Edison issues update on Xcite Energy after positive phase 1a drill

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An interesting read from Edison on Xcite Energy this morning, see the full report at http://www.edisoninvestmentresearch.co.uk/researchreports/Xciteupdate171012.pdf

The shares are currently up 3.5% at 107p. 

Given the conservative estimates from Edison there appears to be some upside to their share price valuation (see extract below) as well as an opportunity for a reserves upgrade after the successful conclusion of phase 1a of the Bentley field extended well test. However, further news on the $155 million Reserves Based Lending (RBL) deal, field development approval, farm out and revised CPR (Competent Persons Report) allowing a potential reserves upgrade are not expected until the first quarter of 2013. In addition, first oil from phase 1b of the field development has now slipped to the end of 2014.

So, in summary, don’t expect any fireworks with the share price for a little while until significant progress updates from the company unless Edison have been overly pessimistic (and this is unlikely given that Xcite is a research client).There may be opportunities to pick up cheap shares on weak market days in the meantime. 

Contrarian Investor UK

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