SOURCE: Xcite Energy Limited

April 27, 2012 02:00 ET

Statement of Reserves Data and Funding Strategy

ABERDEENSHIRE, UNITED KINGDOM--(Marketwire - Apr 27, 2012) -








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                           TSX-V, LSE-AIM: XEL



27 April 2012



                           Xcite Energy Limited
                    ("Xcite Energy" or the "Company")

         Statement of Reserves Data and other Oil and Gas Information 
                              (Form 51-101F1)

                                     and

                              Funding Strategy




Key Points- 2P oil reserves for the Core Area of approximately 116 MMstb, 
  with NPV10 (after tax) value of approximately $1.46 billion.

- Funding resources for Phase 1A work programme available to the
  Company.

- Funding for Phase 1B work programme planned to be secured from
  external sources and oil revenue.

- Advanced discussions being held with group of commercial lending
  banks to secure reserves based lending ("RBL") facility.

- Company considering a range of options (including farm-out partner,
  industry participation, convertible debt instruments and equity) to
  finance the balance of funds required for Phase 1B; Jefferies and
  Rothschild appointed to assist.



Introduction

The Company has filed under its profile on SEDAR ( www.sedar.com ) and on
its website, its annual Statement of Reserves Data and other Oil and
Gas Information (Form 51-101F1) under National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities and in accordance
with the Canadian Oil and Gas Evaluation Handbook, with an effective
date of 31 December 2011.

The Form 51-101F1 is an annual statement required by Canadian
regulations to be filed by the Company, which sets out its interests in
oil and gas reserves, provides key data with respect to those interests
and identifies changes, if any, which have occurred since the previous
annual filing.

The information contained in the Form 51-101F1 is taken directly from
the recently updated Reserves Assessment Report ("RAR") prepared by
TRACS International Consultancy Limited, an independent qualified
reserves auditor, dated 17 February 2012 with an effective date of 31
December 2011.

The Form 51-101F is available on the Company's website at:
 http://www.xcite-energy.com/companyinformation.htm 


Oil and Gas Reserves

The Company's oil and gas reserves are held through its wholly owned
subsidiary, Xcite Energy Resources Limited ("XER"), comprising 100%
working interest in Block 9/3b, which contains the Bentley field (the"Field").

As announced by the Company on 20 February 2012, key information from
the RAR in connection with the Core Area of the Field includes:

  - Oil reserves of the type 1P, 2P and 3P for the Core Area of
    approximately 96 MMstb, 116 MMstb and 140 MMstb, respectively;

  - NPV10 (after tax) value of oil reserves for the Core Area of
    approximately $1.076 billion, $1.464 billion and $1.921 billion
    on a 1P, 2P and 3P basis, respectively*.

  - NPV10 (after tax) value per barrel of oil reserves in the Core
    Area of approximately $11.27, $12.64 and $13.77 on a 1P, 2P and
    3P basis, respectively*

  * See "Cautionary Language" below for a general explanation of the
    method and assumptions used in these calculations.


Total Future Net Revenue - Undiscounted forecast prices and costs

Set out below is the total forecast, undiscounted net revenue and costs
attributable to the Core Area Bentley reserves as included in the RAR
and Form 51-101F1.

                                  Abandon-     Future            Future
                                      ment        Net               Net
                                       and    Revenue           Revenue
                          Develop- Reclama-    before             after
                Operating     ment    tion     Income   Income   Income
         Revenue    Costs    Costs   Costs      Taxes    Taxes    Taxes

Reserves
Category     $MM      $MM      $MM     $MM        $MM      $MM      $MM
________ _______  _______  _______   _____    _______  _______  _______

TOTAL    9,284.0  2,446.0  2,211.5   422.4    4,204.1  2,124.1  2,079.9
PROVED
(1P)

TOTAL
PROVED
PLUS                        
PROBABLE
(2P)    11,257.8  2,605.7  2,211.5   430.8    6,009.8  3,246.8  2,763.0

TOTAL
PROVED
PLUS
PROBABLE
PLUS
POSSIBLE
(3P)    13,519.7  2,671.2  2,211.5   430.8    8,206.1  4,651.3  3,554.8
        ========  =======  =======   =====    =======  =======  =======


Based on the 116MMstb 2P reserves, the RAR assumes approximately $11.3
billion revenue for the life of field development, equating to $97 per
barrel.

