By Iain Packham
LONDON--U.K. North Sea-focused oil company Xcite Energy Ltd.
(XEL.LN) said Tuesday it has amended its Bentley oilfield offtake
services agreement with BP PLC (BP.LN), in a deal it says will add
significant financing for the second stage of the oilfield
development program, through a combination of reserves based
lending and flexible working capital support.
Under the terms of the agreement, BP will provide $5 million of
financing for Phase 1B of the Bentley field development, as part of
the reserves-based lending facility being negotiated with a group
of commercial banks.
For an initial phase of up to three years BP will deliver
dilutant products in-field to Xcite Energy, for blending with the
heavy Bentley crude to maximize its value prior to offtake by
BP.
BP has also undertaken to provide further support to Xcite
during the initial phase, by reducing Xcite Energy's working
capital requirements for the dilutant products to be used in the
blending-in-field operations.
At current oil prices, this working capital support is estimated
to be in the range of $20 million to $40 million depending on
Bentley crude production and blending requirements, in respect of
which Xcite Energy would pay BP an appropriate commercial financing
charge.
Xcite said these increased financial commitments replace the
previous commitment to procure $20 million of financing from a
commercial bank with credit support from BP.
Xcite shares closed Monday at 87.5 pence.
Write to Iain Packham at iain.packham@dowjones.com