Xcite Energy, a North Sea focused oil company, has been put into liquidation after having been deemed insolvent, as it failed to raise funds for debt payment.
The company, working to develop the Bentley field in the UK North Sea, failed to pay $152 million in debt when bonds issued in 2014 matured on Ocober 31, 2016.
On November 1, 2016 the Bond Trustee made demand on Xcite to repay the debt in full. Xcite then confirmed that it could not repay the debt claimed in the demand.
The creditors then applied to court to place Xcite into liquidation, and the court on December 5 appointed joint liquidators of the company.
Xcite’s material assets are the licenses its subsidiary XER holds in four blocks in the UK North Sea, the most significant of which is the Bentley field license.
The assets have been put up for sale prior to the court action, but the process is now monitored by liquidators who will review bids received and determine further course of action.
In a letter to shareholders, the liquidator has said that based upon current forecasts, the funding available to Xcite will be exhausted during January 2017.
“If this occurs, XER will cease to operate and the Licences will likely be revoked resulting in little or no value being available to XEL’s stakeholders. In view of this, and in anticipation of the liquidation, the Directors determined that it was appropriate to commence a marketing process for the sale of the shares XEL holds in XER.”
As for the company shareholders, in order for them to receive a distribution from the disposal of XEL’s assets, that sale must realize in excess of all secured and unsecured creditor claims. At this stage, those claims are estimated to be $152 million, according to FTI Consulting, the liquidator.
In light of these developments, the Final Investment Decision for Bentley field, which Xcite hoped to file in 2016, will most likely, almost certainly, not happen.
The Bentley is the crown jewel of Xcite’s portfolio, which the company has been working to develop since 2003. It 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. Xcite has described the oilfield as one of the largest undeveloped resources in the UK North Sea.
Offshore Energy Today Staff
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