It also announced that it has now contracted a shuttle tanker and a pipeline for the start of the Bentley field’s production phase.

Xcite said the Bentley 9/3b-7 well has so far been drilled to a depth of 6,684 feet. And drilling to the reservoir section will soon follow – after a liner has been set, cemented and pressure tested.

It has signed a time charter contract with Teekay Navion Offshore for the ‘Scott Spirit’ shuttle tanker, which will be used as the in-field storage and offtake facility during Phase 1A of the Bentley field development.

And Ocean Installer has been contracted to provide the 1.8 kilometre pipeline that will connect the Rowan Norway jack-up rig to the Scott Spirit vessel.

This morning, the company told investors the Rowan Norway jack-up drilling rig is making good progress. 

The 36” hole and 30” conductor pipe have been completed, while the 262 hole has been directionally drilled and the 20” surface casing has now been set and cemented, it said.

“Completion of these upper hole sections, safely and as planned, gives a firm foundation for the rest of the Phase 1A work programme planned to be undertaken within the 240 days initial term under the rig contract, which commenced in early March,” Xcite said in a stock market statement.

Phase 1A of the development programme will see Xcite drill two development wells and carry out an extended production test, which is expected to last 90 days in total. 

This will be a technical test, not a headline flow rate test, with around 30 days flow being expected to confirm and calibrate the reservoir model.

In February, Xcite upgraded the Bentley field’s oil reserve estimate. Xcite increased 2P reserves from 28 to 116 million barrels of oil. These reserves are estimated to be worth US$1.46 billion, it said.

It was a choice stock in 2010. A successful appraisal drilling result and flow test proved that that Bentley heavy oil reservoirs could produce economically. Those findings helped lift the shares from 80p to just over 400p by January 2011.

Subsequently the group has focussed on the development of the Bentley oilfield, which is located around 160 kilometres east of the Shetlands.  During the past year Xcite has upgraded its oil reserves up to the £116 million mark and it has completed a three step field development plan, which is now underway.

But, on AIM the shares suffered a notable fall from grace, which saw the Xcite price fall all the way back towards the 80p mark by the end of the year.

“The uncertainty in the capital markets has added to the normal challenges of a North Sea project, but the Xcite team has maintained its focus on the prize and shown remarkable flexibility to overcome problems,” Ramshaw said in today’s results statement.

During the past year Xcite has upgraded its oil reserves up to the 116 million barrel mark and it has completed a three step field development plan, which is now underway.

“It has been, without doubt, a demanding year, but the expected value of the company remains unchanged and we look forward to the results of the Phase 1A work programme and the future development of the Bentley field.”

Drilling began earlier this month on the wells that will form the basis of the Phase 1A programme. 

Xcite says this work programme will be just as important for the company as the successful appraisal well, drilling in 2010, which demonstrated the field’s commercial flow rates and prompted the rally that created a great deal of excitement and interest among investors.

Phase 1A of the development programme will see Xcite drill two development wells and carry out an extended production test, which is expected to last 90 days in total. 

To support the development Xcite raised just over £55 million in new capital, via draw downs to equity line facilities and more conventional share placings, and it ended 2011 with £38.8 million in cash.

There have also been a number of drawn downs and fundings in the current year, totalling around £44 million so far.

Xcite actually reported a small paper profit for the year as much of the work confined to the desktop, and payments to contractors are currently being held in escrow, and thanks to a strengthening dollar.

It said net profit for the year, ended December 31, was £129,563.  At the end of the year it had £47.1 million in two escrow accounts to meet in contractor commitments. 

Top earners will pay less in tax from next year as chancellor of the exchequer George Osborne cut the top rate to 45 pence from 50 pence.

Osborne said it was a decision based on HMRC’s report which said due to self-assessment receipts being pushed into the previous tax year the 50 pence rate had only raised one third of the £3 billion expected.

Personal income tax allowances rise to £8,105 next year and to £9,205 from April 2013, making 24 million people £220 a year better off, including higher rate earners the chancellor said.

But the threshold will be reduced from £42,475 to £41,450 while age-related income tax allowances are to be removed for new pensioners from April 2013. Other age-related allowances will be frozen.

