Xcite Energy Ltd (XEL)

blinko

Wobblydeb wrote: »

I use that too - mostly because you can see several different time periods at once. There is however a 15 minute delay on live prices, so probably not much good if you are trading

no they are live buddy

does anyone know what advfn premium toplists are like ?

thanks

blinko

http://ftalphaville.ft.com/blog/2010/12/21/443976/markets-live/

Right
NH we had better get this out of the way now

NH then we can get on with our lives

NH Xcite Energy

NH hands up

NH we got it wrong

Xcite Energy Ltd (XEL:LSE): Last: 395.00, up 76 (+23.82%), High: 425.25, Low: 368.00, Volume: 5.29m

BE Sigh.

NH they have found heavy oil

BE It’s not a matter of getting it right or wrong.

BE It’s a matter of risk and reward.

BE Before today, the shares looked overvalued

NH true

BE To be honest, they should have pretty much doubled on the news

BE Because a ten-to-one shot has just come in.

NH (fat man – off. you can’t mention his name on this site. sorry)

NH zap

Warning to rude and abusive commenters – your ability to comment will be terminated immediately and permanently, without warning. Henceforth, FTAlphaville has instituted a One Strike and You Are Out policy. We’ve had enough. We are going to clean up these pixels once and for all.

BE So well done, punters, for getting the 20% on today’s news.

NH

NH help loads of muppets are logging on

NH we need to get through this

BE (10/1 is about the industry standard well failure/success rate, ROTR.)

NH quick

NH right

NH we weren’t the only ones to get it wrong

NH the sector watcher has put his hands up today

NH Well, well, well – they’ve actually gone and done it. Inevitable really as I picked it last week as my bear stock for 2011, XEL announced this morning that its appraisal well on the Bentley heavy oilfield had successfully flowed oil at 2,900 barrels/day. The group believes that this demonstrates the commerciality of the 100%-owned field, and moreover that the reservoir properties are at the upper end of expectations. I presume this may translate into the reserves base being closer to the P10 case of 235 million barrels than the P50 of 160 million barrels, although today’s short statement doesn’t actually make any reference to reserves, and I imagine the reserves auditors will require a couple of successful appraisal wells to confirm this

NH Nevertheless this looks like a very good result for the group and its shareholders. On the basis of the P10 reserves number and an assumed NPV of $6/barrel (i.e. reflecting the heavy nature of the crude), it is quite possible to get to a share price of around 600p/share for XEL. I’d say there’s still a bit of work to be done, so it’s not quite in the bag yet, but certainly in the short-term I’d expect the shares to go better.

NH however

NH some caution is in order

NH there is an awful lot to do

NH before any oil flows out of the ground

NH so I suspect the stock price might be becalmed for a while

NH however, I note that house broker Arbuthnot

NH has upgraded to strong buy

NH with a 600p target price

NH In what has proven to be a polarising stock in recent months, Xcite has successfully achieved what many thought would never happen. The latest well at the Bentley field in the UK North Sea has flowed at a stabilised rate of 2,900bopd. Overall the well flowed for 36 hours (including 9 hours of clear up) at various flow rates, cumulative production was 2,000bbl. This rate confirms commerciality as well as the reservoir to be above the upper end of expectations.

NH This flow rate was achieved despite operational difficulties with the tanker’s hose which prevented its use. Instead the company resorted to what was in effect a bucket chain using tote tanks. Not the ideal method for testing (especially given the adverse weather conditions at the field over the last few weeks), but highly effective nonetheless.
The rig will now be released after suspending the well the company will consolidate the data acquired during drilling and testing to RPS Energy who will update the Competent Person Report (CPR). This process should see the contingent resources being converted into reserves and provide the basis for Amec and others to begin to scope the development phase of this project.



NH Xcite has already secured a Letter of Intent (LoI) for a long term contract with Rowan to provide a drilling/production rig (the “Rowan Norway”, currently under construction) from 4Q11 to drill the development wells in order to get to First Stage Production (FSP). We expect the LoI to convert shortly to meet to a contract ahead of the 15th January 2011 deadline. This deadline is subject to a $4m termination fee if not met.
Assuming the updated CPR warrants development there are a number of other significant milestones which need to be achieved.
Sign off on a potential FSP development plan in conjunction with Amec
Raise capital (through a combination of both debt and equity) to fund the FSP development, we estimate the total to in the order of $100m
Gain the necessary approvals from DECC for drilling and construction
This is a transformational result for Xcite and given the scale of the opportunity in terms of reserves and production will put it on a par with several main board listed companies.



NH (@edmondj – it is not flowing commerically. yellow. one more and you take an early bath)

NH We continue coverage with a Strong Buy recommendation (neutral previously) and we increase our target price to 600p (247p previously). This target price is derived from the high case scenario from the previous CPR. Investors should note that this CPR was originally published in September 2007 and was updated in February 2009 and is subject to review. The assumptions and valuation output will very likely change to take into account the Heavy oil fiscal terms, 3D seismic data as well as the drilling and testing data gathered from the recent well, including the upside oil in place in the reservoir.

