Xcite Energy Regulatory News (XEL)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

TSX-V, LSE-AIM: XEL

1 December 2011

Xcite Energy Limited

("Xcite Energy" or the "Company")

Bentley Field - Operational Update

The Company notes the recent publication of the Addendum to the Bentley Environmental Statement, which will be available on the Company's website and on www.sedar.com.

In response to feedback from the Department of Energy and Climate Change ("DECC") on the Bentley field development plan, the Company has re-configured its approach to the first phase of development of Bentley to provide 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. The principal elements of this plan are Phase 1A with first oil planned for 2012, Phase 1B planned for 2013 and Phase 2 estimated to commence in 2016. The Company understands that the plan is in the final stages of DECC approval.

If DECC approval is obtained, the financial resources to commence Phase 1A are available. The Company continues to make good progress with respect to securing additional sources of funding, including project finance from commercial lending banks. 

Whilst adopting this more financially efficient approach to Phase 1, the Company intends to pre-invest substantially in Phase 1B and Phase 2, with the objective of lowering 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. Further announcements will be made to the market as soon as practicable.

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.

Notes to editors - Phase 1 and Phase 2 Information

Phase 1A comprises the drilling of and production from the first motherbore well and associated laterals on Bentley, prior to the final design and optimisation of Phase 1B. The produced oil will be transferred via a pipeline to a dynamically positioned shuttle tanker, in which a diluent crude oil will be present and thus enabling blending tests to be undertaken for marketing and offtake purposes.

Phase 1B is planned to comprise a permanent, normally unattended, minimum facilities, lightweight wellhead tower, capable of accommodating up to 12 drilling risers and remaining throughout the rest of field life. Four additional production motherbore wells will initially be drilled with their associated laterals which, together with the well drilled in Phase 1A, will provide the basis for the remainder of Phase 1 production. Crude oil will be produced to an FPSO via a subsea pipeline, with export via a shuttle tanker. The intention is to run Phase 1B for approximately 3 years, with the additional riser and potential production capacity providing significant flexibility.

Phase 2 remains as previously planned, with a further permanent production platform comprising full processing, drilling and accommodation facilities for the balance of life of field production. 

Morgan Stanley which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Oriel Securities which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Forward-Looking Statements

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 October 26, 2010 and in the annual Management's Discussion and Analysis for Xcite Energy dated March 24, 2011 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.