.

lol.,.

At a guess : another jump on monday morning......this could be valued somewhere between 300p to 400p on a good test.....(that's my estimated guess)....

http://www.proactiveinvestors.co.uk/companies/news/22762/investors-bet-on-north-sea-success-as-xcite-hits-a-new-record-22762.html

Investors bet on North Sea success as Xcite hits a new record

Friday, November 05, 2010 by Jamie Ashcroft
Share

Xcite Energy (LON:XEL, TSX-V:XEL) is certainly living up to its name with the share price up almost 50 per cent this week and an incredible 500 per cent in the past year.

This of course is a pivotal period for the heavy oil specialist, which is developing the Bentley field 100 miles east of the Shetland Islands.

Work on well 9/3b-6 began in September and the Ocean Nomad semi-submersible rig hit its target depth at the end of last month. The next step is a 500 metre horizontal drill from the eastern flank of Bentley into the main pool. Flow testing will occur later this month.

Initial results showed the oil column was around 40 foot thicker than expected, with 113 feet of oil in a high quality Dornoch reservoir. The oil column has 100 per cent of oil net-to-gross, while oil-water contact at 3,729 feet.

Its this information which lit the blue touch-paper under the share price, and elicited some very positive comments from Xcites finance director Rupert Cole when we interviewed him shortly after the release of the update on October 25.

This is a significant outcome as it justifies the placement of the horizontal well, he told Proactive Investors.
The 100 per cent net to gross is outstanding.

Xcite believes the results from the pilot section will lead to a significant increase in the Bentley fields oil in place.

Indeed Coles view was echoed by Arbuthnot Securities analyst Dougie Youngson. This is a fantastic result for Xcite and should give investors encouragement in the drill programme, he said.

The share price, up 34.48p at 248.98p today, is slowly homing in on the valuations set by the brokers of between 235p and 299p a share.

However they were set long before Xcite began work on 9/3b-6. The current drill programme could significantly de-risk the project, which in turn would transform the valuation of this company.

A successful outcome of the 9/3b-6 well should significantly de-risk the project and remove shareholder doubts regarding the technical ability to bring Bentley on-stream, with the potential to unlock shareholder value, said Edison analyst Ian McLelland in a recent research note.

The neighbouring close analogue Bressay field, operated by Statoil, will also provide additional confidence of success as it is moved through development.
Although technically it is difficult to compare Xcites contingent resources to the 2P resources of the majority of its North Sea peers, the company is trading at a low level for the region.

Chief executive Richard Smith and his team should be applauded for the way they have tackled what is a tricky and lets face it unfashionable project.

Heavy oil in the North Sea is not the sort of thing that normally gets investors pulses racing. Off-shore Ghana perhaps. Northern Kurdistan definitely.

But Xcite has the managerial expertise in this field of getting this more viscous crude out of the ground. It has found the financing for the first stage of what is essentially a development project. And most importantly it has brought on board a number of blue-chip partners including Amec and BP under the umbrella of the Bentley alliance and yet has still maintained control of the project.

The company intends to fund most of its field development through an alliance structure with key project partners, McLelland said.

As well as providing the necessary billion dollar funding required for such a major North Sea development this points to the confidence major industry players have in working with Xcite.

Funding details and partner off-take agreements for both the first stage production and full field development have still to be published and these will ultimately determine the netback value to Xcite.

Flow testing of well 9/3b-6 later this month will determine whether Bentley is commercially viable. But if all goes according to plan we could see oil production from the field next year.

According to one report, the plan is to be extracting 15-20,000 barrels a day using a floating jack-up rig through to 2014, when it is hoped Xcite's commercial partners will have a more permanent solution ready to take over. Plateau production is expected to hit 60-80,000 barrels a day.

EO. (Encore) - Market Cap presently 367 million.

Potential of "Cladhan" = 300 mmbo OIP.
Recovery @ 40% = Cladhan 120 million barrels recoverable
Encore share is 17% = Cladhan for Encore Maximum 20.4 million barrels.

Presently proven OIP is just 89 million barrels so presently Cladhan represents 6 million barrels net to Encore.

In summary :

Cladhan presently represents 2C of 6 million barrels and upside with more drilling is 20.4 million recoverable barrels total.

Catcher is very similar for Encore as Cladhan.

So in summary the present 369 million market cap is supported by 2C of approx 12 million recoverable barrels (6+6) and upside potential which would take it to perhaps 50 million recoverable barrels (generous 25+25).

Throwing Encore a very generous 15 US$ a barrel in the ground as its light crude
that would mean.

Present 12mmbo net to EO. recoverable = 111m (using a 15 US$ in ground price)
Going for 50mmbo net to EO. recoverable = 465m (using a 15 US$ in ground price).

But market cap is presently already 367m.


++++++++++++++++++

Compare to XEL

Going for what looks like 200mmbo recoverable. Use a 10 US$ per barrel in the ground price, discounted due to heavy oil but raised for new government tax breaks on heavy oil production.

100% owned.

200mmbo x 10 US$ = 1,242m (potential to be up to 235mmbo recoverable)

Present market cap of XEL is about 377m (adding on recent shares)



In summary based on market caps and based on a successful flow test and based on the drilling results so far giving a 100% gross to net for the pay and a thicker pay by 40 feet resulting in a hoped for 200mmbo recoverable I would suggest :

EO. has a lot of future success in the price already, but should still rise but not by too much or too quickly as a lot is already in there.

XEL has very little in the price "if" success comes with the flow test and should rise by significant amounts on good news due to its present undervaluation.


