Mr. Rupert Cole reports

RESULTS FOR THE 3 AND 9 MONTH PERIODS ENDED 30 SEPTEMBER 2014

Xcite Energy Ltd. has released its results for the three-month and nine-month periods ended Sept. 30, 2014.

Highlights for the year to date

• Memorandum of understanding signed with China Oilfield Services Ltd., setting out the principles for the provision and operation of a new-build, harsh-environment, jack-up drilling rig, completing the final role in the Bentley development group, which now consists of Amec, Aibel, Arup, Baker Hughes, COSL and Teekay;
• Collaboration agreements signed with Statoil and EnQuest to share information to evaluate the potential benefits of a future shared gas import pipeline;
• Collaboration agreement signed with Statoil and Shell for the sharing of information to evaluate potential synergies and collaboration between the Bentley and Bressay fields;
• $140-million (U.S.) raised through the issue of senior secured bonds and issue of new equity share capital, and repayment of the $80-million (U.S.) of unsecured loan notes;
• Upgrade in 1P (proved), 2P (proved-plus-probable) and 3P (proved-plus-probable-plus-possible) oil reserves for the Bentley field to 203 million stock tank barrels, 257 million stock tank barrels and 317 million stock tank barrels, respectively, effective Dec. 31, 2013, and based on an initial 35-year production period;
• Material licence extension granted by the Department of Energy and Climate Change for the Bentley field until Dec. 31, 2016;
• Loss for the three-month period ended Sept. 30, 2014, of 2.7 million British pounds, arising from unrealized foreign exchange losses from a strengthening U.S. dollar;
• Cash balance of 38.7 million British pounds as at Sept. 30, 2014.

Rupert Cole, chief executive officer of Xcite Energy, commented: "The Bentley development group continues to mature, with pre-FEED/assurance [front-end engineering design] engineering progressing well, contract negotiations with development partners continuing constructively and the important signing of another key MOU with China Oilfield Services Ltd. for the provision of a jack-up drilling rig. This means we now have Amec, Aibel and Arup engaged to manage and construct the Ace platform, Baker Hughes to provide drilling services, Teekay to supply a Sevan FSO [floating storage and offloading] unit and now COSL providing the rig; this completes the key development partner lineup and will help us create further certainty over the project schedule.

"We successfully conducted an offshore geotechnical survey in September, 2014, and are waiting for the final results from the sample analysis, which we expect to confirm the suitability of the platform location for the first-phase development. We will be submitting a revised environmental statement to reflect the updated technical blueprint of the field development plan, in particular, the utilization of the Ace platform and the Sevan FSO.

"We have consistently stated that the technical and commercial work streams would be our focus for 2014, and that we will only submit a formal field development plan when we are able to demonstrate both the technical and financial capability required by DECC. I believe the progression of our MOUs to firm contracts will be an important step towards demonstrating the technical expertise surrounding the Bentley development to allow us to construct the required financial capability.

"We continue to progress available financing options, and discussions with potential co-venturers are ongoing.

"Offshore oil and gas developments are major and complex engineering projects, which require detailed planning and execution for successful delivery. We believe that our strategy to work with our selected development partners early in the project life, in a collaborative partnership model, with aligned incentives to deliver the project safely, on time and on budget, is an innovative and appropriate strategy for addressing the key challenges currently facing our industry.

"As we look forward to formalizing the relationship with our partners over the coming months, we remain committed to delivering value for all stakeholders and firmly believe that this collaborative strategy is the right approach in the current market environment."

The attached table summarizes the group's financial performance in the three and nine months ended Sept. 30, 2014, and the comparatives for the three and nine months ended Sept. 30, 2013.

                                INCOME STATEMENT INFORMATION
                   (in millions of British pounds except per-share amounts)

                    Nine months ended  Three months ended  Nine months ended  Three months ended
                       Sept. 30, 2014      Sept. 30, 2014     Sept. 30, 2013      Sept. 30, 2013 

Net (loss) profit                (2.2)               (2.7)               9.2                 0.9
Basic earnings per
share (in pence)                 (0.7)               (0.9)               3.2                 0.3
Diluted earnings 
per share 
(in pence)                       (0.7)               (0.9)               2.8                 0.3

We seek Safe Harbor.