TUSCANY ENERGY LTD.
TSX VENTURE : TUS

TUSCANY ENERGY LTD.

February 25, 2011 09:00 ET

Tuscany Announces a 55% Increase in Proved Plus Probable Reserves for 2010 and a Resource Estimate for the Evesham, Saskatchewan Dina Pool

CALGARY, ALBERTA--(Marketwire - Feb. 25, 2011) - Tuscany Energy Ltd. (TSX VENTURE:TUS) ("Tuscany" or the "Company") is pleased to provide a summary of the independent evaluation and estimates of the Company's proved and probable reserves as at December 31, 2010, and a contingent resource estimate for the Evesham, Saskatchewan, horizontal oil wells and to report the filing of amended financial statements and MD&A for the three and nine months ended September 30, 2010.

2010 Reserves

The Company recorded a 55% increase in proved plus probable reserves to 1,151 MBOE at December 31, 2010. The net present value of the Company's reserves, before tax and using a 10% discount rate, increased by 33% to $22.9 million, compared with $17.2 million at December 31, 2009.

Tuscany's focus during the year was to prove up the development opportunity in the Dina formation on Tuscany's Evesham property in Saskatchewan. The successful drilling of five horizontal wells on the property has enabled the Company to increase the proved plus probable reserves on the property to 1,027 MBOE.

The Company's December 31, 2010 reserves were evaluated in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities by McDaniel and Associates Consultants Ltd. ("McDaniel"), independent reserves evaluators of Calgary, Alberta, in a report prepared by McDaniel dated February 9, 2011 and effective December 31, 2010 (the "McDaniel Report"). The following summary is based on the McDaniel Report.



Summary of Reserves
December 31, 2010

SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET
REVENUE AS OF DECEMBER 31, 2010
FORECAST PRICES AND COSTS
RESERVES (1)
----------------------------------------------------
LIGHT AND
MEDIUM OIL HEAVY OIL NATURAL GAS
Gross (2) Net (3) Gross (2) Net (3) Gross (2) Net (3)
RESERVES CATEGORY (MBbl) (MBbl) (MBbl) (MBbl) (MMcf) (MMcf)
----------------------------------------------------------------------------
PROVED
Developed Producing 4.0 3.3 302.3 289.1 517.7 508.8
Developed Non-producing - - 15.0 14.3 - -
Undeveloped - - 270.0 264.1 - -
TOTAL PROVED 4.0 3.3 587.3 567.5 517.7 508.8
PROBABLE 10.0 9.1 448.9 416.7 83.1 81.3
----------------------------------------------------------------------------
TOTAL PROVED PLUS
PROBABLE 14.0 12.4 1,036.2 984.2 600.7 590.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------


RESERVES (1)
-------------------------------------------------
NATURAL GAS
LIQUIDS TOTAL TOTAL
Gross (2) Net (3) Gross (2) Net (3)
RESERVES CATEGORY (MBbl) (MBbl) (MBOE) (MBOE)
----------------------------------------------------------------------------
PROVED
Developed Producing 0.6 0.3 393.2 377.5
Developed Non-producing - - 15.0 14.3
Undeveloped - - 270.0 264.1
TOTAL PROVED 0.6 0.3 678.2 655.9
PROBABLE 0.2 0.1 473.0 439.5
----------------------------------------------------------------------------
TOTAL PROVED PLUS
PROBABLE 0.7 0.4 1,151.0 1,095.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Columns may not add due to rounding.

(2) Gross reserves are the The Company's working interest share, before
deduction of royalties and with out including any royalty interest.

(3) Net reserves are the The Company's working interest share, after
deduction of royalties plus the Company's royalty interest in reserves.


NET PRESENT VALUES OF FUTURE NET REVENUE (1)
---------------------------------------------
BEFORE INCOME TAXES
DISCOUNTED AT (% per year)
0 5 10 15 20
RESERVES CATEGORY (MM$) (MM$) (MM$) (MM$) (MM$)
----------------------------------------------------------------------------
PROVED
Developed Producing 11.95 10.03 8.64 7.62 6.85
Developed Non-producing 0.35 0.32 0.29 0.26 0.24
Undeveloped 6.07 4.90 3.97 3.24 2.66
TOTAL PROVED 18.37 15.25 12.91 11.13 9.75
PROBABLE 18.51 13.19 9.97 7.89 6.48
TOTAL PROVED PLUS
PROBABLE 36.88 28.44 22.88 19.02 16.23
----------------------------------------------------------------------------
(1) Columns may not add due to rounding.

