ABERDEENSHIRE, UNITED KINGDOM--(Marketwire - June 11, 2012) -
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES
TSX-V, LSE-AIM: XEL
Xcite Energy Limited ("Xcite Energy" or the "Company")
12 June 2012 Marketing and Offtake Agreement with BP Oil International Limited
Xcite Energy announces that it has amended its agreement with BP Oil International Limited ("BPOI"), a wholly owned subsidiary of BP plc ("BP"), as announced on 28 January 2010, under which BPOI will provide the offtake services to market and sell the Bentley crude oil in return for an incentive-based fee per barrel.
Under the amended agreement:
- The incentivised marketing and offtake fee to be paid to BPOI continues to be directly related to the realised price achieved by BPOI for the Bentley crude oil in relation to the prevailing Dated Brent crude price.
- For the initial phase of up to three years under the amended agreement BPOI will deliver diluent products in-field to Xcite Energy for blending with the Bentley crude to maximise its value prior to offtake by BPOI, subject to BP offshore operational standards being met.
- BPOI has undertaken that either BPOI or an associated BP company will, subject to certain conditions, provide US$5 million of financing for Phase 1B of the Bentley field development as part of the reserves based lending facility being negotiated with a group of commercial banks.
- BPOI has also undertaken to provide further support to Xcite Energy during the initial phase of the amended agreement by reducing Xcite Energy's working capital requirements for the diluent products to be used in the blending-in-field operations. At current oil prices, this working capital support is estimated to be in the range of US$20 million to US$40 million depending on Bentley crude oil production and blending requirements, in respect of which Xcite Energy would pay BPOI an appropriate commercial financing charge.
- The increased financial commitments referred to above replace the previous commitment to procure US$20 million of financing from a commercial bank with credit support from BP.
Rupert Cole, Chief Financial Officer, commented:"We are very pleased with this further endorsement and increased support from BP, with the amendment to the marketing and offtake agreement providing significant additional financing for Phase 1B of the Bentley field development programme, through a combination of reserves based lending and flexible working capital support. This amended agreement shows how Xcite Energy and BP have successfully focused on operational detail to deliver an amended agreement that assists Xcite Energy as it moves towards production of oil from the Bentley field"
Xcite Energy Limited +44 (0) 1483 549 063 Richard Smith Chief Executive Officer Rupert Cole Chief Financial Officer Oriel Securities +44 (0) 207 710 7600 (Joint Broker and Nomad) Emma Griffin Partner Michael Shaw Partner
Morgan Stanley (Joint Broker) +44 (0) 207 425 8000 Andrew Foster Managing Director
Pelham Bell Pottinger +44 (0) 207 861 3232 Mark Antelme Director Henry Lerwill Account Director
Paradox Public Relations +1 514 341 0408 Jean-Francois Meilleur Consultant
Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan","anticipate", "believe", "intend", "estimate", "predict", "target","potential", "continue" or other similar expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. Additional information identifying risks and uncertainties are contained in the Company's annual information form dated 26 October 2010 and in the interim Management's Discussion and Analysis for Xcite Energy for the period ended 31 March 2012 filed with the Canadian securities regulatory authorities and available at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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