North Sea oilfield developer Xcite Energy (AIM:XEL, TSX-V:XEL) gave a generally upbeat assessment of its prospects as it unveiled third quarter results.
The figures showed the company has cash balances of £27.8 million compared with £1.74 million a year ago, and the funds to pursue its plans for the Bentley heavy oil field, 100 miles east of Shetland.
The company’s 9/3b-6 well has now spud and the results thus far are described as “excellent”.
Xcite says the drilling is expected to continue during November, with the results announced shortly afterwards.
An update was issued last week, which confirmed the existence of a significantly increased volume of oil in place in the reservoir that had previously been predicted from the latest interpretation of the 3D seismic data.
In addition, the lower Jurassic oil has also been found to be present in the pilot well location, thus confirming further potential within the block.
“Management believes this confirms that an upside structure is present in the eastern half of the reservoir, significantly increasing the volume of oil in place,” Xcite said in a statement to the stock exchange this morning.
A successful outcome from the 9/3b-6 well flow test should enable the company to designate reserves on the Bentley field and move forward with the planning for the first stage production programme during 2011.
With this in mind, Xcite said it has made further progress with the Bentley Alliance, which includes Amec and BP. In particular it has looked at the availability of drilling units and off-take vessels to perform this work.
During the three months to September 30 the group raised £5.8 million and a further £3 million since then from equity credit line provided by Yorkville. It still has £17 million available from this source.
At the same time Xcite’s net assets have more than doubled to £52.9 million from £24.07 million a year earlier and £48.3 million in the second quarter.
The company posted a net loss of £212,000 compared with £249,000 a year earlier and £246,000 three months earlier.
Chief executive Richard Smith said: "An excellent few months on all fronts, with the 9/3b-6 pilot well confirming that we have been conservative in our predictions for the Bentley field thus far.
“With the upside reservoir structure now confirmed and the 100 per cebt net to gross oil column, the location selection for the horizontal well test is an outstanding piece of planning by the team.
“We look forward to the next few weeks with high expectations."