Xcite Energy reverses downward trend

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After several days of declines in Xcite Energy, driving it down to the 95p mark yesterday, the shares have rebounded strongly this morning to stand at 103p, up 7.5%. Apart from a Buy initiation from broker Liberum Capital, there doesn’t seem to be any clear drivers for the change in sentiment. 

Long traders have been waiting on the side lines waiting for signs of a bottom and the sudden reversal may be a signal that shorters have been closing their positions in anticipation of a rise as a result of anticipated news flow.

Xcite shareholders are waiting for an update on a potential reserves upgrade following the end of the extended well test on its Bentley field but this is still likely to be some weeks away. Farm-out negotiations are also either already in progress or shortly to begin. Edison recently published an updated broker report that stated that significant updates on these issues were unlikely before Q1 2013.  

We retain our Conviction Buy recommendation on Xcite Energy.

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