Xcite Energy’s (LON:XEL, CVE:XEL) Bentley oil field could be worth over £1.8 billion after tax according to the hotly anticipated reserve assessment report (RAR).
The highlights of the RAR were released in a stock exchange statement this morning. The report follows on from the successful flow test from the horizontal well that was drilled last year.
Bentley’s oil reserves for the first stage production (FSP) phase were set at 22 million barrels in proven reserves (1P), 28 million barrels of proved plus probable reserves (2P) and 35 million barrels of proved, probable plus possible reserves (3P).
Crucially this puts the value of the FSP reserves at between US$229 and US$558 million.
“This is an excellent outcome following the successful 9/3b-6 and 6Z wells,” chief executive Richard Smith said.
“The Reserve Assessment Report confirms management's belief in the commercial value of Bentley and its potential as one of the largest undeveloped fields in the UK sector of the North Sea.”
Smith added: “This reserves upgrade allows us to proceed with the First Stage Production and is a key milestone in our program to determine full field reserves and deliver significant value for shareholders."
Beyond the FSP stage the report also estimates contingent resources for the rest of the core Bentley field are in second stage production between 73 and 101 million barrels of oil.
Consequently the report values the SSP between US$661 million and US$1.315 billion.
As such it puts the combined value of both the FSP and the SSP between US$890 million and US$1.8 billon.
The RAR also assigned prospective resources for seven prospects giving them about 17.7 million barrels of oil equivalent on a risked basis.
Xcite said that it will continue to incorporate updated modelling and the latest technologies through the life of the field, which will include the potential application of enhanced oil recovery techniques.
It also said it expects to upgrade contingent and prospective resources with further drilling as the oil field development matures.
The RAR looked at the reserves that could be accessed from a single drill centre in the FSP it also looked at the further development of the core area incorporating the FSP and the SSP, as well as the additional prospective resources within the company's assets – undrilled prospects that are predominantly on the Bentley East structure.
Notably all the reserves and resources reported in the RAR assumed only conventional, cold-flow recovery techniques.
Xcite believes that enhanced oil recovery (EOR) techniques have the potential to increase recovery from the Bentley field. During the FSP Xcite plans to carry out pilot tests of EOR techniques.