Xcite Energy (LON:XEL, TSX-V:XEL) has extended the binding letter of intent it announced last month with a view to securing a first stage production rig for the Bentley heavy oil field it is currently developing in the North Sea.
The LOI originally had a December 15 deadline when it was reported on November 17, but this has been extended to January 15 2011.
The agreement is with British American Offshore Limited (BAOL), part of Rowan Companies Inc, for the N-Class "Rowan Norway", a harsh environment, deep water jack-up unit, designed and built for simultaneous drilling and production, which is currently under construction.
The termination fee payable by Xcite in the event it does not enter into a definitive agreement by the deadline has been increased to US$4 million. The previous LOI carried a fee of US$2.5 million.
Investors are eagerly awaiting the start of flow testing of Xcite’s 9/3b-6z well on the Bentley field which has been held up by poor weather and a technical glitch that was reported only yesterday.
“An operational issue with the export hose has occurred and an alternative testing procedure has been identified and is in the process of being implemented,” the company had said. “The well test is expected to commence as soon as operational and weather conditions allow.”
Xcite recently completed the horizontal section of the well and flow testing was expected to get underway in the first week of December.