Xcite Energy Limited ("Xcite Energy" or the "Company") Filing of Material Change Report

ABERDEENSHIRE, UNITED KINGDOM--(Marketwire - May 17, 2011) -

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

Xcite Energy (TSX-V: XEL) (LSE: XEL) (AIM: XEL) announces that it has filed a Material Change Report with the Canadian Regulatory Authorities.

Under Canadian Securities Law, a Material Change Report is required to be filed when, amongst other things, a company's reserve report is updated. The Material Change Report provides background information in respect of the information contained in the Company's press announcement dated 10 May 2011, and is taken from the Company's Reserve Assessment Report prepared by TRACS International Consultancy Ltd.

The Material Change Report will be available for review on:
http://www.rns-pdf.londonstockexchange.com/rns/7026G_1-2011-5-16.pdf

Sedar at: www.Sedar.com

and on the Company's website at: http://www.xcite-energy.com/docs/MCR11.pdf

On 10 May, 2011, the Company announced the results of an independent evaluation of its reserves and resources. 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) (collectively, the "Company's Assets"). The Company's Assets are located in the North Sea in the United Kingdom and a map is provided in Schedule A to the Material Change Report to assist understanding.

The Company has recently successfully 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.

The highlights of the RAR (as set out in the Press Announcement of 10 May, 2011 and the Material Change Report) are as follows (see the Material Change Report for definition of certain technical terms):

• NPV10 (after tax) of approximately $229 MM, $396 MM and $558 MM for the 1P, 2P and 3P reserves in the area constituting the First Stage Production ("FSP"), respectively, with additional NPV10 (after tax) of $661 MM, $961 MM and $1,315 MM for contingent resources for the area constituting the Second Stage Production ("SSP") on a "low estimate", "best estimate" and "high estimate" basis, respectively.

• RPS Energy, in its Competent Person's Report dated and effective 20 February 2009 (the "2009CPR") (in which no reserves were assigned to the Company's Assets), assigned a NPV10 (after tax) valuation of $781 MM for the Company's "best estimate" contingent resources for the core structure, which is equivalent to the Core Area in the RAR. The NPV10 (after tax) valuation assigned by the RAR to the reserves in the FSP and the contingent resources in the SSP (together constituting the "Core Area"), demonstrates a material increase over the NPV10 (after tax) valuation of $781 MM in the 2009 CPR.

• Reserves of the type 1P, 2P and 3P in the FSP of approximately 22 MMstb, 28 MMstb and 35 MMstb, respectively.

• Contingent resources for the SSP (which are in addition to the reserves in the FSP stated above) of approximately 73 MMstb, 87 MMstb and 101 MMstb on a "low estimate", "best estimate" and "high estimate" basis, respectively.

• As no technical contingencies remain, the RAR confirms that the contingent resources in the SSP would be converted to an equivalent volume of reserves following the Company's decision to pursue the development of the SSP and the approval by DECC of its development plan for this purpose. On this basis, the Company intends to seek approval from DECC for the FSP and SSP which, when obtained, would enable it to (i) move forward with the FSP without delay; (ii) move forward with the SSP at an appropriate time that suits its business objectives; and (iii) upgrade the SSP contingent resources to reserves status.

• The 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 of the Company has confirmed to TRACS that it will continue to incorporate the latest modelling and latest technologies through the life of Field, including the investigation of the application of enhanced oil recovery techniques. As a result, the RAR confirms that it expects prospective resources to be upgraded to contingent resources and those contingent resources to be upgraded to reserves as the Field development matures and additional drilling is undertaken. The RAR also confirms that the combination of these factors is expected to materially improve the ultimate recovery of oil from the Company's Assets.

As a result of the increase in the aggregate NPV10 valuation, the value per barrel was materially increased from the 2009 CPR to the RAR and the Core Area was de-risked as a result of the drilling of the 9/3b-6 and 6Z wells at the end of 2010.

On a value per barrel basis:

• The RAR assigned a NPV10 (after tax) value per barrel for the 1P, 2P and 3P reserves in the FSP as approximately $10.40, $14.20 and $16.00, respectively.

• The RAR assigned a NPV10 (after tax) value per barrel for the "low", "best" and "high" estimate of contingent resources in the SSP as approximately $9.10, $11.00 and $13.00, respectively.

• Based upon the 2009 CPR, the NPV (after tax) can be calculated for the "low", "best" and "high" estimate of contingent resources as approximately $2.50, $6.40 and $9.20, respectively. If risked at the 70% chance of commercial success, as in the 2009 CPR, these values per barrel would be $1.80, $4.50, and $6.40, respectively.

There is no certainty that it will be commercially viable to produce any portion of the contingent resources noted above.

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.

Forward Looking Information and Risks and Assumptions

Certain statements contained in this report constitute forward-looking information within the meaning of securities laws, including states relating to the estimated reserves, resources and exploration activities associated with the oil and gas properties in which the Company holds an interest. 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 the Company 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 and resources 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 contained herein does not necessarily represent the fair market value of the Company's reserves and resources. There is no assurance that the forecast price and cost assumptions contained in the RAR will be attained and variances could be material. The recovery and reserves estimates on the Company's properties described herein are estimates only. The actual reserves on the Company's properties may be greater or less than those calculated.