SOURCE: Xcite Energy Ltd

April 30, 2008 09:33 ET

XCITE ENERGY LIMITED Results Update for the 9/3b-5 Appraisal Well

ABERDEENSHIRE, UK--(Marketwire - April 30, 2008) -


THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES

Xcite Energy Limited ("Xcite Energy" or the "Company") (TSX-V: XEL) (LSE: XEL) (AIM: XEL), a heavy oil company focused on the development of discovered resources in the UK North Sea, is pleased to announce a further and important update to the results of the 9/3b-5 appraisal well on the "Bentley" field. This update follows the review and interpretation by the Company's test partner, Schlumberger Limited ("Schlumberger"), of the data and the hydrocarbon and fluid samples obtained from the well.

Well Overview

As set out in the Company's announcement on February 4th 2008, the well was drilled to a total depth of 4105ft. and, as anticipated, encountered heavy oil bearing Palaeocene Upper Dornoch Formation sands at 3712ft with 87ft gross (86 ft net) hydrocarbon column.

During the drill stem test, 100% crude oil production was demonstrated at rates of up to 150 bopd from the 50ft section of the oil column that had been successfully perforated. This flow rate was within the expected range for a test of this design and nature.

Data Review and Interpretation

The Company's well test partner, Schlumberger, has now reviewed and interpreted the data obtained from the well, together with the hydrocarbon and fluid samples recovered from the drill stem test. Based on this review and interpretation, Schlumberger has confirmed:

   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