Xcite Energy Plc (XEL.L), listed on LSE-AIM and owner of one of the largest undeveloped and proven oilfields in the North Sea, has recently seen a shareholder revolt to a proposed EGM.
The Company RNS on the 27th September 2016, http://www.iii.co.uk/research/LSE:XEL/news/item/2124568/statement-re-proposed-restructure?context=LSE:XEL proposed that through the means of an EGM, existing shareholders will be diluted to a remaining 1.5%, by transferring a $149 million debt to Bondholders into a new stake of 98.5% in the Company. Xcite should make an attractive takeover target at this stage given that it has a current and decimated market capitalisation of around £6 million against an asset value of their Bentley oil field of $2.5 billion as credited by AGR TRACS http://www.agr.com/. This valuation is based upon 267 million barrels of 2P reserves, the oil industry's measure of value and carries a total cost of just short of $30 a barrel, $17 per barrel of which is operating expenses. Bentley is considered by management to be "economic and robust" at these levels.
Xcite Energy's share register is generally understood to be largely populated by private investors who have seen value in their shares collapse, yet the asset sits as a" high priority" and one of "significant value" for the Oil and Gas Authority (OGA). The OGA has even done their own technical due diligence on the field, prior to the intended submission of a financed Field Development Plan. Given that in 2012, Xcite delivered a very successful mini-production scheme called an Extended Well Test, delivering production of around 149,000 barrels of heavy oil which was sold into the market, shareholders are up in arms about the demise of their investment and the intended proposals as RNS'd.
As a result of the above, an online petition was set up on the 17th October 2016 to gain support for a "No" vote (http://www.ipetitions.com/petition/xcite), should an EGM proceed on the terms suggested. As of the 23rd October 2016, 541 shareholders had registered their support for a "No" vote and the petition continues to gain support on a daily basis. Discussions among private investors appear to suggest that the Bondholders would do well to significantly reduce the proposed percentage if they want shareholder support and to not put the Company into receivership, as they appear to have the power to do.
The petition will likely gain further support with many stating they would rather lose their…
