XCITE ENERGY (V-XEL) $1.05 n/c

We spend some time today with Charles Lucas-

Clements, who is the Director of Strategy and Business

Development at Xcite Energy, one of the stories that is going

to become front-page news one way or another some

time late summer.

Charles, who is an Irishman, born in Libya and married

to an Australian is typical of the wandering oil man who

has worked in places like Angola, Malaysia, Oman, Abu

Dhabi, Pakistan and even relatively safe places like Houston

and of course London and Aberdeen.

He gives us a personal update on Xcite Energy and this

is a story that has somewhat frustrated us up until quite

recently...imagine a story that could have 700 million barrels

of oil in the North Sea or better and yet no one has

heard of it.

Oh well, that’s being taken care of now as executives of

Xcite Energy are crossing the country getting their story

told and the volume in the market shows that some people

are listening.

Still to us, this is an intriguing kind of story where

much of the company management had worked together

for Conoco also tackling a big North Sea project many

years ago and now once again, reunited. But still the idea

of working on a project for up to eight years before that

one really big well is drilled, still boggles the mind.

Rupert Cole had met with Keith Schaefer, editor of

the Oil and Gas Investments yesterday and subscribers

of the oil and gas investments newsletter read an intriguing

report by Keith Schaefer last night. Keith

wrote: “Unfortunately, I have to report to subscribers

that it appears I got one rather important point wrong in

my initial write up on Xcite. They WILL RAISE MONEY

IN THE FALL, at least $25 million in equity, according to

CFO Rupert Cole. Every other part of the story was the

same – even a bit better actually, as this first well in

summer 2010 will tap into a section of the east side of

the reservoir that they believe is productive but has not

been taken into account in their estimates of potential

reserves. Their Bentley field project has a massive potential

to hold 900 million barrels of original oil in place

(OOIP), about 105% of the entire North Sea.”

Schaefer continues, “The Bentley well is spudding

early July, with initial flow rates expected to be reported

in mid September. On a well that independent

consultants give a 90% chance of success, I hope the

stock would be trading $3-$5 at that time. But if the

market knows the company will issue shares, or raise

equity, then they will sell a stock down to get the new

stock as cheaply as possible. In traders lingo, we say

the equity issue is overhanging the market, or capping

the stock.”

Schaefer adds at the end this intriguing paragraph:

“In any event, subscribers should be aware that there is

one more equity raise coming in the fall, and I think that

will prevent the stock from having its big run until after

this issue is completed. How big could that run be? I

knew you would ask me that. If they could prove up a

reserve of 200 million barrels, the market could value

that at $10/bbl, which would be a $2 billion valuation on

say...175 million shares out, which equals $11.42 a

share. Like I say, when making projections it’s important

to have one foot planted firmly in the air.”