ABERDEENSHIRE, UNITED KINGDOM--(Marketwire - Apr 27, 2012) -

 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION TSX-V, LSE-AIM: XEL 27 April 2012 Xcite Energy Limited ("Xcite Energy" or the "Company") Statement of Reserves Data and other Oil and Gas Information (Form 51-101F1) and Funding Strategy Key Points- 2P oil reserves for the Core Area of approximately 116 MMstb, with NPV10 (after tax) value of approximately $1.46 billion. - Funding resources for Phase 1A work programme available to the Company. - Funding for Phase 1B work programme planned to be secured from external sources and oil revenue. - Advanced discussions being held with group of commercial lending banks to secure reserves based lending ("RBL") facility. - Company considering a range of options (including farm-out partner, industry participation, convertible debt instruments and equity) to finance the balance of funds required for Phase 1B; Jefferies and Rothschild appointed to assist. Introduction The Company has filed under its profile on SEDAR ( [ www.sedar.com ] ) and on its website, its annual Statement of Reserves Data and other Oil and Gas Information (Form 51-101F1) under National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and in accordance with the Canadian Oil and Gas Evaluation Handbook, with an effective date of 31 December 2011. The Form 51-101F1 is an annual statement required by Canadian regulations to be filed by the Company, which sets out its interests in oil and gas reserves, provides key data with respect to those interests and identifies changes, if any, which have occurred since the previous annual filing. The information contained in the Form 51-101F1 is taken directly from the recently updated Reserves Assessment Report ("RAR") prepared by TRACS International Consultancy Limited, an independent qualified reserves auditor, dated 17 February 2012 with an effective date of 31 December 2011. The Form 51-101F is available on the Company's website at: [ http://www.xcite-energy.com/companyinformation.htm ] Oil and Gas Reserves The Company's oil and gas reserves are held through its wholly owned subsidiary, Xcite Energy Resources Limited ("XER"), comprising 100% working interest in Block 9/3b, which contains the Bentley field (the"Field"). As announced by the Company on 20 February 2012, key information from the RAR in connection with the Core Area of the Field includes: - Oil reserves of the type 1P, 2P and 3P for the Core Area of approximately 96 MMstb, 116 MMstb and 140 MMstb, respectively; - NPV10 (after tax) value of oil reserves for the Core Area of approximately $1.076 billion, $1.464 billion and $1.921 billion on a 1P, 2P and 3P basis, respectively*. - NPV10 (after tax) value per barrel of oil reserves in the Core Area of approximately $11.27, $12.64 and $13.77 on a 1P, 2P and 3P basis, respectively* * See "Cautionary Language" below for a general explanation of the method and assumptions used in these calculations. Total Future Net Revenue - Undiscounted forecast prices and costs Set out below is the total forecast, undiscounted net revenue and costs attributable to the Core Area Bentley reserves as included in the RAR and Form 51-101F1. Abandon- Future Future ment Net Net and Revenue Revenue Develop- Reclama- before after Operating ment tion Income Income Income Revenue Costs Costs Costs Taxes Taxes Taxes Reserves Category $MM $MM $MM $MM $MM $MM $MM ________ _______ _______ _______ _____ _______ _______ _______ TOTAL 9,284.0 2,446.0 2,211.5 422.4 4,204.1 2,124.1 2,079.9 PROVED (1P) TOTAL PROVED PLUS PROBABLE (2P) 11,257.8 2,605.7 2,211.5 430.8 6,009.8 3,246.8 2,763.0 TOTAL PROVED PLUS PROBABLE PLUS POSSIBLE (3P) 13,519.7 2,671.2 2,211.5 430.8 8,206.1 4,651.3 3,554.8 ======== ======= ======= ===== ======= ======= ======= Based on the 116MMstb 2P reserves, the RAR assumes approximately $11.3 billion revenue for the life of field development, equating to $97 per barrel. On this 2P basis, the RAR assumes: - operating costs of approximately $2.6 billion, equating to $22.5 per barrel. These operating costs are assumed to be funded out of oil revenue. - development costs of approximately $2.2 billion, equating to $19 per barrel. These development costs are discussed in more detail below. - abandonment and reclamation costs at the end of field life of approximately $431 million. Thesecosts, when accounted for (and thus discounted) within the NPV10 (after tax) value for 2P reserves of approximately $1.46 billion, equate to approximately $50 million. - net revenue before income taxes of approximately $6.0 billion which, when discounted in the NPV10 (after tax) calculation, equates to approximately $3 billion. - net revenue after income taxes of approximately $2.76 billion, which equates to the NPV10 (after tax) value of 2P reserves of approximately $1.46 billion. Future Development Costs Attributable to Reserves (Undiscounted) Set out below are the future development costs attributable to the Core Area Bentley reserves from the RAR and Form 51-101F1, which