Tuscany International Drilling Inc.
TSX : TID

Tuscany International Drilling Inc.

March 23, 2011 09:00 ET

Tuscany International Drilling Inc. Reports Year End and Fourth Quarter Results

CALGARY, ALBERTA--(Marketwire - March 23, 2011) -

THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Tuscany International Drilling Inc. (TSX:TID) ("Tuscany" or the "Company") is pleased to announce its financial results for the year ending December 31, 2010.

Overview

During 2010, Tuscany transitioned from start-up to executing as an operating company. Fiscal 2010 was a watershed year in getting Tuscany's initial fleet to South America. The year consisted of rig building, corporate structuring (particularly in Brazil), transporting, shipping, clearing customs, customer inspections, in some cases, waiting for customer to commence operations and initial start-up. As a result, Tuscany's financials for 2010 reflect a start-up year.

During the year ended December 31, 2010, the Company recorded a net loss of $19,305,061 ($0.13 per common share) compared to a net loss of $2,488,653 ($0.02 per common share) for the year ended December 31, 2009. During the year ended December 31, 2010, the Company recorded oilfield services revenue of $19,394,669 and gross margin from rig operations of $4,309,779 compared to revenue of $2,983,441 and gross margin from rig operations of $1,176,122 during the year ended December 31, 2009. During 2010, Tuscany constructed and deployed 10 new drilling and heavy-duty workover rigs and purchased one drilling rig. The increase in 2010 revenue compared to revenue in 2009 reflects the deployment and contracting of these new rigs as it occurred during 2010. The revenue for the year ended December 31, 2010 was offset by general and administrative expenses of $11,785,590 depreciation of $6,715,864, interest of $2,084,438, financing fees of $1,367,987 and stock based compensation expense of $854,005. For the year ended December 31, 2010, the Company also recorded current income tax expense of $417,382 and other expenses, consisting primarily of foreign exchange losses and equity income, of $64,301. During 2010, general and administrative expenses included significant legal, professional and other administrative expenses (including the significant additions to the Company's management teams, both in the Company's head office in Calgary and in its operating centres in South America) related to tax structuring activities, establishing operating centres in Brazil and Peru, expanding existing operating centres in Colombia and Ecuador, and transitioning the Company into a public entity. For the year ended December 31, 2009 Tuscany was operating with a minimum of staff and was in a "start-up" phase, with operating activity only commencing in the fourth quarter of 2009. The net loss reported for the year ended December 31, 2009 reflects the administrative cost to the Company during this "start-up" phase.

During the year ended December 31, 2010 Tuscany received $216,667,293 from financing activities, which includes $75,161,845 (net) from the issue of common shares, $59,475,408 (net) from the issue of special warrants, $71,938,693 (net) from the issue of long-term debt, a $5,000,000 advance on the Company's convertible debenture, and $5,874,620 in short-term advances from Perfco Investments Ltd., a corporation owned by the Company's Chairman and CEO. Funds raised were used to construct/purchase and deploy new drilling equipment to South America and to support administrative and corporate development activities. During the year ended December 31, 2010, Tuscany incurred $162,142,806 of capital expenditures (including $6,146,662 of non-cash share consideration). Capital expenditures during the year ended December 31, 2010 were incurred to complete the construction of two 550/650 HP heli-portable drilling rigs, two 1,500 HP drilling rigs, two 550/650 HP drilling/heavy duty workover rigs, one 1,000 HP drilling rig, one 850 HP pad drilling rig and to continue construction of two 1500 HP heli-portable drilling rigs. In addition, the Company purchased a 2,000 HP heli-portable drilling rig.

On April 16, 2010 Tuscany completed a reverse take-over transaction. In conjunction with this transaction the Company's common shares were approved for listing on the Toronto Stock Exchange ("TSX") completing the transition of Tuscany from a private company to a public company. The Company's shares began trading on the TSX on April 19, 2010 under the symbol TID.

In May 2010, Tuscany completed the acquisition of 40% of Warrior Rig Ltd. ("Warrior"). Warrior is a private company that manufactures, sells and services top drives, automated pipe handling systems and hydraulic catwalks for the global oilfield services industry.



Review of Balance Sheet
----------------------------------------------------------------------------
Change ($) Explanation
----------------------------------------------------------------------------
Cash and cash equivalents 45,125,383 See consolidated statement of cash
flows.
----------------------------------------------------------------------------
Restricted cash 3,328,096 Increase due to requirement of
credit agreement to
maintain a debt service reserve
account and a deposit with a bank
in Peru being held as security
for a letter of credit.
----------------------------------------------------------------------------
Share subscriptions (100,000) Decrease due to receipt of the
receivable related subscription
funds.
----------------------------------------------------------------------------
Accounts receivable 5,411,756 Increase due to increased operating
activity levels in the fourth
quarter of 2010 compared with the
fourth quarter of 2009.
----------------------------------------------------------------------------
Prepaid expenses and 1,056,161 Increase due to a deposit on the
deposits purchase of drill pipe and
increased prepaid insurance.
----------------------------------------------------------------------------
Inventory 860,681 Increase due to increased operating
activity resulting in establishment
of inventory to supply operations.
----------------------------------------------------------------------------
Foreign VAT recoverable 2,852,940 Increase due to VAT on operating
(current and non-current) and administration expenses during
the period and additional amounts
paid related to the importation
of drilling equipment.
----------------------------------------------------------------------------
Long-term investments 5,054,278 Increase due to the Company
acquiring a 40% investment in
Warrior Rig Ltd.
----------------------------------------------------------------------------
Property and equipment 155,426,930 Increase due to the construction
and purchase of rigs and related
equipment, net of depreciation
expense.
----------------------------------------------------------------------------
Accounts payable and 9,074,162 Increase due to increased operating
accrued liabilities activity levels and significant rig
construction activity in the fourth
quarter of 2010 compared to the
fourth quarter of 2009.
----------------------------------------------------------------------------
Due to shareholders 6,005,672 Increase primarily due to
short-term advances from a related
party.
----------------------------------------------------------------------------
Convertible debenture (164,465) Decrease due to the obligation
being converted to common shares in
2010.
----------------------------------------------------------------------------
Long term debt 70,730,800 Increase due to the Company
obtaining a loan pursuant to a
credit agreement entered into in
2010
----------------------------------------------------------------------------
Share capital 146,668,522 Increase due to the exercise of
warrants, the conversion of a
convertible debenture, the issuance
of common shares in settlement of
obligations, the issuance of common
shares in relation to the
acquisition of Cheq-IT Ltd., the
issuance of common shares in
relation to the acquisition of a
40% equity interest in Warrior Rig
Ltd., shares issued in relation to
a special warrant financing, and
common shares issued in a bought
deal financing.
----------------------------------------------------------------------------
Contributed surplus 2,649,732 Increase due to stock based
compensation being recorded and
the value attributed to warrants
that expired during the period
----------------------------------------------------------------------------
Warrants 4,059,979 Increase due to additional warrants
being granted in excess of warrants
exercised and expired during the
period.
----------------------------------------------------------------------------


