Concerns have been raised over the future of the key Bentley oilfield in the North Sea after shares in Xcite Energy were suspended yesterday and the firm looked set to be liquidated.
The fears came after the breakdown of crunch talks between bondholders the Aim-quoted firm, which has its operational headquarters in Aberdeen and its registered office in the British Virgin Islands.
Xcite had been in talks to hand 98.5 per cent of its shares to lenders. However, it said yesterday that the main bondholders were “not satisfied that the transaction is capable of being implemented in a manner acceptable to them”.
It added: “On this basis, they expect to instruct the bond trustee to petition the court in the British Virgin Islands within the next ten days requesting the appointment of a liquidator to the company, which is expected to take effect approximately four to six weeks from the filing of such request.”
Xcite, which was incorporated in January 2007, said liquidation was unlikely to result in the return of any value to its existing shareholders.
“As a consequence, the directors have requested the immediate suspension of the trading on Aim of the ordinary shares in the company.”
Xcite stressed that its wholly owned UK subsidiary Xcite Energy Resources (XER) and the unit’s assets “are not expected to be the subject of enforcement action and XER is expected to remain a going concern throughout this process”.
Via XER, Xcite has a 100 per cent working interest in areas including the Bentley oilfield, which is located about 100 miles east of Shetland.
The field, discovered in 1977, is estimated to contain recoverable reserves of some 267 million barrels, making it one of the largest undeveloped prospects in UK waters.
The timing of the rejection of Xcite’s debt-for-equity plan was seen as negative for North Sea recovery by Ian McLelland, global head of natural resources at Edison Investment Research.
He said Xcite’s bondholders have evidently decide to cut their losses rather than take control of the company. “This is a big blow for everyone, and suggests that management could not broker a deal to sell its prized Bentley asset at pretty much any reasonable price.
“Timing could not have been worse for the UK, as the newly independent Oil & Gas Authority attempts to drive the industry towards maximum economic recovery. The Bentley field was one of OGA’s strategic priorities when it was formed, now its future is more uncertain than ever.”
Xcite said in June that its bondholders had given it some breathing space by agreeing to extend the repayment of the bonds by three months while talks continued with the aim of resolving terms for a restructuring of $135 million (£111m) in debt.