Xcite fires up investors with oil field upgrade

Proven plus probable reserves at Bentley are 250 million barrels. Picture: Contributed
Proven plus probable reserves at Bentley are 250 million barrels. Picture: Contributed
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SHARES in oil minnow Xcite Energy jumped yesterday after a report estimated reserves in its North Sea field to be significantly more than previously thought.

The company, which has its operations base in Aberdeen and is one of the oil explorers most closely followed by private investors, said it was now seeking partners to help develop its Bentley field.

The firm said proven plus probable (2P) reserves at Bentley stood at 250 million barrels, more than double the 116 million barrels estimated in February last year.

Chief executive Rupert Cole said the latest figures exceeded expectations and supported the board’s “long-held belief in the potential of the Bentley field”.

He continued: “We have now moved Bentley from being a significant asset to one of the major strategic assets in the North Sea, which will be an important source of future employment and economic contribution to the UK for many years to come.”

He said the next goal for the company was to fund the development of the field and that the increased reserves should enable it to increase borrowing capacity considerably. Cole said it was also the right time to evaluate suitable farm-in partners for Bentley.

“We have demonstrated the value of the field, materially de-risked it ahead of development and we would expect potential partners to recognise these achievements.”

Xcite added that it planned to submit an updated field development plan to the UK government in the coming months, a key step before it can proceed with the project.

Shares in Xcite have seen huge volatility in recent years – ranging from just 35p in 2010 to a high of 390p in 2011. They closed up 9p, or 8.3 per cent, yesterday at 118p.

Investors also reacted positively to news from Premier Oil that an exploration well in the Norwegian sector of the North Sea had highlighted a “potentially significant” oil discovery.

The firm has a 30 per cent stake in well PL 359, which contains the Luno II prospect, and operator Lundin Petroleum said testing on the discovery is expected to be completed within two to three weeks.

But Aberdeen-based Faroe Petroleum saw its shares fall after reporting that the Darwin exploration well in the Barents Sea had been plugged and abandoned. The well, which Faroe has a 12.5 per cent interest in, was the first to be drilled in the licence area.

Faroe chief executive Graham Stewart said that although the result was disappointing, the exploration well did “provide important new data and information which will allow further evaluation and de-risking of this extensive licence in the Barents Sea province in which Faroe has a strategic position”.

Stewart also stressed Faroe had an “exciting” drilling programme lined up for 2013 and beyond, with five wells planned for this year in Norwegian waters and the UK North Sea.

Shares in Premier Oil rose by 22.2p to 385p and in Faroe Petroleum they fell 10p to 128p