Xcite Energy Ltd (XEL TSX-V & AIM)

Shares Outstanding: 71.5M

Market cap of 53.6M

Click For: Share Capital Ownership

Website: www.xcite-energy.com

Click For: Briefing Notes

Key management: Chairman of the company is the Ex President of ConocoPhillips

Pure oil play

Resource of 160 MMbbls+

Undervalued asset: Valuation in XEL of 0.33$ per barrel @ 0.75$ share price

Industry benchmark at same resource development: 3-5$ per barrel

Fugro Agreement:

1. Fugro will fund a material part of the well costs – final proportion depends on the well costs, but not less than 1/3 of total cost

2. Effectively a free farm-in for Xcite, as no equity in Bentley is being given in exchange.

3. The win for Fugro is a commitment to use them for the EPS wells/work programme, if we choose to do this. Also it potentially opens up a new business stream for them.

4. It is a turn-key solution for Xcite, with Fugro taking effective weather risk on the vessel and associated services.

5. Fugro is a Euro 3 billion market cap company and, therefore, a powerful founding member of the ‘Bentley Alliance’, with more members to follow.

6. The drill ship is DP (dynamically positioned) so it can work in up to Force 9 weather; this means no anchoring or mob/demob issues that can be so expensive in the North Sea.

7. They are proving the vessel capability in 7-10 days time by drilling the technical borehole on the field.

8. Plan is to drill the 9/3b-R horizontal production well at the end of Q1 2010, to obtain oil flow from the reservoir and Reserves status.

9. Convincing a service provider / contractor to take risk in this way is more significant than an oil company doing it, since it is not their core business at present. This has been a business objective for Xcite since it was formed in 2003.

Development Highlights:

Ø Xcite goal is to drill an early production well in the 1st Quarter of 2010

Ø RPS Energy gives 90% chance of success for next well

Ø Fugro as undertaken to drill & test the 2010 horizontal production well

Ø Fugro will pay a material cost of the next well (about 10M$) in exchange of future work on Bentley Field if the well is successful

Ø Based on the results of the last vertical well, the subsequent analysis of the 3D seismic interpretation and the close analogue comparison to Bressay Field we are considered at 1 low risk well from reserve status

Ø The current base-case recovery is 160 to 324MMbbls with the up-side structure

Ø XEL is anticipating Cash Flow from 1st well in 2010 and reserve status

Note that the industry benchmark for reserve is 10 to 15$ per barrel while Xcite is currently trading at 0.33$ per barrel

Management:

Richard Smith – Chief Executive Officer

Ø Over 25 years engineering and business management experience in onshore and offshore oil and gas.

Ø Former programme director (CEO of Business Group) for Halliburton/Granherne.

Rupert Cole – Chief Financial Officer

Ø Over 20 years experience in corporate finance, focused on the UK oil and gas sector.

Ø Six years as finance director for Harpur, an international downstream service provider to major oil companies.

Stephen Kew – Exploration and Development Director

Ø 30 years development engineering and project management experience in upstream oil and gas.

Ø 25 years experience with Conoco in the UK and internationally, including work on Block 9/3b.

Roger Ramshaw – Chairman

Ø Experienced executive manager with over 30 years of domestic and international experience in operations, project and commercial activity in the petroleum industry, including heavy oil.

Ø Former Chairman & Managing Director of ConocoPhillips (UK) Ltd. and former President of Conoco Venezuela Ltd.

Project:

Bentley Field (100%)

160km East of Shetlands in the Notht Sea

Bentley Field Potential Recoverable Resources( After 3D Seismic Data)

Structure

Conventional Recovery (MMbbls)

Low Case

Base Case

High Case

Down-Side Structure

73

123

168

Most-Likely

109

160

220

Up-Side Structure

165

235

324

Field Highlights:

900 MMbbls STOIIP (Stock Tank Oil Initially In Place)

Base Case for the Most-Likely Structure is 160 MMbbls

100-300 MMbbls Recoverable with conventional techniques

Up to 500 MMbbls with Enhanced Oil Recovery

2007 Succesfull Flow Test (Produced Oil @125bbls/day from a 50 foot completion with very high skin)

Bressay vs Bentlay Field

Analogy to Bressay Field ( 6KM of Bentley 9/3b)

Similar Heavy Oil Characteristics

Full development of the field in 2015 (Bressay)

Bresay tested 3200 bbls/day on a Horizontal Well vs circa 300 bbls/day on a Vertical Well

On a Horizontal Well Xcite flow rate target is 1500 to 3000 bbls/day