4th Feb 2008 15:27
Xcite Energy Limited04 February 2008 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES TSX-V, LSE-AIM: XEL February 4th, 2008 XCITE ENERGY LIMITED Results of the 9/3b-5 Appraisal Well Xcite Energy Limited ("Xcite Energy" or the "Company"), a heavy oil companyfocused on the development of discovered resources in the UK North Sea, ispleased to announce the results of the 9/3b-5 appraisal well on the "Bentley"field with all principal objectives being met during the well evaluationprogramme. The well was drilled to a total depth of 4105ft. and, as anticipated,encountered heavy oil bearing Palaeocene Upper Dornoch Formation sands at 3712ftwith 87ft gross (86 ft net) hydrocarbon column. Despite difficult weatherconditions and, as a result, a shorter period for the drill stem test than theCompany had hoped for, the well test met all of the Company's principalobjectives and is a significant step forward in the understanding of the Bentleyfield and its commercial value. These objectives included: 1. Obtaining a crude oil sample to establish the key fluid parameters includingAPI gravity, viscosity, TAN (total acid number) and the metals content of theoil; 2. Flowing crude oil to surface through a drill stem test at rates commensuratewith the well conditions, completion approach and pump capacity, and to recoverthe oil produced; 3. Obtaining a water sample from the aquifer for chemical analysis and forcalibration of wireline logs; 4. Confirming the characteristics of the reservoir; 5. And obtaining productivity data on which to model potential productionprofiles. The drill stem test was conducted under difficult weather conditions that, inthe event, reduced the time available for testing to 20 hours. During thisperiod, the well clean up process was undertaken gradually and was still notfully complete at the time the test was stopped due to severe weatherconditions. The planned low capacity, sand tolerant electrical submersible pump performed asexpected, with the slow start and gradual increase in pump speed confirming thesuitability of the Company's testing approach for a reservoir of this nature. The final few hours of the flow test demonstrated 100% crude oil production(with intermittent pockets of drilling fluids) at a rate equivalent to 150 bbls/d from the planned 50ft section of the oil column that had been successfullyperforated. This flow rate was within the expected range for a test of thisdesign and nature, with approximately 75 barrels of crude oil collected. This drill stem test outcome in such a short timescale is viewed by the Companyas a major success and as a seminal step forward in the understanding of theBentley field and its commercial value. The initial analysis of the crude oil sample obtained indicates, at reservoirconditions of 40 degrees centigrade, a specific gravity of 0.976, which theCompany believes is within the acceptable range for commercial development andis consistent with the Company's expectation for the Bentley reservoir. TheCompany is greatly encouraged by this outcome. The crude oil sample is undergoing a range of further analysis and a watersample, obtained through the wireline formation tester tool, is currently alsoundergoing analysis. The characteristics of the reservoir, all of which are consistent with theCompany's expectations, were confirmed as: • High porosity and permeability unconsolidated sandstone • Temperature of over 103 degrees Fahrenheit • Depth to top of reservoir 3712ft • No gas cap Based on these well test results, the Company believes that commercially viableproduction rates are achievable through the application of horizontal welltechnology coupled with appropriate artificial lift, including submersiblepumps. The Company now intends to proceed with planning for the next phase ofthe development process for the Bentley field, which will utilise EOR techniquesconsistent with the qualities of the reservoir and characteristics of the crudeoil. Based on the success of the 9/3b-5 appraisal well, the Company now intends tore-process the 3D seismic data over the Block to confirm the results of itsrecent 3D interpretation, which indicated a material increase in STOIIP comparedto the 2D seismic. In addition, the Company will move forward to plan further and identify theoptimum methodology for the future commercial development of the Bentley field.As part of this work programme, the Company intends to update the work performedby RPS Energy Canada Ltd to provide a revised Competent Person's Report. The Bentley heavy oil field is located on Block 9/3b (licence P. 1078), in whichXcite Energy holds 100% working interest. Block 9/3b is approximately 160km eastof the Shetland Isles with an area in excess of 200 km(2). Bentley