SP Angel this morning commented on Xcite Energy news: “Today’s news is another update from the Company in which the elephant in the room is not tackled, or fully explained, and one wonders how much longer the situation will limp on. To be fair to management, we believe that they want to develop the asset as much as anybody, but it is now a question of whether the asset is the barrier to progress, or structure of the transaction that is being expected.
The former is a nagging doubt that we have had continually about this asset, especially with respect to the gas content and the impact that the J-T effects may have on the reservoir as it is produced, but the latter is very much in the management’s bailiwick. All of this is of course set against a backdrop of savage cuts in the North Sea oil market, precipitated by a collapse in the oil price.
We have said previously that:
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and today we don’t see any reason to change our minds.
The Company need to be more articulate about what their strategy is, and if they are putting themselves up for sale, they should say that too. We have no doubt that ideally they would like an angel investor to foot the development cost while leaving them with the rump of the asset, but in this market, and with the uncertainty surrounding Bentley’s enduring commerciality, we see the need to be more inventive, and less rigid on how to structure and develop the asset.”
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