LONDON (Alliance News) - Xcite Energy Ltd Monday said the recently agreed terms covering the proposed funding for the first phase of development of the Bentley field in the UK North Sea will require a partner to join the project.
The company, which is holding its annual general meeting later Monday, recently said it had agreed principal commercial terms for development funding proposals, and said a partner will be needed to either guarantee the full funding package or to provide any balance of funding required.
Xcite said it still cannot "expand on the details of this proposal until it is secured".
"In working with supportive providers of capital, who see the opportunity to fund the Bentley project at a time when development capital is in short supply, we believe that our ability to attract a guarantor partner will be improved by such a proposal, although it will still be challenging in the short term, in the current environment," said the company.
"We are fully committed to this process and concluding funding on this scale would be a major achievement in the UK North Sea," Xcite added.
Xcite said it is also evaluating a shortlist of companies to provide engineering, procurement, construction, installation and commissioning activities for the mobile offshore production unit and floating storage and offtake facility, stating it has received "significant interest".
The construction of the jack up drilling rig continues in Singapore. However, Xcite said it will monitor the market and engage with suppliers where opportunities arise to further reduce costs or improve terms.
"Costs have been removed from the business throughout the year as we have limited the project scope to critical activities, lowered personnel costs, released contractors and reduced general operating overheads as part of the restructuring process," said Xcite.
Xcite said it is continuing to hold talks with its bondholders as it tries to restructure its bonds which matured at the end of June. The maturity date has been extended until the end of September, and Xcite said negotiations have been "constructive" but conceded that no terms have yet been agreed.
"Whilst we are not able to make any further comment on the potential outcome of these negotiations until they are concluded, should agreement on the terms of a restructuring be reached, we believe it is likely that these will involve a reduction to the balance of the bonds in return for an equity stake in the company," said Xcite.
Xcite also said that the EU referendum result, which saw the UK decide to leave the European Union, may affect the company's Bentley field or "dollar-denominated economics", but said it is currently too premature to assess the potential consequences.
Xcite shares were down 6.0% to 8.23 pence per share on Monday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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