Osborne also made significant changes to stamp duty and corporation tax.

A 15 per cent stamp duty will be levied on houses worth over £2 million bought through a company, 

The chancellor committed to catching tax evaders who he called ‘morally repugnant.’

Family homes purchased over £2 million will also now pay stamp duty of 7 per cent.

Corporation tax was cut to 24 per cent with the further aim to cut it to 22 per cent by 2014. Osborne said the rate is 18 per cent less than in the US.

Other company-specific proposals included tax relief on the decommissioning of oil installations in the North Sea.

Angelos Damaskos, CEO, sector investment managers and fund adviser, Junior Oils Trust said: “We believe that the proposals will give greater confidence to oil companies to invest in North Sea projects by removing the uncertainty on treatment of de-commissioning costs.

“The support for deep-water exploration will bring the UK system closer to that of Norway, which provides refunds on the majority of exploration expenditure, and stimulate activity and investment in the UK North Sea territory.”

In a bid to attract overseas companies and keep creative programme makers in the UK the government is to introduce a tax credit scheme for computer games and TV  programme makers.

Referring to British animators Aardman’s warning of moving production abroad the chancellor said: “It is the determined policy of this government to keep Wallace and Gromit exactly where they are.”

Osborne said he was committed to upgrading Britain’s broadband speed in ten of the UK’s largest cities while £50 million worth of investment would be used in smaller cities.

The south eastern airport controversy is due to be addressed by the transport secretary this summer whilst there were proposed rail improvements in the north-west.

He also said there would be a planned deregulation of planning permission.

There was no increase on alcohol duty whilst smokers face an increase of 5 per cent above inflation on cigarettes as of 6pm tonight. This will mean an increase of 37 pence.

Gaming machines used by bookmakers will now face a 20 per cent game duty on large machines.

Broker Jefferies said: “New tax measures announced, in the budget will cost an estimated £12 million - £13 million  for both Ladbrokes and William Hill.”

Meanwhile, the government confirmed it will introduce a taxation scheme for internet gambling based on the point of consumption.

Changes to resolve VAT loopholes will come into effect as of midnight tonight.

The chancellor also confirmed trading hours will be extended for eight Sundays during the Olympics.

There was some easing in the proposed changes to child benefit. 

Households where one or more persons earns more than £60,000 will lose their child benefit but in households where one person earns over £50,000 benefits the benefit will be phased out gradually.

Meanwhile, pensions are to be reviewed and a single-tier state pension based on contributions, for future pensioners, is to be set at about £140.

On the economy, Osborne said the Office for Budget Responsibility (OBR) now forecasts growth for 2012-13 of 0.8 per cent, up from a current estimate of 0.7 per cent, with estimated growth of 2 per cent in 2013.

The chancellor said: “Public sector net debt is now set to peak at 76.3 per cent in 2014-15, almost 2 per cent lower than previously thought – before falling the following year.”

Osborne added borrowing is £11 billion less than he forecast in the autumn for the period up to 2016-17.

It is issuing 8.3 million new shares priced at 124p a share. 

Xcite says the new cash will be used for future working capital and to help the firm progress towards first oil from the Bentey oil field in the North Sea.

On Monday, Xcite announced the spudding of the first development well on the Bentley oil field.

The 9/3b-7 well marks the start of the Phase 1A of the Bentley oilfield development, 160 kilometres east of the Shetland Isles. 

Phase 1A of the development programme will see Xcite drill two development wells and carry out an extended production test, which is expected to last 90 days in total. 

This will be a technical test, not a headline flow rate test, with around 30 days flow being expected to confirm and calibrate the reservoir model.

In February, Xcite upgraded the Bentley field’s oil reserve estimate.

Xcite increased 2P reserves from 28 to 116 million barrels of oil. These reserves are estimated to be worth US$1.46 billion, it said.

Prior to that, in December, Xcite revealed a new approach to the development, splitting the first stage production work programme into two parts - Phase 1A and Phase 1B.

It was a top performer in 2010 before spending much of last year in the doldrums. But the shares have gained almost 90 per cent this week, to trade as high as 187p each.

This comes as the group prepares for the initial phase of development for the Bentley oilfield. 