Ignore the share price rise, look at the reasons why and the potential ahead and what the valuation metrics should be. As is the case of RKH as is the case of XEL, they own 100% of the project and so valuing them you do not have to cut out the other partners shares, as the oil is 100% to one company and not shared between many.


(Just illustrates the potential of XEL, not aimed as a dig at EO., which I know is popular with many people, just in case the post grinds a few people who own EO.)

PROS - the above MAY have some validity, though it would be useful to know the source - certainly not you - so please advise so one may judge it's impartiality

personally, i am very happy to be holding and doing extremely well from both stocks

LOL cynic....... absolutely written by me ! :)

don't tell me your learning to right proper then! ..... anyway, at least we know it lacks impartiality lol!

On a good flow test...I'm hoping for a surge up to possiby even as high as 350p or 400p....perhaps the latter is a bit pushing it...but we very much dependent on this up and coming test...everything is based on that....so far I would think that it looks like a very successful one coming but you can never be sure of anything....fingers crossed.....

Setting your expectations very low there RF.

Based on the market cap, the oil (in terms of recoverable barrels) why do you have those prices ?

Or just plucking numbers out of the air ?

Don't forget NPE also got a flow test coming in very soon, possibly next week, have gone back in at 369p and hoping for good news. All in the same area.,.

Yes...the numbers are just guesswork...but let's not get too over the moon just yet...my years of trading have taught me not to get over enthusiastic about anything until the fact arrives....it looks fantastic for this company and its shareholders but let's keep our feet on the ground.....350p is feasible...the market could take it further but it's in the lap of the gods as to how far....

RNS and progress is excellent !!

The Canadians will especially like it, they are averse to risk in a large way and now the tick off boxes are getting more with ticks in and only one left to go :

Vertical risk eliminated = Tick

Oil in place risk eliminated = Tick

Reservoir size risk eliminated = Tick

Horizontal drilling risk eliminated = Tick

Upside to reservoir size/Oil in Place = Tick

Upside to flow rate potential = Tick

Flow rate of over 1200 bopd = Not yet, coming soon !


As I said before, with 550M of net horizontal pay I would now expect the flow rate to be stable in the 2600bopd to 3000bopd range (could flow over 3000)

I think, well I HOPE, that this will lead to an RNS which says "Stable flow rates of 3000bopd were achieved which were RESTRICTED by the size of the pump".


Thats what we all want, where they say the flow was at maximum and restricted by equipment !! I think its possibly coming.

Tick

Just fab...what more can be said ?....

nowt! ..... kinda sorry i sold a lump the other day albeit at a thumping profit, but can scarcely complain as still hold o'weight position

"Monday 08 November
Xcite Energy* Strong Buy
XEL.L / 246.5p / 365.8m / TP: 247p
Event: News report

Xcite has now successfully completed the horizontal drilling phase at the 9/3b-6 well at its Bentley project. The horizontal well covers 1,800ft of reservoir section which will now be put under flow test.

The reservoir was found to be 18ft higher than expected, which will yield a thicker oil column. It also showed that the column is almost 100% net to pay, the same result was found in the vertical well. Xcite will now conduct the critical flow test on the well, which it expects to be completed by the end of November.

The drilling results so far have been extremely encouraging; we highlight that both the vertical and horizontal wells have shown that the reservoir is thicker, which increases the prospect that the oil in place will be towards the high case scenario. However, investors must be reminded that it is the flow test which will determine the future of the project. The data collected so far, as well as the flow rate data, will be used to update the reservoir model and this will provide the basis for scoping any future development.

Xcites share price has increased by c.235% since drilling started. This increase has been primarily driven by the retail market. Our target price of 247p was reached last Friday and given the strength of the appetite of the retail market for this stock it is very likely that the share price will substantially increase ahead of the flow test.

We therefore continue coverage with a Strong Buy recommendation.


Dougie Youngson, 020 7012 2098, dougieyoungson@arbuthnot.co.uk"

Being the percentages player i am ,l crystalized some healthy profit at 272 ish after only buying on friday at 225p level .........nice ;-))......but after doing a lot of number crunching l bought back in on the fallback to mid of 253p i couldnt resist another bite of the cherry so back in at 255 .. ....Everyone seen the Goldman Sachs note this miserable morning ref. to mergers and aquisitions in gas/oil sector ? - naming about 50 stocks that "Big Oil " has in their sights . Xcite got a very positive write up as did nearly all junior oilees ..A noteable exception which has proven very popular on BBs was GKP which G/S downgraded to SELL..- but considering where it operates i am hardly surprised...........XEL reminds me very much of Dana and Tullow whose initial success in North sea led to them both becoming global players ( Before, of course, Dana was swallowed up ............

Bought any more AFR " J "

Worth a read :

http://boards.fool.co.uk/xcite-new-broker-valuations-12088518.aspx

.

l havent actually Roly .Currently on a free ride with AFR after selling 50% not so long ago . lts come a long way since i initiated a thread on AM @ 39p what seems years ago ; and is now virtually unrecognizable to the company into which l then bought into..../ What with probs with security for their staff who are forced to live in virtual prisons protected by the millitary and regular sabotage on upstream oil infratructure in Nigerian delta coupled with characteristic massive scale of corruption weighs perhaps a tad unduly heavily on my mind.But not thinking of buying any more as yet . ..... lnterestingly even AFR diversifying and looking east wards for new projects...,,,,,,,,,,,,,,,,Do you have a position with XEL ?