NET PRESENT VALUES OF FUTURE NET REVENUE (1)
---------------------------------------------
AFTER INCOME TAXES
DISCOUNTED AT (% per year)
0 5 10 15 20
RESERVES CATEGORY (MM$) (MM$) (MM$) (MM$) (MM$)
----------------------------------------------------------------------------
PROVED
Developed Producing 11.95 10.03 8.64 7.64 6.85
Developed Non-producing 0.35 0.32 0.29 0.26 0.24
Undeveloped 5.24 4.25 3.45 2.81 2.30
TOTAL PROVED 17.55 14.60 12.39 10.71 9.39
PROBABLE 13.64 9.62 7.18 5.62 4.55
TOTAL PROVED PLUS
PROBABLE 31.19 24.22 19.57 16.32 13.94
----------------------------------------------------------------------------
(1) Columns may not add due to rounding.


Pricing Used in Evaluation

SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS
AS OF DECEMBER 31, 2010
FORECAST PRICES AND COSTS

Alberta
WTI Edmonton Bow River
Crude Light Hardisty
Inflation Exchange Oil Crude Oil Crude Oil
YEAR Rate Rate $US/bbl $Cdn/bbl $Cdn/bbl
--------------------------------------------------------
--------------------------------------------------------
2011 2.0% 0.975 85.00 84.20 72.80
2012 2.0% 0.975 87.70 88.40 75.00
2013 2.0% 0.975 90.50 91.80 75.10
2014 2.0% 0.975 93.40 94.80 77.50
2015 2.0% 0.975 96.30 97.70 80.00
2016 2.0% 0.975 99.40 100.90 82.50
2017 2.0% 0.975 101.40 102.90 84.20
2018 2.0% 0.975 103.40 104.90 85.90
2019 2.0% 0.975 105.40 107.00 87.50
2020 2.0% 0.975 107.60 109.20 89.30
2021 2.0% 0.975 109.70 111.30 91.10
2022 2.0% 0.975 111.90 113.60 92.90
2023 2.0% 0.975 114.10 115.80 94.70
2024 2.0% 0.975 116.40 118.10 96.70
2025 2.0% 0.975 118.80 120.60 98.60
2026+ 2.0% 0.975 +2%/yr +2%/yr +2%/yr
--------------------------------------------------------
--------------------------------------------------------


Alberta Alberta U.S. Alberta Sask.
Heavy AECO Henry Hub Average Spot Sales
Crude Oil Gas Price Gas Price Plantgate Plantgate
YEAR $Cdn/bbl $Cdn/Mcf $US/Mcf $Cdn/MMBtu $Cdn/MMBtu
----------------------------------------------------------
----------------------------------------------------------
2011 66.70 4.25 4.55 4.05 4.15
2012 68.70 4.90 5.30 4.70 4.80
2013 68.60 5.40 5.75 5.20 5.30
2014 70.80 5.90 6.30 5.70 5.80
2015 73.00 6.35 6.80 6.15 6.25
2016 75.40 6.75 7.35 6.55 6.65
2017 76.90 7.10 7.70 6.85 6.95
2018 78.40 7.40 8.00 7.15 7.25
2019 80.00 7.60 8.20 7.35 7.45
2020 81.60 7.75 8.35 7.50 7.60
2021 83.20 7.85 8.50 7.60 7.70
2022 84.90 8.05 8.70 7.80 7.90
2023 86.60 8.20 8.85 7.95 8.10
2024 88.30 8.40 9.05 8.15 8.30
2025 90.10 8.50 9.20 8.25 8.40
2026+ +2%/yr +2%/yr +2%/yr +2%/yr +2%/yr
----------------------------------------------------------
----------------------------------------------------------


Detailed reserve information will be contained in the Company's Reserve Data and Other Oil and Gas Information which will be available on the Company's SEDAR profile at www.sedar.com.

Evesham Update

Tuscany has received an independent evaluation report on the Evesham Dina pool, summarized below, which estimates Contingent Resources, net to Tuscany, ranging from a low of 1.3 million barrels to a high of 3.9 million barrels, with a best estimate of 2.6 million barrels.

