A third quarter update from North Sea-focused oil firm Xcite Energy (XEL:AIM) disappoints investors. The shares fall 5.9% at 104.1p (a recovery from earlier this morning when it was down more than 17%). There is no real bad news in the statement but the absence of an update on a farm-out and/or lending facility to fund the development of its Bentley field appears to be the culprit behind today's sell off.
There had been speculation Norwegian giant Statoil (STL:OL) was poised to take an interest in the asset. It was revealed on 22 November as being the 'unnamed buyer' which paid £10 million to acquire technical data from well tests on the Bentley field; Xcite first announcing this transaction back in May (20 May). Statoil has long been linked with a bid for the company.
The fact this release comes substantially later than the announcement covering the same period in 2012 – which was out earlier in November (9 Nov '12) – may also have contributed to hopes it was putting the finishing touches on a deal. Shares understands that the hold up related to negotiations over refinancing its $60 million loan notes.
Xcite's core asset is the Bentley field – a 100%-owned 250 million barrel heavy oil field in the North Sea. Liberum Capital carries an estimated net asset value (NAV) for the company – essentially based on Bentley – of 340p and we looked at the investment case in a bit more detail here.
The estimated cost of bringing the field to the point where it is generating positive cashflow is $700 million. According to today's update Xcite had £22 million on its balance sheet as at the end of September down from £25.6 million at the start of 2013.