaining Core
Area of the Field in the SSP (ie in addition to the reserves stated
above) of approximately $661 MM, $961 MM and $1315 MM, on a "low
estimate", "best estimate" and "high estimate" basis, respectively.
* RAR assigned prospective resources for seven (7) prospects on the
Company's Assets of, in the aggregate, approximately 17.7 MMboe on a
risked "best estimate" basis.
* Management has confirmed that it will continue to incorporate updated
modelling and latest technologies through the life of Field, including
the potential application of enhanced oil recovery techniques. As a
result of further, successful drilling, management expects prospective
resources to be upgraded to contingent resources and contingent
resources to be upgraded to reserves as the Field development matures.
The combination of these factors is expected to materially improve the
ultimate recovery of oil from the Field.
Summary of the RAR
The RAR focused on the reserves accessed from a single drill centre for
the northern Core Area of the Field relating to the FSP. In addition,
the RAR assessed the Core Area development scenario, incorporating the
FSP and the SSP, together with the additional prospective resources
within the Company's Assets, all of which have yet to be drilled,
predominantly the Bentley East structure.
All reserves and resources being reported in the RAR assume only the
use of conventional, cold-flow recovery techniques. The Company
believes that enhanced oil recovery techniques to be assessed in due
course have the potential to increase recovery from the Field.
Analysis of the long-term well performance during the FSP will help
determine the design of the wells for the SSP. It is the intention
during the FSP to conduct pilot tests for the potential enhanced oil
recovery techniques to be used in due course.
Richard Smith, Xcite Energy Chief Executive Officer, commented:"This is an
excellent outcome following the successful 9/3b-6 and 6Z
wells. The Reserve Assessment Report confirms management's belief in
the commercial value of Bentley and its potential as one of the largest
undeveloped fields in the UK sector of the North Sea. This reserves
upgrade allows us to proceed with the First Stage Production and is a
key milestone in our program to determine full field reserves and
deliver significant value for shareholders."
A summary of the Company's updated reserves and net present value of
future net revenue dated effective 30 April 2011 will be set out in a
Material Change Report to be filed by the Company at www.sedar.com in
connection herewith.
ENQUIRIES:
Xcite Energy Limited +44 (0) 1483 549063
Richard Smith Chief Executive Officer
Rupert Cole Chief Financial Officer
Arbuthnot Securities +44 (0)20 7012 2000
Limited
(Nomad and Broker)
Antonio Bossi Director
Pelham Bell Pottinger +44 (0) 20 7861 3232
Mark Antelme Director
Henry Lerwill
Paradox Public Relations +1 514 341 0408
Jean-Francois Meilleur Consultant
Contingent resources are those quantities of petroleum estimated, as of
a given date, to be potentially recoverable from known accumulations
using established technology or technology under development, but which
are not currently considered to be commercially recoverable due to one
or more contingencies. Contingencies may include factors such as
economic, legal, environmental, political, and regulatory matters, or a
lack of markets. There is no certainty that it will be commercially
viable to produce any portion of the contingent resources.
The risks and uncertainties associated with recovery of the contingent
resources for the Company's Assets which prevent them from being
classified as reserves are, as set forth in the RAR, project sanction
and deliverability of the SSP.
Prospective resources are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects.
Prospective resources have both an associated chance of discovery and a
chance of development. Prospective resources are further subdivided in
accordance with the level of certainty associated with recoverable
estimates assuming their discovery and development and may be
sub-classified based on project maturity.
There is no certainty that any portion of the prospective resources
will be discovered. If discovered, there is no certainty that it will
be commercially viable to produce any portion of the prospective
resources.
The principal risks and uncertainties associated with the recovery of
the prospective resources (over and above the contingent resources)
which prevent them from being classified as contingent resources are
that they have not yet been confirmed by appraisal drilling.
Glossary"1P" means proved reserves."2P" means proved plus probable
reserves."3P" means proved plus probable plus possible reserves. Possible
reserves are those additional reserves that are less certain to be
recovered than probable reserves and there is a 10% probability that
the quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves."best estimate" is considered
to be the best estimate of the quantity
that will actually be recovered. It is equally likely that the actual
remaining quantities recovered will be greater or less than the best
estimate. If probabilistic methods are used, there should be at least a
50 percent probability (P50) that the quantities actually recovered
will equal or exceed the best estimate."boe" means barrels of oil
equivalent. Boe's, derived by converting
gas to oil in the ratio of five thousand eight hundred cubic feet of
gas to one barrel of oil, may be misleading, particularly if used in
isolation. A boe conversion is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead."Core Area" means FSP and
SSP."DECC" means UK Department of Energy and Climate Change."FSP" means
First Stage Production in the core area of the Field."high estimate" is
considered to be an optimistic estimate of the
quantity that will actually be recovered. It is unlikely that the
actual remaining quantities recovered will exceed the high estimate. If
probabilistic methods are used, there should be at least a 10 percent
probability (P10) that the quantities actually recovered will equal or
exceed the high estimate."low estimate" is considered to be a conservative
estimate of the
quantity that will actually be recovered. It is likely that the actual
remaining quantities recovered will exceed the low estimate. If
probabilistic methods are used, there should be at least a 90 percent
probability (P90) that the quantities actually recovered will equal or
exceed the low estimate."MM" means millions."MMboe" means millions of
barrels of oil equivalent."MMstb" means millions stock tank barrels."NPV10"
means net present value in money of the day using a 10% forward
discount rate, which values do not represent fair market value."SSP" means
Second Stage Production in the core area of the Field."$" means US dollars.
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 October
26, 2010 and in the annual Management's Discussion and Analysis for
Xcite Energy dated March 24, 2011 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.
Statements relating to "reserves" or "resources" are deemed to be
forward-looking statements or information, as they involve the implied
assessment, based on certain estimates and assumptions, that the
resources and reserves described can be profitable in the future.
There are numerous uncertainties inherent in estimating quantities of
proved reserves, including many factors beyond the control of the
Company. The reserve data included herein represents estimates only.
In general, estimates of economically recoverable oil reserves and the
future net cash flows therefrom are based upon a number of variable
factors and assumptions, such as historical production from the
properties, the assumed effects of regulation by governmental agencies
and future operating costs, all of which may vary considerably from
actual results. All such estimates are to some degree speculative and
classifications of reserves are only attempts to define the degree of
speculation involved. For those reasons, estimates of the economically
recoverable oil reserves attributable to any particular group of
properties and classification of such reserves based on risk of
recovery and estimates of future net revenues expected therefrom,
prepared by different engineers or by the same engineers at different
times, may vary substantially. The actual production, revenues, taxes
and development and operating expenditures of the Company with respect
to these reserves will vary from such estimates, and such variances
could be material.
Consistent with the securities disclosure legislation and policies of
Canada, the Company has used forecast prices and costs in calculating
reserve quantities included herein. Actual future net cash flows also
will be affected by other factors such as actual production levels,
supply and demand for oil and natural gas, curtailments or increases in
consumption by oil and natural gas purchasers, changes in governmental
regulation or taxation and the impact of inflation on costs
Neither the 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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