Xcite Energy Regulatory News (XEL)

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TSX-V, LSE-AIM: XEL

12 December 2011

Xcite Energy Limited

("Xcite Energy" or the "Company")

Shareholder Update

Over recent days we have received a number of messages from our shareholders expressing concern with respect to the current share price and requesting more information from the Company. The Board of Directors and management team recognise your concern and your desire for timely information.

We remain highly committed to the successful commercial development of the Bentley field, one of the largest undeveloped oil fields in the UK North Sea. We shall continue to provide timely news updates based on the regulatory environment that governs our public listing status.

We recognise that the announcement of 1 December 2011 comprised an evolution of our field development plans from those set out earlier in the year. We believe these changes provide the Company with a viable and more financially efficient solution to achieve our shared objective of commercialising the Bentley field.

The update to the market of these plans was not previously announced as it has not yet received a response from DECC. We had hoped, and remain optimistic, that this response will be received shortly and that the field development update could have been made in conjunction with the announcement of a number of other important events for the Company in the coming weeks.

We are currently waiting for the DECC response with respect to the Field Development Plan ("FDP"). We are unable to provide definitive guidance on when this will be received, but based upon our positive, on-going dialogue with DECC, the Company is expecting to receive the necessary response shortly. This will allow us to move forward with the reconfigured development plan and to deliver Phase 1A on Bentley, which includes an expected First Oil date in the first half of 2012.

Following the response from DECC regarding the FDP, the Company is also optimistic that it will be able to convert the 87 MMbbls of Contingent resources to 2P Reserves in due course. This would assign to the Company approximately 115MMbbls of 2P Reserves, which we believe would be an important milestone in demonstrating the value of the Bentley field. 

Work has started on the enhanced oil recovery programme, where we are identifying the technologies and business methods that can deliver significant additional barrels from Bentley through tertiary production techniques. Our early work is encouraging.

We have a highly valuable asset being managed by an experienced and knowledgeable team, supported by, in our view, excellent technical and financial advisers. Bentley remains a complex project, which we are striving to bring to fruition as efficiently as possible in challenging economic circumstances. We have confidence in the outcome and ask for the patience and support of shareholders while we progress the various initiatives.

We reiterate the commitment of the Board of Directors and management team to its shareholders. For over eight years, the Xcite Energy team has been and continues to work hard on the Bentley project and we are now at a decisive stage for the Company, with drilling planning for Phase 1A proceeding on schedule.

We look forward to providing you with regular updates as we enter a period of increasing newsflow.

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.

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.