NH right

NH that’s it

NH mea cupla over

NH let’s get a millions miles away from this thin

Shatners_Bassoon

I'll take that with a pinch of salt as I really can't decipher who is posting what. It's commercial and it will go into production that's all you need to know

There will be further RNS's as follows so 6.00 broker sp will become 1000p and then some.

RNS for signed rig contract for the FSP, and approximate start dates,

RNS for another Rig contract could be on the cards, for further Reservoir exploration etc,

RNS for logging results from the flow test plus confirmed oil qualities and reserve size .

RNS for updated CPR

RNS for possibly 3-D seismics to be done on the two adjoining fields, next year.

Broker upgrades,

Plus of course the possibilities of a takeover.

Arbuthnot has already raised their BUY target to 600p just on the flow test, and I'm sure that they will now continually raise their expectations as more RNS confirmed news is released over the next few weeks. Plus of course updates from all of the other Brokers.

carolroy52

Thanks very much SB - a wise friend indeed for the New Year! Carol :T

Shatners_Bassoon

No probs, glad to be of assistance

Anyway, read this excellent post from iii and tell me you want to sell!!!


http://boards.fool.co.uk/the-first-value-creation-point-has-now-been-12129245.aspx?sort=postdate


The first value creation point has now been attained and the most important bridge has been crossed. The orcs tried to storm it but have retreated for now (they will be back for sure but they will be licking their wounds).

There will of course be some pitfalls along the way but overall the viability of this company is now firmly established.

The next significant value catalysts will be as follows

1)The CPR with communication of the new estimate for reserves
2)Start of First Stage Production
3)Start of Full Production ( which I suspect will not happen due to prior T/O)

Arbuthnot today set a new SP target of 600p today but investors should remember that this target is based on a recoverable reserves of 166 mmbbls.

By simple extrapolation a reserves upgrade to 250 mmbbls ( which I think is very much on the cards) should logically see Arbuthnot setting a new SP target of 900p. Once again this is all ceteris paribus and we could have some positive upside bonus surprises further dow the line.

From a preflow test trading range of 235-325p ( which paradoxically corresponded to the broker SP target ranges) to a successful initial post flow test SP target range of 375-400p, the key question is where does the SP go now.

To paraphrase a famous statesman who used to live just a few miles from me in snowy Kent- I would posit that that this is "not the beginning of the end" but maybe the "end of the beginning".

I think that the share price will trend towards 600p on anticipation of a significant reserve upgrade ( 250 mmbbls ?) and there will be further upward pressure from continual metronomic newsflow being drip fed into the market by the BoD (they are after all consummate masters of this art) relating to FSP details, news rig contracts etc etc...

When a company's share price goes up from 60p to 375p in 6 months one has a natural tendancy to assume that the bulk of the value accretion has taken place and it is time to move on.

The paradox of this share is that there is now a multiplier effect to its value creation potential - some of this comes from intrinsic value ( assset base reserve estimates, NPV calculations etc..) but there is going to be buying momentum as a new class of investors jump on board who previously waited for the flow test results.

The big catalyst however for me has been and remains the M&A side of things : Statoil have got a couple of adjacent fields and the purchase of Bentley will create a cost effective production hub from which pretty significant synergies can be extracted (further shareholder value creation here).

Remember that depending on the CPR reserve upgrade this company could be at the very least a top three or four producer in the north sea.

Dana had 243 mmbbls of reserves and was taken out at GBP 1.8 Billion last year but their assets were fragmented and scattered whereas Xcite has a king maker asset.

The confirmation of the Flow test this morning has transformed the Bentley field into a STRATEGIC ASSET which is now in play and the siginificance of this cannot be UNDERESTIMATED.

The corporate finance brotherhood in the City will for sure be busy running their slide rules over Xcite over the next few weeks.

The beauty here is the management foresaw and (indeed with the benefit of hindsight) more or less preannounced the success of the FT and put in place a poison pill defence to avoid beeing picked off cheaply.

The train ride on this one is just beginning. Hold on to your shares for dear life in the next 12 months and barring a nuclear war you will be rewarded.

As always DYOR but Caveat Venditor remains my guiding principle.

uptomyeyeballs

Quality summation that mate. I've taken some profit, but over the next 12 months will be purchasing new shares each month until production starts. That should yield some terrific results I think.

Jonbvn

I've seen it mentioned that XEL could be the next Tullow Oil

blinko

Jonbvn wrote: »

I've seen it mentioned that XEL could be the next Tullow Oil

stop ramping its all over till next upgrade

now go and find me the next XEl for 2011

copthis1

Is it worth me buying £1000 worth now?

Y or N.

Shatners_Bassoon

It's still got a long way to go for sure, it's the end of the beginning rather than the beginning of the end.

XEL at the moment is probably not being valued anything like it's worth and until the Broker Reports and revised CPR come out then it's not going to move in a massive way, but who knows when it will move, the fact that this is under 4 quid is in my opinion a joke but I don't dictate the shareprice. Rockhopper needed a revision of their recoverable rates to drive them from 350p to the 500p mark. Dana had less than us (providing we get the revised 110ft net pay CPR) and they had resources scattered all over the place which devalued it somewhat. XEL on the other hand have a single Bentley field which could produce 250-300mmbls of oil and the flow rates could exceed 3000 bopd. I am holding all the way until the market wake up to this one.