THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES Xcite Energy (
-- The CPR supports the Company's view that the Bentley field should be
commercial based on proving the modelled flow rates and completion
techniques through an Early Production System ("EPS"); the probability of
commercial success for the Bentley field has been increased from 50% to
70%.
-- The Bentley field has been classified as having Contingent Resources
(Development Pending), the highest category of Contingent Resources before
the "Reserves" category under PRMS (as subsequently defined) terminology,
which represents a significant reduction of risk compared with the resource
category assigned to the field prior to the drilling and testing of the
9/3b-5 well. The risks and the uncertainty associated with recovery of the
resources have been set out in the CPR.
-- The volume of recoverable resources on the Bentley field has been
increased significantly in the Low and Base cases; 72 MMbbls (previously 37
MMbbls) for the Low case and 122 MMbbls (previously 68 MMbbls) for the Base
case. With the increased confidence in the commercial potential of the
Bentley field, the Base case risked resources have increased from 34 MMbbls
to 86 MMbbls, an increase of over 250%.
-- Further potential upside has been identified in the recoverable
volumes reported from a range of reservoir parameters and data, including
the re-processed 3D seismic survey.
-- The success case Net Present Value of the Bentley field in the Base
case, using a 10% forward discount rate ("NPV10"), a flat real price of $80
for Brent crude (the RPS Energy current price forecast) and a 15% discount
for heavy oil, is approximately US$780 million.
-- Principal issues remaining to be addressed following the drilling and
testing of the 9/3b-5 well include the requirement to confirm commercial
flow rates within Bentley, which are currently predicted from modelling and
are supported by the well flow rates in the analogue Bressay field. This
will require a horizontal well and flow test during the next reservoir
intervention, i.e. the planned EPS.
-- The EPS work programme has been designed to resolve these remaining
issues and should enable the Company to book "Reserves" (as defined under
PRMS) on the Bentley field.
2009 OUTLOOK
-- Preparation for the EPS on the Bentley field (as outlined in the CPR)
will continue together with the application to the Department for Energy
and Climate Change to become a North Sea production operator.
-- Financing and commercial options for undertaking the EPS are currently
being discussed and appraised with a number of potential business partners,
with a view to concluding such discussions during 2009.
In a development that the Company believes shows the potential for heavy
oil production in the North Sea, StatoilHydro, as operator of the Bressay
field, completed the fifth well on the field in November 2008 and has
publicly announced its intention for the development of the field with a
target first oil date in 2014. The Bressay field is 6km from the Bentley
field and has been shown to be a close reservoir analogue field for the
Bentley field, with similar crude oil and geological properties.
Richard Smith, Xcite Energy Chief Executive Officer commented:
"We are very pleased to be able to announce the results of this new
Competent Person's Report from RPS Energy, which has substantially improved
all material aspects of the Bentley field from recoverable volumes through
to the commercial chance of success, and thus the potential economic value
of this significant asset. This new CPR has been made possible by the
enormous efforts of the XER team during the latter half of 2008, which the
Company believes has also brought a new level of understanding to the
behaviour of this type of heavy oil. We have now set our sights clearly on
planning for the next reservoir intervention, an early production system
which, on success, should enable Xcite Energy to book "Reserves" to the
Bentley field, one of the largest undeveloped heavy oil fields in the
United Kingdom North Sea.
The complete CPR is available for viewing at
http://www.rns-pdf.londonstockexchange.com/rns/6619N_-2009-2-20.pdf and on
the System for Electronic Document and Analysis Retrieval at www.sedar.com
and on the Company's website at www.xcite-energy.com.
The CPR has been prepared by RPS Energy using the definitions and
guidelines set out in the 2007 SPE/WPC/AAPG/SPEE Petroleum Resource
Management System ("PRMS") as incorporated into the Canadian Oil and Gas
Evaluation Handbook ("COGEH") by the Society of Petroleum Evaluation
Engineers & Canadian Institute of Mining, Metallurgy & Petroleum.
Contingent Resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations using
established technology or technology under development, but which are not
currently considered to be commercially recoverable due to one or more
contingencies. Contingencies may include factors such as economic, legal,
environmental, political, and regulatory matters, or a lack of markets.
There is no certainty that it will be commercially viable to produce any
portion of the resources.
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-V has not reviewed and does not accept 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 changes in market and
competition, governmental or regulatory developments and general economic
conditions. Additional information identifying risks and uncertainties are
contained in the Company's annual information form dated June 30, 2008
filed with the Canadian securities regulatory authorities, 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 +44 (0) 1330 826 740 Richard Smith, Chief Executive Officer Rupert Cole, Chief Financial Officer Thomas Weisel Partners (UK) Limited +44 (0) 20 7877 4300 Paul Colucci, Managing Director Paul Newman, Managing Director Strand Partners Limited +44 (0) 20 7409 3494 James Harris, Director Rory Murphy, Director Pelham Public Relations +44 (0) 20 7743 6676 Mark Antelme, Director