- 22 Oct 2009 11:14
- 15 Feb 2010 11:25
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- 06 Mar 2010 11:42
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Friday, March 05, 2010
Xcite Energy wins Transocean's Challenger Minerals as farm-in partner for Bentley oil field
Xcite Energy Ltd (TSX-V, LSE-AIM: XEL), a developer of heavy oil assets in the UK North Sea, said its subsidiary Xcite Energy Resources Ltd has signed a legally binding agreement with Challenger Minerals (North Sea) Lrd for CMNS to farm in to the Bentley field, commencing with the forthcoming 9/3b-R well intended to be drilled this summer.
CMNS, a subsidiary of Transocean Drilling UK Limited, will provide US$4 million as its share of the 9/3b-R well costs in exchange for 4% working interest in the Bentley field through an earn-in mechanism, which allows CMNS to join the Bentley field licence at any time prior to the commencement of the first phase development of the field.
Xcite is making good progress on the Bentley field, On February 10, it announced two separate agreements with third party contractors, one with AMEC (LSE: AMEC) for the provision of technical expertise, engineering and project management, and another with Transocean Drilling UK, which will supply a heavy duty, deep water jack-up drilling unit.
AMEC has been hired to advise Xcite on the upcoming Bentley 9/3b-R horizontal test well, and will support the company further through the planned works on early production systems and the full field development in due course, Xcite said. The services to be provided by AMEC will include project management, engineering, facilities design, planning and programming, supply chain management and operational support.
Transocean Drilling’s well management unit, Applied Drilling Technology International, will provide a heavy duty, deep water jack-up drilling unit. The rig is being procured to undertake the drilling and testing of the 9/3b-R well on Bentley. As part of the deal ADTI has also joined the Bentley Alliance, the operational structure created by Xcite. The addition of ADTI’s technical expertise and project management skills is expected to greatly assist Xcite Energy in moving the Bentley field towards production.
A few days prior to the AMEC and Applied Drilling Technology agreements, Xcite appointed book-runners to conduct an equity placing to finance the Benmtley development. The company estimates that approximately C$50m is required in total. To facilitate the equity financing the company hired Arbuthnot Securities in the UK and Octagon Capital Corporation and CIBC World Markets in Canada.
The net proceeds will be used primarily to fund the C$40m drilling and flow testing of a pre-development well on the Bentley oil field. Additionally C$5m is intended for early production system planning and engineering, and a further C$5m will be raised for general working capital purposes.
In January, BP (LSE: BP) signed an off-take agreement for the Bentley oil production. The international oil major’s BPOI unit will sell the crude from the Bentley field in return for an incentive-based fee per barrel. The off-take fee is directly related to the realised price achieved by BPOI for the Bentley crude oil in relation to the prevailing Brent crude price, thus incentivising BPOI to maximise the price per barrel achieved for XER by minimising the discount to Brent crude.
Furthermore the FTSE100 constituent is also supporting the commercial development of the Bentley oilfield. BPOI will procure US$20 million of financing from a commercial bank for Xcite and provide credit support from BP once Xcite moves to full field development.
The Bentley field is among the largest undeveloped heavy oil prospects in the North Sea. Its resource estimate was last year upped to 690 million barrels of oil (mbo) with the upside at nearly 890 mbo following a 3D seismic survey.
- 14 Mar 2010 01:15
- 124 of 2998
Things moving along now, placing has been done and cash raised and onwards and upwards now.
Following a recent £25 million placing, this summer will see the drilling of another well on the field to confirm the commerciality of the project. “This will be a watershed valuation event for Bentley and Xcite,” said Lucas-Clements.
The company hopes to deliver first oil in mid-2011 through an EPS, drawing on three to five wells, with an estimated production rate of 20,000 bpd. “Our EPS is the size of a normal North Sea development in the current market,” noted Lucas-Clements.
This would then pave the way for moving to full field development in 2013, with the field drawing on more than 75 wells to evacuate the resource. The company has formed an alliance with some of the leading names in the service business, including AMEC and Transocean, in order to deliver a project which could involve expenditure of US$4 billion over a 20 year life span: the alliance partners provide risk capital, be it cash, equipment or services, in return for a share in the value uplift of the project. It’s an innovative way of doing business and one that should help monetise one of the North Sea’s largest undeveloped heavy oil deposits.
