Xcite Energy has announced the publication of its Reserves and Resources Assessment Report ('RAR') for the UKCS Bentley field dated 17 March 2016, as evaluated by AGR TRACS International, an independent, qualified reserves auditor and a wholly owned subsidiary of AGR Group (Holdings).

Summary of the RAR

• Mean PIIP for the Bentley field of 885 MMstb. 
• 1P, 2P and 3P heavy oil reserves for the Bentley field of 236 MMstb, 267 MMstb and 298 MMstb, respectively, based on an initial 35 year production period.
• 1P, 2P and 3P natural gas reserves for the Bentley field of 23 bcf, 36 bcf and 49 bcf, respectively.(1)
• NPV10 (after tax) value of reserves for the Bentley field of approximately $2.1 billion, $2.5 billion and $2.9 billion on a 1P, 2P and 3P basis, respectively.
• P50 Contingent Resources of 9 MMstb assigned to the Bentley field for potentially recoverable volumes beyond the initial 35 year production period.
• Aggregate, unrisked mean Prospective Resources assigned of approximately 70 MMstb, relating to prospects in the Greater Bentley area.

Notes:

(1) Natural gas reserves excludes natural gas liquids and assumes that 90% of produced gas is used for process heat and power within the Bentley facilities during ongoing operations.

Background to the RAR

Since the previous RAR dated 29 April 2015, the Company has continued to add further project definition and risk mitigation to the Bentley field development plan in conjunction with the Bentley development group, which it is believed has improved the efficiency, cost effectiveness and deliverability of the plan.

The principal elements of the work that the Company has undertaken, the results of which are incorporated into the RAR, include:

• Refinements to the well design, resulting in slim-hole wells being replaced by full-hole well architecture.
• Quantitative review of drilling and completion times, benchmarked to Bentley drilling data and cross-referenced to North Sea drilling databases, resulting in material time savings in drilling for the first phase development.
• An accelerated well delivery programme resulting from the improved definition of well times increases production volumes in the first seven years of field life, increasing 2P reserves from 265 to 267 MMstb
• Completion of the pre-FEED and optimisation engineering required at this stage to support the development concept.
• Completion of a cost optimisation program including active engagement with suppliers and contractors to receive updated quotes for key services and materials in order to update and validate the cost base, resulting in material overall savings and reducing the unescalated, full field life cycle costs for 2P reserves from approx. $35/stb to approx. $30/stb, with the escalated, full field life cycle costs for 2P reserves reducing from approximately $47/stb to approx. $40/stb.

The aggregate effect of the reductions in costs and taxation (including the reduction in Supplementary Charge to 10% announced in the budget on 16 March) has offset the predicted reduction in oil revenue. For the 2P reserves on an NPV10 basis, the reduction in costs and taxation amount to $1,124 million, while the reduction in oil revenue is $883 million, following a drop in the forward price curve of Brent crude. This has resulted in an increase in the NPV10 from $2.25 billion in the previous RAR dated 29 April 2015, to $2.50 billion in the current RAR.

The Company's oil and gas reserves are held through its wholly owned subsidiary, Xcite Energy Resources ('XER'), comprising 100% working interests in Blocks 9/3b, 9/4a, 9/8b and 9/9h, which contain the Bentley field and adjoining assets (together the 'Greater Bentley area').