Mr. Rupert Cole reports

XCITE ENERGY LTD: HALF YEARLY REPORT

Xcite Energy Ltd. is releasing its second-quarter results for the three-month and six-month periods ended June 30, 2015.

Highlights for the year to date:

• Increase in 1P, 2P and 3P heavy oil reserves for the Bentley field to 234 million stock tank barrels, 265 million stock tank barrels and 296 million stock tank barrels, respectively, effective Dec. 31, 2014, and based on an expected initial 35-year production period;
• NPV10 (after tax) value of reserves for the Bentley field of approximately $1.9-billion (U.S.), $2.3-billion (U.S.) and $2.6-billion (U.S.) on a 1P, 2P and 3P basis, respectively, effective Dec. 31, 2014;
• Net loss in the second quarter of $400,000 (U.S.);
• Cash balance of $34.4-million (U.S.) as at June 30, 2015;
• Technical due diligence continuing with a number of potential field development partners.

Overview of Results

Management believes it is making progress despite the industry environment remaining challenging with the oil price recently falling below $50 (U.S.) per barrel, development budgets remaining under pressure, projects deferred and an increasing number of North Sea assets being put up for sale as oil companies seek to realign their portfolios. The company's strategy remains flexible and innovative as it pursues a range of potential financing solutions to secure the development capital required for the Bentley first-phase development.

Technical due diligence continues with a number of potential field development partners. While management recognizes that this appears to be a slow process, as a key element of any such diligence review, the Bentley reservoir requires extensive and iterative subsurface modelling and detailed analysis in order to fully understand the production mechanism and recovery from the field. Xcite Energy's own experience and knowledge have been developed through the course of its appraisal program and an extended well test, and it should be appreciated that a detailed analysis by any third party is necessary, partly to compensate for a lack of analogous oil fields and databases against which to benchmark outcomes, and partly due to the unique characteristics of the field that drive the application of innovative engineering solutions incorporated into the development plan. While this type of analysis is a highly technical process, it is important to note that the work completed by the company; its reserves evaluator, AGR TRACS; and recently Baker Hughes has consistently shown the potential recoverability from the field.

The Baker Hughes technical evaluation of the reservoir has produced first-phase development production profiles that closely match the company's base-case modelling and those reported in the company's reserves and resources assessment report effective Dec. 31, 2014, and dated April 29, 2015. Following on from the RAR, the company will continue to optimize the production profile and will review potential uplifts from specific Baker Hughes technology.

The company is also continuing to work with a number of parties in order to develop an asset financing package for the construction and delivery of the mobile offshore production unit and the floating storage and offloading vessel. The current industry environment has freed up capacity in shipyards, and the company is actively pursuing and evaluating potential opportunities as a result of increasing competitiveness for major projects in order to deliver the best value and most secure project execution strategy. Management believes this process is complementary with the potential field development partner discussions and will create greater clarity for the overall Bentley first-phase development financing requirements. Construction of the N Plus-class drilling rig continues to make good progress in Singapore.

The project execution strategy and the provision of yard quotes and third party estimates incorporated into the RAR have been supported by the assurance engineering and subsurface work programs completed to date, all of which underpin the current full field development life cycle cost estimate of $35 (U.S.) per barrel, representing a relatively low cost per barrel for a United Kingdom North Sea development. The company has worked closely with third parties to validate the economic and commercial viability of the Bentley project. The collaborative work with the development group has also resulted in material operational efficiencies, such as the utilization of a bridge-linked FSO into the development plan, which offers significant operational cost savings potential throughout the life of the field. The company believes this is a good example of how contractor group collaboration can contribute toward maximizing economic recovery in the U.K. North Sea.

The company has an active dialogue with the Oil and Gas Authority and has recently begun detailed discussions to review the technical approach to the Bentley field development in order to ensure that it will be compliant with government policy. Xcite Energy is fully committed to maximizing economic recovery from the Bentley field, maintaining a collaborative approach with its development group and remaining consistent with the aims of the OGA.

The company will continue to update shareholders with material news as required, in addition to its regular reporting schedule.

The table summarizes the financial performance of the company and its wholly owned subsidiary, Xcite Energy Resources PLC, in the three- and six-month periods ended June 30, 2015.

                        INCOME STATEMENT INFORMATION                        
                        (in millions of U.S. dollars)                       

                          Six months  Three months  Six months  Three months
                               ended         ended       ended         ended
                            June 30,      June 30,    June 30,      June 30,
                                2015          2015        2014          2014

Net (loss)/profit              (0.83)        (0.38)       0.81          0.88
Basic earnings per share
in cents                        (0.3)         (0.1)        0.3           0.3
Diluted earnings per
share in cents                  (0.3)         (0.1)        0.2           0.3

We seek Safe Harbor.