Review of Annual Income Statement
----------------------------------------------------------------------------
%
2010 2009 Change Change
----------------------------------------------------------------------------
Oilfield services revenue 19,394,669 2,983,441 16,411,228 550
Oilfield services
expenses (15,084,890) (1,807,319) (13,277,571) 735
------------ ----------- ------------
Gross margin 4,309,779 1,176,122 3,133,657
------------ ----------- ------------
------------ ----------- ------------
Gross margin % 22.2% 39.4%
------------ -----------
------------ -----------

----------------------------------------------------------------------------


Oilfield services revenue recorded in the year ended December 31, 2010 totaled $19,394,669 compared with $2,983,441 for the year ended December 31, 2009, an increase of 550%. The increase in revenue is a result of an increase in the number of revenue days in 2010 compared to 2009. During 2010, the Company had 1,251 revenue days compared to 184 revenue days in 2009. In 2009, rig operations did not commence until the fourth quarter. Revenue days increased in 2010 as a result of additional rigs being deployed to South America during the year. By December 31, 2010, Tuscany had 15 drilling and heavy-duty workover rigs deployed into South America.

For the year ended December 31, 2010, gross margin was $4,309,779, or 22.2%, compared with a gross margin of $1,807,319, or 39.4%, for the year ended December 31, 2009. The decrease in gross margin percentage reflects costs associated with the initial start-up of several rigs, particularly during the fourth quarter of 2010, and unbudgeted camp rental costs.



----------------------------------------------------------------------------
2010 2009 Change % Change
----------------------------------------------------------------------------
Depreciation 6,715,864 408,503 6,307,361 1,544
----------------------------------------------------------------------------


Depreciation expense increased to $6,715,864 for the year ended December 31, 2010 compared with $408,503 for the year ended December 31, 2009. The significant increase is a result of depreciation related to rigs and related equipment and the inclusion of a one-time charge related to the write-off of property and equipment. Under the Company's depreciation policy, depreciation of rigs and related equipment does not commence until the equipment is put into operation. During 2010, the Company had seven rigs in operation compared to three rigs that operated during 2009. In the fourth quarter of 2010, a shipment containing $2,428,438 of property and equipment en route to Guyana was seized in customs, and as yet the Company has not been successful in securing a release of the equipment or recovering the amount from third parties. As a result, the Company has recorded a provision of $2,428,438 in depreciation expense.



----------------------------------------------------------------------------
%
2010 2009 Change Change
----------------------------------------------------------------------------
General and Administrative 11,785,590 2,897,958 8,887,632 307
----------------------------------------------------------------------------


General and administrative expense increased to $11,785,590 for the year ended December 31, 2010 from $2,897,958 for the year ended December 31, 2009. Compared to 2009, the Company has added administrative and operating management and staff in Canada, Colombia and Ecuador resulting in a substantial increase in salaries and wages. Also, in the third quarter of 2010 the Company established two operating centers in Brazil and incurred significant professional fees and salary expenses in relation to this activity. In addition, the Company incurred significant professional fees, listing fees and travel expenses associated with its transition to a publicly traded company on the Toronto Stock Exchange, which occurred in April 2010, and corporate development activities.



----------------------------------------------------------------------------
2010 2009 Change % Change
----------------------------------------------------------------------------
Stock based compensation 854,005 - 854,005 N/A
----------------------------------------------------------------------------


Stock based compensation expense increased to $854,005 for the year ended December 31, 2010, compared with nil for the year ended December 31, 2009. Stock-based compensation expense represents the value, calculated using the Black-Scholes option pricing model, related to the granting of 8,550,000 stock options during 2010. No stock options were granted in 2009.



----------------------------------------------------------------------------
2010 2009 Change % Change
----------------------------------------------------------------------------
Amortization of financing fees 1,367,987 - 1,367,987 N/A
----------------------------------------------------------------------------


Amortization of financing fees expense increased to $1,367,987 for the year ended December 31, 2010, compared with nil for the year ended December 31, 2009. On August 13, 2010, the Company entered into a credit agreement. The fees associated with this credit facility have been presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan.



----------------------------------------------------------------------------
2010 2009 Change % Change
----------------------------------------------------------------------------
Interest 2,084,438 233,316 1,851,122 793
----------------------------------------------------------------------------


Interest expense increased to $2,084,438 for the year ended December 31, 2010, compared with $233,316 for the year ended December 31, 2009. Interest expense for the year ended December 31, 2010, is related to three items. In June 2009, the Company issued a $15,000,000 convertible debenture and between February 12, 2010 and March 31, 2010, the Company was advanced another $5,000,000 under the convertible debenture and the Company incurred $49,697 of interest expense on the convertible debenture during 2010. Second, during 2010, the Company received $5,874,620 of short-term advances from Perfco Investments Ltd, a corporation owned by the Company's Chairman and CEO. The short-term advance incurs interest at 10% per annum. During 2010, the Company has recorded $514,823 of interest expense related to these advances. Finally, on August 13, 2010 Tuscany entered into a $125 million credit agreement. At December 31, 2010, the Company had drawn $80,000,000 under the terms of this facility. The loan was drawdown in three tranches: the first drawdown of $20,000,000 was received on August 13, 2010; the second drawdown of $30,000,000 was received September 10, 2010; and the remaining drawdown of $30,000,000 was received on November 3, 2010. Interest is payable at three-month LIBOR plus 6.5% per annum. The Company has recorded $1,519,918 of interest expense related to this credit facility.



