Xcite rumour dispelled - Rowan Stavanger goes to Talisman

A form 8-K SEC release from Rowan companies yesterday confirms that the Rowan Stavanger is going to Talisman Norway. Looks like Rowan Norway for Xcite assuming all agreed by 31st January with delivery June 2011. Another solid possibility is that Xcite is talking to Talisman (who have operations in the UK North Sea) about using the Rowan Stavanger until the Rowan Norway is available in June 2011.

http://secwatch.com/rdc/8k/events-or-changes-between-quar/2011/1/21/7522190?source=rss

In terms of the funding of the Rowan Norway, in the event that cash is needed to pay for it (other collateral could potentially be used), there should be sufficient money left from the SEDA (Standby Equity Distribution Agreement) arrangement where the company gets cash in exchange for the issue of shares to Yorkville Advisors - the YA Global Master SPV Ltd. From the December 17th RNS, "Xcite Energy (LON:XEL, TSX-V:XEL) has increased its existing Standby Equity Distribution Agreement (SEDA) by £20 million.The company can now raise up to £60 million through the equity line facility.". Alternatively money could be obtained from the Bentley Alliance (BP, Transocean, ADTI, AMEC, Fugro) without needing to resort to alternatives such as a placing. BP have already put in £4 million (see previous post on Alliance - http://contrarianinvestoruk.blogspot.com/2011/01/xcite-energy-should-prove-highly.html). I would guess that the company could also get a loan if necessary on the oil in place resource estimate, which will be converted to reserves in place in February or March. Either way, no big discounted placing.

Rowan Stavanger

*

N-Class

400

35,000

2011

North Sea

Talisman Norway

Low 300s

August 2011

Rig is under construction with delivery expected in January 2011. Rig received an LOI for approximately 90 to 120 days for accommodation work in the Norwegian Sector of the North Sea.Commencement date is expected to occur between May and August 2011 upon  receipt of Norwegian regulatory approval.

Rowan Norway

*

N-Class

400

35,000

2011

UK North Sea

Xcite Energy

Low 250s

June 2012

Rig is under construction with delivery expected in June 2011.  Received LOI for approximately 240 days.   LOI provides for a termination fee of $4 million payable by the customer in the event it does not enter into  the drilling contract by January 31 , 2011.  Customer is required to provide security in the amount of   $30 million for the first 120 days of the contract term by January 31 , 2011.  Customer is also required to  provide additional security in the amount of $30 million for the second 120 days of the contract term by  January 31, 2011.  Customer may reduce the contract term to 120 days, in which event it will be required  to increase the security from $30 million to $33.6 million and day rate is increased to low 280s .