Private Placement & Equity Credit Facility

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ABERDEENSHIRE, UNITED KINGDOM--(Marketwire -12/16/11)-


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TSX-V, LSE-AIM: XEL


Xcite Energy Limited ("Xcite Energy" or the "Company")

GBP25.8 million Private Placement and GBP60 million Equity Credit Facility Agreement

Xcite Energy is pleased to announce that it has agreed a GBP25.8 million private placement (the "Placing") with Socius CG II, Ltd. ("Socius"), a subsidiary of Socius Capital Group, LLC. Based in Bermuda, Socius invests in emerging growth companies in the United States, Canada, Europe and Australia.

The Company also announces that it has entered into a GBP60 million Equity Credit Facility with Esousa Holdings, LLC ("Esousa"), with whom Socius has been a co-investor in previous transactions. The Company has terminated its standby equity agreement with YA Global Master SPV Ltd. dated September 27, 2010.

The combination of financing made available from the Placing and the Equity Credit Facility will further strengthen the Company's balance sheet to allow it to progress Phase 1A of the development of the Bentley field.

Commenting on today's announcement Richard Smith, CEO, said:"Against a challenging economic backdrop, we are very pleased to have further strengthened our balance sheet as we move forward with the field development plan towards first oil."

The Placing

The Placing will occur in two stages. The first stage, which closed today, provides the Company with gross proceeds of GBP12.9 million (C$20.7 million) through the issuance of 15,195,294 units (each, a"Unit") at a price of GBP0.85 per Unit. The Company and Socius have agreed to complete the second stage of the Placing, which will provide the Company with gross proceeds of approximately GBP12.9 million, at any time between eight to twelve weeks from today, at a price per Unit equal to the 20 day volume weighted average price of the Shares on AIM (the "20 Day VWAP") calculated two trading days prior to the closing of the second stage, subject to the private placement pricing parameters of the TSX Venture Exchange (the "TSX-V").

Each Unit comprises one ordinary share in the capital of the Company (a"Share") and one-half of one ordinary share purchase warrant (a"Warrant"). Each whole Warrant issued pursuant to the Placing is exercisable for one additional Share at 120% of the Unit price per share for three years from the date of issue. The exercise price of the Warrants issued in the first stage of the Placing is GBP1.02.

The Warrants are subject to a forced exercise provision, at the Company's discretion, provided that the 20 Day VWAP exceeds a 20% premium to the Warrant exercise price and the average trading volume of the Shares during such period exceeds one million shares. The Warrants are subject to a cashless exchange right, exercisable at the discretion of the holder, in the event that the 20 Day VWAP is less than the exercise price of the Warrants. In such event, the holder may exchange the Warrants for such number of Shares calculated by reference to the Black-Scholes value of the Warrants divided by the last closing price of the Shares on the AIM market of the London Stock Exchange plc ("AIM") at such time. The cashless exchange right is only exercisable by the holder during the period commencing 20 trading days and ending six months following the closing of the second stage of the Placing.

Equity Credit Facility

Under the terms of the Equity Credit Facility with Esousa, the Company may draw down funds from time to time, at its sole discretion, over a period of three years in consideration for the issuance of new ordinary shares in the capital of the Company. All shares issued by Xcite Energy will be at a price based on existing market conditions at the time of each drawdown, subject to the private placement pricing parameters of the TSX-V.

Additional Information

Dundee Securities Ltd. ("Dundee") acted as financial advisor to the Company with respect to the Placing. A fee in the amount of 4.5% of the gross proceeds of the Placing is payable by the Company to Dundee at closing of each of the respective stages of the Placing.

The closing of each stage of the Placing is subject to final acceptance from the TSX-V. Except in accordance with Canadian securities laws and with the prior written approval of the TSX-V, the Shares underlying the Units, the Shares issuable upon exercise or exchange of the Warrants, and the Shares issuable pursuant to the Equity Credit Facility may not be sold or otherwise traded on or through the facilities of the TSX-V or otherwise in Canada or to or for the benefit of a Canadian resident until the date that is four months and one day from the date of issue.

Application has been made for admission ("Admission") to AIM of the 15,195,294 Shares underlying the Units issued in the first stage of the Placing, and dealings are expected to commence on 19 December 2011. The Shares shall rank pari passu in all respects with the Company's existing issued ordinary shares of no par value. At Admission, Socius will hold 7.4% of the Company's issued share capital.

Following Admission of the Shares issued in the first stage, the Company's enlarged issued share capital will comprise 206,005,364 Shares with one voting right per share. There are no shares held in treasury. The total number of voting rights in the Company is therefore 206,005,364. The number of un-exercised Warrants at Admission will be 7,597,647. In addition, at Admission there will be 380,325 outstanding warrants to subscribe for Shares.

This figure of 206,005,364 Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the Financial Service Authority's Disclosure and Transparency Rules or pursuant to the AIM Rules for Companies.

This press release shall not constitute an offer for sale of the securities referenced herein in the United States. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration oran exemption from those registration requirements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Oriel Securities which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Morgan Stanley which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Forward-Looking Statements

Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan","anticipate", "believe", "intend", "estimate", "predict", "target","potential", "continue" or other similar expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. Additional information identifying risks and uncertainties are contained in the Company's annual information form dated October 26, 2010 and in the annual Management's Discussion and Analysis for Xcite Energy dated March 24, 2011 filed with the Canadian securities regulatory authorities and available at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

This information is provided by RNS The company news service from the London Stock Exchange

END

Contact:
ENQUIRIES:
Xcite Energy Limited
+44 (0) 1483 549 063
Richard Smith
Chief Executive Officer
Rupert Cole
Chief Financial Officer
Oriel Securities (Joint Broker and Nomad)
+44 (0) 207 710 7600
Emma Griffin
Partner
Simon Edwards
Partner
Morgan Stanley (Joint Broker)
+44 (0) 207 425 8000
Andrew Foster
Managing Director
Pelham Bell Pottinger
+44 (0) 207 861 3232
Mark Antelme
Director
Henry Lerwill
Account Director
Paradox Public Relations
+1 514 341 0408
Jean-Francois Meilleur
Consultant

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