Shares in Xcite Energy (LSE: XEL) have fallen by over 10% after it released results for the 2015 financial year. Encouragingly, Xcite Energy has been able to reduce lifecycle costs to $30 per barrel and also increase the net present value (NPV) of its Bentley field to $2.5bn. Given the uncertainty surrounding the price of oil and the concern among investors regarding costs and profitability, this is a step in the right direction for Xcite Energy.
However, there’s still concern regarding its near-term prospects, since Xcite Energy is due to make bond repayments in June of this year. While it has apparently been searching for a partner for the potentially lucrative Bentley field in the North Sea, it’s still considering various fundraising options. As such, and while the Bentley field clearly has upbeat long-term prospects, it seems prudent to await further information regarding the company’s near-term financial outlook before buying a slice of it.
Long-term potential
Also releasing news today was UK Oil & Gas (LSE: UKOG), with the final Horse Hill Portland test flowing at a stable dry oil rate of 323 barrels of oil per day (bopd). This is double the previously reported rate. When taken into account it means the final aggregate stable dry oil flow rate from the two Kimmeridge limestones, plus the overlying Portland sandstone, stands at 1688 bopd, which is higher than the previous flow rate of 1528 bopd.
Given these impressive results, Nutech will investigate a possible upgrade to the oil in place calculated within all three test zones, with engineering studies to examine possible flow rates from a horizontal well. And with UKOG owning a 20% stake in the project, it seems to be in a strong position to benefit from the asset’s potential over the long run. The company’s chairman said today that the flow test results have demonstrated North Sea-like oil rates from an onshore well.
Clearly UKOG remains a relatively high-risk play that’s highly dependent on not only near-term news flow but also the price of oil. As such, it may only be of interest to less risk-averse investors, although it continues to benefit from rising investor sentiment, which has helped to treble its share price in the last year.
Ebb and flow
Meanwhile, Bahamas Petroleum’s (LSE: BPC) share price surged by as much as 25% today before falling to be flat at the time of writing. Today it released results for the 2015 financial year, reporting an operating loss of $4.8m versus $4.7m last year. However, the company remains singularly focused on commencing drilling activities by April 2017. And with the Bahamian Senate having passed the Petroleum Bill and Sovereign Wealth Fund Bill, it seems to have improved prospects of attracting a high quality farm-in partner.
Furthermore, Bahamas Petroleum is seeking to cut costs and on this front it has been able to reduce operating cash outflows by 8% and slash employee costs by 10% versus the prior year. As such, its share price could continue to rise after its 33% gain of the last year, although it remains a very high-risk play, which may be highly dependent on positive news flow in the short-to-medium term.