A copy of the presentation to follow next week
Also worth reading the 2nd post on the thread link below :
- 18 Mar 2010 08:54
- 125 of 2998
...............Word has it that Xcite Energy (down 0.5p at 40p) has completed its share placing to raise £25m, which will be used to bankroll its ambitions for the Bentley field in the North Sea. The group specialises in heavy oil, which is slightly more difficult to get out of the ground than some of the lighter crudes. But if the firm's reserve projections prove correct then Xcite could be become the third largest independent in the North Sea.
- 18 Mar 2010 14:17
- 126 of 2998
18 March 2010
Xcite Energy Limited Closes C$38.4 million (£24.9 million) Placing
Xcite Energy, a developer of heavy oil assets in the UK North Sea, is pleased to announce that it has successfully raised gross proceeds of C$38.4 million (approximately £24.9 million) through its previously reported placing of new ordinary shares, principally to institutional investors.
As a result of the placing 61,972,394 new Ordinary Shares have been issued at a price of C$0.62 (£0.40) per Ordinary Share.
The net proceeds of the offering, together with US$4 million in funds committed to the Company by Challenger Minerals (North Sea) Limited, are anticipated to be used primarily to fund the drilling and flow testing of the 9/3b-R pre-development well on the Company's Bentley oil field. The balance of the net proceeds of the offering will be used for general working capital purposes.
Richard Smith, Chief Executive of Xcite Energy, commented:
"This fund raising represents a significant step forward for the Company in the overall achievement of the development plan for the Bentley field. We have successfully obtained commitment from our Bentley partners, BP, Transocean/ADTI/ChallengerMinerals, AMEC and Fugro in the last few months and, now that we have the finance in place, we have the resources to drill the 9/3b-R well expected to commence during the summer of 2010."
- 19 Mar 2010 08:08
- 127 of 2998
From another BB :
Jimarilo - 19 Mar'10 - 07:46
Using the Arbuthnot note and adjusting the price targets set by them adding the new placing shares and the £25m the new price targets must be around
Low end 90p, base case 346p and high end 663p
In addition to that there is the ADTI $4m and the $20m credit facility that BP have agreed to guarantee
- 19 Mar 2010 08:13
- 128 of 2998
there is a somewhat facetious argument that if the likes of CHAR and MATD can go intergalactic without any obvious reason, especially in the case of the former, then XEL should at least manage to go into orbit ..... but the Daily Mail does rather gloss over the fact that heavy oil sells at a pretty hefty discount to light crude, and extraction is a LOT more difficult
- 19 Mar 2010 08:35
- 129 of 2998
Yes, but this a confirmed discovery and on our doorstep, plus everything is set up to drill, and produce...big, quality firms are in on this...it looks great to me...
- 19 Mar 2010 08:42
- 130 of 2998
but as always, the question is WHEN?
- 19 Mar 2010 09:01
- 131 of 2998
They will be spudding very soon...in a month....
- 19 Mar 2010 09:04
- 132 of 2998
announced as much?
i also note that this is an MM stock only, offered in max blocks (effectively) of only 5,000 and with tiny average volume
- 20 Mar 2010 01:43
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- 20 Mar 2010 08:34
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perhaps i missed something, but that indicated drilling Q2/3, which implies to me no earlier than May or even a bit later
- 20 Mar 2010 09:52
- 135 of 2998
Yes, rig is booked for June so spud should be June or July pending the inevitable delays.
- 20 Mar 2010 10:50
- 136 of 2998
aha .... so "in a month" showed considerable artistic licence then!
- 20 Mar 2010 13:24
- 137 of 2998
At the moment does it really matter if it is 1 or 2 months....they are going to drill and this is undervalued by two thirds in my opinion....don't forget : this is proven...the oil is there....
- 20 Mar 2010 14:05
- 138 of 2998
sort of and more likely 3/4 and possibly so and yes though rather low value sticky stuff
- 20 Mar 2010 14:07
- 139 of 2998
cynic, low value sticky stuff but lots and lots and lots of it.
So much so that best case would have XEL up over 600p a share.
Not bad for low value sticky stuff :)
- 20 Mar 2010 14:43
- 140 of 2998
and not the easiest stock to trade either! ..... but yes, i have some
- 25 Mar 2010 12:12
- 141 of 2998
RNS drilling to start shortly.