Investors excited by rig launch

WEATHER permitting, Xcite Energy’s Rowan Norway rig will be towed out of Dundee tomorrow, taking with it the hopes of its army of small investors.

Aberdeenshire-based Xcite’s shares have been one of the most hotly traded stocks over the past year, and are particularly popular with private shareholders.

The company’s value has almost doubled as attention focused on the potential size of its reserves in the North Sea’s Bentley field. But the company is taking a more cautious approach to its prospects.

The management team that set up Xcite in 2003 with the idea of exploiting the field has never been in any doubt that large amounts of recoverable oil exist in the area.

Two major oil companies failed to make anything of the asset and returned the licence to the UK government, but Xcite’s team was convinced that increased knowledge and technology could develop the prospect’s notoriously heavy oil, and their last test well proved that.

Chief executive Richard Smith says the company is not aiming to maximise the flow from the wells it plans to drill this year. Instead, it will be focused on resolving technical issues about how the water table under the oil behaves, which is key to extracting as much of the reserves as possible in the long term.

That knowledge will allow the company to book proven reserves for the core area of the field, which it hopes will be at least 115 million barrels. It will also help it finalise a field development plan that is eagerly awaited by investors.

Questioned by analysts, Smith said: “It’s important that the market understands that what we are seeking to get out of this well is not necessarily what they are hoping to get out of it.”