----------------------------------------------------------------------------
2010 2009 Change % Change
----------------------------------------------------------------------------
Foreign exchange loss (639,414) (153,839) (485,575) 316
----------------------------------------------------------------------------


Tuscany incurs operating expenses and capital expenditures in U.S. dollars ("$USD"), Colombian pesos, Canadian dollars and Brazilian Real. Foreign exchange gains and losses arise on the settlement of accounts payable invoices denominated in currencies other than the U.S. dollar and the collection of accounts receivable invoices in currencies other than the US dollar. The foreign exchange loss in 2010 arises primarily from the settlement of Canadian dollar accounts payable invoices. The large increase in the foreign exchange loss for the year ended December 31, 2010, compared to the corresponding year ended December 31, 2009, reflects the significant increase in Canadian dollar accounts payable activity, largely related to the construction of rigs and related equipment, in 2010 compared to 2009. The foreign exchange loss for the year ended December 31, 2010, reflects, during 2010, a 5.4% weakening in the value of the U.S. dollar compared to the Canadian dollar, a 6.1% weakening of the U.S. dollar compared to the Colombian peso and a 6.2% weakening of the U.S. dollar compared to the Brazilian real.



----------------------------------------------------------------------------
2010 2009 Change % Change
----------------------------------------------------------------------------
Current income taxes 417,382 - 417,382 N/A
----------------------------------------------------------------------------


Although the Company had a net loss before income tax of $18,433,804 for the year ended December 31, 2010, current income tax expense of $417,382 has been recorded. The current income tax expense for the year ended December 31, 2010 relates to the Company's operations in Ecuador, Colombia and Peru. During 2010, the Company's operations in Ecuador became taxable on a current basis and the Company has recorded current income tax expense of $271,477 for the year ended December 31, 2010. The Company's operations in Colombia are not currently taxable based on earnings, but are subject to an alternative minimum tax based on the net worth of the Colombia branch. The Company has recorded current income tax expense of $124,000 for the year ended December 31, 2010 related to its operations in Colombia. For the year ended December 31, 2010, the Company has recorded current income tax expense of $21,905 related to operations in Peru.

At December 31, 2010, Tuscany has non-capital losses totaling approximately $38,943,000 and capital losses of approximately $2,700. The non-capital losses relate primarily to Canada and Colombia. Non-capital losses in Canada total approximately $15,089,000 and represent the significant general and administrative cost over the 2009 and 2010 fiscal years as well as interest costs in 2010. Non-capital losses in Colombia total approximately $22,286,000 and result primarily from a one-time Enhanced Tax Allowance available to the Company in 2010. The Colombian Enhanced Tax Allowance is based on 30% of the capital cost of the drilling equipment in the country. This deduction does not reduce the tax depreciation otherwise available to the Company. The Company has not recorded the benefit of these tax losses in the consolidated financial statements.

Working Capital, Funds from Operations and Liquidity

At December 31, 2010, Tuscany had working capital of $41,503,091 compared to $633,650 of working capital at December 31, 2009. The increase in working capital is a result of the Company receiving $45,209,568, net of transaction costs, in proceeds from a common share issue. On December 21, 2010, the Company received gross proceeds of $45,209,568 and issued 33,333,900 common shares in connection with a bought deal financing.

For the year ended December 31, 2010, cash used on operating activities totaled $3,117,890. After removing the impact on the change in non-cash working capital, funds used in operations totaled $10,828,613 and reflect significant administrative costs and limited rig operations. During 2010, cash flow from rig operations was insufficient to cover the significant administrative costs incurred by the Company. As a result, the Company used cash received from financing activities to support operating activity. At December 31, 2010, the Company had 15 rigs deployed into South America. Subsequent to December 31, 2010, the Company deployed the final two rigs in the Company's 2010 rig construction program to Brazil.

The significant factors that may impact the Company's ability to generate funds from operations in future periods are outlined in the "Risks and Uncertainties" section of this MD&A.

Investing Activities

During the year ended December 31, 2010, Tuscany spent $167,859,873 on investing activities, including $155,763,107 of cash related to the construction and importation of drilling equipment to South America and $1,975,168 of cash related to the Company's acquisition of Cheq-IT Ltd. and investment in Warrior Rig Ltd.

Financing Activities

During the year ended December 31, 2010, Tuscany received $216,667,293 from financing activities, comprised primarily of $75,161,845 (net) from the issuance of share capital, $71,938,693 (net) from the issuance of long term debt, $59,475,408 (net) from the issue of special warrants, $5,000,000 from an advance on the Company's convertible debenture, and $5,874,620 in short-term advances from Perfco Investments Ltd., a corporation owned by the Company's Chairman and CEO.

Related Party Transactions

During the year ended December 31, 2010, the Company entered into the following related party transactions:

a) The Company is party to a sublease agreement for its head office in Calgary, Alberta. The sublease is with a company whose parent has a director that is also a director of Tuscany. During the year ended December 31, 2010, Tuscany paid $CDN 119,706 in occupancy costs associated with this sublease.

b) On January 5, 2010 the Company issued 5,000,000 Common shares to Perfco Investments Ltd., a corporate shareholder owned by the Company's Chairman and CEO pursuant to the exercise of share purchase warrants.

c) On April 21, 2010 the Company issued 4,000,000 common shares to a director of the Company pursuant to the exercise of share purchase warrants.

d) On June 29, 2010, the Company issued 164,203 common shares to Perfco Investments Ltd, a corporate shareholder owned by the Company's Chairman and CEO, related to the conversion of accrual interest related to the Company's convertible debenture.

e) On June 29, 2010, the Company issued 100,000 common shares to a director of the Company pursuant to the exercise of share purchase warrants. Also on June 29, 2010, the Company issued 120,852 common shares to Perfco Investments Ltd., a corporate shareholder owned by the Company's Chairman and CEO, pursuant to the exercise of share purchase warrants and in settlement of $120,852 of accrued salary and reimbursable expenses due to the Company's Chairman.

f) During the year ended December 31, 2010, the Company purchased $2,807,591 of drilling equipment from Loadcraft Industries Ltd., a company whose President, CEO and majority owner is also a director of Tuscany.

g) During the period from May 19, 2010 to December 31, 2010, the Company purchased $339,190 of drilling equipment from Warrior Rig Ltd., a company in which Tuscany obtained a significant influence ownership interest on May 19, 2010.

h) On February 1, 2010, Perfco Investments Ltd., a corporation owned by the Company's Chairman and CEO, advanced the Company $5,000,000. On July 30, 2010, Perfco Investments Ltd. advanced the Company an additional $874,620. The advances are unsecured and bear interest at 10% per annum.

i) During the fourth quarter of 2010, the Company recorded $573,500 of revenue from a company whose chairman is a director of Tuscany.

