After a wait of over a month since the last operational update, Xcite Energy issued an RNS this morning on the progress of the Bentley North Sea field extended well test (EWT).
The company has sold in excess of 135,000 barrels of Bentley crude, with pricing better than the Company’s assumption of the anticipated discount to Brent (modelled at 12%) for the conservative full field economics.
The pre-production flow test continues to be conducted in line with the Company’s expectations and is approaching the end of its planned programme. It is expected to be concluded within the next two weeks, with additional crude oil production in this period included as part of the sold cargo. The original target for production was at least 45,000 barrels, a very strong result.
So, with the test completed by the end of September and the Rowan Norway rig off hire in October, plenty for the management team to get their teeth stuck into. Firstly, there’s the submission of the revised field development approval to DECC, modelling of the new reservoir data which may lead to a reserves upgrade by the end of 2012, and then the start of farm-in discussions to finalise the funding of phase 1b of Bentley production.
With the extended well test seeming to be a great success and the data package looking encouraging, Xcite may be looking more enticing than ever for a potential acquirer.
For long term shareholders, it is a great shame that DECC threw out the original field development plan submitted in 2011, since Bentley would now be producing crude oil at substantial quantities. The set back means that full production is still more than a year off.
The shares are up 2.5% percent right now, but a catalyst for a major rise may not be apparent for some time unless a bid emerges given the need to complete a farm in and get the necessary approvals.
So far so good for the revised management team, following the retirement of CEO Richard Smith – now to deliver DECC approval and get the replacement rig for the Rowan Norway ordered as soon as possible given the 12-18 month lead time for delivery.
Contrarian investor UK