TIDMXEL
RNS Number : 6666S
Xcite Energy Limited
21 March 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
LSE-AIM: XEL
21 March 2016
Xcite Energy Limited
("Xcite Energy" or the "Company")
Reserves and Resources Assessment Report, as at 31 December
2015
Xcite Energy announces the publication of its Reserves and
Resources Assessment Report ("RAR") dated 17 March 2016, as
evaluated by AGR TRACS International Limited ("TRACS"), an
independent, qualified reserves auditor and a wholly owned
subsidiary of AGR Group (Holdings) Limited.
Summary of the RAR
-- Mean PIIP for the Bentley field of 885 MMstb.
-- 1P, 2P and 3P heavy oil reserves for the Bentley field
of 236 MMstb, 267 MMstb and 298 MMstb, respectively,
based on an initial 35 year production period.
-- 1P, 2P and 3P natural gas reserves for the Bentley
field of 23 bcf, 36 bcf and 49 bcf, respectively.(1)
-- NPV10 (after tax) value of reserves for the Bentley
field of approximately $2.1 billion, $2.5 billion
and $2.9 billion on a 1P, 2P and 3P basis, respectively.
-- P50 Contingent Resources of 9 MMstb assigned to the
Bentley field for potentially recoverable volumes
beyond the initial 35 year production period.
-- Aggregate, unrisked mean Prospective Resources assigned
of approximately 70 MMstb, relating to prospects in
the Greater Bentley area.
Notes:
(1) Natural gas reserves excludes natural gas liquids and
assumes that 90% of produced gas is used for process heat and power
within the Bentley facilities during ongoing operations.
Background to the RAR
Since the previous RAR dated 29 April 2015, the Company has
continued to add further project definition and risk mitigation to
the Bentley field development plan in conjunction with the Bentley
development group, which it is believed has improved the
efficiency, cost effectiveness and deliverability of the plan.
The principal elements of the work that the Company has
undertaken, the results of which are incorporated into the RAR,
include:
-- Refinements to the well design, resulting in slim-hole
wells being replaced by full-hole well architecture.
-- Quantitative review of drilling and completion times,
benchmarked to Bentley drilling data and cross-referenced
to North Sea drilling databases, resulting in material
time savings in drilling for the first phase development.
-- An accelerated well delivery programme resulting from
the improved definition of well times increases production
volumes in the first seven years of field life, increasing
2P reserves from 265 to 267 MMstb
-- Completion of the pre-FEED and optimisation engineering
required at this stage to support the development
concept.
-- Completion of a cost optimisation program including
active engagement with suppliers and contractors to
receive updated quotes for key services and materials
in order to update and validate the cost base, resulting
in material overall savings and reducing the unescalated,
full field life cycle costs for 2P reserves from approximately
$35/stb to approximately $30/stb, with the escalated,
full field life cycle costs for 2P reserves reducing
from approximately $47/stb to approximately $40/stb.
The aggregate effect of the reductions in costs and taxation
(including the reduction in Supplementary Charge to 10% announced
in the budget on 16 March) has offset the predicted reduction in
oil revenue. For the 2P reserves on an NPV10 basis, the reduction
in costs and taxation amount to $1,124 million, while the reduction
in oil revenue is $883 million, following a drop in the forward
price curve of Brent crude. This has resulted in an increase in the
NPV10 from $2.25 billion in the previous RAR dated 29 April 2015,
to $2.50 billion in the current RAR.
For additional information regarding the RAR, please see the
Company's website at www.xcite-energy.com.
The Company's oil and gas reserves are held through its wholly
owned subsidiary, Xcite Energy Resources plc ("XER"), comprising
100% working interests in Blocks 9/3b, 9/4a, 9/8b and 9/9h, which
contain the Bentley field ("Bentley" or the "Field") and adjoining
assets (together the "Greater Bentley area").
In accordance with the AIM Rules, the information in this
release has been reviewed and signed off by Tom Gunningham (C.Eng.
MEI.), an associate at TRACS, who is a Chartered Petroleum
Engineer, member of the Energy Institute and an Independent
Qualified Reserves Auditor.
ENQUIRIES: +44 (0) 1483 549
Xcite Energy Limited 063
Rupert Cole / Andrew Fairclough
+44 (0) 203 100
Liberum (Joint Broker and Nominated Adviser) 2222
Clayton Bush / Jamie Richards
+44 (0) 207 425
Morgan Stanley (Joint Broker) 8000
Andrew Foster
+44 (0) 203 772
Bell Pottinger 2500
Henry Lerwill
Cautionary Language
Liberum Capital Limited, 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.
The calculation of the NPV10 (after tax) for the Field disclosed
above takes into account the following: (a) UK Ring-Fence
Corporation Tax is charged at the rate of 30% on net taxable
income; (b) UK Supplementary Charge ("SC") is charged at the rate
of 10% on net taxable income with no deduction for finance charges
and interest; and (c) investment allowances have been applied to
offset the SC to the extent possible.
Glossary
"1P" means proved reserves, which are those quantities that are
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves.
"2P" means proved plus probable reserves. Probable reserves are
those quantities of additional reserves that are less certain to be
recovered than proved reserves. It is equally likely that the
actual remaining quantities recovered will be greater or less than
the sum of the estimated proved plus probable reserves.
"3P" means proved plus probable plus possible reserves. Possible
reserves are those additional reserves that are less certain to be
recovered than probable reserves. It is unlikely that the actual
remaining quantities recovered will exceed the sum of the estimated
proved plus probable plus possible reserves.
"bcf" means billion cubic feet of gas.
"Contingent Resources" means those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political, and regulatory matters, or a lack of
markets. There is no certainty that it will be commercially viable
to produce any portion of the Contingent Resources.
"FEED" means front-end engineering and design.
"MMstb" means millions stock tank barrels.
"NPV10" means net present value in money of the day using a 10%
forward discount rate, which values do not represent fair market
value.
"PIIP" means petroleum initially in place.
"Prospective Resources" means those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future projects. There
is no certainty that any portion of the prospective resources will
be discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of the prospective
resources.
"stb/d" means stock tank barrels per day.
"$" means United States dollars.
Forward-Looking Statements
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