SOURCE: Xcite Energy Ltd

November 17, 2010 09:47 ET

Xcite Energy Limited ("Xcite Energy" or the "Company") Letter of Intent for "Rowan Norway" N-Class Jack-up Rig

ABERDEENSHIRE, UNITED KINGDOM--(Marketwire - November 17, 2010) - This Announcement Is Not for Release, Publication or Distribution in or Into the United States.

Xcite Energy (TSX-V: XEL) (LSE: XEL) (AIM: XEL) is pleased to announce that its 100% subsidiary, Xcite Energy Resources Limited ("XER"), has entered into a binding letter of intent ("LOI") with British American Offshore Limited ("BAOL"), part of Rowan Companies, Inc. for the N-Class "Rowan Norway", a harsh environment, deep water jack-up unit, designed and built for simultaneous drilling and production, which is currently under construction.

The LOI anticipates that XER and BAOL will enter into a definitive agreement ("Agreement") for the rig by 15 December 2010, following which the Rowan Norway is expected to be available to commence the first stage production ("FSP") on the Bentley field in the fourth quarter of 2011. The LOI provides for a termination fee of US$2.5 million payable by XER in the event it does not enter into the Agreement by this date. The initial commitment period of 240 days will facilitate the drilling of up to six wells on the Bentley field as part of the anticipated three year FSP.

At the time of signing the Agreement, XER will be required to demonstrate financial capability for the first 120 days of the contract commitment in the amount of US$30 million. In addition, XER will be required to demonstrate financial capability for the second 120 days of the contract commitment in the amount of US$30 million by 31 January 2011. XER may reduce the initial commitment period to 120 days, in which event it will be required to demonstrate additional financial capability of US$3.6 million for this 120 day period.

As noted in the Company's press release dated 8 November 2010, "9/3b-6z Well Update", the testing of the horizontal section is progressing on plan and on schedule, with the test expected to be completed by the end of November.

Richard Smith, Xcite Energy Chief Executive Officer commented:

"This is another significant event for the Company which, following the anticipated successful completion of the current 9/3b-6 well test programme, would enable us to move forward and plan the first stage production programme on the Bentley field. This drilling unit has been designed with good capabilities and flexibility in mind and we are pleased to be working with Rowan for this vital phase of the Bentley development programme."

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.

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, 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.

Contact Information

  • ENQUIRIES:

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

    Arbuthnot Securities Limited
    (Nomad and Broker)
    Antonio Bossi
    Director
    +44 (0)20 7012 2000

    Pelham Bell Pottinger
    Mark Antelme
    Director
    Henry Lerwill
    +44 (0) 20 7861 3232

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