Xcite Energy aims to upgrade Bentley oil field resources in 2010 after progress in 2009

Even though the economic conditions remained challenging in 2009, Xcite Energy (TSX-V, AIM: XEL) managed to make significant progress on the operational and financial fronts at its key project, the Bentley oil field in the North Sea, which was reflected in today’s full year report.

The company said that the economic conditions are picking up, enabling the company to go ahead with the Bentley work programme to achieve its goals of demonstrating its commerciality and upgrading its resources to reserves.

Despite the challenging economic environment that prevailed in 2009, Xcite managed to make considerable progress at Bentley, which included the reprocessing of 3D seismic data to confirm higher estimates of petroleum initially in place (PIIP) for the field and consequent potential recoverable reserves. The PIIP estimate for the most likely structure was estimated to be 689 mmboe (million barrels of oil equivalent), while evaluation of a full field development showed a range of potential recoverable resources from 109 to 220 mmbbls (million barrels) with a base case of 160 mmbbls.

The most significant achievement of the year highlighted in the report was the establishment of the Bentley Alliance, which comprises a number of companies, including Fugro Well Services, Amec (LSE: AMEC) and Transocean Drilling’s well management arm Applied Drilling Technology, which will provide services for the field. Other notable developments included a supply and offtake agreement with BP’s (LSE: BP) subsidiary BP Oil Intl Ltd and a farm-in agreement with Challenger Minerals, which will provide US$4 million towards the cost of the 9/3b-R well in exchange for 4% of the Bentley field. BP will procure US$20 million of financing to assist with the development of the field.

The project economics further benefited from allowances introduced by the Uk Chancellor in the 2009 budget, which resulted in a reduction of the overall corporation tax applicable to the field by £160 million, increasing its present value by £100 million.

Gross proceeds of £2.1 million were raised from investors in the UK and Canada last October and a further financing of £2.7 million was secured in the Challenger Minerals  farm-in undertaking, together with an equity share issue earlier this month raise £23.5 million, which provides what the company called adequate funds for the 9/3b-R well and working capital for “foreseeable future".

Xcite has also reported on the financial results, saying its pre-tax losses widened from £0.53 million to £0.78 million, while operating loss narrowed from £0.88 million to £0.79 million. Basic and diluted losses per share widened from 0.9 pence to 1.4 pence. Total attributable losses for the year amounted to £0.88 million compared to last year’s £0.55 million.

The company’s total assets stood at £24.79 million compared to last year’s £23.8 million.

http://www.proactiveinvestors.co.uk/companies/news/14872/xcite-energy-aims-to-upgrade-bentley-oil-field-resources-in-2010-after-progress-in-2009-14872.html