Xcite Energy signs LoI with British American Offshore for jack-up unit

Xcite Energy, an oil exploration and development company, has announced that its subsidiary, Xcite Energy Resources Limited has entered into a binding letter of intent, or LoI, with British American Offshore Limited, part of Rowan Companies, Inc., for the N-Class Rowan Norway, a harsh environment, deep water jack-up unit, designed and built for simultaneous drilling and production, which is currently under construction.
The LoI anticipates that XER and BAOL will enter into a definitive agreement (Agreement) for the rig by 15 December 2010, following which the Rowan Norway is expected to be available to commence the first stage production (FSP) on the Bentley field in the fourth quarter of 2011.
At the time of signing the Agreement, XER will be required to demonstrate financial capability for the first 120 days of the contract commitment in the amount of US$30 million. In addition, XER will be required to demonstrate financial capability for the second 120 days of the contract commitment in the amount of US$30 million by 31 January 2011. XER may reduce the initial commitment period to 120 days, in which event it will be required to demonstrate additional financial capability of US$3.6 million for this 120 day period.
Richard Smith, Xcite Energy CEO commented: "This is another significant event for the Company which, following the anticipated successful completion of the current 9/3b-6 well test program, would enable us to move forward and plan the first stage production program on the Bentley field. This drilling unit has been designed with good capabilities and flexibility in mind and we are pleased to be working with Rowan for this vital phase of the Bentley development program."
Source: Trading Markets 9Press release)