The above transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Contractual Obligations

In the normal course of business the Company enters into various contractual obligations that will have an impact on future operations. These contractual obligations relate to office leases and, in certain circumstances, the construction of drilling equipment. At December 31, 2010, the Company had contractual obligations related to office leases of $CDN 24,616 per month (approximately $USD 24,750) for its office in Calgary, Canada 13,705,000 Colombian pesos per month (approximately $USD 7,160) for its office in Bogota, Colombia; $USD 3,340 per month for its office in Quito, Ecuador; 19,599 Brazilian real per month (approximately $USD 11,762) for its office in Rio de Janerio, Brazil; and 19,734 Brazilian real (approximately $USD 11,843) for its office in Manaus, Brazil. The office lease in Calgary expires April 30, 2021; the office lease in Colombia expires February 28, 2013; the office lease in Ecuador expires August 14, 2012; the office lease in Rio de Janerio, Brazil expires May 31, 2012; and the office lease in Manaus, Brazil expires September 30, 2013. The future lease obligation for the next five years is as follows: 2011 - $706,260, 2012 - $608,896, 2013 - $417,907, 2014 - $297,000 and 2015 - $297,000. At December 31, 2010, the Company had $4,441,145 to be paid pursuant to rig construction contracts related to the Company's two rigs that have been deployed into Brazil.

As part of the Company's acquisition of 40% of Warrior Rig Ltd., Tuscany will make available to Warrior a $ CDN 3,000,000 revolving loan, bearing interest at prime plus 4% per annum and having a term of three years. At March 22, 2010, Warrior has not indicated an intention to draw on the loan facility.

The Company is obligated to pay interest on an $80,000,000 loan from Credit Suisse. Interest on the loan is at three-month LIBOR plus 6.5% and is payable quarterly.

Subsequent Events

Subsequent to December 31, 2010 the Company issued 2,179,930 common shares in connection with the exercise of 2,179,930 warrants for gross proceeds of $3,269,895.

Segmented Information

The Company is engaged in developing oil and gas drilling and work over operations, initially in South America, which the Company considers to be its only geographic segment.



Summary Quarterly Results
Q4 Q3 Q2 Q1
2010 2010 2010 2010
------------------------------------------------
Revenue 7,824,428 6,434,626 1,755,457 3,380,158
Net loss (13,212,692) (3,534,483) (1,935,370) (1,039,898)
Per share (basic
and diluted) (0.08) (0.02) (0.01) (0.01)

Q4 Q3 Q2 Q1
2009 2009 2009 2009
------------------------------------------------
Revenue 2,983,441 - - -
Net loss (1,050,326) (739,512) (383,841) (314,974)
Per share (basic
and diluted) (0.02) (0.01) (0.01) (0.01)


Prior to the fourth quarter of 2009, the Company did not have any operating activity. Tuscany began to generate revenue from rig operations during the fourth quarter of 2009. During 2010, revenue from rig operations increased as newly constructed and deployed drilling equipment was contracted and commenced operating in South America. In conjunction with rig construction and deployment activities, the Company incurred significant general and administrative expenditures related to establishing and expanding operating centers in South America as well as expanding its head office in Calgary. In addition, during 2010 the Company incurred substantial expenditure on legal, accounting and other associated professional fees related to the planning and business development activities. The quarterly net losses incurred during 2010 reflect the significant administration costs associated with the growth of the Company over the 2010 fiscal year.

The net losses recorded prior to the fourth quarter of 2009 reflect the administrative cost to the Company during its start-up phase.



Review of Fourth Quarter Income Statement
----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Oilfield services revenue 7,824,428 2,983,441 4,840,987 162
Oilfield services expenses (7,058,814) (1,807,319) (5,251,495) 291
----------- ----------- -----------
Gross margin 765,614 1,176,122 (410,508)
----------- ----------- -----------
----------- ----------- -----------
Gross margin % 9.8% 39.4%
----------- -----------
----------- -----------
----------------------------------------------------------------------------


Oilfield services revenue recorded in the three months ended December 31, 2010 totaled $7,824,428 compared with $2,983,441 for the three months ended December 31, 2009, an increase of 162%. The increase in revenue is a result of an increase in the number of revenue days in the fourth quarter of 2010 compared to the corresponding period in 2009. During the three months ended December 31, 2010, the Company had 463 revenue days compared to 184 revenue days during the three months ended December 31, 2009. Revenue days increased in the fourth quarter of 2010 compared to the fourth quarter of 2009 as a result of additional rigs being deployed to South America during the year. During the fourth quarter of 2010, Tuscany earned revenue from seven rigs compared to three rigs during the fourth quarter of 2009.

For the three months ended December 31, 2010, gross margin was $765,614 or 9.8% compared with a gross margin of $1,807,319, or 39.4%, for the three months ended December 31, 2009. The decrease in gross margin percentage reflects costs associated with the initial start-up of several rigs during the fourth quarter of 2010 and unbudgeted camp rental costs.



----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Depreciation 3,819,966 395,615 3,424,351 866
----------------------------------------------------------------------------


Depreciation expense increased to $3,819,966 for the three months ended December 31, 2010, compared with $395,615 for the three months ended December 31, 2009. The significant increase is a result of depreciation related to rigs and related equipment and the inclusion of a one-time charge related to the write-off of property and equipment. Under the Company's depreciation policy, depreciation of rigs and related equipment does not commence until the equipment is put into operation. During the three months ended December 31, 2010, the Company had seven rigs in operation compared to three rigs that operated during the fourth quarter of 2009. Also during the fourth quarter of 2010, a shipment containing $2,428,438 of property and equipment en route to Guyana was seized in customs, and as yet the Company has not been successful in securing a release of the equipment or recovering the amount from third parties. As a result the Company has recorded a provision of $2,428,438 in depreciation expense.



