April 27, 2012 09:23 ET

Tuscany Announces Significantly Improved Results for the Year Ended December 31, 2011

CALGARY, ALBERTA--(Marketwire - April 27, 2012) - Tuscany Energy Ltd. (TSX VENTURE:TUS) ("Tuscany" or the "Company") announces that it is filing today its 2011 MD&A, Financial Statements, and Annual Information Form ("AIF") on SEDAR. These will also be available on the Company's website at www.tuscanyenergy.com.

Tuscany is pleased to report on the second straight year of significant increases of revenue, cash flow and reserves, as the Company continues to grow through the results of horizontal heavy oil drilling.

The Company began 2012 with an optimistic view of future oil prices and commenced the year with the drilling of three successful development wells at Macklin, Saskatchewan, which are currently exhibiting excellent production characteristics.

2011 Highlights

For 2011, Tuscany's revenue increased by 110% to $6.1 million, cash flow improved fivefold to $3.2 million, and proved and probable reserves increased by 55% to 1.7 million barrels of oil equivalent, compared with the prior year. Tuscany's revenues were derived 98% from oil production in 2011.

Tuscany completed the acquisition of Sharon Energy Ltd. ("Sharon") in June 2011 which added $7.9 million in available working capital and $3.8 million in marketable investments which was used to reduce the Company's bank debt to zero and to help finance Tuscany's drilling program for the year. With the additional capital from the Sharon transaction, the Company drilled 11 new horizontal heavy oil wells during the year (6.7 net wells) all of which are currently producing. The production and reserves added from the new wells contributed significantly to the positive financial results for 2011.

Macklin, Saskatchewan

At Macklin, Saskatchewan, Tuscany participated for a 55% interest in three Dina horizontal heavy oil wells during 2011 and an additional three oil wells in Q1 2012. Two of the three recent wells are producing at over 100 bopd, with lower water cuts than expected. Tuscany acquired a 55% interest in section 33-39-28 W3 immediately to the north of the initial development, and shot a two section 3D seismic program to delineate further locations. The first well drilled in Q1 2012 tested the acquired area to the north and has also been producing at rates exceeding 100 bopd, since March 8, 2012. Based on the success of the first six wells, Tuscany plans to drill additional wells at Macklin during the second half 2012.


Tuscany's 2011 revenues net of royalties increased 110% to $6.1 million compared with $2.9 million in the prior year. Cash flows from operations increased by 555% to $3.2 million compared with $482,000 in 2010. Net earnings increased to $2.0 million compared with a net loss of $833,000 in 2010, as a result of a $3.1 million gain on the acquisition of Sharon Energy Ltd.

Tuscany incurred $8.7 million of capital expenditures during 2011 compared with $3.0 million for the prior year. Capital expenditures for the year were financed primarily from cash, disposal of oil and gas assets of $913,000, and from operating cash flow. At December 31, 2011, Tuscany had net debt of $446,000 compared with net debt of $4.2 million at the beginning of the year.

Subsequent to the end of 2011, Tuscany sold 326,195 shares of its investment in Magnum Hunter for net proceeds of $2.2 million. As of April 24, 2012 the remaining investment, 100,000 Magnum Hunter shares, were worth approximately $550,000.

Business Outlook

Tuscany expects oil prices to hold above WTI $95 per barrel in 2012 as world demand for oil continues to be strong. This should result in realized heavy oil prices in excess of $70 per barrel for the year, which would support continued development of the Company's heavy oil projects.

Tuscany is focused on growth through oil exploration and development. With its prospect inventory, developed over the past three years, Tuscany believes it can achieve growth by continuing to develop its Dina oil properties at Macklin and Evesham, and its Lloydminster heavy oil projects, from working capital, operating cash flows and minimize the reliance on bank debt to finance future capital expenditures.

Three Years
Period ended December 31 Months ended ended
($ Thousands, unless otherwise indicated) 2011 2010 2011 2010
Revenue $ 2,516 $ 785 $ 6,073 $ 2,892
Cash flow from operations* 1,740 142 3,155 482
per share, diluted 0.01 0.00 0.03 0.01
Earnings (loss) for the period 1,869 (268 ) 2,031 (833 )
per share, diluted 0.02 0.00 0.02 (0.01 )
Capital additions 3,496 1,340 8,712 3,042
Dispositions (521 ) (34 ) (913 ) (34 )
Net capital additions 2,975 1,306 7,799 3,008
Net debt (447 ) (4,205 ) (447 ) (4,205 )
Investment - marketable securities 2,328 - 2,328 -
Total assets 27,740 12,445 27,740 12,445
Total shares outstanding at period end (millions) 123.4 62.8 123.4 62.8
Oil (Bopd) 321 127 226 117
Gas (Mcfd) 65 128 124 164
BOEd (6 Mcf = 1 Bbl) 332 148 247 144
Product Prices
Oil ($/Bbl) $ 87.80 $60.68 $ 73.22 $61.66
Gas ($/Mcf) $ 3.55 $4.93 $ 4.00 $4.03
Reserves (proved plus probable, forecast costs and prices)
Gas (MMcf) 409.7 600.7
Oil (MBbl) 1,645.9 1,050.2
BOE (Thousands) 1,714.1 1,150.3
Net present value of future net revenue, before tax,
discounted at 10% (millions) $ 37.0 $ 22.9
Undeveloped land holdings (net acres)
Alberta 2,766.5 1,231.6
Saskatchewan 3,946.6 1,801.1
Total net acreage 6,713.1 3,032.7


Mr. Donald K. Clark, has been appointed to the position of Chief Operating Officer of Tuscany, replacing Mr. John G.F. McLeod who has been the COO for the last three years. Mr. McLeod will continue with the Company as a director. Tuscany would like to thank Mr. McLeod for his valuable service as the Company transitioned to a new management team.

Please refer to Tuscany's website at www.tuscanyenergy.com for more information on the Company's Evesham and Macklin fields and other prospects in Alberta and Saskatchewan.

ADVISORY: Certain information regarding the Company in this News Release including management's assessment of future plans and operations may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, unexpected decline rates in wells, wells not performing as expected, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at the Company's website (www.tuscanyenergy.com). 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).


Contact Information

  • Tuscany Energy Ltd.
    Robert W. Lamond
    President & CEO
    (403) 269-9889
    (403) 269-9890 (FAX)

    Tuscany Energy Ltd.
    Donald K. Clark
    Vice President Operations & COO
    (403) 269-9889
    (403) 269-9890 (FAX)