Shares in oil and gas exploration firm Xcite Energy spiked on Monday after it announced a major uprating of the potential reserve in a key North Sea field.
The firm increased its forecast for Bentley to 909 million stock tank barrels (MMstb) from a previous estimate of 550 MMstb made in February last year.
The company which has regularly used Dundee Port for rig refurbishments said it has now upgraded Bentley’s status to that of a major strategic asset and expects the field to be a major economic contributor to the UK for years to come.
Investors reacted strongly to the upgrading, and Xcite stock rose by almost 9% in morning trading.
Based on a 35-year production lifetime, the proven (1P) reserve at Bentley is now estimated at 198 MMstb, with proven and probable (2P) reserve of 250 MMstb and the 3P reserve which takes into account proven, probable and possible reserves at 312 MMstb.
On an after-tax basis, Xcite said the value of the oil reserve at Bentley was now estimated at between $1.5 billion (1P) and $2.8bn.
The new forecasts are based on the results of a pre-production well test carried out last autumn and a new 3D seismic survey.
Xcite said it had demonstrated the value and materially de-risked development of Bentley and was now moving to a phase of evaluating suitable farm-in partners to work with it on Bentley.
Chief executive Rupert Cole said: “I am very pleased to report this significant increase in both reserves and value attributable to our assets, which supports our long-held belief in the potential of the Bentley field.
“This 2P reserves update, at 250 million barrels, plus considerable upside potential, has exceeded our expectations.
“We have now moved Bentley from being a significant asset to one of the major strategic assets in the North Sea, which will be an important source of future employment and economic contribution to the UK for many years to come.
“We shall now continue to move the project forward with ongoing studies into the potential for enhanced oil recovery, which has yet to be factored into the reserves assessment.
“There is also further scope for field optimisation in order to accelerate delivery of the contingent resources, as well as the potential for exploration barrels from our prospective resources.
“Our next goal is to fund the future development of our assets. Having put in place the RBL (reserves-based lending) facility last year, we still see this as an important part of our future funding structure.
“By increasing our reserves so significantly and developing a more balanced phasing of production volumes, with approximately half of the 2P reserves now expected to be delivered from the first phase development wells, we anticipate being in a position to increase the borrowing capacity of the field considerably and we shall be discussing this with our existing and potential new lenders.”
An updated field development plan for Bentley, which will reflect the greater capacity of the first phase of development, is expected to be submitted to the Department for Energy and Climate Change within a matter of months.
Shares in Xcite closed up 9p at 118p on Monday a rise of more than 8%.