Xcite looking to cut price for Bentley development

Xcite Energy Ltd, the operator of an oilfield dubbed one of the largest undeveloped resources in the UK North Sea, the Bentley field, is looking to benefit from the lack of work in shipyards, while also trying to secure funding for the development.

The company which operates the Bentley heavy oil field with a 100% stake said Monday that it was continuing technical due diligence with its potential development partners. The company said that its management acknowledged that the progress was slow, but it required a detailed analysis due to the fields unique nature. It also said it was pursuing a range of potential funding solutions to secure the development capital required for the Bentley first phase development. The funding options could include a joint venture, farm down deal , public financing, asset financing or “other means”.

The company took over the licence in 2003, and has been working to bring Bentley oil into steady production ever since. The Bentley field is located on the East Shetland Platform in the UK Northern North Sea. Xcite in 2012 completed pre-production phase, producing 147,000 barrels of Bentley crude oil in the process.

According to the company’s updates released over the past years, the plan for the development of the Bentley field should include a self-elevating ACE production platform, a bridge-linked Floating, Storage and Offloading (FSO) unit, and a jack-up drilling rig.

In its Monday’s statement, Xcite Energy said it was continuing to work with a number of parties in order to develop an asset funding package for the construction and delivery of the mobile offshore production unit (“MOPU”) and the floating storage and offloading vessel (“FSO”).

Xcite is hoping to benefit from the lack of work and increasing competitiveness among the shipyards for large projects.

“The current industry environment has freed up capacity in shipyards and we are actively pursuing and evaluating potential opportunities as a result of increasing competitiveness for major projects in order to deliver the best value and most secure project execution strategy. Management believes this process is complementary with the potential field development partner discussions and will create greater clarity for the overall Bentley First Phase Development funding requirements,” the company said,

The company also said that the construction of the N Plus class drilling rig continues to make good progress in Singapore.

$35 per barrel

Xcite Energy said that the current full field development life-cycle cost estimate is around $35 per barrel, representing a relatively low cost per barrel for a UK North Sea development.

“The Company has worked closely with third parties to validate the economic and commercial viability of the Bentley project. The collaborative work with the development group has also resulted in material operational efficiencies, such as the utilisation of a bridge-linked FSO into the development plan, which offers significant operational cost savings potential throughout the life of the field. The Company believes this is a good example of how contractor group collaboration can contribute towards maximising economic recovery in the UK North Sea,” Xcite said.

It added: “The Company has an active dialogue with the Oil and Gas Authority (“OGA”) and has recently begun detailed discussions to review the technical approach to the Bentley field development in order to ensure that it will be compliant with government policy. Xcite Energy is fully committed to maximising economic recovery from the Bentley field, maintaining a collaborative approach with its development group and remaining consistent with the aims of the OGA.”

The company did not provide any timeline for the expected first oil from the project.

Offshore Energy Today Staff