16th Nov 2007 13:30
Xcite Energy Limited16 November 2007 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES November 16, 2007 XCITE ENERGY LIMITED ("Xcite Energy" or the "Company") FIRST DAY OF DEALINGS ON AIM AND TSX-V Xcite Energy (LSE-AIM: XEL, TSX-V: XEL), a heavy oil company focused on thedevelopment of discovered resources in the United Kingdom North Sea, todayannounces the placing of 18,750,000 ordinary shares without par value ("OrdinaryShares") and the admission of the Company's Ordinary Shares to trade on the AIMMarket of the London Stock Exchange ("AIM") and the Venture Stock Exchange ("TSX-V") of the Toronto Stock Exchange. Westwind Partners (UK) Limited acted as lead agent and the Company's AIMNominated Adviser is Strand Partners Limited. Admission Details Offering Price (per Ordinary Share) C$1.60 (£0.805)Number of Ordinary Shares in the Offering to be issued by the Company 18,750,000Percentage of the enlarged issued Share capital in the Offering 31%Ordinary Shares in issue on Admission 60,550,000Basic market capitalisation at the Offering Price £48,742,750Number of Fully Diluted Shares in issue following the Offering 76,022,500Estimated Net proceeds of the Offering receivable by the Company* £13,221,010 *Net proceeds receivable by the Company are stated after deduction of theOffering expenses of approximately £1,872,740 Company Background Xcite Energy is an exploration and development company currently focused on theappraisal and development of heavy oil resources in the North Sea on the UKContinental Shelf (the "UKCS"). Xcite Energy has a 100% working interest in Block 9/3b, the Bentley Field,situated in the North Sea. The block was offered in the United Kingdom's 21stSeaward Licensing Round, administered by the BERR. The 9/3b Licence, offered aspart of the UK government's "Promote Licence" initiative, was awarded to XERwith effect from October 1, 2003 and contains the 1977 Bentley heavy oildiscovery. RPS Energy Canada Ltd. has assigned best estimate contingent and prospectiveresources of 109 million barrels of oil ("mmbbls") and P50 oil-in-place volumesof 592 mmbbls for Block 9/3b. Business Objectives and Milestones The executive management team of the Company includes experienced oilprofessionals with over 100 years of combined industry experience. The Company'sprincipal objectives are: • To acquire further heavy oil properties in the North Sea by participating in the 25th Seaward Licensing Round and other future licensing rounds; • To have commenced full field production on Block 9/3b by mid-2011; and • To further the Group's growth through acquisition and joint venture opportunities. The Company has identified the following milestones to commence production onBlock 9/3b. • Rig secured for appraisal well and testing in Q4 2007; • Six month extended well test, commencing in Q4 2008; • Initiate an early production system in Q2 2009; and • Full Field Development in Q2 2011. Use of Proceeds The principal purposes to which the Company intends to use the proceeds of theOffering are as follows: Testing of Block 9/3b Appraisal Well . . . . . . . . . . . . .......C$15,000,000 Drilling Contingencies . . . . . . . .. . . . . . . . . . . . .....C$10,000,000 Working Capital and General Corporate Purposes . . . . . .. . . . . .C$5,000,000 Richard Smith, Chief Executive Officer of Xcite Energy, commented: "We are very pleased with the strong institutional support we have receivedwhich has given us the financial resources to pursue our field development planfor the Bentley heavy oil discovery. "Xcite Energy's management have no doubt that the importance of heavy oil in theNorth Sea will continue to grow as the demand for resources increases whilstsupply tightens, and heavy oil technology and extraction methods improve. "Xcite Energy intends to become a leading player in this expanding sector andintends to be a significant independent North Sea heavy oil producer, targetingnet production of 60,000 bopd and reserves of 250 mmbbl by 2012." Enquiries: Xcite Energy 013 3082 6740Richard Smith Chief Executive OfficerRupert Cole Chief Financial Officer Westwind Partners 020 7290 9716Paul Colucci Managing Director Strand Partners Ltd.James Harris Director 020 7409 3494Warren Pearce Associate Director Pelham Public Relations 020 7743 6676Alisdair HaythornthwaiteKatherine StewartLucy Frankland NOTES TO EDITORS Further Details on Block 9/3b The location of Block 9/3b is within the northern North Sea, approximately 160kmeast of the Shetland Isles on the western edge of the Viking Graben. This blockcovers slightly more than 200 km2. Analogous commercial