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Market: TSX, AIM
Sector: Oil & Gas Exploration & Production
Epic: XEL
News: Latest news
Web Site: Xcite Energy
Other Articles: 10-03-201005-03-201010-02-2010

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Xcite Energy

Xcite Energy

Xcite Energy Resources Limited is an oil exploration and development company, which is focused on the exploration and development of heavy oil resources in the North Sea on the United Kingdom Continental Shelf. Xcite Energy was formed in 2003 by experienced industry professionals, applying for the Bentley field (Block 9/3b, heavy oil) in the 21st UK Licence Round.  Following $50 million funding in 2007, Xcite successfully drilled and flow tested the fifth well on Bentley (well 9/3b-5) at the start of 2008. This was the first time that oil had been brought to surface since field discovery in 1977. Xcite believes that Bentley is one of the largest proven, undeveloped fields in the North Sea and is now focused on drilling a pre-development well on the field..

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Monday, February 08, 2010

Xcite Energy raising funds through placing to progress Bentley oil field development in North Sea

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Xcite Energy (AIM, TSX-V: XEL) has appointed book-runners to conduct an equity placing to finance the development of its Bentley oil field in the North Sea. The company estimates that approximately C$50m is required in total. To facilitate the equity financing the company hired Arbuthnot Securities in the UK and Octagon Capital Corporation and CIBC World Markets in Canada.

The net proceeds will be used primarily to fund the C$40m drilling and flow testing of a pre-development well on the Bentley oil field. Additionally C$5m is intended for early production system planning and engineering, and a further C$5m will be raised for general working capital purposes.

The planned pre-development well represents the company’s next step towards full production following the BP (LSE: BP) off-take agreement signed in January 2010. The international oil major’s BPOI unit will sell the crude from the Bentley field in return for an incentive-based fee per barrel. The off-take fee is directly related to the realised price achieved by BPOI for the Bentley crude oil in relation to the prevailing Brent crude price, thus incentivising BPOI to maximise the price per barrel achieved for XER by minimising the discount to Brent crude.

Furthermore the FTSE100 constituent is also supporting the commercial development of the Bentley oilfield. BPOI will procure US$20 million of financing from a commercial bank for Xcite and provide credit support from BP once Xcite moves to full field development.

Last month, Xcite said it will be drilling the development well in the current first quarter of 2010. Last October the company announced an agreement with Fugro Well Services Ltd to drill and test the well, called  9/3b-R, on a risked basis. Fugro will bear a material percentage of the cost of the well in return for a commitment to be engaged to carry out future work if the well is successful. Fugro has joined the Bentley Alliance, a management and operational structure created by Xcite to direct the Bentley field into full field development.

According to Xcite, the Bentley field is among the largest undeveloped heavy oil prospects in the North Sea. Its resource estimate was last year upped to 690 million barrels of oil (mbo) with the upside at nearly 890 mbo following a 3D seismic survey.

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