London and Toronto listed North Sea oilfield developer, Xcite Energy (LSE:XEL, TSX:XEL), is set to raise over C$8.5 million via a placing to bankroll an 'enhanced' work programme on the Bentley field.
The company has hired Arbuthnot Securities and FirstEnergy Capital, which already have indicative commitments in excess of that figure.
"We are very pleased with the support of existing and new investors for our enhanced drilling programme”, Xcite Chief Executive Richard Smith commented.
Drilling on the 9/3b-R well gets under way next month.
“We look forward to moving ahead rapidly with the next steps to bring the Bentley Field into production and maximise its commercial value", Smith added.
The company believes its updated plan - which will now include a slant pilot well section - will “provide greater certainty” for the planned horizontal flow test. Importantly the enhancement will add new “significant data”, and accelerate development to reach first stage production.
Xcite said the new approach is only possible due the company’s recent decision to use Diamond offshore Drilling’s semi-submersible, ‘Ocean Nomad’ drilling rig. According to Xcite the Ocean Nomad has significant operating advantages over the originally planned jack-up rig.
By drilling a slant pilot well through the reservoir, Xcite expect to optimise horizontal well placement, whilst collecting a range of data to assist the planning of the First Stage Production programme.
“The pilot well will be logged and a core sample collected to allow enhanced analysis of reservoir permeability and fluid flow characteristics ... The core will also help to identify the existence of a tar mat at the base of the reservoir”, Xcite stated.
The well will then be suspended for re-use at a later date as part of the FSP, which would potentially provide early oil revenues and consequently reduce funding requirements for the production programme.
“Given the environmental sensitivities surrounding flaring of crude oil produced offshore ... crude off-take from the planned well test will be transferred to a vessel moored in the field and shipped to shore”.
Subsequently this off-take will sold to Xcite’s partner BP - who will also conduct blending and refinery tests on the Bentley oil.
The company highlights that these sales will re-coup “a portion of the additional cost”. Furthermore, Xcite sees additional cost savings, as it’s changed some terms of the partial turn-key programme in favour of day rates. The changes apply to the low-risk drilling element of the programme.
With the support of its development partners, collectively known as the Bentley Alliance, Xcite has been making rapid progress in the development of the Bentley field over the past year.
The Bentley field has independently assessed contingent resources of 122.5 million barrels on a most likely basis, which has been upped to 160 million barrels by the management following a reassessment of 3D seismic.
Should the resource be converted to 2P (proven and probable) reserves, Xcite would become the third largest independent producer in the North Sea.