Xcite receives more support from BP

AIM-listed oil and gas firm Xcite Energy has amended an agreement with BP Oil International (BPOI) which will see BPOI provide more funding for Xcite's flagship Bentley field in the North Sea.

The agreement, originally announced in January 2010, will see BPOI provide the offtake services to market and sell the Bentley crude oil in return for an incentive-based fee per barrel.

Either BPOI or a BP company will provide $5m of financing for Phase 1B of the Bentley development as part of the reserves-based lending facility being negotiated with a group of commercial banks.

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BPOI is also to reduce Xcite's working capital requirements by $20-40m for the diluent products to be used in the blending-in-field operations. This replaces the previous commitment to procure $20m of financing from a commercial bank with credit support from BP.

"We are very pleased with this further endorsement and increased support from BP, with the amendment to the marketing and offtake agreement providing significant additional financing for Phase 1B of the Bentley field development programme, through a combination of reserves based lending and flexible working capital support," said Xcite's Chief Financial Officer Rupert Cole.

"This amended agreement shows how Xcite Energy and BP have successfully focused on operational detail to deliver an amended agreement that assists Xcite Energy as it moves towards production of oil from the Bentley field," he said.

Xcite's shares jumped 5% in early trading on Tuesday.

BC