On this 2P basis, the RAR assumes:

- operating costs of approximately $2.6 billion, equating to $22.5 
  per barrel. These operating costs are assumed to be funded out of oil
  revenue.

- development costs of approximately $2.2 billion, equating to $19
  per barrel. These development costs are discussed in more detail 
  below.

- abandonment and reclamation costs at the end of field life of
  approximately $431 million. Thesecosts, when accounted for (and thus
  discounted) within the NPV10 (after tax) value for 2P reserves of
  approximately $1.46 billion, equate to approximately $50 million.

- net revenue before income taxes of approximately $6.0 billion
  which, when discounted in the NPV10 (after tax) calculation, equates 
  to approximately $3 billion.

- net revenue after income taxes of approximately $2.76 billion,
  which equates to the NPV10 (after tax) value of 2P reserves of
  approximately $1.46 billion.


Future Development Costs Attributable to Reserves (Undiscounted)

Set out below are the future development costs attributable to the Core
Area Bentley reserves from the RAR and Form 51-101F1, which uses a 2%
per annum escalation in costs commencing 1 January 2012.



                  Total   Total Proved       Total Proved Plus
                 Proved  Plus Probable  Probable Plus Possible
              Estimated      Estimated               Estimated

Year               ($MM)          ($MM)                   ($MM)
_____________ __________  _____________ _______________________
Bentley Field
Core Area

2012               204.6         204.6                   204.6
2013               360.1         360.1                   360.1
2014               316.8         316.8                   316.8
2015               324.2         324.2                   324.2
2016               542.0         542.0                   542.0
2017               200.6         200.6                   200.6
2018               185.6         185.6                   185.6
2019                34.5          34.5                    34.5
2020                34.5          34.5                    34.5
2021                 8.6           8.6                     8.6
Thereafter           0.0           0.0                     0.0
Total for all    2,211.5       2,211.5                 2,211.5
years
undiscounted (1)




Note:

(1) The capital expenditure and construction schedule of Phase 1A,
Phase 1B and Phase 2 is assumed to be the same for the Proved (1P),
Proved plus Probable (2P) and Proved plus Probable plus Possible (3P)
outcomes. Hence the estimated future development costs are assumed to
be the same for all three outcomes.

Phase 1A development costs in aggregate are accounted for in 2012, for
which the funding resources are available to the Company and the work
programme has commenced.

Phase 1B is planned, subject to Department of Energy & Climate Change
("DECC") approval, to comprise a permanent, normally unattended,
minimum facilities, lightweight wellhead tower, capable of
accommodating up to twelve drilling risers and remaining throughout the
rest of field life. Four additional production motherbore wells are
planned to be drilled during 2013, 2014 and 2015 for Phase 1B with
their associated lateral wells which, together with the motherbore well
drilled in Phase 1A, will provide the basis for the planned Phase 1B
production incorporated into the RAR economics.

The additional drilling riser and thus production capacity noted above,
i.e. five motherbore wells planned for Phase 1B compared with up to
twelve drilling riser slots, which is inherent within the wellhead
tower design, is expected to provide the flexibility to generate
additional cash during Phase 1B.

The $360 million development expenditure assumed to be incurred in the
RAR in 2013 is required to be funded from external sources to achieve
first oil in Phase 1B. Such funding is expected to include the
RBLfacility noted below andnet Bentley crude oil revenue in 2013 of
approximately $50 million, after accounting for 2013 operating costs.
The RAR assumes that future oil revenues will fund the balance of Phase
1B development expenditure in 2014 and 2015.

Phase 2 of the Bentley field development, subject to DECC approval, is
planned to comprise the full field platform infrastructure and
production facilities, plus the drilling of additional wells. The
associated Phase 2 expenditure is assumed to be incurred commencing in
2015 and running through to 2020, with later years relating solely to
the drilling of wells.

The Company currently plans to operate Phase 1B for approximately 3
years to enable Phase 2 to be funded by means of internally generated
cash flow from oil revenue, together with a new RBL facility planned to
be entered into in due course based on 116MMstb 2P reserves in the core
area of the Field.

Future Potential

In addition to the reserves already assigned to the Bentley field and
the subject of the future development costs set out above, the Company
plans to undertake tests which, if successful, will be followed by the
implementation of an enhanced oil recovery ("EOR") programme for the
entire Bentley field in due course. It is anticipated that the EOR
programme will incur additional costs to be met from cash flow being
generated at the time, but will give rise to additional recoverable
crude oil that, when sold, will generate additional revenue in excess
of the associated costs.