has beendrilled by three of the four previous wells on Block 9/3b, being wells 9/3-1(Amoco, 1977), 9/3-2A (Conoco, 1983) and 9/3-4 (Conoco, 1986). This is the fifthwell on the Block. Richard Smith, Chief Executive Officer of Xcite Energy, commented: "The outstanding success of the 9/3b-5 appraisal well takes us past another ofour key milestones for the Xcite Energy business and for the Bentley field, oneof the largest undeveloped heavy oil fields in the North Sea. We are grateful toall those who have helped achieve this success and we now turn our attention tothe next phase of commercialising the Bentley field within the Company'sexpected timescale" Enquiries: Xcite Energy +44 (0) 1330 826 740Richard Smith Chief Executive OfficerRupert Cole Chief Financial Officer Thomas Weisel Partners (UK) Limited +44 (0) 20 7290 9716Paul Colucci Managing DirectorPaul Newman Managing Director Strand Partners Ltd. +44 (0) 20 7409 3494James Harris DirectorWarren Pearce Associate Director Pelham Public Relations +44 (0) 20 7743 6676Alisdair Haythornthwaite DirectorKatherine Stewart Account ExecutiveLucy Frankland Account Executive Stephen Kew has reviewed and approved the technical information contained withinthis press release in his capacity as a competent person, as required under theAIM rules. Stephen Kew is Head of Exploration and Development at Xcite Energyand is an associate of the Institution of Chemical Engineers and a member of theSociety of Petroleum Engineers. The TSX Venture Exchange does not accept responsibility for the adequacy oraccuracy of this release. Glossary "bbls/d" means barrels per day. "best estimate" is considered to be the best estimate of the quantity that willactually be recovered from an accumulation and, if probabilistic methods areused, this term is a measure of central tendency of the uncertainty distribution(most likely/mode, P50/median, or arithmetic average/mean). "crude oil" means a mixture that consists mainly of pentanes and heavierhydrocarbons, which may contain sulphur and other non-hydrocarbon compounds,that is recoverable at a well from an underground reservoir and that is liquidat the conditions that is recoverable at a well from an underground reservoirand that is liquid at the conditions under which its volume is measured orestimated. It does not include solution gas or natural gas liquids. "discovered resources" means those quantities of oil and gas estimated on agiven date to be remaining in, plus those quantities already produced from,known accumulations. Discovered resources are divided into economic anduneconomic categories, with the estimated future recoverable portion classifiedas reserves and contingent resources, respectively. "drill stem test" means a procedure for testing the surrounding geologicalformation using specialised tubing. "EOR" means enhanced oil recovery. "field" means an area consisting of a single reservoir or multiple reservoirsall grouped on or related to the same individual geological structural featureand/or stratigraphic condition. "heavy oil" means oil with API gravity of less than 22 degrees and reservoirviscosity greater than 5 centipoise. "mmbbls" means million barrels. "reservoir" means a porous and permeable underground formation containing anatural accumulation of producible oil or gas that is confined by impermeablerock or water barriers and is individual and separate from other reservoirs. "STOIIP" means stock tank volume of oil initially-in-place. Forward-Looking Statements Certain statements contained in this announcement constitute forward-lookinginformation within the meaning of securities laws. Forward-looking informationmay relate to the Company's future outlook and anticipated events or resultsand, 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 expressionsconcerning matters that are not historical facts. These statements are based oncertain factors and assumptions including expected growth, results ofoperations, performance and business prospects and opportunities. While theCompany considers these assumptions to be reasonable based on informationcurrently available to us, they may prove to be incorrect. Forward-lookinginformation is also subject to certain factors, including risks anduncertainties that could cause actual results to differ materially from what wecurrently expect. These factors include changes in market and competition,governmental or regulatory developments and general economic conditions.Additional information identifying risks and uncertainties are contained inXcite Energy' prospectus filed with the Canadian securities regulatoryauthorities, available at www.sedar.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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