.

Super day for this one....

http://www.iii.co.uk/articles/articledisplay.jsp?article_id=10118476&section=ShareDealing

Stock to Watch: Xcite Energy


Edmond Jackson
20.09.10 12:41


This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Renewed surges in small to mid cap oil & gas shares may reflect some benefit from Dana Petroleum (DNX) shareholders selling amid the takeover or getting cash quite soon - there could be well over 1 billion looking for a new home in this sector. It may accentuate share price rises where companies (are expected to) announce good news.

Coincidentally, the AIM-listed shares in Xcite Energy (XEL) have spiked above 100p as investors consider its prospects for developing the 'heavy oil' Bentley field in Block 9/3b in the UK North Sea, off the Shetland Islands. Imminent drilling ought to bear news this autumn which, given the scale of the prospect, represents attractive risk/reward. While it is hard to assert a fair value at this stage in the project, hence the shares' volatility, Xcite's profile is gaining interest as a longer-term play.

Heavy oil should not be seen as a dirty word nowadays: the technology for recoverability and refining has much improved, with applications such as diesel. About 20% of North Sea production is heavy oil, furthermore tax incentives are involved.

I drew attention at 85p last May, pointing out that further trading opportunities would be likely. The shares have spent the summer in a 60p to 80p range, so the rise above 100p is a break-out (if in line with the longer-term chart) signalling traders latching onto the prospect here.

Progress news on the 9/3b-R well should be forthcoming, given the 27 August interim results anticipated spudding the well in weeks ahead, the intention being "to demonstrate the commercial potential of the Bentley field through a representative flow test rate and thereby confirm its value as a significant North Sea oil field".

Current estimates are for about 900 million barrels of oil in place and Xcite enjoys full ownership - so although the market capitalisation is about 150 million while the company has yet to make profits, there is considerable scope.

The flow test is the first of three main value drivers for the shares that management has entertained, hence it is rational for interest to perk up. The second is early production from around the middle of next year and the third, full field development from 2014 onwards. Management has indicated scope for early production of about 15,000 barrels a day, building up to 60,000 to 80,000 in years ahead.

The August share placing was specifically to enhance the 9/3b-R well work programme, a slant pilot well section enabling Xcite to collect additional data to expand its understanding of the field. The result ought to better define upside potential. Be aware the shares may remain volatile given those in the latest placing are already looking at a 70% profit in a month, however the rise is in line both with the chart and highly prospective fundamentals.

While Arbuthnot is the UK broker, Xcite shares also trade in Canada where Wellington West published a 'speculative buy' note in June with an 85p (sterling equivalent) near-term value, 150p medium-term target, and with long-term un-risked upside potentially over 1,300p a share.

The Canadian broker draws attention to an effective alliance of service organisations, to phase development initially up to 15,000 barrels a day next year, with over 70 horizontal locations identified to more fully capture the upside potential. Although the current, risked value is estimated around 85p a share, "significant upside exists to this risked net present value as the company moves to exploit net recoverable resource potential over 123 million barrels on primary recovery alone". This estimate is backed by RPS Energy, the industry consultants who did extensive analysis.

In future it will also be worth watching progress with the nearby Bressay field, which has a very similar reservoir and oil to Bentley.

Xcite's principal management is ex-Conoco who drilled three previous Bentley wells; clearly they have more confidence in the prospect than Conoco itself which relinquished the block back to regulators. Admittedly, this is a point of scepticism, that an oil major preferred to walk away from Bentley. Another is there being no published evidence of the directors buying in the latest 60p a share placing although the announcements cite significant share option grants last March, with an exercise price of 44p.

The end-June interims were what you might expect from of a company at this development stage: a loss of about 500,000, operating expenses slightly offset by income on 23.3 million cash. This was likely bolstered by about 5 million net, after the latest placing, so Xcite should be well capitalised for medium-term progress.

Overall, despite being mainly a 'one-asset company', Xcite appeals on grounds of already being a substantial proven resource; the industry risk is with development than exploration. I find the profile attractive and will personally look for an entry point with cash proceeds from Dana. In contrast with fleeting joy at the drill bit, for many an explorer, and assets in politically risky countries, this is a share which looks to offer substantial upside closer to home.

So it should be well worth watching for the flow test results, to confirm the Bentley prospect. Possibly there will be further chances to average your buying here, in months ahead, as the project develops.

For more information visit www.xcite-energy.com

Another 10% today, all very nice.

10% a day for many more days before this gets to a realistic level ahead of the drill results ;)

Drilling now all over at NPE.

Time for the rig to now go to XEL and spud Bentley :) !!

http://www.investegate.co.uk/Article.aspx?id=201009211053200283T

.

Out of npe for time being with a very, very nice profit..

In up to my neck with this......

required field - 17 Sep 2010 08:25 - 263 of 278
I was just thinking that....what a ramper, glad to had him on our side (or her)....


Indeed, he tried a nasty deramping episode on Pele but vanished when it doubled,
i'm waiting for when he dumps this and rkh and then starts the same deramping on
these two :-))

RDG - i see no apology from you on BLNX .... selectively blind are you?

NPE looks a great find which should give XEL a boost

WHy the big drop?

more sellers than buyers! ..... profit taking

Consolidation over and now bouncing back it seems :)

Onwards to 300p+ on a good result :)

http://www.thisismoney.co.uk/investing/share-tips-and-fund-tips/article.html?in_article_id=515476&in_page_id=23&position=moretopstories

Investment extra: Hang on to Xcite Energy
By Ian Lyall

25 September 2010

Xcite Energy is living up to its name. The shares have advanced over 50% in the past month and more than doubled in value since they were tipped here in April.

