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http://www.spreadbetmagazine.com/blog

North Sea oil gold rush - risk:reward ratio improves further for investors

The North Sea oil sector had a boost this week when the Government announced further tax breaks to companies working over older oilfields in order to enhance production - a welcome change from the dark days of 2010 when the Government was seeking to do the opposite and hobble the industry!

Often with AIM and FTSE350 companies there are many pitfalls to cross – the sheer lack of finance available has hindered both exploration and the all important move to “first oil” for many companies. However, over the last few months, M&A activity has been in the ascendance. This week Edison Investment Research published a piece of analysis (Link here - http://www.edisoninvestmentresearch.co.uk/research/sector-commentary/#a-8272) in which they noted that since their previous review of the sector that, of the dozen players in the North Sea region that can be invested in, 6 have been approached or taken over in 2012. Whilst some of these companies like Encore and Nautical Petroleum effectively had to call time on their efforts to go it alone and accept offers some way below their potential value – they still managed to sell for between $8-12 dollars a barrel which is a not too bad return for investors. In fact this seems to be the benchmark level for North Sea players in takeovers.

Despite the massive money printing exercises and bond buying by the major central banks, capital markets access remains tight however. What is noticeable in recent months though and encouraging for shareholders is that management of these companies are themselves now balking at further equity dilutions as they are finding their holdings being diluted too much. One prime example is Xcite Energy which has seen the decimation of its share price due to perpetual equity and attached warrant issuance and so structured a $155m RBL lending deal recently. Bearing in mind the corporate acquisition benchmark of an average around $10 to the barrel, and a typical undisturbed share price prior to acquisition of a discount of around 50% to $10 , this would imply an enterprise value of less than $6.50 per barrel being a good investment proposition. Xcite currently trades for around $4.80 a barrel implying 20% upside just to harmonise with the peer group. If one is optimistic on the Enhanced Oil Recovery (EOR) in relation to the believed 550m boe in Bentley then a share price meaningfully higher than 200p can be postulated in the event of a takeout.

Ithaca Energy, itself a successful producer, turned down an offer at 205p just a couple of months ago and promptly saw its share price halve and only recover today to 140p. This turning down of the bid does however demonstrate that as the field of companies suitable for take-over shrinks that those companies that address their intermediate funding needs are getting more pricing power when the raiders come knocking.

Below is the list of companies and their current resources that are listed on the FTSE and AIM markets. Of the North Sea players there are only a handful left in the smaller market – Enquest, Ithaca, Xcite, Serica, Faroe and Premier Oil. Premier is established enough that is an unlikely takeover target and indeed may in fact be a consolidator.

The lack of targets left in this politically stable, proven area of Oil exploration and, with easy access to the market and plentiful infrastructure, will help to underpin the prices of these remaining companies for sometime to come in our opinion. In fact, it is only a matter of time until the major players take out another few of these.

Another 25 - 30p and I will :-))

at least my current holding is now nicely in the money, albeit i'm sure i must have lost a fair bit somewhere in the the past - unless i was astute enough to bank sufficient profit en route (can't remember!)

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Xcite to present at World Heavy Oil Conference
RNS
RNS Number : 0464M
Xcite Energy Limited
12 September 2012



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







12th September 2012



Xcite Energy Limited

("Xcite Energy" or the "Company")





Xcite Energy to present at the World Heavy Oil Conference 2012





Xcite Energy announces that it will be presenting at the World Heavy Oil Conference 2012, taking place in Aberdeen until 13th September, at which Xcite Energy is a sponsor. Mr Steve Kew, Chief Operating Officer of Xcite Energy, will today present on the history and background of the Bentley field, and on Thursday, 13th September, Mr Barny Brennan, Director of Subsurface of Xcite Energy, will present on the pre-2012 appraisal of the field.

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Oh, lol ----"no new information will be provided"

Keeps on trundling up. Nice

And more, think I was accused of ramping xel!
Fogl only down 30% since that comment was made, Xcite heading towards 75% up in the same timeframe. Now this stock has value :)

They have OIL!! and easy toget to.,. lol

Xcite about 4 mins into talk


http://www.youtube.com/watch?v=1HpCk_m18Dc

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Commenting on today's announcement, Rupert Cole, Xcite Energy CEO, said:



"We are extremely pleased with the outcome of the Phase 1A work programme, which has exceeded our expectations. We have gathered very substantial quantities of high quality data, which has materially de-risked the project. This will enable us to confirm the full field development plan and advance our commercial strategy. As a result of the expertise within the Xcite team, supported by our contractors and service providers, we have safely delivered an outstanding pre-production well test on Bentley, one of the largest remaining, undeveloped North Sea oil fields."

I thought we might of got an upgrade on the field size........i dont see why we have not with all the work been carried out on the field.

But still good news.

Just watching the sells going through, crazy.

Some very postive wording in RNS so am happy holding

Might buy a few more on the bounce to stick in my Isa for this year

The SP is all over one second bid at 123p then 126p

very dull, but as it's a bit of a stinky day anyway, it'll be exacerbated by peeps selling on the news

The bounce so taken a few for ISA

Bought to early again.........hay ho

11% down ?