30th Apr 2008 14:00
Xcite Energy Limited30 April 2008 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES TSX-V, LSE-AIM: XEL April 30th, 2008 XCITE ENERGY LIMITED Results Update for 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 a further and important update to the results of the 9/3b-5appraisal well on the "Bentley" field. This update follows the review andinterpretation by the Company's test partner, Schlumberger Limited ("Schlumberger"), of the data and the hydrocarbon and fluid samples obtained fromthe well. Well Overview As set out in the Company's announcement on February 4th 2008, the well wasdrilled to a total depth of 4105ft. and, as anticipated, encountered heavy oilbearing Palaeocene Upper Dornoch Formation sands at 3712ft with 87ft gross (86ft net) hydrocarbon column. During the drill stem test, 100% crude oil production was demonstrated at ratesof up to 150 bopd from the 50ft section of the oil column that had beensuccessfully perforated. This flow rate was within the expected range for a testof this design and nature. Data Review and Interpretation The Company's well test partner, Schlumberger, has now reviewed and interpretedthe data obtained from the well, together with the hydrocarbon and fluid samplesrecovered from the drill stem test. Based on this review and interpretation,Schlumberger has confirmed: 1. Analysis of the pressure build up indicates a high permeability formation of greater than 5 Darcies, with a reservoir pressure of 1630 psi at 3730 ft MDRT. 2. The well, as anticipated, demonstrated a high "skin" of 29, consistent with an appraisal well with drilling damage, limited entry perforations and a thick cemented zone due to bore hole washout during drilling. This high skin value significantly impaired the productivity of this vertical appraisal well. 3. Adjusting the "skin" to 5 for production well conditions, assuming the use of a gravel packed 3000ft horizontal well 15ft from the top of the formation and using a kv/kh ratio of 1, the forecast flow rate from such a well in the reservoir would be circa 4,400 bopd with zero water cut. This low skin value, which is achievable for a production well using current technologies, demonstrates the expected productivity in reservoir conditions. Future Activities Based on these well test results and the Schlumberger data review andinterpretation work, the Company believes that commercially viable productionrates are achievable through the application of horizontal well technologycoupled with appropriate artificial lift techniques, including submersiblepumps. The Company is now planning for the next phase of the development processfor the Bentley field, which will utilise EOR techniques consistent with thequalities of the reservoir and characteristics of the crude oil. Following the success of the 9/3b-5 appraisal well, the Company is re-processingthe 3D seismic data over the Block to confirm the results of its recent 3Dinterpretation, which indicated a material increase in STOIIP compared to the 2Dseismic. In addition, the Company has commenced the planning and identification of theoptimum methodology for the future commercial development of the Bentley field.As part of this work programme, the Company has commissioned RPS Energy CanadaLtd to provide a revised Competent Person's Report. Richard Smith, Chief Executive Officer of Xcite Energy, commented: "The Company was extremely pleased with the outstanding success of the 9/3b-5appraisal well and the work that has now been completed by Schlumberger confirmsour belief in the commercial potential of the Bentley field, one of the largestundeveloped heavy oil fields in the North Sea. The forecast flow rate of over 4,000 bopd from a single production well usingcurrent technologies means that we can proceed with the next phase of theBentley development within the Company's expected timescale. We look forward tocontinued progress during the course of 2008." Enquiries: Xcite Energy +44 (0) 1330 826 740Richard Smith Chief Executive OfficerRupert Cole Chief Financial Officer Thomas Weisel Partners (UK) Limited +44 (0) 20 7877 4472Paul 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 qualified 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 theadequacy or accuracy of this release. Editors' Notes The Bentley heavy oil field is located on Block 9/3b (Licence P. 1078),approximately 160km east of the Shetland Isles, in which Xcite Energy holds 100%working interest. Bentley has been drilled by three of the four previous wellson Block 9/3b, being wells 9/3-1 (Amoco, 1977), 9/3-2A (Conoco, 1983) and 9/3-4(Conoco, 1986). The 9/3b-5 well is the fifth well on the Block. Glossary "bopd" means barrels of oil per day. "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. "kv/kh" means the relative permeability of the reservoir based on the verticalpermeability (kv) and the horizontal permeability (kh). "MDRT" means measured depth (from the) rotary table. "mmbbls" means million barrels. "psi" means pounds per square inch pressure. "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. "skin" has no unit, but represents a measure of the inhibiting factor to theflow of oil into the well bore compared with the flow of oil through thereservoir under natural conditions, thereby directly affecting the productivityof the well. "STOIIP" means stock tank volume of oil initially-in-place. "water cut" means the relative volume of water contained within the total volumeof fluids produced from the reservoir during production at any given point intime. 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. The Company does not intend and doesnot assume any obligation to update these forward-looking statements to reflectnew information, subsequent events or otherwise, except as required by law. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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