(XEL) Xcite Energy

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

TSX-V, LSE-AIM: XEL

3 February 2012

Xcite Energy Limited

("Xcite Energy" or the "Company")

Amendment to Rowan Rig Contract

Xcite Energy is pleased to announce that its 100% subsidiary, Xcite Energy Resources Limited ("XER"), has negotiated an amendment to its rig contract with British American Offshore Limited, a subsidiary of Rowan Companies Inc. ("Rowan"). The amendment provides additional flexibility around timing of the provision of a heavy duty, harsh environment jack up drilling unit, which will better suit the revised work programme as anticipated for Phase 1B of the first phase development of the Bentley field.

The original contract provided for a fixed 240 day initial period for the Phase 1A work programme, commencing from arrival of the rig at the Bentley field location, followed by six consecutive one year extension options. The first one year extension option was required to be exercised by XER no later than 120 days after the start of the 240 day initial period.

The contract amendment provides XER with the following:

·   The ability to shorten the 240 day initial period for Phase 1A, thereby reducing its financial commitment if completion of the work programme is ahead of schedule.

·   The ability at any time up to 240 days after the end of Phase 1A in which to re-call an appropriate rig from the Rowan fleet for Phase 1B of the Bentley field development (the "Call Option").

·   A flexible delivery window of between 14 and 20 months from the exercise of the Call Option for the selected rig, to be determined in consultation with Rowan to match the construction and installation of facilities for Phase 1B of the Bentley field development.

Commenting on today's announcement Richard Smith, CEO, said:

"This is a very good outcome for the Company allowing us to maintain our principal objective of using a suitable jack-up unit for the first phase of the Bentley development. This amendment provides greater flexibility to manage the timing and costs of our revised work programme for Phase 1B."

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 November 15, 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.