Xcite-ing development: New drill hole is predicted to yield between 109m and 220m barrels of oil

In the next few days the company is going to spud its first North Sea well.

Don't worry. Xcite hasn't blown the development budget on blasting 12 tonnes of King Edwards into the sea bed.

Spudding is the process of dropping the first drill hole in this case into the Bentley Field, 100 miles east of Shetland.

So, pretty soon we ought to be getting a much better idea of how big Bentley's reserves are and just how thick, or should I say heavy, the oil is.

So-called heavy oil of the kind expected to come out of the ground at Bentley sells at a discount to North Sea Brent crude and American light sweet oil because of the viscosity.

For that reason too it is also tricky to get up to the surface.

It is only with the advent of modern drilling techniques perfected in China and Venezuela that Xcite has been able to go back and develop a field that was first discovered in 1977.

There are two things which have happened in recent weeks that have altered Xcite's plans to test and bring Bentley on stream.

The first would barely register on the radar screens of most investors.

The firm was supposed to use what is called a jack-up rig, supplied by Transocean, which owned and ran the BP Deepwater Horizon platform in the Gulf of Mexico. Instead it has settled on a 'semi-submersible' from Diamond Offshore.

The new kit will allow the company to carry out an 'enhanced work programme' on Bentley, which may bring the field into production earlier than forecast.

The second change to the original plan is that Xcite last month came back to the market to raise a further 5.8m.

The cash will bankroll that quest for new data as it collects and logs drill samples from well 9/3b-R on Bentley.

It will also fund a tanker which will ship the crude to shore where partner BP will attempt to blend the Bentley oil with its own reserves before selling it on.

Once the drill-bit is in the ground, the company plans to provide updates on its progress during the initial two-month campaign.

The timeline for development is fluid, but the aim is to be pumping commercial quantities of oil from the field by the middle of next year.

But what is beneath the surface? Well initially, the recovery estimates were for a base case of 37m barrels of crude.

Today, and several appraisals later, it is predicted that Bentley will yield between 109m and 220m barrels in total, giving a most likely scenario of around 160m barrels of crude.

However, investors are hoping the drilling campaign soon to get under way will firm up those forecasts and perhaps even push the figures higher.

Even at the current share price, Xcite's oil reserves are being priced at a significant discount to those of businesses at a similar stage of development.

My assessment is there is plenty still to go for with Xcite, and now is not the right time to be cashing in your chips.

However it is not prudent either to sit and watch as the share price drifts slowly back from its peak. And we have seen sellers of Xcite shares enter the marketplace in the past two days.

With this in mind it is worth setting a stop loss a price at which you should seriously consider selling the stock and booking that very hefty profit.

At a current share price of 105p, I would recommend getting out if the shares retreat back to 90p. That still gives a gain of around 77%.

It is also worth setting what is called a trailing stop loss which tracks the price higher.

http://www.shipais.com/arrivals.php?at=232648000

Ships arrive at Ocean Nomad location today, move to start, spudding very soon now, not many days away.

Well spudded...sp drops....time and time again, this happens.....

aaparent fall highlights the prob with stocks that are MM only .... when they don't want to deal, they just widen the spread - it's 5p today, though by picking and choosing, it can brought down to 3p

It is isable....fingers crossed for a good result....the good thing is that this is not an exploration well.....they know the oil is there...

Rock on.,.

Broker update :

Thursday 30 September

Xcite Energy* Strong Buy (from No Rec)

XEL.L / 109.5p / 158.8m / TP: 247p

Xcite has spudded its well on the Bentley field we therefore have taken the opportunity to re-visit our valuation. In addition new shares have been added to the register following the recent exercise of warrants. Our valuation matrix
is now as follows.

Table 1: Valuation matrix
Low Base High
NPV/share (p) - Unrisked 113 353 656
NPV/share (p) - Risked 79 247 459
Source: Company data, Arbuthnot estimates

The unrisked valuations reflect the slight dilution due to the recent conversion of 250,000 warrants. The risked valuations reflect the 70% chance of success which RPS Energy has determined for the well.

Now that the well has spudded we feel that it provides an ideal opportunity to upgrade our valuation to the base case (i.e. 122mmbbl of resource) scenario.

Table 2: CPR assumptions and outputs
Input assumption Low Base High
Capex (m) $1,881 $2,573 $2,661
Opex (m) $1,394 $2,135 $2,229
Oil price $80 Brent (flat real) $80 Brent (flat real) $80 Brent (flat real)
less 15% discount less 15% discount less 15% discount
Recoverable resource (mmbbl) 72.0 122.5 166.0
Field life (years) 13 15 15
Success case NPV10 (m) - New
terms* $282 $881 $1,635
Success case NPV10 (m) - Old
terms $181 $781 $1,535
Source: RPS Energy estimates, *includes new heavy oil incentives

The CPR does not include the additional 3D seismic data which was evaluated in 2009. The company now estimates that the field could contain in excess of 200mmbbl of recoverable oil, well in excess of the high scenario.

The company has also indicated that by employing enhanced oil recovery techniques the recovery factor could be increased substantially.

The well is due to drill for a maximum of 60 days which will be followed by a 5 day flow test. Post drilling the data gathered from the vertical and horizontal wells will be used to update the CPR. At this stage we should start to see some of the contingent resource base being converted into reserves.

We continue coverage with a Strong Buy recommendation and increase our target price to 247p (114p previously)."

Like the story so had a nibble earlier today for the SIPP.