From III.co.uk Conversation with Jon Dale

Fowlertheprowler 16.57 iii.co.uk xcite board

I am happy to post the following feedback from a conversation I had with Jon Dale yesterday late afternoon.

He knows who I post as and he has my personal details (address etc) so I can be authenticated and brought to task if I relay false information. Also for the record I currently hold 60,000 shares and only plan to add over the next few months when the opportunities allow.

I will keep it short and simple:

ISSUE ONE - Appointment of TRACS for Reserves Report

I asked why the apparent change regarding regarding the appointment of Tracs (part of APR Group) to complete the Reserves report as opposed to RPS Energy...

The explanation was absolutely reasonable and logical. Firstly, as the RNS clearly states, Tracs were appointed as independent third party engineers in the second half of 2010. In other words, their involvement is nothing new and in no shape or form a panic reaction.

Secondly, Jon pointed out that due to the amount of work RPS have already carried out for Xcite over a long period of time, it was felt that their independence could be compromised / called into question and that appointing Tracs would overcome this issue. That is not to say that RPS lack credibility, on the contrary, but what it does do is show that the Xcite BOD want the reserves report to be above reproach in terms of the perception of it from the City and other investors. This a good thing.

ISSUE TWO - Is a Placement about to be announced in tandem with Report

I asked if the slight delay in the report due to an imminent placement. Of course, Jon cannot answer this question and I have always found his conduct to be 100 per reputable and professional. However, I made the point that I assumed a fundraising was imminent. At this point Jon echoed Rupert Cole's recent comments (which are on the public record) that this assumption should not be necessarily made. Read into this what you will.

ISSUE THREE - Xcite will never move to production - they will be takenover first...

This has never been my assumption, as many of you will know, although I sit in the minority camp on this one with many very well informed posters convinced that Mr Kew has no intentions of managing lots of staff as potentially the North Seas second largest independent oil producer.

Of course Jon cannot mention any talks even if there were any, but he was very convincing when he stated that it is they every intention to bit by bit prove up the Bentley field and extract oil from here....making the point that it is when the oil is extracted commercially that the true value will be unlocked.

ISSUE FOUR Share price expectations.....

My views in this area mirror Jon's. He made the point that it is not realistic to expect all of the possible contingency resources (385 million barrels perhaps by 2014 - my opinion here not Jon's) to be converted into reserves in one go in the approaching report. That is not to say that some will be allocated. However, as an investor the most sensible course is to view the progression of the share price on a long term trajectory with value being unlocked on an incremental basis as bit by bit the enormous potential of the Bentley field (and beyond..) is realised.

Whilst Jon was in no way dismissive of private investors he did make the point that if a few pi's sell off because of a lack of understanding of the a process that has been clearly communicated and because of unrealistic expectations (ie 200 million booked into reserves by April!!!) there is not a lot that Xcite can do about it.

Finally Jon shared all of our disappointment with current reaction to the share price, but he did not seem unduly fazed by it and why would he be!

Conclusion - Be patient and you will be rewarded. If you can't afford to leave money in for 12-18 months you should not be investing in an oily that has not gone into production yet...

Make of the above what you will and I'm sure some will weave conspiracy theories into it, but I will continue to hold and hope to fill my SIPP with these when I have converted my company pension.

The daffodils may not be dancing yet (funnily enough none of mine have flowered yet this year), but I am confident they will be joyful, radiant and triumphant by spring next year.

Patience will be rewarded.

As for the Saudi question, I can't control events in the Middle East and yes there is a risk that a big prolonged spike in the oil price could tip the world into the recession which would result in a large drop in oil price. This would of course have a detrimental effect short term on Xcite. However, I put this to you all, if regimes are toppled do you really think they will turn the oil taps off and refuse investment and development from the major oilies? Surely, they will want to rebuild their infrastructure, lay the foundations for a civil society, share the oil wealth around the citizens. The motivation to boost the state coffers will be hugh. If it leads to a more inclusive less corrupt and more equitable society in the middle east I can wait a few years for my fortune!

NM