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

LSE-AIM, TSX-V: XEL

20 September 2012

Xcite Energy Limited

("Xcite Energy" or the "Company")

Successful Bentley Field Pre-Production Well Test

Xcite Energy announces that it has successfully concluded the Bentley Field pre-production well test in the Phase 1A work programme.

Highlights

·; Pre-production well test results exceeded management expectations

·; Successfully demonstrated full field development drilling, completion, production and export techniques

·; Extensive data gathering for reservoir model calibration and production facilities design, enabling optimisation of field development

·; Significantly improved understanding of oil, gas and water movement behaviour

·; Water ingress to wellbore better than expected (i.e. less water produced)

·; Produced approximately 147,000 barrels of Bentley crude

·; Successful management of flow assurance issues, including pipeline transfer to a dynamically positioned shuttle tanker for in-field blending

Summary of results

Xcite Energy has concluded the Bentley pre-production well test in the Phase 1A work programme ("Phase 1A"), meeting its principal objectives to:

1. Demonstrate the mechanical and operational aspects of the drilling, completion and flowing of the proposed well design for application in Phase 1B; and

2. Collect additional reservoir and production data to improve the calibration of the reservoir engineering model and production facilities design, enabling field development optimisation.

The pre-production test comprised two horizontal wellbore sections (9/3b-7 and 9/3b-7Z), totalling in excess of 4,200 feet of net reservoir. The 9/3b-7 well was placed at a depth within the reservoir close enough to the oil-water contact such that water would be produced during the period of the flow test. The 9/3b-7Z well was successfully geo-steered within five to ten feet of the attic of the reservoir. Downhole control valves were successfully operated, delivering flow from each wellbore individually and in combination.

Approximately 147,000 barrels of Bentley crude oil was safely produced from the field during Phase 1A without any environmental incidents. This crude, as previously announced, has been sold to a major refiner in Europe.

The timing of first water ingress to the wellbore and the subsequent rate of water build-up was better than expected (i.e. less water was produced). As a result, the ratio of oil to water produced was also better than expected, providing important information for modelling long term future oil recovery from the field.

The flow test also confirmed the existence of a large, active aquifer, which will provide vital long term pressure support during life-of-field production.

During Phase 1A, the Company has collected extensive data relating to the reservoir and fluid characteristics, and has significantly improved its understanding of the oil, gas and water movement within the reservoir. This confirms that the field is behaving within the range of modelled outcomes and should enable optimisation of the field development plan and facilities. The data also provides key information to plan an enhanced oil recovery programme for the field.

The Company also conducted successful process facility trials during the pre-production well test, including (i) design confirmation of offshore separation, metering and export systems; (ii) the effect on flow rates of demulsifier, defoamer and other speciality chemicals and diluents; and (iii) verification of all principal process simulations, including sub-surface diluent injection, downhole heating, pipeline flow assurance and crude oil blending.

The substantial amount of data collected from the seabed and downhole pressure gauges, the rig and from the extensive sampling programme, will now be analysed and used to update the reservoir and economic models. This analysis will form the basis for updating the Reserves Assessment Report, the updated Field Development Plan for resubmission to the Department of Energy and Climate Change and for the review process of the Reserves Based Lending banks, which are expected to be undertaken by early 2013.

The well will now be suspended, with both 9/3b-7 and 7Z wellbores being kept available for future use in the next phase of the field development.

The well test equipment on the Rowan Norway is currently being decommissioned and dismantled in advance of being returned to Aberdeen. The rig will be de-mobilised from the Bentley field as soon as practicable, from where it will be towed to Dundee and released back to Rowan.

The Scott Spirit tanker has left the field to discharge the collected water and transfer the Bentley blended crude for onward shipment to the refinery.

Commenting on today's announcement, Rupert Cole, Xcite Energy CEO, said:

"We are extremely pleased with the outcome of the Phase 1A work programme, which has exceeded our expectations. We have gathered very substantial quantities of high quality data, which has materially de-risked the project. This will enable us to confirm the full field development plan and advance our commercial strategy. As a result of the expertise within the Xcite team, supported by our contractors and service providers, we have safely delivered an outstanding pre-production well test on Bentley, one of the largest remaining, undeveloped North Sea oil fields."

Stephen Kew has reviewed and approved the technical information contained within this press release in his capacity as a qualified person, as required under the AIM Rules. Stephen Kew is Chief Operating Officer at Xcite Energy and is an associate of the Institution of Chemical Engineers and a member of the Society of Petroleum Engineers.

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 preliminary interpretation of data, 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, the availability of equipment 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 Management's Discussion and Analysis for Xcite Energy dated 25 July 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) acceptsresponsibility for the adequacy or accuracy of this release.