Yesterday Xcite hosted an analyst and media day in Dundee, where the newly built Rowan Norway rig is currently moored ahead of a development drilling programme.

Analysts were told that two wells will be drilled and a 90 day production test will be completed as part of the programme.

It is believed that Xcite may be able to start work on the first development well at some point this month. That requires approval from the UK Department for Energy & Climate Change first however. The DECC inspected the rig on Wednesday.

In a note to clients today Seymour Pierce analyst Dr Doug Youngson said the share price reaction is a sign that investors are desperate for any information. 

“We feel that the DECC approval and subsequent departure of the rig should provide major drivers for the share price. 

Any conversion of contingent resources into reserves should also enhance valuation.

The share price performance will continue to be strong in anticipation of newsflow, he added.

Seymour Pierce has a ‘buy’ recommendation on the stock with a 242p target.

AIM quoted North Sea oil firm Xcite Energy (LON:XEL) has now completed the second part of its £25.5 million private placing.

In December it unveiled a number of funding agreements, totaling US$85 million, which will assist the company as it pursues its new field development plan for the Bentley oilfield. The funding comprised a share placing and a US$60 million equity line facility.

This afternoon Xcite confirmed that it has now closed the share placing after it issued 13.35 million new shares, priced at 95p, to a subsidiary of Socius Capital Group. As a result the firm raised £12.6 million through this part of the funding.

Last Monday, Xcite announced its first draw down on the equity line facility, taking just over £3.5 million in new capital in return for 3.7 million shares priced at 93p.

The Bentley field development plan was submitted to the DECC back in August. In December, however, it reconfigured its approach to the development by splitting the first phase into two parts - 1A and 1B.

Some £25.8 million of the money is being raised through a share placing while a further £60 million will be made available through an equity credit line facility.

Xcite also revealed that it has terminated its existing equity line arrangement with Yorkville Advisor’s YA Global Master fund.

"Against a challenging economic backdrop, we are very pleased to have further strengthened our balance sheet as we move forward with the field development plan towards first oil," said chief executive Richard Smith.

The placing has been arranged by a subsidiary of Bermuda based Socius Capital Group.  It will be completed in two tranches.

In the first tranche 15.1 million units, comprising one share and half a warrant, are being issued to Socius at a price of 85p. This will raise £12.9 million for Xcite.

The second tranche will provide a further £12.9 million. The remaining shares will be issued at any time between eight to twelve weeks from today. The price that those shares will be issued at will be linked to the share price at that time. This will be the 20-day volume weighted annual price (VWAP) as calculated two days prior to closing the second tranche.

The equity credit facility is being provided by a co-investor of Socius, called Esousa Holdings. 

Xcite says the arrangement allows it to draw down fund from time to time, at its sole discretion, over a period of three years. These shares will be issued at a price based on existing market conditions at the time of each drawdown, subject to the private placement pricing parameters of the Toronto’s Venture Exchange.

The facility is provided by Yorkville Advisers.

The company raised an additional £2.5 million though the draw down. It is issuing 2.1 million new shares to Yorkville’s YA Global Master fund. The new shares were issued at a price of £1.153 each.

Last month Xcite extended the equity line by £50 million to £150 million. Xcite still has over £75 million available to it through this facility.

This funding will be used as future working capital for the company and to progress towards first oil from the Bentley field,” Xcite said.

Xcite is currently gearing up for a work programme to achieve first oil production from the Bentley heavy oil field in the North Sea. 

This summer the firm submitted field development plan to the UK’s Department of Energy and Climate Change. 

The document outlines the proposed two stage development plan that encompasses the core area of the Bentley reservoir. 

It addresses the first stage production programme in detail. And it also references the second stage production programme.

Operationally preparation work is also underway.  Last month Xcite reported that the jack-up rig, which will be used to establish first production, had arrived in Dundee.  Long lead items were being ordered and delivery times are expected to coincide with the deployment of the rig.

Xcite is also finalising the selection of in-field storage facilities for the first stage production programme. It plans to contract this equipment ‘in line with the work programme to first oil’.  

The group is also in talks with potential lending banks for the project financing to proceed with the first stage production programme, additionally it is also in talks over further borrowing facilities to supplement its existing financial resources.