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, TSX-V: XEL
30 April 2015
Xcite Energy Limited
("Xcite Energy" or the "Company")
Filing of Annual NI 51-101 Reserves Report and Summary of Reserves Results
Xcite Energy announces that it has filed its annual Statement of Reserves Data and other Oil and Gas Information (Form 51-101F1) under National Instrument 51-101, as at 31 December 2014, as evaluated by AGR TRACS International Limited ("TRACS"), an independent, qualified reserves auditor and a wholly owned subsidiary of AGR Group (Holdings) Limited, in their Reserves and Resources Assessment Report ("RAR") dated 29 April 2015.
Summary of the NI 51-101
· Mean PIIP for the Bentley field of 881 MMstb.
· 1P, 2P and 3P heavy oil reserves for the Bentley field of 234 MMstb, 265 MMstb and 296 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 $1.9 billion, $2.3 billion and $2.6 billion on a 1P, 2P and 3P basis, respectively.
· P50 Contingent Resources of 21 MMstb assigned to the Bentley field for potentially recoverable volumes beyond the initial 35 years production period.
· Aggregate, unrisked mean Prospective Resources assigned of approximately 80 MMstb, relating to prospects in the Greater Bentley area.
(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.
For additional information regarding the independent reserves evaluation that was conducted by TRACS, please see the Company's Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1 dated 30 April 2015), which is available on the SEDAR website at www.sedar.com.
Summary of RAR
Since the previous Reserves Assessment Report dated 25 February 2014, the Company has focused on creating an efficient, cost-effective and deliverable development plan, supported by a clearly defined execution strategy with an externally validated cost base.
In carrying out this work, the Company has successfully completed a significant number of technical, engineering, optimisation and value assurance programmes in conjunction with the Bentley development group that should deliver improved functional and cost definition for the project. Subsurface definition has also been improved, with additional detailed reservoir analysis and modelling that should provide further technical assurance as part of the overall development strategy.
The key features of this work programme, which have been incorporated into the RAR, include:
· A more detailed reservoir simulation and geological model, which should enable further recovery optimisation.
· An optimised development plan and execution strategy utilising an Arup ACE Mobile Offshore Production Unit (MOPU) and a bridge-linked cylindrical Floating Storage and Offloading unit (FSO).
· A revised drilling and completion strategy, including the removal of all subsea wells, which balances technical risk and cost during the different phases of the development with the overall project objectives.
· Incorporation of a Keppel FELS N Plus Class rig into the development plan, which would allow additional wells to be drilled from the planned facilities.
· Increased fluid handling capacity in both the first and the second phases of the development, which should increase front-end production and overall economic recovery.
· Reduced operating expenditure over the life of field from operational efficiencies.
These have resulted in revised production profiles and an increase in 2P heavy oil reserves estimates from 257 MMstb to 265 MMstb, with some Contingent Resources being converted into reserves as part of the ongoing optimisation process.
NPV10 (after tax) value of reserves for the Bentley field has increased from approximately $2.1 billion to $2.3 billion.
Unescalated full field life cycle 2P costs remain at less than $35 per barrel.
For additional information regarding the Reserves Assessment Report dated April 29, 2015 that was conducted by TRACS, please see the Company's website at https://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 compliant with COGEH requirements.
Xcite Energy's hydrocarbon reserves were evaluated by TRACS, in accordance with National Instrument 51-101 and the Canadian Oil and Gas Evaluation Handbook.
The Form 51-101F1 is an annual statement required by Canadian regulations to be filed by the Company, which sets out its interests in oil and gas reserves, provides key data with respect to those interests and identifies changes, if any, which have occurred since the previous annual filing. The information contained in the Form 51-101F1 is taken directly from the RAR.
Rupert Cole / Andrew Fairclough
Liberum (Joint Broker and Nominated Adviser)
Morgan Stanley (Joint Broker)
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 20% 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.
"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.
"FPD" means First Phase Development of the Field.
"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.
"SPD" means Second Phase Development of the Field, or Phase 2.
"stb/d" means stock tank barrels per day.
"$" means United States dollars.
Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, 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 expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates in oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. Additional information identifying risks and uncertainties are contained in the annual Management's Discussion and Analysis for Xcite Energy dated 25 March 2015 filed with the Canadian securities regulatory authorities and available at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
Statements relating to "resources" and "reserves" are deemed to be forward-looking statements or information, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitable in the future. There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond the control of the Company. The reserve data included herein represents estimates only. In general, estimates of economically recoverable oil reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary considerably from actual results. All such estimates are to some degree speculative and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable oil reserves attributable to any particular group of properties and classification of such reserves based on risk of recovery and estimates of future net revenues expected therefrom, prepared by different engineers or by the same engineers at different times, may vary substantially. The actual production, revenues, taxes and development and operating expenditures of the Company with respect to these reserves will vary from such estimates, and such variances could be material.
Consistent with the securities disclosure legislation and policies of Canada, the Company has used forecast prices and costs in calculating reserve quantities included herein. Actual future net cash flows also will be affected by other factors such as actual production levels, supply and demand for oil and natural gas, curtailments or increases in consumption by oil and natural gas purchasers, changes in governmental regulation or taxation and the impact of inflation on costs. The estimated future net revenue set out herein does not necessarily represent the fair market value of the Company's reserves.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release.