WWCM Research Archives

Xcite Energy Ltd. (XEL-V) : Tapping One of the Largest UKCS Oil Fields & 689 mmbbls OOIP via Big Oil Hztl Drilling

Huge oil resource and potential recoverable reserves
Est. OOIP of 689 mmbbls in Bentley field could be ~886 mmbbls; primary recoveries of ~162 mmbbls could be 400+ mmbbls on secondary.

Ex-Conoco team to spud 1st hztl into ex-Conoco field this summer
Bentley horizontal well booked for Q3; Statoil operated analogue field Bressay (6 km away) demonstrated vertical well flow test of 3,200+ bopd.

Heavy oil accounts for ~20% of North Sea's current oil production
UK incentives & technology progress to bump recovery rates warrants increased industry focus given '09 N. Sea heavy oil prodn of ~250 kbopd.

Initiating coverage with a Speculative Buy rating & $2.40 target price
$2.40 target based on 70:30 split between risked NPV/sh of $1.37 and risked EMV/sh of $4.80; unrisked 'bluesky' upside could be over $22/sh.
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