Yesterday morning Xcite Energy tested a low of 73.5p, a 52 week low, before reversing sharply and finishing the day up 9p or 11% at 90.5p. Volume was strong with nearly 9.6 million shares traded.
The previous low for the year was 78p set in December 2011. Since then the company has upgraded its P2 (probable and proven) oil reserves from 28 million barrels to 116 million barrels, struck a deal to secure a $50 million unsecured loan to fully fund phase 1A of the Bentley North Sea field and moved the Rowan Norway rig onto the field to drill the well for the forthcoming well test (EWT). The EWT will begin in June in order to validate the oil reservoir properties, aiming to produce at least 45,000 barrels during the process expected to take 3 months or so.
The big question is the reason for the sharp turnaround? Speculation around:
1. Notice by Socius that they want their warrants, removing the overhang of uncertainty about these additional shares. There are suspicions that the price has been manipulated to lower the share price below an average of 102p to allow Socius to get these essentially for free.
2. A reserves based lending deal (RBL) has been agreed
3. A joint venture with another party is about to be announced.
I guess investors will find out next week. The usual pattern of leak, spike and then official RNS. The AGM is on Thursday 24th May, where more will be revealed no doubt.
Contrarian Investor UK