Xcite Energy Regulatory News (XEL)

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES

TSX-V, LSE-AIM: XEL

1 February 2012

Xcite Energy Limited

("Xcite Energy or the ("Company")

DECC Approval Process Update

Further to the announcement of 1 December 2011, the Company is pleased to provide an update on the DECC approval process. In the opinion of the management team of Xcite Energy Resources Limited ("XER"), all of the broad operational and planning questions from the Department of Energy and Climate Change ("DECC") with respect to Phase 1A and Phase 1B of the Bentley First Phase Development have been addressed. A number of detailed questions on technical matters are currently being resolved and it is XER's expectation that this will be completed as a matter of due process.

DECC has issued a letter of comfort to XER to confirm its support for the Field Development Plan ("FDP") for the Bentley field and is broadly satisfied with the phased development approach from a resource recovery perspective. This now leaves the formal approval of the FDP subject to funding and any amendments to the FDP that may be proposed by XER following the results of Phase 1A, with the re-submission of the FDP expected in the latter half of 2012.

By agreement with DECC, the approval of the Phase 1A work programme will now be managed through the conventional Well Operations Notification System ("WONS"). It is the Company's expectation that DECC will give its approval for the Phase 1A WONS in the near future, enabling XER to commence the 2012 drilling programme and achieve an expected First Oil date in the first half of 2012.

The Environmental Statement ("ES") with respect to the overall Field Development Plan is expected to be approved by DECC in a similar timeframe to the WONS. It is not expected that the ES will require to be re-submitted to DECC.

Based on the letter of comfort from DECC, it remains the Company's expectation that it will be able to convert the currently assigned Contingent Resources to 2P Reserves.

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.

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.

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.

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.