(MENAFN - ProactiveInvestors - UK) Xcite Energy (LON:XEL, CVE:XEL) has now completed the drilling portion of the Phase 1A part of the Bentley oil field development project.
This morning it revealed that the second lateral well of the current programme, the 9/3b-7z well, has reached target depth of 9,646 feet.
It has a reservoir section of over 2,000 ft with 100 per cent net pay.
Xcite says this lateral well hit the top reservoir at a higher point, at 3,609 ft, than previously encountered anywhere on the Bentley field to date. And this meant that it has an oil column depth of 121ft.
"We are pleased with the work programme to date and this marks the end of the drilling phase as the rig operations now focus on the completion and preparation for production testing, with the upper lateral now ideally positioned as the first production well for Phase 1B of the Bentley development programme," said Steve Kew, exploration and development director.
"The additional oil column encountered will be assessed and modelled in due course, and augurs well as we move ahead with the work programme towards first oil on Bentley."
Xcite will now continue with the rest of the planned development work. It will install the completion equipment, down-hole pumps and processing equipment.
After that it will begin the production testing part of Phase 1A.
Today's follows news yesterday that Xcite's offtake partner BP is providing funding support for the next phase of development.
The oil giant will provide Xcite with between US20 - 40 million of working capital for the first three years of a newly amended oil offtake deal. Xcite will pay BP a commercial financial charge for the facility.
This is the results of amendments to previous oil marketing agreements, struck in 2010. The new arrangement will see BP deliver diluent products in-field to Xcite for blending with crude from Bentley to maximise value.
BP has also said it will provide US5 million of financing for Phase 1B of the Bentley field development as part of the reserves based lending facility being negotiated between Xcite and a group of commercial banks.
Phase 1B of the Bentley will see start of the production operation at Bentley, using a floating production vessel and shuttle tanker to offload oil to be followed by drilling of a number of further production wells.
Subsequently, Phase 2 will see development of permanent oil production facilities, and scaling up of development.
Phase 1B is expected to begin next year. Phase 2 is planned for 2015 through to 2020.
It is planned that Phase 2 will be funded through production revenues generated in the earlier phase of development, as well as a further reserves based loan.