Xcite Energy appoints Andrew Fairclough as CFO – why now?

An interesting announcement this morning from North Sea focused Xcite Energy with the appointment of Andrew Fairclough as Chief Financial Officer, moving from his previous position as Corporate Affairs Director. He joined the company in August 2012.

CEO, Rupert Cole’s comments “….his appointment further strengthens the board at this important time”.

Important time, absolutely yes. Shareholders have been waiting with baited breath for a confirmation of the long awaited farm out of the company’s Bentley North Sea heavy oil field following a succesful EWT (Extended Well Test) at the end of 2012. The EWT confirmed 2P (probable and proven) reserves of 250 million barrels from the 909 million barrel field without EOR (enhanced oil recovery) techniques.

In the meantime there has been little to talk about with Xcite. Farm out discussions have gone on throughout 2013 with the shares sitting below £1 for some time. Late in 2013, Statoil confirmed that they had paid Xcite $15 million for access to the EWT data, but Xcite have remained tight lipped.  Shareholders have become anxious that the farm out discussions may have collapsed.

Today’s news re. Andy Fairclough ask many questions. Why move him from his corporate affairs position to CFO? Has a farm out deal much rumoured in 2013 been done and the farm out partners now want a CFO to deal with? Is the contract close to be finalised and a CFO signature needed for corporate governance?

Certainly it seems unlikely that Xcite would move board positions around at this stage in the farm out process unless there was a clear corporate rationale i.e. strengthening the board in light of new money coming into the company. In addition to the farm out discussions, news is expected on enhanced RBL (reserves based lending) to cover the estimated $700 million initial development costs of the $4.5 billion Bentley project. If corporate activity had really gone pear shaped, it seems strange to promote Fairclough.

With the Statoil Strategy meeting on February 7th, plenty for shareholders to think about.

Contrarian Investor UK

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