SOURCE: Xcite Energy Ltd

December 27, 2007 09:23 ET

XCITE ENERGY LIMITED ("Xcite Energy" or the "Company") Spudding of 9/3b-5 Appraisal Well

ABERDEENSHIRE, UK--(Marketwire - December 27, 2007) -


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

Xcite Energy (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 that the 9/3b-5 appraisal well on the Bentley field has now spudded. The Company anticipates reaching its target depth in the second week of January, and expects testing to be completed before the end of January.

The Bentley heavy oil discovery is located on Block 9/3b, in which Xcite Energy holds a 100% interest, 160km east of the Shetland Isles and covering an area of approximately 200 km². Bentley has been drilled by three of the four wells on Block 9/3b, being wells 9/3-1 (Amoco, 1977), 9/3-2A (Conoco, 1983) and 9/3-4 (Conoco, 1986).

RPS Energy Canada Ltd. has assigned best estimate contingent and prospective resources of 109 million barrels of oil ("mmbbls") and P50 oil-in-place volumes of 592 mmbbls for Block 9/3b, as more fully described in the Company's admission document published on 7 November 2007.

Richard Smith, Chief Executive Officer of Xcite Energy, commented:

"The spudding of the 9/3b-5 appraisal well marks the first of our key milestones as we target first production from Bentley in early 2009, with full field development planned for 2011. We have an experienced team in place and we look forward to commencing Xcite Energy's activities on one of the largest undeveloped heavy oil fields in the North Sea"

Stephen Kew has reviewed and approved the technical information contained within this press release in his capacity as a competent 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.

Glossary

"Best Estimate" is considered to be the best estimate of the quantity that will actually be recovered from an accumulation and, if probabilistic methods are used, this term is a measure of central tendency of the uncertainty distribution (most likely/mode, P50/median, or arithmetic average/mean).

"contingent resources" means those quantities of oil and gas estimated on a given date to be potentially recoverable from known accumulations but are not currently economic.

"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.

"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 cp.

"High Estimate" is considered to be an optimistic estimate of the quantity that will actually be recovered from an accumulation and, if probabilistic methods are used, this term reflects a P10 confidence level.

"lead" means an identified potential hydrocarbon trap which requires further work before becoming a drill-ready prospect.

"Low Estimate" is considered to be a conservative estimate of the quantity that will actually be recovered from an accumulation and, where probabilistic methods are used, this term reflects a P90 confidence level.

"original resources" means those quantities of oil and gas estimated to exist originally in naturally occurring accumulations; they are, therefore, those quantities of oil and gas estimated on a given date to be remaining in known accumulations, plus those quantities already produced from known accumulations, plus those quantities in accumulations yet to be discovered. Original resources are divided into discovered resources, which are limited to known accumulations, and undiscovered resources.

"P10" means a 10% probability that the value will be equal to or greater than stated value

"P50" means a 50%probability that the value will be equal to or greater than stated value.

"P90" means a 90% probability that the value will be equal to or greater than stated value.

"petroleum" means oil and/or gas.

"prospect" means an identified potential hydrocarbon trap which is sufficiently well defined and de-risked to merit the drilling of an exploration well.

"prospective resources" means those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. If discovered, they would be technically and economically viable to recover.

"reserves" means those quantities of oil and gas anticipated to be economically recoverable from discovered resources.

"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.

"stb" stock tank barrel(s) measured at 14.7 psia and 60™ Fahrenheit.

"STOIIP" means stock tank volume of oil initially-in-place.

"undiscovered resources" means those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered.

The following measures and abbreviations shall have the meanings set forth below:

Oil Liquids
Bbl(s) = Barrels
Boe = Barrels of oil equivalent
Mbbls = thousand barrels
MMboe = million barrels of oil equivalent
MMbbls = million barrels
Mcf = thousand cubic feet
Bbbls = billion barrels
bbls/d = barrels per day

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.

Contact Information

  • Enquiries:

    Xcite Energy
    Richard Smith
    Chief Executive Officer
    Email Contact
    +44 (0) 1330 826 740

    Rupert Cole
    Chief Financial Officer
    Email Contact
    +44 (0) 1330 826 740

    Pelham Public Relations
    Alisdair Haythornthwaite
    Email Contact
    +44 (0)20 7743 6676
    +44 (0)7714 721 379

    Katherine Stewart
    Email Contact
    +44 (0)20 3170 7439

    Lucy Frankland
    Email Contact
    +44 (0)20 3008 5509