Xcite Energy (LON:XEL, CVE:XEL) today told investors that it has re-configured its approach to the first phase of development of Bentley oil field, in the UK North Sea.
The change comes in response to feedback on the group’s field development plan from the UK government’s Department of Energy and Climate Change (DECC).
Xcite says the new approach provides a more financially efficient outcome.
“This re-configuration has allowed the company to maintain the first oil date in 2012, while enabling the completion of a more cost effective field development plan,” Xcite said in a stock exchange statement.
The original plan proposed a two stage development programme. There will now effectively be three stages in the development.
Phase 1A will see Xcite achieve first oil from the First Stage Production (FSP) area next year. Xcite said the financial resources to start Phase 1A are available, should the DECC approve the development plan.
Xcite said that Phase 1B is planned is for 2013 and Phase 2 is pencilled in to start in 2016.
The firm added that it continues to make good progress in securing additional sources of funding for the project and this includes project finance from commercial lending banks.
Xcite also explained that it plans to pre-invest substantially in Phase 1B and Phase 2. It expects this to lower the unit cost of oil produced and, thus, maximising the commercial industry value of the Bentley asset in advance of Phase 1B.
“Management considers that this re-configuration of the Phase 1 production and financial plans for the Bentley field should maximise shareholder value,” it added.
The company understands that the field development plan is currently in the final stages of DECC approval.
The FSP area, which will be developed through Phase 1A and 1B, has ‘reserve status’ oil with 28 million barrels in 2P reserves.
Meanwhile the second stage production (SSP) area, which will be developed from 2016 onwards, is estimated to contain contingent resources of between 73 and 101 million barrels of oil.
In a separate statement Xcite revealed that it has drawn down a further £2 million on the equity credit line facility it has with Yorkville Advisors’ YA Global Master fund. Through the draw-down it has issued 1.8 million shares at a price of 110.25 per share.
It said that the additional cash will be used as future working capital and to progress towards first oil from the Bentley field.
Xcite still has over £70 million available to it through this equity line facility.