Broker comments on Xcite Energy tinged with recrimination perhaps?

The following extract was published in the FT on Friday,

“Explorer Xcite Energy edged higher by 1.4 per cent to 106.5p after it appointed Jefferies and Rothschild to investigate options to fund the $360m cost of its second stage of development for its Bentley field in the North Sea. Options would include a farm-down of its interest, it said.

“Overall this funding strategy is starting to feel desperate,” said Seymour Pierce. “The fact they are now looking at farming down goes against everything management has said before. “What the company should be focusing on is getting a good result from the extended well test, as this is what will ultimately determine the commerciality of the Bentley field.”

It is interesting that the author of the Seymour feedback in the article was Dougie Youngson who was once oil and gas analyst at Arbuthnot who were Xcite Energy’s NOMAD broker until 2011. He now works for Seymour Pierce and guess what, after issuing house broker notes whilst at Arbuthnot in early 2011 for Xcite at 600p he seems to have miraculously changed his view, I wonder why? I’m sure its nothing to do with the fact that Xcite fired Youngson and the Arbuthnot mob…

18 May 2011

Xcite Energy Limited

(“Xcite Energy” or the “Company”)

Appointment of Joint Brokers, Financial Adviser and change of Nominated Adviser

Xcite Energy, a developer of heavy oil assets in the UK North Sea, is pleased to announce that Morgan Stanley & Co. International (“Morgan Stanley”) and Oriel Securities Limited (“Oriel Securities”) have been appointed as joint corporate brokers to the Company. Rothschild has been appointed as the Company’s financial adviser.

In addition, Oriel Securities has been appointed as the Company’s Nominated Adviser. All appointments are effective immediately.

He criticizes the company for planning for funding for stage 1b of the Bentley field. Now this is just prudent. I for one have criticised the board for not being transparent on their strategy, the RNS that Xcite issued on Friday gave clarity on what the board of director’s plans are for reserved based lending or a farm out. The Rowan Norway is drilling away on Bentley in order for the extended well test to begin, it makes sense for Richard Smith and Rupert Cole to be focused on the longer term i.e funding phase 1b and then phase 2, rather than focusing their energy on executing the EWT. At the end of the day, I’m sure Xcite have a very competent operations director and drilling team on site. 

What a rather silly comment to make to the FT. I note that Youngson is also probably the “sector watcher” on FT Alphaville given that the commentary on that forum is usually very negative these days. I want the board of Xcite to be creating long term value for shareholders, not putting their overalls on and making sure that the boys on board the rig are pulling their weight. These brokers are motivated by one thing and I’m sure it isn’t accuracy or facts!!

Contrarian Investor UK