It is planned that prospective resources currently contained within the
Bentley South and East prospects and other prospects will be the
subject of separate appraisal and development programmes in due course,
with funding for such work programmes assumed to be available from cash
flow generated from the core area of the field. It is expected that
these work programmes, if successful, will give rise to additional
reserves being assigned to the Bentley field.

Funding Strategy

Phase 1A development costs in 2012 are being funded from resources
available to the Company and the work programme has commenced.

The Company is in advanced discussions with a group of commercial
lending banks to secure an RBL facility, which will provide significant
project debt to be used as a material part of the overall funding
required for Phase 1B.

In order to maintain flexibility and in line with the previously
outlined strategy, the Company is considering a range of options to
provide the balance of the funding required to commence the Phase 1B
development including, but not limited to, farm-out, other industry
participation, convertible debt instruments and equity financing.

The Company has begun preparations for discussions with potential
industry partners, and has appointed Jefferies International Limited
("Jefferies") and Rothschild to act as advisers to the Company in this
process. In order to maximise the value for the Company and its
shareholders, it is considered unlikely that any transaction will be
concluded until after the results of the Phase 1A programme are known,
when greater certainty is expected to have been achieved with respect
to the longer term oil, gas and water production profiles and
recoverable reserves from the Bentley field.


ENQUIRIES:                                  
Xcite Energy Limited                       +44 (0) 1483 549 063
Richard Smith (CEO) / Rupert Cole (CFO)    

Oriel Securities (Joint Broker and Nomad)  +44 (0) 207 710 7600
Emma Griffin / Michael Shaw                

Morgan Stanley (Joint Broker)              +44 (0) 207 425 8000
Andrew Foster                              

Rothschild                                 +44 (0) 207 280 5000
Neeve Billis / Stewart MacDonald           

Jefferies International Limited            +44 (0) 207 029 8000
Richard Kent       

Pelham Bell Pottinger                      +44 (0) 207 861 3232
Mark Antelme / Henry Lerwill               

Paradox Public Relations                   +1 514 341 0408
Jean-Francois Meilleur                     
Cautionary Language

Oriel Securities Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting
exclusively for Xcite Energy and for no one else in connection with the
subject matter of this announcement and will not be responsible to
anyone other than Xcite Energy for providing the protections afforded
to its clients or for providing advice in connection with the subject
matter of this announcement.

Morgan Stanley, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Xcite
Energy and for no one else in connection with the subject matter of
this announcement and will not be responsible to anyone other than
Xcite Energy for providing the protections afforded to its clients or
for providing advice in connection with the subject matter of this
announcement.

N M Rothschild & Sons ("Rothschild"), which is authorised and regulated
in the United Kingdom by the Financial Services Authority, is acting
exclusively for Xcite Energy and for no one else in connection with the
subject matter of this announcement and will not be responsible to
anyone other than Xcite Energy for providing the protections afforded
to its clients or for providing advice in connection with the subject
matter of this announcement.

Jefferies International Limited ("Jefferies"), which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is
acting exclusively for Xcite Energy and for no one else in connection
with the subject matter of this announcement and will not be
responsible to anyone other than Xcite Energy for providing the
protections afforded to its clients or for providing advice in
connection with the subject matter of this announcement.

The RAR, as audited by TRACS, is based on forecast and prices effective
as at 31 December 2011 from McDaniel & Associates' 1 October 2011 Brent
oil forecast, less a 12% discount for Bentley crude ( www.mcdan.com ).

The calculation of the NPV10 (after tax) for the Core Area disclosed
above takes into account the following: (a) UK Corporation Tax is
charged at the rate of 30% on net taxable income; (b) UK Supplemental
Corporation Tax ("SCT") is charged at the rate of 32% on net taxable
income; and (c) heavy oil allowances of up to GBP800 million have been
applied to offset the SCT to the extent possible.

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."Core Area" means FPD and 
SPD."DECC" means UK Department of Energy and Climate Change."FPD" means 
First Phase Development in the core area of the Field, or Phase 1B. 
"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."SPD" means Second Phase Development in the core 
area of the Field, or Phase 2. "$" means United States dollars. "$MM" means
millions of United States 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 26 October
2010 and in the annual Management's Discussion and Analysis for Xcite
Energy dated 22 March 2012 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" 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. The
estimated future net revenue set out herein does not necessarily
represent the fair market value of the Company's reserves

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

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

END

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