production of heavy oilis located in Block 13/22a (the Captain Field) approximately 250 km away. Othernearby heavy oil discoveries yet to be developed are the Bressay fieldimmediately north of Block 9/3b, the Kraken accumulation in neighbouring Block 9/2b to the west of Block 9/3b and the Mariner field in Block 9/11, approximately35 km southwest of Block 9/3b. Based on 2D seismic data analysis two structures within Block 9/3b haveestablished accumulations of heavy oil known as the Bentley field. Bentley hasbeen drilled by three of the four wells on Block 9/3b, being wells 9/3-1 (Amoco,1977), 9/3-2A (Conoco, 1983) and 9/3-4 (Conoco, 1986). Based on the same 2Danalysis, Block 9/3b also contains one identified prospect and one identifiedlead (Prospect A, Lead B). RPS Energy Canada Ltd's estimate of unrisked barrels of oil-in-place ranges from508 mmbbls to 691 mmbbls: Stock Tank Volume of Oil Initially-In-Place P90 P50 P10 ("STOOIP")Bentley Field (mmbbls) 313 370 440Prospect A (mmbbls) 147 163 180Lead B (mmbbls) 48 59 71Total STOOIP (mmbbls) 508 592 691 Reservoir simulations result in a best estimate of net contingent andprospective resources of 109 mmbbls: Contingent Resources Low Best HighBentley Field (mmbbls) 37 68 176Prospective ResourcesProspect A (mmbbls) 17 30 72Lead B (mmbbls) 6 11 28Total Contingent & Prospective (mmbbls) 60 109 276 Focus on Heavy Oil in the North Sea Heavy oil is viscous crude oil, requiring proven, modern drilling techniques &technology for commercial development. UK heavy oil is generally classified ashaving an API (a measure of the relative density compared to water) between 10degrees and 22degrees. It is often known for having high levels of sulphur andheavy metals, though the North Sea has exceptionally low levels. Heavy oil isfound around the world and there have been successful large scale offshoreprojects in Brazil, Venezuela, the Far East and the North Sea. Recently there has been increased interest in developing heavy oil resources inthe North Sea. This increased interest has been influenced by a number offactors, including (i) the economic potential of in-place undeveloped heavy oilresources in the North Sea, which are estimated by the BERR to be in excess of 9Bbbls; (ii) the advancement of new technologies, including horizontal wells andreliable down-hole pumps, which are achieving increased recovery of heavy oil;and (iii) high oil prices, which encourage larger players to reconsider heavyoil developments. Heavy oil development in the North Sea has recently garnered attention withannouncements by StatoilHydro that it has concluded two separate transactions onthe UKCS, including an agreement with Chevron to acquire its total interests inthe Mariner and Bressay fields on the UKCS. StatoilHydro is already the largestheavy oil producer within the North Sea with its Grane heavy oil field on theNorwegian Continental Shelf currently producing 220,000 bbls/d. Hydro is alsocurrently the operator of the Peregrino heavy oil field development offshoreBrazil, which holds an estimated 300 to 600 Mmbbls of recoverable reserves. While StatoilHydro has stated that it is too early to confirm the commercialityof these UKCS heavy oil interests, based on StatoilHydro's heavy oil experience,management of Xcite Energy believes that these acquisitions are an importantstep forward in the possible commercialisation of these fields and other heavyoil fields in the North Sea. Furthermore, given the proximity of StatoilHydro'sUKCS heavy oil interests to Block 9/3b, commercialisation of these fields mayhave a positive effect on the Company's activities in Block 9/3b. For example,successful commercialisation could potentially result in the development of aheavy oil "hub" in the area, providing joint development possibilities for theBentley field. Senior Management Team Richard Smith, aged 59, Chief Executive Officer Prior to joining Xcite in 2003, Mr. Smith was Programme Director at Granherne, acompany within the Halliburton Group of companies. He was responsible for thecreation and formation of a business providing programme management services toclients in the international onshore and offshore oil and gas business. Mr.Smith is a Chartered Engineer and has over 25 years of experience in engineeringand business management in onshore and offshore oil and gas projects. He is aFellow of the Institute of Civil Engineers and a Corporate Member of theInstitute of Marine Engineers and the Royal Institute of Naval Architects. Rupert Cole, aged 48, Chief Financial Officer Prior to joining Xcite in 2003, Mr. Cole was Programme Management BusinessAdvisor at