THIS ANNOUNCEMENT IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES
Xcite Energy (TSX-V: XEL) (LSE: XEL) (AIM: XEL) announces that
it has filed a Material Change Report with the Canadian Regulatory
Authorities.
Under Canadian Securities Law, a Material Change Report is
required to be filed when, amongst other things, a company's
reserve report is updated. The Material Change Report provides
background information in respect of the information contained in
the Company's press announcement dated 10 May 2011, and is taken
from the Company's Reserve Assessment Report prepared by TRACS
International Consultancy Ltd.
The Material Change Report will be available for review on:
http://www.rns-pdf.londonstockexchange.com/rns/7026G_1-2011-5-16.pdf
Sedar at: www.Sedar.com
and on the Company's website at:
http://www.xcite-energy.com/docs/MCR11.pdf
On 10 May, 2011, the Company announced the results of an
independent evaluation of its reserves and resources. The Company,
through its wholly owned subsidiary Xcite Energy Resources Limited
("XER"), holds a 100% working interest in
Block 9/3b (which contains the Bentley field (the "Field")) and a 100% working interest in Blocks 9/3c and
9/3d (both adjacent to the Field) (collectively, the "Company's Assets"). The Company's Assets are located in
the North Sea in the United Kingdom and a map is provided in
Schedule A to the Material Change Report to assist
understanding.
The Company has recently successfully drilled and tested the
9/3b-6 and 6Z wells in the northern part of the Field, which
demonstrated commercial flow rates and, on this basis, XER
commissioned TRACS International Consultancy Ltd ("TRACS"), an independent qualified reserves auditor, to
prepare an independent audit of reserves and resources for the
Company's Assets. That audit by TRACS is set out in the Reserves
Assessment Report ("RAR") dated 9 May 2011
and effective 30 April 2011, prepared using guidelines outlined in
the Canadian Oil and Gas Evaluation Handbook and in accordance with
National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities.
The highlights of the RAR (as set out in the Press Announcement
of 10 May, 2011 and the Material Change Report) are as follows (see
the Material Change Report for definition of certain technical
terms):
- NPV10 (after tax) of approximately $229 MM, $396 MM and $558 MM
for the 1P, 2P and 3P reserves in the area constituting the First
Stage Production ("FSP"), respectively, with
additional NPV10 (after tax) of $661 MM, $961 MM and $1,315 MM for
contingent resources for the area constituting the Second Stage
Production ("SSP") on a "low estimate", "best
estimate" and "high estimate" basis, respectively.
- RPS Energy, in its Competent Person's Report dated and
effective 20 February 2009 (the "2009
CPR") (in which no reserves were assigned to
the Company's Assets), assigned a NPV10 (after tax) valuation of
$781 MM for the Company's "best estimate" contingent resources for
the core structure, which is equivalent to the Core Area in the
RAR. The NPV10 (after tax) valuation assigned by the RAR to the
reserves in the FSP and the contingent resources in the SSP
(together constituting the "Core Area"),
demonstrates a material increase over the NPV10 (after tax)
valuation of $781 MM in the 2009 CPR.
- Reserves of the type 1P, 2P and 3P in the FSP of approximately
22 MMstb, 28 MMstb and 35 MMstb, respectively.
- Contingent resources for the SSP (which are in addition to the
reserves in the FSP stated above) of approximately 73 MMstb, 87
MMstb and 101 MMstb on a "low estimate", "best estimate" and "high
estimate" basis, respectively.
- As no technical contingencies remain, the RAR confirms that the
contingent resources in the SSP would be converted to an equivalent
volume of reserves following the Company's decision to pursue the
development of the SSP and the approval by DECC of its development
plan for this purpose. On this basis, the Company intends to seek
approval from DECC for the FSP and SSP which, when obtained, would
enable it to (i) move forward with the FSP without delay; (ii) move
forward with the SSP at an appropriate time that suits its business
objectives; and (iii) upgrade the SSP contingent resources to
reserves status.
- The RAR assigned prospective resources for seven (7) prospects
on the Company's Assets of, in the aggregate, approximately 17.7
MMboe on a risked "best estimate" basis.
Management of the Company has confirmed to TRACS that it will
continue to incorporate the latest modelling and latest
technologies through the life of Field, including the investigation
of the application of enhanced oil recovery techniques. As a
result, the RAR confirms that it expects prospective resources to
be upgraded to contingent resources and those contingent resources
to be upgraded to reserves as the Field development matures and
additional drilling is undertaken. The RAR also confirms that the
combination of these factors is expected to materially improve the
ultimate recovery of oil from the Company's Assets.
