Xcite Energy Negotiates Rig Amendment with Rowan

Xcite Energy announced that its 100% subsidiary, Xcite Energy Resources Limited, has negotiated an amendment to its rig contract with British American Offshore Limited, a subsidiary of Rowan Companies Inc. The amendment provides additional flexibility around timing of the provision of a heavy duty, harsh environment jackup drilling unit, which will better suit the revised work program as anticipated for Phase 1B of the first phase development of the Bentley field.

The original contract provided for a fixed 240 day initial period for the Phase 1A work program, commencing from arrival of the rig at the Bentley field location, followed by six consecutive one year extension options. The first one year extension option was required to be exercised by XER no later than 120 days after the start of the 240 day initial period.

The contract amendment provides XER with the following:

• The ability to shorten the 240 day initial period for Phase 1A, thereby reducing its financial commitment if completion of the work program is ahead of schedule.
• The ability at any time up to 240 days after the end of Phase 1A in which to re-call an appropriate rig from the Rowan fleet for Phase 1B of the Bentley field development (the Call Option).
• A flexible delivery window of between 14 and 20 months from the exercise of the Call Option for the selected rig, to be determined in consultation with Rowan to match the construction and installation of facilities for Phase 1B of the Bentley field development.

Commenting on the announcement Richard Smith, CEO, said, "This is a very good outcome for the Company allowing us to maintain our principal objective of using a suitable jackup unit for the first phase of the Bentley development. This amendment provides greater flexibility to manage the timing and costs of our revised work program for Phase 1B."