----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
General and Administrative 6,145,035 1,593,698 4,551,337 286
----------------------------------------------------------------------------


General and administrative expense increased to $6,145,035 for the three months ended December 31, 2010, compared with $1,593,698 for the three months ended December 31, 2009. Compared to 2009, the Company has added administrative and operating management and staff in Canada, Colombia and Ecuador resulting in a substantial increase in salaries and wages in the fourth quarter of 2010 compared to the fourth quarter of 2009. In addition, during the third quarter of 2010, the Company established two operating centres in Brazil and incurred significant professional fees and salary expenses during the fourth quarter of 2010 in relation to this activity. In addition, the Company incurred significant professional fees, listing fees and travel expenses associated with its efforts in becoming a publicly traded company on the Toronto Stock Exchange, which occurred in April 2010, and corporate development activities.



----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Stock-based compensation 749,726 - 749,726 N/A
----------------------------------------------------------------------------


Stock-based compensation expense increased to $749,726 for the three months ended December 31, 2010 compared with nil for the three months ended December 31, 2009. Stock based compensation expense represents the value, calculated using the Black-Scholes option pricing model, related to the granting of 7,000,000 stock options during the fourth quarter of 2010.




----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Amortization of financing fees 1,222,872 - 1,222,872 N/A
----------------------------------------------------------------------------


Amortization of financing fees expense increased to $1,222,872 for the three months ended December 31, 2010 compared with nil for the three months ended December 31, 2009. On August 13, 2010, the Company entered into a definitive financing agreement. The fees associated with this debt financing have been presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan.



----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Interest 1,364,089 131,970 1,232,119 934
----------------------------------------------------------------------------


Interest expense increased to $1,364,089 for the three months ended December 31, 2010, compared with $131,970 for the three months ended December 31, 2009. Interest expense for the three months ended December 31, 2010, is related to the following two items: During 2010, the Company received $5,874,620 of short-term advances from Perfco Investments Ltd, a corporation owned by the Company's Chairman and CEO. The short-term advance incurs interest at 10% per annum. During the fourth quarter of 2010, the Company recorded $158,380 of interest expense related to these advances, On August 13, 2010, Tuscany entered into a $125 million definitive financing agreement with Credit Suisse. At December 31, 2010, the Company had drawn $80,000,000 under the terms of this facility. The loan was drawdown in three tranches: the first drawdown of $20,000,000 was received on August 13, 2010; the second drawdown of $30,000,000 was received September 10, 2010; and the remaining drawdown of $30,000,000 was received on November 3, 2010. Interest is payable at three-month LIBOR plus 6.5% per annum. During the fourth quarter of 2010, the Company recorded $1,205,709 of interest expense related to this credit facility.



----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Foreign exchange loss (222,329) (110,311) (112,018) (102)
----------------------------------------------------------------------------



Tuscany incurs operating expenses and capital expenditures in U.S. dollars ("$USD"), Colombian pesos, Canadian dollars, and Brazilian real. Foreign exchange gains and losses arise on the settlement of accounts payable invoices denominated in currencies other than the U.S. dollar and the collection of accounts receivable invoices in currencies other than the US dollar. The foreign exchange loss in the fourth quarter of 2010 arises primarily from the settlement of Canadian dollar accounts payable invoices. The foreign exchange loss for the three months ended December 31, 2010 reflects a 3.3% weakening of the value of the U.S. dollar compared to the Canadian dollar during the fourth quarter of 2010.



----------------------------------------------------------------------------
Three months ended
----------------------------------------------------------------------------
%
Dec 31, 2010 Dec 31, 2009 Change Change
----------------------------------------------------------------------------
Current income taxes 182,866 - 182,866 N/A
----------------------------------------------------------------------------


Although the Company had a net loss before income tax of $12,158,569 for the three months ended December 31, 2010, current income tax expense of $182,866 has been recorded. The current income tax expense for the three months ended December 31, 2010 relates to the Company's operations in Ecuador, Colombia and Peru. During 2010, the Company's operations in Ecuador became taxable on a current basis and the Company has recorded current income tax expense of $132,366 for the three months ended December 31, 2010. The Company's operations in Colombia are not currently taxable based on earnings, but are subject to an alternative minimum tax based on the net worth of the Colombia branch. The Company has recorded current income tax expense of $28,595 for the three months ended December 31, 2010 related to its operations in Colombia. For the three months ended December 31, 2010, the Company has recorded current income tax expense of $21,905 related to operations in Peru.

Outstanding Share Data

As at March 22, 2011 Tuscany had 197,027,765 common shares outstanding and 29,850,445 share purchase warrants outstanding representing a total equity value of $206,300,456. As at March 22, 2011, the Company has a total of 8,700,000 stock options outstanding of which 366,667 are currently exercisable.

Financial instruments

The Company's financial instruments included in the balance sheet are comprised of cash, accounts receivable, accounts payable and accrued liabilities, due to shareholders, a convertible debenture and long-term debt.

a) Fair values

The fair value of a financial instrument is the estimated amount that the Company would receive or pay to settle a financial asset or liability as at the reporting date. The fair values of the Company's financial instruments do not differ significantly from their carrying values.

The Company has estimated the fair value amounts using appropriate valuation methodologies and information available to management as of the valuation dates. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it was practicable to estimate that value:

- Cash and cash equivalents, restricted cash, accounts receivable, share subscriptions receivable, accounts payable and accrued liabilities and amounts due to shareholders - The carrying amounts approximate fair value because of the short maturity of these instruments.

- Long-term debt - The fair value of the long-term debt is not based on observable market data and is a level 3 in the fair value hierarchy.

b) Credit risk

The Company is exposed to credit risk resulting from the possibility that parties may default on their financial obligations. The maximum exposure of the Company to credit risk at December 31, 2010 is the total of cash, restricted cash and accounts receivable of $58,969,540. The Company's credit risk exposure on cash is minimized substantially by ensuring that cash is held with credible financial institutions. The Company's accounts receivable are related to customers with signed contracts and there are no receivables considered uncollectible. The accounts receivable are not considered by management to be exposed to significant credit risk.

As at December 31, 2010, the Company had accounts receivable of $22,335 (2009 - nil) that were greater than 90 days for which no provision had been established, as the Company believes that this amount will be collected.

