October 05, 2005 13:35 ET

Tuscany Updates on Saskatchewan Acquisition

CALGARY, ALBERTA--(CCNMatthews - Oct. 5, 2005) - Tuscany Energy Ltd. (TSX VENTURE:TUS) announced on September 23, 2005 that it had entered into a non-binding letter of intent. Tuscany is now pleased to announce that it has entered into a binding letter of intent to acquire all of the assets, in an arm's length transaction, of a private oil and gas company, whose properties are located in west central Saskatchewan, for $5.97 million. The purchase price will be satisfied with cash of $4,980,000 and the issuance of 2,200,000 Tuscany common shares priced at $0.45 per share. The acquisition has an effective date of August 1, 2005 with closing expected on or before October 31, 2005. There is no finder's fee related to this transaction. The cash portion of the acquisition will be financed as follows: (a) $1.1 million cash on hand; (b) $2.5 million bank financing and; (c) up to $1.4 million in interim financing from Humboldt Capital Corporation.

The assets include 3.5 net sections (100%) with current production rates of approximately 190 net barrels of oil equivalent ("BOE") per day (6 Mcf of natural gas equals 1 BOE) consisting of approximately 85 BOE 16-degree API oil and 105 BOE of natural gas. Tuscany has also identified three additional drilling locations on the assets with the potential for additional follow-up locations including reduced spacing type opportunities.

The acquisition parameters, based on the total purchase price of $5,970,000 for the reserves are as follows:

- Proven Reserves of 417 MBOE and proven plus probable reserves of 557 MBOE, based on the independent evaluation, effective September 1, 2005 under NI 51-101;

- Reserve acquisition cost of $14.32 per proven BOE and $10.72 per proven plus probable BOE; and

- Production acquisition cost of $31,421 per BOEd (based on 190 BOEd).

The transaction is considered to be accretive to Tuscany's cash flow, reserves, production and net asset value, all on a per share basis. An independent evaluation of the properties conducted by McDaniel and Associates Consultant's Ltd. assigned proved and probable reserves of 557 MBOE.

Tuscany is pleased with the overall parameters of the transaction and considers the acquisition as a major step forward in establishing a platform for the future success and execution of its business plan. Upon closing, Tuscany plans to immediately capitalize on the upside by commencing with its drilling program in efforts to further increase overall production levels and cash flow by year end.

Tuscany currently has 17,495,214 common shares issued and outstanding and 21,495,214 on a fully diluted basis. Humboldt Capital Corporation together with Mr. Robert Lamond owns 33.04% of the common shares on a fully diluted basis. Mr. Robert Lamond owns 67% of Humboldt's outstanding shares.

Tuscany is an emerging junior oil and gas company engaged in the acquisition, exploration and development of oil and natural gas reserves in western Canada.

Forward-looking statements - statements included in this press release that are not historical facts may be considered "forward-looking statements." All estimates and statements that describe the Company's objectives, goals or future plans are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties where actual results could differ materially from those currently anticipated.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Tuscany Energy Ltd.
    Greg T. Busby
    President & CEO
    (403) 264-2398
    (403) 264-2399 (FAX)
    Tuscany Energy Ltd.
    Robert W. Lamond
    (403) 269-9889
    (403) 269-9890 (FAX)