1st Quarter Results

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LSE-AIM: XEL

24 May 2016

Xcite Energy Limited

("Xcite Energy" or the "Company")

First Quarter Results for the 3 Month Period Ended 31 March 2016

Xcite Energy announces its first quarter results for the 3 month period ended 31 March 2016.

Highlights for the year to date

Overview of Results

Xcite Energy remains engaged in discussions with its bondholders ahead of the bond maturity on 30 June 2016, in order to re-negotiate the terms of its bond and, assuming it is able to agree such terms, provide financial flexibility to continue to pursue its development funding initiatives.  The Company will update the market on the outcome of discussions with bondholders when it is in a position to do so.

The Company has now reached agreement on the principal commercial terms for the development funding proposals for the first phase of the Bentley project.  These proposals will require a partner to join the development group and the Company believes its ability to offer a funding package to potential partners is an innovative structure which potentially mitigates the capital constrained environment in which the oil and gas industry is currently operating.

Concurrently the Company has also continued to progress the tender process to select an EPCIC contractor for the MOPU and FSO, and to finalise a drilling rig contract.  The eventual outcome of the funding proposals and the Company's continuing review of market opportunities to reduce costs, may influence the future structure of the current contractor group as it continues to pursue the principles of its collaborative model which the Company believes creates value for all stakeholders.

On 21 March 2016, the Company announced the results of an updated Reserves and Resources Assessment Report ("RAR"), prepared by AGR TRACS International Limited. This RAR, with an effective date of 31 December 2015, confirmed 2P Reserves for the Bentley field of 267 million stock tank barrels ("MMstb"), an increase of 2 MMstb since the previous RAR dated 29 April 2015.  Additionally, the after-tax net present value of the Bentley field cash flows (discounted at 10%) was confirmed to be approximately US$2.5 billion.  A further 9 MMstb of P50 Contingent Resources were assigned to the Bentley field, representing the additional economic production that could be achieved after an expected initial 35 year facilities life cut-off had been applied to the development plan.

Going Concern and Basis of Preparation

The Bonds were issued by XER in June 2014 and fall due for repayment on 30 June 2016. The Group has met all of its covenants and has paid in full all interest falling due under the Bonds to date. The remaining coupon interest due under the Bonds to maturity is included in restricted cash in an escrow account for the benefit of the Bondholders. However, the Group's current and forecast cash position is insufficient to repay the Bond capital in full by 30 June 2016 and, accordingly, it continues its discussions with the principal bondholders in order to develop financial flexibility for the Group as it continues its efforts to secure a development financing package that meets its long-term field development funding requirements, in addition to the funds required for the settlement in full of the Bonds.

It should be noted that there is no certainty that these efforts will result in funding being secured by the Group or, if funding is secured, the terms or timing of such funding and, therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

These circumstances indicate the existence of material uncertainty in relation to the Group's ability to continue as a going concern.  This is dependent on the Group's ability to repay or renegotiate the key terms of the Group's Bonds which fall due for settlement on 30 June 2016. However, having regard to the legal and financial advice received by the Board of Directors and having carefully considered the current liquidity position of the Group and the financing initiatives being pursued, the Board of Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future.  On this basis, the Group continues to adopt the going concern basis of accounting in preparing these interim unaudited consolidated financial statements and they do not include the adjustments that would result if the Group was unable to secure its long-term funding and to continue as a going concern.

The following tables summarise the Group's financial performance in the 3 months ended 31 March 2016 and the restated US Dollar comparatives for the 3 months ended 31 March 2015.

The Company's unaudited Financial Results for the 3 Month Period Ended 31 March 2016 can be found at the following link:

http://www.rns-pdf.londonstockexchange.com/rns/0628Z_-2016-5-23.pdf

Forward-Looking Statements            

This announcement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst the Company believes the expectations reflected herein to be reasonable in light of the information available to it at this time, the actual outcome may be materially different owing to factors beyond the Company's control, or otherwise within the Company's control, for example, if the Company decides on a change of plan or strategy. Accordingly, no reliance may be placed on the figures contained in such forward-looking statements.

Notes to Editors

Xcite Energy (LSE-AIM: XEL) is an oil appraisal and development company with a portfolio of heavy oilfield assets in the Northern North Sea in the UK. Xcite Energy holds a 100% working interest in the Bentley field; a heavy oil field with 2P recoverable reserves of 267 MMstb, making Bentley one of the largest undeveloped oilfields in the UK Continental Shelf.