Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Xcite Energy; farm-in agreement a sign of desperate times.

By Ben Turney

11 November 2015 04:38

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Shares in Xcite Energy (XEL) are up 6.25% this morning on news of the company’s farm-in with Azinor Catalyst Limited. Under the terms of the deal, Azinor has the opportunity to earn into the UK Continental Shelf (UKCS) Licence P.1979, held by Xcite’s subsidiary Xcite Energy Resources. In return for completing a technical evaluation and then possibly an Induced Polarization survey of P.1979, Azinor could receive as much as 50% of the licence’s equity. On the face of it this looks like decent enough news for Xcite. The deal should enable progress at this non-core asset, allowing the company to focus on its flagship Bentley project. However, Xcite is giving up a significant proportion of P.1979 in return. The question now is, can this deal deliver value to shareholders?

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Comments

Diamond Don

11 November 2015, 12:18

This isn’t about adding value, it’s about reducing financial obligations. Clearly you know all about the oil price and its effect on oilers such as Xcite, so surely even you can understand why this benefits shareholders during difficult times??
I’m not invested in Xcite but I know what makes sense for a struggling company.
Unfortunately, sites like Shareprophets just love to reinvent every announcement as a death knell.
If you were on the ball this might have been an interesting article 6 months ago, had you realised the financial implications of holding on to these blocks long term with no income or farm-in partner.
Rumpelstiltskin

5 December 2015, 18:17

DIAMOND DON, give it a rest. You and your mates have screwed the life out of this dog of a company. It will last as long as there is enough to pay the bod. Seen it a hundred times before.