uses a 2% per annum escalation in costs commencing 1 January 2012. Total Total Proved Total Proved Plus Proved Plus Probable Probable Plus Possible Estimated Estimated Estimated Year ($MM) ($MM) ($MM) _____________ __________ _____________ _______________________ Bentley Field Core Area 2012 204.6 204.6 204.6 2013 360.1 360.1 360.1 2014 316.8 316.8 316.8 2015 324.2 324.2 324.2 2016 542.0 542.0 542.0 2017 200.6 200.6 200.6 2018 185.6 185.6 185.6 2019 34.5 34.5 34.5 2020 34.5 34.5 34.5 2021 8.6 8.6 8.6 Thereafter 0.0 0.0 0.0 Total for all 2,211.5 2,211.5 2,211.5 years undiscounted (1) Note: (1) The capital expenditure and construction schedule of Phase 1A, Phase 1B and Phase 2 is assumed to be the same for the Proved (1P), Proved plus Probable (2P) and Proved plus Probable plus Possible (3P) outcomes. Hence the estimated future development costs are assumed to be the same for all three outcomes. Phase 1A development costs in aggregate are accounted for in 2012, for which the funding resources are available to the Company and the work programme has commenced. Phase 1B is planned, subject to Department of Energy & Climate Change ("DECC") approval, to comprise a permanent, normally unattended, minimum facilities, lightweight wellhead tower, capable of accommodating up to twelve drilling risers and remaining throughout the rest of field life. Four additional production motherbore wells are planned to be drilled during 2013, 2014 and 2015 for Phase 1B with their associated lateral wells which, together with the motherbore well drilled in Phase 1A, will provide the basis for the planned Phase 1B production incorporated into the RAR economics. The additional drilling riser and thus production capacity noted above, i.e. five motherbore wells planned for Phase 1B compared with up to twelve drilling riser slots, which is inherent within the wellhead tower design, is expected to provide the flexibility to generate additional cash during Phase 1B. The $360 million development expenditure assumed to be incurred in the RAR in 2013 is required to be funded from external sources to achieve first oil in Phase 1B. Such funding is expected to include the RBLfacility noted below andnet Bentley crude oil revenue in 2013 of approximately $50 million, after accounting for 2013 operating costs. The RAR assumes that future oil revenues will fund the balance of Phase 1B development expenditure in 2014 and 2015. Phase 2 of the Bentley field development, subject to DECC approval, is planned to comprise the full field platform infrastructure and production facilities, plus the drilling of additional wells. The associated Phase 2 expenditure is assumed to be incurred commencing in 2015 and running through to 2020, with later years relating solely to the drilling of wells. The Company currently plans to operate Phase 1B for approximately 3 years to enable Phase 2 to be funded by means of internally generated cash flow from oil revenue, together with a new RBL facility planned to be entered into in due course based on 116MMstb 2P reserves in the core area of the Field. Future Potential In addition to the reserves already assigned to the Bentley field and the subject of the future development costs set out above, the Company plans to undertake tests which, if successful, will be followed by the implementation of an enhanced oil recovery ("EOR") programme for the entire Bentley field in due course. It is anticipated that the EOR programme will incur additional costs to be met from cash flow being generated at the time, but will give rise to additional recoverable crude oil that, when sold, will generate additional revenue in excess of the associated costs. It is planned that prospective resources currently contained within the Bentley South and East prospects and other prospects will be the subject of separate appraisal and development programmes in due course, with funding for such work programmes assumed to be available from cash flow generated from the core area of the field. It is expected that these work programmes, if successful, will give rise to additional reserves being assigned to the Bentley field. Funding Strategy Phase 1A development costs in 2012 are being funded from resources available to the Company and the work programme has commenced. The Company is in advanced discussions with a group of commercial lending banks to secure an RBL facility, which will provide significant project debt to be used as a material part of the overall funding required for Phase 1B. In order to maintain flexibility and in line with the previously outlined strategy, the Company is considering a range of options to provide the balance of the funding required to commence the Phase 1B development including, but not limited to, farm-out, other industry participation, convertible debt instruments and equity financing. The Company has begun preparations for discussions with potential industry partners, and has appointed Jefferies International Limited ("Jefferies") and Rothschild to act as advisers