Interest rate risk

The Company is exposed to interest rate price risk to the extent that the long term debt has a variable interest rate component. Changes in market interest rates affect the interest rate on this financial instrument.

If the long term debt is held to maturity, a 1% increase or decrease in the interest rate as of December 31, 2010 would result in an estimated change in operations and comprehensive loss of $2,900,000 (2009 - $6,261).

c) Currency rate risk

Currency rate risk is the risk that the fair value of, or future cash flows from, the Company's financial instruments will fluctuate due to changes in foreign exchange rates. The Company is exposed to fluctuations in the following currencies, Colombian pesos (COP), Canadian dollars (CDN $), Brazilian Real (BRL) and Guyanese Dollars (GYD).

The Company is exposed to currency rate risk to the extent that CDN $3,574 of cheques issued in excess of cash and CDN $960,957 of accounts payable and accrued liabilities are denominated in Canadian dollars. A 10% increase or decrease in the value of the United States dollar against the Canadian dollar as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $88,160 (2009 - $131,808).

The Company is also exposed to currency rate risk to the extent that COP 1,796,813,509 of cash, COP 7,307,056,164 of accounts receivable and COP 9,471,445,504 of accounts payable and accrued liabilities is denominated in Colombian pesos. A 10% increase or decrease in the value of the United States dollar against the Colombian peso as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $17,459 ($22,339).

The Company is exposed to currency rate risk to the extent that BRL 1,240,089 of cash. A 10% increase or decrease in the value of the United States dollar against the Brazilian Real as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $67,660 (2009 - nil).

The Company is exposed to currency rate risk to the extent that GYD $1,548,501 of cash. A 10% increase or decrease in the value of the United States dollar against the Guyanese dollar as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $714 (2009 - nil).

The Company does not currently hedge its foreign currency exposure.

d) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet a demand for cash or fund its obligations as they come due. Liquidity risk also includes the risk of the Company not being able to liquidate assets in a timely manner at a reasonable price. The Company meets its liquidity requirements by anticipating operating, investing and financing activities and ensuring there are enough funds to cover these activities through debt financing and the issuance of common shares. Accounts payable are due for payment in accordance with credit terms established by the Company's suppliers; generally between 30 and 90 days from receipt of invoice. The amount due to shareholders is not subject to repayment terms and the long term debt has a maturity date of August 13, 2015.

The following maturity analysis shows the remaining contractual maturities for the Company's financial liabilities:



2011 2012 2013 2014 2015
-------------------------------------------------------

Accounts payable and
accrued liabilities 14,332,388 - - - -

Income taxes payable 89,260 - - - -

Due to Shareholders 6,553,646 - - - -

Interest payments on
long term debt 5,442,248 4,910,448 3,445,266 1,993,999 542,733

Principal payments on
long term debt - 21,333,333 21,333,333 21,333,333 16,000,001
-------------------------------------------------------
26,417,542 26,243,781 24,778,599 23,327,333 16,542,734

-------------------------------------------------------



Critical Accounting Estimates

This MD&A is based on the Company's consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of the consolidated financial statements requires that certain estimates and judgments be made in regard to the reported amount of revenues and expenses and the carrying values of assets and liabilities. These estimates are based on historical experience and management's judgment. Anticipating future events involves uncertainty and consequently the estimates used by management in the preparation of the consolidated financial statements may change as future events unfold, additional experience is acquired, or the environment in which the Company operates changes.

The accounting estimates considered to have the greatest impact on the Company's consolidated financial results are as follows:

Depreciation

Depreciation of the Company's property and equipment incorporates estimates of useful lives and residual values. These estimates may change as more experience is gained or as general market conditions change, both of which could impact the operation of the Company's property and equipment.

Stock-based Compensation

Compensation expense related to options issued under the Company's stock option plan is calculated using the Black-Scholes option pricing model. The Black-Scholes option pricing model utilizes estimates surrounding various assumptions such as volatility, annual dividend yield, risk-free interest rate, and expected life.

Long-lived Assets

The carrying value of the Company's property and equipment is reviewed for impairment periodically or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. This requires the Company to forecast future cash flows to be derived from the utilization of these assets based on assumptions about future operating conditions. These assumptions may change as more experience is gained or as general market conditions change.

Valuation of Accounts Receivable

The Company is subject to credit risk on accounts receivable balances and assesses the recoverability of accounts receivable balances on an ongoing basis. The Company establishes an allowance for doubtful accounts when accounts receivable balances are deemed impaired and uncollectible. Assessing accounts receivable balances for collection involves significant judgment and uncertainty, including estimates of future events. Changes in circumstances underlying these estimates may result in adjustments to the allowance for doubtful accounts in future periods.

Foreign VAT Recoverable

The allocation of foreign VAT recoverable between current and non-current is calculated by applying foreign VAT rates to management's estimate of future revenues. Assumptions regarding management's estimate of future revenues may change as contracts for the Company's oilfield services change.

Taxation

The Company follows the liability method of accounting for income taxes. Under this method, income tax liabilities and assets are recognized for the estimated tax consequences attributable to differences between the amounts reported in the consolidated financial statements and their respective tax bases. The Company establishes valuation allowances to offset future income tax assets when utilization of such tax assets is uncertain. Assessing the realization of future income tax assets includes consideration of tax planning arrangements and estimates of future taxable income. Changes in circumstances and assumptions underlying these considerations may require changes to the valuation allowances recorded to date.

New Accounting Policies

During the year ended December 31, 2010, the Company adopted the following accounting policies:

a) Long-term investments

Investments where the Company exerts significant influence are recorded on the equity basis whereby the investment is originally recorded at cost and the carrying value is adjusted to include the pro-rata share of the investee's earnings less dividends received. On a periodic basis management assesses the carrying value of long-term investments for indications of impairment. An indication of impairment is an ongoing lack of profitability. An impairment loss is recognized when the carrying value of a long-term investment exceeds the total undiscounted cash flows expected from the investment. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. Foreign exchange gains or losses arising from translation of the Company's equity investment are included in the cumulative translation adjustment account in other comprehensive income.

b) Stock-based compensation

The Company follows the fair value method of accounting, using the Black-Scholes option pricing model, whereby compensation expense is recognized for the stock options on the day of granting, and amortized over the options' vesting period.

c) Financing fees

Prior to 2010, the Company's policy was to expense the costs related to the issue of a financial liability as incurred. Transaction costs that are directly attributable to the acquisition or issue of a financial liability are now added to the fair value amount recorded at initial recognition and subsequently are amortized using the effective interest rate method. This change in accounting policy does not have retrospective impact because there were no financial liabilities in prior periods.




