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Xcite Energy; farm-in agreement a sign of desperate times.

By Ben Turney | Wednesday 11 November 2015

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Shares in Xcite Energy (XEL) are up 6.25% this morning on news of the company’s farm-in with Azinor Catalyst Limited. Under the terms of the deal, Azinor has the opportunity to earn into the UK Continental Shelf (UKCS) Licence P.1979, held by Xcite’s subsidiary Xcite Energy Resources. In return for completing a technical evaluation and then possibly an Induced Polarization survey of P.1979, Azinor could receive as much as 50% of the licence’s equity. On the face of it this looks like decent enough news for Xcite. The deal should enable progress at this non-core asset, allowing the company to focus on its flagship Bentley project. However, Xcite is giving up a significant proportion of P.1979 in return. The question now is, can this deal deliver value to shareholders?

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