Xcite Energy (LSE:XEL)
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From Apr 2019 to Apr 2024

Independent U.K. oil explorer Xcite Energy Ltd. (XEL.LN) gave an indication Tuesday of the woes still afflicting small oil and gas companies despite recovering oil prices, and said it is still struggling to raise cash to fund the development of a sizable North Sea oil field.

"The current status of the global equity and credit markets...will make it difficult for the company to raise additional finance and to make significant commitments to move forward with the next phase of the work program on the Bentley field," the company said in a statement.

Small U.K. oil explorers were hit hard by the sharp fall in the oil price last year, as well as the near collapse and partial nationalization of many of the biggest lenders to the sector - Royal Bank of Scotland Group PLC (RBS.LN) and HBOS, now part of Lloyds Banking Group PLC (LLOY.LN).

The most active of the small North Sea oil companies, Oilexco North Sea, declared bankruptcy earlier this year and its assets were purchased by Premier Oil PLC (PMO.LN). A number of other small companies have been forced to find buyers over the previous year as they ran short of cash.

Industry lobby Oil and Gas U.K. said investment and exploration in the U.K. North Sea has slumped this year and warned that without tax incentives to support the sector, total production could fall 40% in the next five years and 50,000 U.K. jobs could be lost.

Xcite's cash balance more than halved over the last six months to just GBP670,000 as of June 30. The company spent GBP280,000 in the first half of this year.

"The group has sufficient existing resources to meet its financial obligations to March 2010, but is reliant on securing additional funding in order to finance working capital beyond that time," is said. "The group is currently pursuing a number of commercial initiatives involving potential farm-in partners and production sharing contractors to facilitate further work on the Bentley field," it added.

Xcite estimates the Bentley field could contain between 109 million and 220 million recoverable barrels of heavy oil, which is more expensive to produce than conventional oil.

Company Web site: http://www.xcite-energy.com

 
   -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com 
 

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