£40 million Increase in Equity Line

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES

TSX-V, LSE-AIM: XEL

18 March 2011

Xcite Energy Limited

("Xcite Energy" or the "Company")

£40 million Increase in Equity Line

Xcite Energy announces that it has increased its Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV Ltd ("Yorkville") by £40 million to £100 million. This is subject to TSX Venture Exchange approval.

In connection with this SEDA increase, the Company will pay Yorkville an aggregate fee of £400,000, of which £100,000 will be payable when any part of the first £20 million of this increased facility is accessed by the Company, £100,000 will be payable when any part of the second £20 million is accessed by the Company and £100,000 will be paid on 27 September 2011 in respect of each £20 million tranche that has been accessed at that time. Prior to this SEDA increase, £27.25 million was available for draw down.

Funding under the SEDA will be used as future working capital for the Company and to progress towards the first stage production of the Bentley field.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws. 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 Xcite Energy 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 October 29, 2010 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.