Granherne, a company within the Halliburton Group of companies. Hewas responsible for providing strategic, commercial and financial advice toupstream oil and gas service providers. From 1990 to 1996, Mr. Cole was financedirector at Harpur, an international downstream service provider to major oilcompanies. Mr. Cole is a chartered accountant and has over 20 years ofexperience in corporate finance. Stephen Kew, aged 54, Head of Exploration and Development, Executive Director Mr. Kew is a Petroleum Engineer and has over 34 years of development engineeringand project management experience in petroleum industry, with 25 years in Conocowhere he previously worked on Block 9/3b, giving him significant insight intothe Bentley field. He is an associate of the Institution of Chemical Engineers,a member of the Society of Petroleum Engineers and President of the Scottish OilClub. Richard West, aged 64, Programme Manager, Bentley Prior to joining Xcite, Mr. West spent 15 years working for Britoil/BP as theEngineering Manager for the Forties field. Mr. West has over 30 years experiencein international oil field development, including the implementation of theConoco MacCulloch field development in the North Sea. This field developmentused the first fully tariffed FPSO solution in the North Sea and has deliveredbeyond expectations. Non-Executive Directors Roger Ramshaw, aged 58, Non-Executive Chairman From 2002, until his retirement in 2003, Mr. Ramshaw was the Chairman andManaging Director of ConocoPhillips (UK) Ltd where he led the company'sexploration, development and production business on the UKCS. From 1999 to 2002,he was President of Conoco Venezuela Ltd., leading the Company's successfulheavy oil development in the region. Mr. Ramshaw has over 30 years of domesticand international experience in operations, project and commercial activity inthe petroleum industry. Gregory J. Moroney, aged 56, Non-Executive Director Mr. Moroney is the Founding and Managing Member of Energy Capital Advisors LLCof Greenwich, Connecticut, which he founded in 2003 to assist independent energycompanies and energy fund managers in North America in their fund-raisingactivities. Mr. Moroney is also a director of BreitBurn Energy Partners, L.P.,an oil and gas limited partnership listed on NASDAQ. From 1993 to 2002, he washead of the Structured Finance Group for the Energy and Natural Resource Sector- Western Hemisphere at Deutsche Bank Securities in New York. Mr. Moroney hasover 25 years of experience as an energy finance specialist. A. Murray Sinclair, aged 46, Non-Executive Director Since June, 2003, Mr. Sinclair has been the Managing Director of Quest CapitalCorp., an asset backed lending organisation listed on the TSX, AMEX and AIMwhich focuses on providing financial services, specifically mortgages and bridgeloans, to small and mid-cap companies. Since December, 1996, Mr. Sinclair hasalso been a director of Quest Management Corp., a management companywholly-owned by Quest Capital Corp. Over-Allotment Option The Company has granted the Agents an option (the "Over-Allotment Option") tocover over-allotments, if any, and for market stabilization purposes. TheOver-Allotment Option may be exercised by the Agents, in whole or part, for a30-day period following the closing of the Offering, and entitles the Agents topurchase from the Company up to that number of Ordinary Shares as is equal to15% of the aggregate number of Ordinary Shares sold pursuant to the Offering, atthe Offering price. 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", "potential", "continue" or other similar expressions concerningmatters that are not historical facts. These statements are based on certainfactors and assumptions including expected growth, results of operations,performance and business prospects and opportunities. While the Companyconsiders these assumptions to be reasonable based on information currentlyavailable to us, they may prove to be incorrect. Forward-looking information isalso subject to certain factors, including risks and uncertainties that couldcause actual results to differ materially from what we currently expect. Thesefactors include changes in market and competition, governmental or regulatorydevelopments and general economic conditions. Additional information identifyingrisks and uncertainties are contained in Xcite Energy' prospectus filed with theCanadian securities regulatory authorities, available at www.sedar.com. General The Ordinary Shares issued pursuant to the Offering have not been, and will notbe, registered under the United States Securities Act of 1933, as amended (the "Act") and