As a result of the increase in the aggregate NPV10 valuation,
the value per barrel was materially increased from the 2009 CPR to
the RAR and the Core Area was de-risked as a result of the drilling
of the 9/3b-6 and 6Z wells at the end of 2010.
On a value per barrel basis:
- The RAR assigned a NPV10 (after tax) value per barrel for the
1P, 2P and 3P reserves in the FSP as approximately $10.40, $14.20
and $16.00, respectively.
- The RAR assigned a NPV10 (after tax) value per barrel for the
"low", "best" and "high" estimate of contingent resources in the
SSP as approximately $9.10, $11.00 and $13.00, respectively.
- Based upon the 2009 CPR, the NPV (after tax) can be calculated
for the "low", "best" and "high" estimate of contingent resources
as approximately $2.50, $6.40 and $9.20, respectively. If risked at
the 70% chance of commercial success, as in the 2009 CPR, these
values per barrel would be $1.80, $4.50, and $6.40,
respectively.
There is no certainty that it will be commercially viable to
produce any portion of the contingent resources noted above.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) acceptsresponsibility for the adequacy or
accuracy of this release.
Forward Looking Information and Risks and
Assumptions
Certain statements contained in this report constitute
forward-looking information within the meaning of securities laws,
including states relating to the estimated reserves, resources and
exploration activities associated with the oil and gas properties
in which the Company holds an interest. Forward-looking information
may relate to the Company's future outlook and anticipated events
or results and, in some cases, can be identified by terminology
such as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "intend", "estimate", "predict", "target", "potential",
"continue" or other similar expressions concerning matters that are
not historical facts. These statements are based on certain factors
and assumptions including expected growth, results of operations,
performance and business prospects and opportunities. While the
Company considers these assumptions to be reasonable based on
information currently available to us, they may prove to be
incorrect. Forward-looking information is also subject to certain
factors, including risks and uncertainties that could cause actual
results to differ materially from what we currently expect. These
factors include risks associated with the oil and gas industry
(including operational risks in exploration and development and
uncertainties of estimates oil and gas potential properties), the
risk of commodity price and foreign exchange rate fluctuations and
the ability of the Company to secure financing. Additional
information identifying risks and uncertainties are contained in
the Company's annual information form dated October 26, 2010 and in
the annual Management's Discussion and Analysis for Xcite Energy
dated March 24, 2011 filed with the Canadian securities regulatory
authorities and available at www.sedar.com. The Company disclaims
any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required under applicable securities
regulations.
Statements relating to "reserves" or "resources" are deemed to
be forward-looking statements or information, as they involve the
implied assessment, based on certain estimates and assumptions,
that the resources and reserves described can be profitable in the
future. There are numerous uncertainties inherent in estimating
quantities of proved reserves, including many factors beyond the
control of the Company. The reserve and resources data included
herein represents estimates only. In general, estimates of
economically recoverable oil reserves and the future net cash flows
therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties, the
assumed effects of regulation by governmental agencies and future
operating costs, all of which may vary considerably from actual
results. All such estimates are to some degree speculative and
classifications of reserves are only attempts to define the degree
of speculation involved. For those reasons, estimates of the
economically recoverable oil reserves attributable to any
particular group of properties and classification of such reserves
based on risk of recovery and estimates of future net revenues
expected therefrom, prepared by different engineers or by the same
engineers at different times, may vary substantially. The actual
production, revenues, taxes and development and operating
expenditures of the Company with respect to these reserves will
vary from such estimates, and such variances could be material.
Consistent with the securities disclosure legislation and
policies of Canada, the Company has used forecast prices and costs
in calculating reserve quantities included herein. Actual future
net cash flows also will be affected by other factors such as
actual production levels, supply and demand for oil and natural
gas, curtailments or increases in consumption by oil and natural
gas purchasers, changes in governmental regulation or taxation and
the impact of inflation on costs.
The estimated future net revenue contained herein does not
necessarily represent the fair market value of the Company's
reserves and resources. There is no assurance that the forecast
price and cost assumptions contained in the RAR will be attained
and variances could be material. The recovery and reserves
estimates on the Company's properties described herein are
estimates only. The actual reserves on the Company's properties may
be greater or less than those calculated.
ENQUIRIES: Xcite Energy Limited +44 (0) 1483 549
063 Richard Smith Chief Executive Officer Rupert Cole Chief
Financial Officer Arbuthnot Securities Limited (Nomad and
Broker) +44 (0) 20 7012 2000 Antonio Bossi Director Pelham Bell
Pottinger +44 (0) 20 7861 3232 Mark Antelme Director Henry
Lerwill Paradox Public Relations +1 514 341 0408
Jean-Francois Meilleur Consultant
Xcite Energy Limited (TSXV:XEL)
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