Little excitement at Xcite Energy on collaboration with Enquest

Xcite Energy’s share price is flat today at 65p despite news that the company  “has entered into a Collaboration Agreement with Statoil (U.K.) Ltd. and EnQuest Heather Limited, in order to share field-specific technical and operational information to evaluate the potential utilisation of common gas import infrastructure between the Kraken, Bentley and Bressay fields.”

In May this year the company announced it was collaborating with Statoil and Shell on potential shared infrastructure on Bressay which caused a temporary spike in the share price prior to the AGM.

After failing to find a farm in partner for its Bentley field, Xcite has been forced to go it alone, entering into a series of MOU’s with third party service providers including Arup, Amec, Teekey and Aibel to try and develop a field development plan (FDP) for Bentley. The share price has been languishing of late as the work required to complete a new FDP is expected to take several months and will probably result in a submission to the Department of Energy and Climate Change (DECC) in quarter one 2015 or at a stretch by the end of this year.

With first oil from Bentley now several years later than originally expected, many shareholders have lost their patience with Chief Executive Rupert Cole and the Xcite Energy board. Funding concerns still remain as is it still not clear how the initial $700 million development costs (or potentially lower with the current revisions to the FDP) will be met. For now the company is sufficiently funded for day to day activities for some time following a refinancing to a secured loan but Xcite is unable to develop Bentley on its own. It was certainly disappointing that a farm in partner could not be achieved following the discussions which started early in 2013. Many are hoping for clarity later this year regarding funding and the potential role of the service providers in providing capital to kick things off.

Contrarian Investor UK

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