These half-year figures from Xcite Energy are a sideshow. The real action is going on in the North Sea, where all eyes are on the company’s ongoing pre-production flow test at its Bentley heavy oil project. That currently boasts 116m barrels of proven and probable (2P) oil reserves and success here could drive a hefty rerating
However, concerns that Bentley's low-quality heavy oil won't flow in commercial quantities for long enough have dampened previous excitement about the discovery. So Xcite drilled two lateral wells there earlier this year in order to better establish the longer-term production profile. The 90-day test began in early July, with results expected in the fourth quarter. Encouragingly, management announced earlier this month that the test is progressing as planned, with a stabilised flow rate of 2,900 barrels of oil per day having been achieved.
Should that continue to go well, Xcite will then apply for field development plan approval and look for a farm-out partner to help finance staged production expansion. To cover its share of costs, Xcite has lined-up a $155m (£100m) loan with a consortium of banks – although this is contingent on a successful flow test.
XCITE ENERGY (XEL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 75p | MARKET VALUE: | £208.7m | |
| TOUCH: | 73-76p | 12-MONTH HIGH: | 189p | LOW: 65p |
| DIVIDEND YIELD: | nil | PE RATIO: | 441 | |
| NET ASSET VALUE: | 69p* | NET CASH: | £50.0m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | nil | -0.31 | -0.19 | nil |
| 2012 | nil | -0.27 | -0.12 | nil |
| % change | - | - | - | - |
*Includes intangible assets of £155m, or 56p a share | ||||
