Xcite Energy announces end of positive pre-production well test – profit taking sets in

Xcite Energy announced this morning the successful conclusion of the Bentley North Sea field pre-production well test. Twenty one long months on from the first field flow test, the scene is now set to exploit the substantial field.

Highlights

Pre-production well test results exceeded management expectations

Successfully demonstrated full field development drilling, completion, production and export techniques

Extensive data gathering for reservoir model calibration and production facilities design, enabling optimisation of field development

Significantly improved understanding of oil, gas and water movement behaviour

Water ingress to wellbore better than expected (i.e. less water produced)

Produced approximately 147,000 barrels of Bentley crude

Successful management of flow assurance issues, including pipeline transfer to a dynamically positioned shuttle tanker for in-field blending

For investors the key questions are:

1. Will auditors TRACS be able to upgrade the reserves from 116mm barres based on the pre-production data and if so when? (quarter four 2012 perhaps)

2. When will the farm out discussions to allow the final funding of phase 1b start and be concluded? Previous interviews with Stephen Kew indicate a November start time

3. When will DECC full field approval be gained? 1st quarter 2013?

4. When will a replacement for the Rowan Norway be available to commence operations on the field? End 2013-early 2014?

So plenty of missing pieces of the puzzle at the moment, but lots of reassurance today that Bentley is one of the North Sea’s largest unexploited fields that can actually be commercialised once the necessary funds/approvals/infrastructure are in place. After the management cock-ups of the past, things seem to be firmly on track at Xcite!

Contrarian Investor UK