Drawdown on Equity Line and Director's Purchase

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

TSX-V, LSE-AIM: XEL

13 September 2011

Xcite Energy Limited

("Xcite Energy" or the "Company")

Drawdown on Equity Line and Director's Share Purchase

Xcite Energy announces that it has drawn down on its Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV Ltd ("Yorkville") as announced on 28 September 2010 in the amount of £6.9 million (CAD$10.9 million). This draw down has been undertaken at a price of £1.2816 (CAD$2.03) per share and will result in the issue of 5,383,894 ordinary shares of no par value in the capital of the Company (the "SEDA Ordinary Shares") to Yorkville. This funding will be used as future working capital for the Company and to progress towards first oil from the Bentley field.

Subject to the terms of the SEDA and except in accordance with Canadian securities laws and with prior written approval of the TSX Venture Exchange, the SEDA Ordinary Shares may not be sold or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until the date that is four months and one day from the date of issue.

Application will be made for the admission to AIM ("Admission") of the SEDA Ordinary Shares upon approval of the share issue by the TSX Venture Exchange. The SEDA Ordinary Shares will rank pari passu with the Company's existing issued ordinary shares (each, an "Ordinary Share").

The Company has engaged Arbuthnot Securities Limited ("Arbuthnot") to assist in the placing of the stock acquired by Yorkville pursuant to the SEDA, for which it will be paid a fee of £51,099 (CAD$80,821). Arbuthnot, as agent for the purchasers, has agreed to acquire 2,795,242 shares acquired by Yorkville pursuant to the SEDA, including stock to be acquired by a director of the Company.

The Company has received communication that one of its directors, Rupert E. Cole, intends to subscribe through Arbuthnot for 801,666 Ordinary Shares of the Company at a purchase price of £1.2816 (CAD$2.03) per share on the date of closing of the issuance of the SEDA Ordinary Shares to Yorkville, following which Mr. Cole will hold an aggregate of 7,000,000 Ordinary Shares.

Subject to approval by the TSX Venture Exchange, following the issue of the 5,383,894 Ordinary Shares the total Ordinary Shares in the Company in issue will be 183,656,292.

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.

Oriel Securities which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Morgan Stanley which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.