may not be offered or sold in the United States absent registration orany applicable exemption from the registration requirement of such Act.Accordingly, this announcement shall not constitute an offer to sell or thesolicitation of an offer to buy, nor shall there be any sale of these securitiesin any jurisdiction in which such offer, solicitation or same would be unlawfulprior to qualification under the securities laws of any such jurisdiction. Capitalized terms used and not defined herein shall have the meaning ascribed tothem in the final prospectus of the Company dated November 7, 2007. Glossary "API" means American Petroleum Institute units of specific gravity of liquidpetroleum. "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). "boe" means barrel of oil equivalent. "Chance of Discovery" means the probability of discovering hydrocarbons whichmay range in recoverable volume from the Low Estimate to the High Estimate. "Chance of Success" or "CoS" means the likelihood, expressed as a percentage ora fraction, of a prospect containing any hydrocarbons. "contingent resources" means those quantities of oil and gas estimated on agiven date to be potentially recoverable from known accumulations but are notcurrently economic. "cp" means centipoise, units of viscosity. "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. "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. "FPSO" means Floating, Production, Storage and Offloading Vessel. "GOR" means gas to oil ratio. "heavy oil" means oil with API gravity of less than 22 degrees and reservoirviscosity greater than 5 cp. "High Estimate" is considered to be an optimistic estimate of the quantity thatwill actually be recovered from an accumulation and, if probabilistic methodsare used, this term reflects a P10 confidence level. "Kv:Kh" means the ratio of vertical permeability(kv) to horizontal permeability(kh). "lead" means an identified potential hydrocarbon trap which requires furtherwork before becoming a drill-ready prospect. "Low Estimate" is considered to be a conservative estimate of the quantity thatwill actually be recovered from an accumulation and, where probabilistic methodsare used, this term reflects a P90 confidence level. "mD" means millidarcies, units of permeability. "mgKOH/g" means milligrams of potassium hydroxide (KOH) per gram, units of TAN. "MMstb" means millions of stock tank barrels measured at 14.7 psia and 60TMFahrenheit. "original resources" means those quantities of oil and gas estimated to existoriginally in naturally occurring accumulations; they are, therefore, thosequantities of oil and gas estimated on a given date to be remaining in knownaccumulations, plus those quantities already produced from known accumulations,plus those quantities in accumulations yet to be discovered. Original resourcesare divided into discovered resources, which are limited to known accumulations,and undiscovered resources. "P10" means a 10% probability that the value will be equal to or greater thanstated value "P50" means a 50%probability that the value will be equal to or greater thanstated value. "P90" means a 90% probability that the value will be equal to or greater thanstated value. "petroleum" means oil and/or gas. "prospect" means an identified potential hydrocarbon trap which is sufficientlywell defined and de-risked to merit the drilling of an exploration well. "prospective resources" means those quantities of oil and gas estimated on agiven date to be potentially recoverable from undiscovered accumulations. Ifdiscovered, they would be technically and economically viable to recover. "psi" means pounds per square inch. "psia" means pounds per square inch absolute. "reserves" means those quantities of oil and gas anticipated to be economicallyrecoverable from discovered resources. "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. "stb" stock tank barrel(s) measured at 14.7 psia and 60TM Fahrenheit. "STOIIP" means stock tank volume of oil initially-in-place. "TAN" means Total Acid Number. "TVDSS" means true vertical sub-sea depth. "undiscovered resources" means those quantities of oil and gas estimated on agiven date to be contained in accumulations yet to be discovered. "wt%" means weight percentage. The following measures and abbreviations shall have the meanings set forthbelow: Oil Liquids Bbl(s) = Barrels Boe = Barrels of oil equivalent Mbbls = thousand barrels MMboe = million barrels of oil equivalent MMbbls = million barrels Mcf = thousand cubic feet Bbbls = billion barrels bbls/d = barrels per day This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Xcite Energy