This week, Xcite Energy Plc (XEL.L) announced through the London Stock Exchange the suspension of its shares http://www.xcite-energy.com/investors/regulatory-news/rns-news/13012324. Evidently, the bondholders who are owed $149 million stated "that they are not satisfied that the transaction is capable of being implemented in a manner acceptable to them". Through a proposed EGM, they wished to lay claim to 98.5% of the Company, thus wiping out the long standing private investor. It would appear that recent shareholder action in this last week may have influenced their decision. Xcite shareholders petitioned on two fronts:-
Petition 1 http://www.ipetitions.com/petition/xcite
Petition 2 http://www.ipetitions.com/petition/xcite-energy-bondholders-notification
In February of this year, the Oil and Gas Authority (OGA), a government body and also now a company in its own right, provided Xcite with a licence extension until June 2017 http://www.xcite-energy.com/investors/regulatory-news/rns-news/12703475. However, it has come to light on the financial bulletin boards that Xcite's solicitors, Ashursts, were engaged in Q3/4 2015 and one of their remits was to explore the scenario of insolvency. Ashursts gave their permission for a shareholder to publish their letter and hence this is in the public domain. According to the OGA, a company has to demonstrate "basic financial viability" to hold such a licence and the timing of these two events does raise questions.
It is understood that the bondholders are financial entities and one has to question if they are the appropriate type of licence holder, should this occur down the line. Furthermore, the OGA has stated the future importance of heavy oil to the North Sea and in particular, the development of hubs in the North Sea https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/499160/OGA_Review.pdf (slides 8 and 13). Xcite Energy has successfully drilled, lifted and sold the heaviest oil to ever be produced in the North Sea and one would likely assume that that in itself would provide the OGA with a major opportunity to learn from Xcite. The OGA has designated Bentley to be of "high priority" and of "significant value" and it does sit in quad 9, identified in the link above.
So, will the UK government, allow a major and proven UK energy asset in the UK North Sea, to go undeveloped after British entrepreneurs proved beyond doubt the technical ability to produce and then commercially deliver this oil to market? Our Prime Minister, Theresa May and her government are about to execute Brexit and here we are with a British success story…