Three Year Financial Data
----------------------------------------------------------------------------
% Change
2010 2009 % Change(i) 2008 (i)

Revenue 19,394,669 2,983,441 550 - N/A
Gross margin 4,309,779 1,176,122 266 - N/A
Gross margin % 22.2% 39.4% (44) - N/A
Net loss (19,305,061) (2,488,653) (676) (53,385)(36,062)
Net loss per share (0.13) (0.02) (550) (0.06) (117)
Total assets 276,150,115 56,569,743 388 6,357,514 4,244
Total long-term
financial
liabilities 70,730,800 164,465 42,907 - N/A
----------------------------------------------------------------------------
(i) Represents the change from 2010


Recent Accounting Pronouncements

The Canadian Institute of Chartered Accountants ("CICA") Accounting Standards Board ("AcSB") confirmed in February 2008 that International Financial Reporting Standards ("IFRS") will replace Canadian GAAP in 2011 for profit-oriented Canadian publically accountable enterprises. Accordingly, the Company will be assessing the potential impacts of this change as well as developing the necessary plans to facilitate the change. When finalized, the Company's plan will encompass project structure and governance, resourcing and training, and an analysis of key differences between IFRS and Canadian GAAP.

The following new accounting recommendations have been issued by the CICA but are not yet required to be adopted by the Company:

As of January 1, 2011, the Company will be required to adopt the following CICA Handbook sections:

CICA Handbook Section 1582 "Business Combinations" will replace the existing business combinations standard. The new standard requires assets and liabilities acquired in a business combination and contingent consideration to be measured at fair value as at the date of the acquisition. Acquisition costs that are currently capitalized as part of the purchase price will be recognized in the consolidated statement of operations. The adoption of this standard will impact the accounting treatment of future business combinations.

CICA Handbook Section 1601 "Consolidated Financial Statements" and Section 1602 "Non-controlling Interests" will replace the former consolidated financial statements standard. These standards establish the requirements for the preparation of consolidated financial statements and the accounting for non-controlling interest (previously referred to as minority interest) in a subsidiary. The new standard requires non-controlling interest to be presented as a separate component of equity and requires net income and other comprehensive income to be attributed to both the parent and non-controlling interest.

International Financial Reporting Standards

In February 2008, the Accounting Standards Board of the Canadian Institute of Chartered Accountants conformed transition timing for publicly accountable enterprises in Canada to adopt International Financial Reporting Standards ("IFRS"). Accordingly, the Company will be required to adopt IFRS on January 1, 2011, including reporting for interim periods in fiscal 2011.

The Company has developed a transition plan, comprised of three phases:

- Phase 1 - Diagnostic

- Phase 2 - Development

- Phase 3 - Implementation.

Corporate governance over the project will involve the establishment of an IFRS committee, comprised of senior management, and will involve regular reporting to the Audit Committee and Board of Directors. The Company currently does not have sufficient internal resources and thus has engaged external advisors to assist with the transition.

The Company has completed Phase 1 - Diagnostic, which involves a high-level review of the major differences between Canadian GAAP and IFRS and the development of a project plan. To date, the Company has determined that the key areas with the highest potential impact to the Company under IFRS financial reporting are:

- Property, plant and equipment

- IFRS 1 - first time adoption of IFRS

- Financial statement presentation and disclosure

The Company is currently in the development and implementation phase; an update on the key areas impacted by IFRS is as follows:

Property, plant and equipment

Management has determined that each rig will be broken down into approximately five components for the purposes of calculating depreciation under IFRS. In addition, the Company will apply the unit of production method to depreciate its rigs and related equipment as opposed to depreciating the assets on a straight line basis as currently done under Canadian GAAP. Management is not able to quantify the effect of these changes at this time.

Under IFRS, an impairment test is done at the level of a cash-generating unit ("CGU"), which is generally at a lower level than under Canadian GAAP. Management has not finalized the Company's CGUs. Given the age and condition of the Company's rig fleet, an impairment charge under IFRS at January 1, 2010 and December 31, 2010 is not anticipated. An impairment test is only required when there are indicators of impairment.

IFRS 1

The main election in IFRS 1 that impacts the Company is with respect to the option to either i) record property, plant and equipment at fair value on January 1, 2010, the IFRS transition date; or ii) record property, plant and equipment at historical cost less accumulated depreciation as if the Company had always applied IFRS. Management expects to apply option two whereby the carrying value of property, plant and equipment will be rebuilt under IFRS since inception of the Company.

Management has commenced rebuilding the IFRS carrying value of property, plant and equipment. However, the process is not complete; therefore the impact on the carrying value of property, plant and equipment at January 1, 2010 cannot be quantified at this time.

Management does not currently anticipate that IFRS will have a significant impact on the historical cost of property, plant and equipment. The use of component accounting and unit of production depreciation could materially impact accumulated depreciation as at January 1, 2010 and the charge for depreciation taken in 2010.

IAS 32 Financial Instruments: Presentation requires an entity to split a compound financial instrument at inception into separate liability and equity components. If the liability component is no longer outstanding, retrospective application of IAS 32 involves separating two portions of equity. The first portion is in retained earnings and represents the cumulative interest accreted on the liability component. The other portion represents the original equity component. However, in accordance with this IFRS, a first-time adopter need not separate these two portions if the liability component is no longer outstanding at the date of transition to IFRS. The company is taking this exemption.

Financial statements presentation and disclosure

The Company has drafted the IFRS financial statements that will be used in the first quarter of 2011. Management analyzed the additional disclosures that will be needed in the IFRS financial statements and has assessed the impact on its financial reporting processes and systems. The Company recently implemented a new financial accounting system and IFRS considerations were addressed during the design of this system.

The Company will continue to advance its IFRS conversion process such that IFRS financial statements for the first quarter of 2011 will be prepared and filed in accordance with the timelines established by Canadian securities regulators. At this time management does not anticipate any significant impediments that would not enable completion of the IFRS conversion in order to meet the Company's reporting requirements.