The report also indicates that a further 59 horizontal wells will be required to develop this resource.

Tuscany has a 60% working interest in 2,240 acres on the Evesham Dina Property. The Company has five producing horizontal wells on the property.

The Contingent Resource Report

McDaniel has prepared an evaluation of Contingent Resources of the Company's Evesham, Dina Pool (the "Resource Report") dated February 18, 2011, effective as of December 31, 2010, which estimates that the portion of the Evesham Dina Pool which was not assigned Proved or Probable reserves in the McDaniel Report, summarized above, may contain the following Contingent Resources:



Contingent Resource ( MBbl)
Low Best High
-----------------------------
Estimate Estimate Estimate
-----------------------------
Total Contingent Resource 2,190 4,380 6,570
Tuscany's interest (60%) 1,314 2,628 3,942


The Resource Report on the resource potential of the Evesham Dina property describes the recoverable volumes of oil associated with the Evesham Dina Property as contingent resources as they do not meet the requisite criteria to be classified as reserves with respect to location relative to producing Dina wells. Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

The "Contingent Resources", as defined by the Canadian Oil and Gas Evaluation Handbook, do not represent an estimate of reserves. The Resource Report was prepared in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" ("NI 51-101").

According to the Resource Report the recovery of the Contingent Resources will require the drilling of 59 additional horizontal wells of 600 metres in horizontal length with interwell spacing of 50 metres. The development of the Contingent Resources will require a significant amount of capital investment and therefore will take several years to complete. In 2011 the Company plans to drill additional horizontal wells on the Evesham Dina Property as the Company's working capital and cash flow permit. There is no certainty that these Contingent Resources will be produced.

The following map link shows the Evesham Dina Property and the locations of the 59 additional horizontal wells as valued in the Resource Report.

http://media3.marketwire.com/docs/dina_map.pdf

The following regional map link shows the relative locations of Tuscany's Evesham Dina pool and the nearby Eyehill and Senlac pools.

http://media3.marketwire.com/docs/dina_map2.pdf

Amended Financial Statement and MD&A

The financial statements and MD&A for the three and nine months ended September 30, 2010 have been reviewed by the Company's auditors and certain changes to information disclosed have been made. Amended financial statements and MD&A have been filed on www.sedar.com and on the Company's web site.

Please refer to Tuscany's website at www.tuscanyenergy.com for more information on the Company's developing Evesham horizontal oil wells and other prospects in Saskatchewan.

ADVISORY: This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains forward-looking information and statements pertaining to the following: the recognition of significant additional reserves; the volumes and estimated value of Tuscany's oil and gas reserves and resources; and future oil and natural gas prices.

The estimates of Tuscany's reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves or resources with be recovered. In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of Tuscany which have been used to develop such statements and information but which may prove to be incorrect. Although Tuscany believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Tuscany can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: that Tuscany will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities consistent with past operations; the continued and timely development of infrastructure in areas of new production; the accuracy of the estimates of Tuscany's reserve and resource volumes; continued availability of debt and equity financing and cash flow to fund Tuscany's current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which Tuscany operates; the general continuance of current industry conditions; the timely receipt of any required regulatory approvals; the ability of Tuscany to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which Tuscany has an interest in to operate the field in a safe, efficient and effective manner; the ability of Tuscany to obtain financing on acceptable terms; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Tuscany operates; and the ability of Tuscany to successfully market its oil and natural gas products.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statement, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of Tuscany's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Tuscany or by third party operators of Tuscany's properties, increased debt levels or debt service requirements; inaccurate estimation of Tuscany's oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Tuscany's public disclosure documents, (including, without limitation, those risks identified in this news release and Tuscany's Annual Information Form). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Where amounts are expressed on a barrel of oil equivalent (BOE) basis, natural gas volumes have been converted to barrels of oil at six thousand cubic feet (mcf) per barrel (bbl). BOE figures may be misleading, particularly if used in isolation. A BOE conversion of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids (NGLs).

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.

Contact Information

  • Tuscany Energy Ltd.
    Robert W. Lamond
    President & CEO
    (403) 264-2398
    (403) 261-4072 (FAX)
    or
    Tuscany Energy Ltd.
    Donald K. Clark
    Vice President Operations
    (403) 264-2398
    (403) 261-4072 (FAX)
    www.tuscanyenergy.com