Takeover rumours around Xcite Energy continue to stir..

Punters favourite XEL (and a Conviction Buy recommendation of ours) continues to generate investor interest during the last few days with the stock sharply outperforming the AIM Oil & Gas sector and the wider market, even in the face of a falling oil price. Mmmm.. The chart below shows the price action over the last week.

Volume has been encouraging for the bulls and is now leading some to conclude that many shareholder’s Xmas wish of a bid for the company, with Statoil being the main name in the frame, may, finally, be about to come to fruition…

5 day intraday chart


The company will certainly require more cash to completely develop their Bentley fields and given the negative effect of the prior equity issuances on the stock price, management may be close to concluding that a near term premium for existing shareholders that more accurately reflects the DCF value of the company is a more palatable prospect than renews dilution. We estimate a price of 200p-220p would be required to carry the day with management and shareholders and be a fair value relative to recent North Sea oil deals on a $/boe comparable basis.