Company Information for Xcite Energy Resources Limited

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Company Statement

Business of the Group
The Company, through its wholly owned subsidiary, Xcite Energy Resources Limited (“XER”), is an oil exploration and development company, which is focused on the exploration and development of heavy oil resources in the North Sea on the United Kingdom Continental Shelf.

The Company is incorporated and domiciled in the BVI under the BVI Business Companies Act, 2004 with its registered office in Tortola, BVI. As such, the rights of shareholders may be different from the rights of shareholders in a UK incorporated company. The Company is listed on AIM in London and the Toronto Stock Exchange – Venture Division in Canada.

In 2003, XER was awarded its 100% working interest in the Bentley field in Block 9/3b in the UK North Sea. All of the Company’s current material assets are held through XER.

XER’s head office is located at Banchory Business Centre, Hill of Banchory Business Park, Burn O’Bennie Road, Banchory, AB31 5ZU, United Kingdom.

The executive management team of the Company includes experienced oil professionals with over 100 years of combined industry experience.

Group Strategy
The Group intends initially to evaluate and develop the identified heavy oil discoveries in the Bentley field, to be complemented by appraising and exploring the identified prospects and leads on the block. The Group will also pursue potential acquisition opportunities and participate in future UK offshore licensing rounds to become a significant independent heavy oil producer in the North Sea by 2014

Operations and Technology

Block 9/3b, Bentley Field

XER are 100% owner and operator of Block 9/3b, licence P.1078, containing the Bentley Field in its entirety. The block, which was awarded to XER in 2003 as part of the 21st UK Offshore Licensing Round, is located 160 km east of the Shetland Isles in 113 m of water.

In January 2008, XER successfully operated the drilling and testing of the 9/3b-5 well in the central area of the field. The well achieved its primary objectives of (i) sampling the Bentley oil by way of a drill stem test (DST), (ii) confirming the excellent reservoir characteristics and continuity of the Bentley reservoir, and (iii) enabling potential flow rates under development conditions to be established through modelling and by analogy to the nearby Bressay field, 6 km to the northwest. The Bressay field achieved stabilised, vertical well flow rates in excess of 3,100 bopd from similar reservoir and oil type.

The Bentley field, which is a large four-way dip-closed structure, approximately 15 km by 6 km, within the Upper Palaeocene Dornoch reservoir at an average depth of 3,700 ft TVDSS, is established by four appraisal wells and delineated with reprocessed 3D seismic.

Bentley crude is heavy with an oil gravity of 10-12° API, analogous to the neighbouring Bressay field, with which there are potential development synergies. The crude has been assessed by an independent crude oil marketing specialist, and has many valuable attributes, with a large VGO cut, low sulphur and low metals content. In addition, Bentley crude has a high aromatic and naphthenic content favouring naphthenic lube production and the potential to produce high grade needle-coke.

Detailed analysis of the Bentley and Bressay flow tests has established the key controls on optimisation of flowrates. XER are therefore confident in progressing Bentley to development.

The development is planned utilising fixed platforms with first oil targeted at end 2013, assuming adherence to the current timetable. In February 2009, RPS Energy published a Competent Persons Report (CPR) for block 9/3b, in which they assigned the highest category of Contingent Resources to the field with a probability of commercial success of 70% and Base Case resources of 122.5 MMbbls. The CPR only considered conventional recovery from the core area of the field utilising a single drilling centre. Subsequent to the CPR, based on reprocessed 3D seismic, XER have shown the Bentley East feature to be part of the overall Bentley field and, therefore, now include a second drill centre to the south to access Bentley East and the southern areas of the field, thereby adding 40 MMbbls to the base case resources.

The Bentley field, therefore, has most-likely (P50) resources of around 160 MMbbls, with a low to high range (broadly equivalent to P90 to P10) from 109 to 235 MMbbls, assuming conventional, cold flow recovery, utilising pumps to lift the oil. There is considerable up-side in the field both through the presence of a potential up-side structure and also through application of Enhanced Oil Recovery (EOR) techniques. Use of EOR has been shown to be of particular benefit to heavy oil fields in both onshore and offshore settings. Further analysis of EOR for Bentley is part of XER’s ongoing work programme

Geographical Spread

North Sea, United Kingdom

Board of Directors and Key Management

Major Shareholders

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