to the Company in this process. In order to maximise the value for the Company and its shareholders, it is considered unlikely that any transaction will be concluded until after the results of the Phase 1A programme are known, when greater certainty is expected to have been achieved with respect to the longer term oil, gas and water production profiles and recoverable reserves from the Bentley field. ENQUIRIES: Xcite Energy Limited +44 (0) 1483 549 063 Richard Smith (CEO) / Rupert Cole (CFO) Oriel Securities (Joint Broker and Nomad) +44 (0) 207 710 7600 Emma Griffin / Michael Shaw Morgan Stanley (Joint Broker) +44 (0) 207 425 8000 Andrew Foster Rothschild +44 (0) 207 280 5000 Neeve Billis / Stewart MacDonald Jefferies International Limited +44 (0) 207 029 8000 Richard Kent Pelham Bell Pottinger +44 (0) 207 861 3232 Mark Antelme / Henry Lerwill Paradox Public Relations +1 514 341 0408 Jean-Francois Meilleur Cautionary Language Oriel Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement. Morgan Stanley, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement. N M Rothschild & Sons ("Rothschild"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement. Jefferies International Limited ("Jefferies"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement. The RAR, as audited by TRACS, is based on forecast and prices effective as at 31 December 2011 from McDaniel & Associates' 1 October 2011 Brent oil forecast, less a 12% discount for Bentley crude ( [ www.mcdan.com ] ). The calculation of the NPV10 (after tax) for the Core Area disclosed above takes into account the following: (a) UK Corporation Tax is charged at the rate of 30% on net taxable income; (b) UK Supplemental Corporation Tax ("SCT") is charged at the rate of 32% on net taxable income; and (c) heavy oil allowances of up to GBP800 million have been applied to offset the SCT to the extent possible. Glossary"1P" means proved reserves."2P" means proved plus probable reserves."3P" means proved plus probable plus possible reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves and there is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves."Core Area" means FPD and SPD."DECC" means UK Department of Energy and Climate Change."FPD" means First Phase Development in the core area of the Field, or Phase 1B. "MMstb" means millions stock tank barrels."NPV10" means net present value in money of the day using a 10% forward discount rate, which values do not represent fair market value."SPD" means Second Phase Development in the core area of the Field, or Phase 2. "$" means United States dollars. "$MM" means millions of United States US dollars. Forward-Looking Statements Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "target", "potential", "continue" or other similar expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. Additional information identifying risks and uncertainties are contained in the Company's annual information form dated 26 October 2010 and in the annual Management's Discussion and Analysis for Xcite Energy dated 22 March 2012 filed with the Canadian securities regulatory authorities and available at [ www.sedar.com ] . The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations. Statements relating to "reserves" are deemed to be forward-looking statements or information, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitable in the future. There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond the control of the Company. The reserve data included herein represents estimates only. In general, estimates of economically recoverable oil reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary considerably from actual results. All such estimates are to some degree speculative and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable oil reserves attributable to any particular group of properties and classification of such reserves based on risk of recovery and estimates of future net revenues expected therefrom, prepared by different engineers or by the same engineers at different times, may vary substantially. The actual production, revenues, taxes and development and operating expenditures of the Company with respect to these reserves will vary from such estimates, and such variances could be material. Consistent with the securities disclosure legislation and policies of Canada, the Company has used forecast prices and costs in calculating reserve quantities included herein. Actual future net cash flows also will be affected by other factors such as actual production levels, supply and demand for oil and natural gas, curtailments or increases in consumption by oil and natural gas purchasers, changes in governmental regulation or taxation and the impact of inflation on costs. The estimated future net revenue set out herein does not necessarily represent the fair market value of the Company's reserves Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release. This information is provided by RNS The company news service from the London Stock Exchange END