Disclosure on Controls and Internal Controls over Financial Reporting Update

The Company's management, including the Chief Executive Officer, President, and Chief Financial Officer, has reviewed and evaluated the effectiveness of both the Company's disclosure procedures and controls and the Company's internal controls over financial reporting (as defined in National Instrument 52-109 issued by the Canadian securities regulators) as of December 31, 2010.

Management has concluded that, as of December 31, 2010, the Company's internal controls over financial reporting were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Risks and Uncertainties

Crude Oil and Natural Gas Prices

One of the most significant factors that can affect the business of the Company is oil and natural gas commodity prices. Commodity prices affect the capital programs of energy exploration and production companies, as the price they receive for the crude oil and natural gas they produce has a direct impact on the cash flow available to them and the subsequent demand for the services provided by the Company. Crude oil and natural gas prices have been volatile in recent years, and may continue to be as weather conditions, government regulation, political and economic environments, pipeline capacity, storage levels and other factors outside of the Company's control continue to influence commodity prices. Demand for the Company's services in the future will continue to be influenced by commodity prices and the resultant impact on the cash flow of its customers, and may not be reflective of historical activity levels.

Foreign Operations

The Company is providing drilling and workover services in several international onshore drilling areas. Tuscany's operations are subject to regulations in various jurisdictions and support of the oil and natural gas industry can vary in these jurisdictions. In general, Tuscany negotiates long-term service contracts for drilling and workover services and these contracts usually include clauses for the Company's protection.

Foreign Exchange Exposure

The Company's consolidated financial statements are presented in U.S. dollars and as such operations in Canada, Colombia, Brazil and Guyana result in foreign exchange risk to the Company. The principal foreign exchange risk relates to the conversion of Colombian peso, Canadian dollar, and Brazilian real denominated activity to U.S. dollars. The Colombian peso/U.S. dollar exchange rate at December 31, 2010 was 1,903 compared to 2,048 at December 31, 2009. The Canadian/U.S. dollar exchange rate at December 31, 2010 was 1.005 compared to 0.9555 at December 31, 2009. The Brazilian real/U.S. dollar exchange rate at December 31, 2010 was 1.64 compared to 1.75 on August 31, 2010. Under Tuscany's current operating structure, it's Colombian and Brazilian operations are considered to be integrated for foreign currency translation purposes. Fluctuations in future exchange rates will impact the U.S. dollar equivalent of the results reported by the Company's foreign subsidiary and branches.

Changes in Laws and Regulations

The Company and its customers are subject to numerous laws and regulations governing its operations and the exploration and development of crude oil and natural gas, including environmental regulation. Existing and expected environmental legislation and regulations may increase the costs associated with providing drilling and workover services, and Tuscany may be required to incur additional operating costs or capital expenditures in order to comply with any new regulations. The costs of complying with increased environmental and other regulatory changes in the future may also have an adverse effect on the cash flows of the Company's customers and may reduce the demand for services provided by the Company.

Operating Risks and Insurance

The Company's operations will be subject to risks inherent in the oilfield services industry. The Company carries insurance to cover the risk to its equipment and people and will review the level of insurance on a regular basis to ensure it is adequate. Although the Company believes its level of insurance coverage is adequate, there can be no assurance that the level of insurance carried by the Company will be sufficient to cover all potential liabilities.

Outlook

Tuscany's operations are currently focused in the northern part of South America. The Company currently has nine rigs in Colombia, four rigs in Ecuador, two rigs in Brazil, one rig in Peru and one rig in Guyana. In addition, Tuscany is currently building two new drilling rigs that are slated to be deployed to Colombia during the second and third quarters of 2011.

The construction of two new drilling rigs will increase the Company's fleet to 19 drilling and heavy-duty workover rigs. During 2011, Tuscany will continue to focus on expanding its rig fleet, either through additional new-build opportunities or through acquisition, and obtaining critical mass in its core areas of business. The Company currently has $45 million available to be drawn on its existing credit facility (subject to satisfying certain conditions) and continues to evaluate additional financing alternatives. In addition, as the Company's current fleet of 17 drilling and heavy-duty workover rigs is fully deployed into South America, Tuscany anticipates the cash flow from the operation of this fully deployed fleet will support growth opportunities as they arise. Almost universally, Latin American governments have stated the goal of growing petroleum production and exports. Most fields have not been efficiently exploited, allowing for not only greenfield projects but also opportunities for optimizing existing production. As such, South America has seen an increase in exploration and production actively engaged in optimizing and extending older wells as well as drilling exploratory wells. Tuscany's significant investment in establishing operating centres in South America during 2010 helps to ensure that the Company is well positioned to capitalize on the future growth associated with the increased level of oilfield service activity expected in South America.



Tuscany International Drilling Inc.
Consolidated Balance Sheets
As at December 31, 2010 and 2009
----------------------------------------------------------------------------
(expressed in US dollars)
2010 2009
-----------------------
Assets

Current Assets
Cash and cash equivalents 47,965,303 1,839,920
Restricted cash (Note 4) 3,328,096 -
Term deposits - 435,853
Share subscriptions receivable - 100,000
Accounts receivable 7,348,019 1,936,263
Inventory 860,681 -
Prepaid expenses and deposits 1,565,865 509,704
Foreign VAT recoverable 1,410,421 1,618,110
-----------------------
62,478,385 6,439,850

Foreign VAT recoverable 3,810,400 749,771
Long-term investment (Note 5) 5,054,278 -
Property and equipment (Note 7) 204,807,052 49,380,122
-----------------------
276,150,115 56,569,743
-----------------------
-----------------------
Liabilities

Current Liabilities
Accounts payable and accrued liabilities 14,332,388 5,258,226
Income taxes payable (Note 14) 89,260 -
Due to shareholders (Note 8) 6,553,646 547,974
-----------------------
20,975,294 5,806,200

Convertible debenture (Note 9) - 164,465
Long term debt (Note 10) 70,730,800 -
-----------------------
91,706,094 5,970,665
-----------------------
Shareholders' Equity
Share capital (Note 11) 189,478,515 42,809,993
Contributed surplus (Note 11) 2,649,732 -
Warrants (Note 12) 14,391,727 10,331,748
Accumulated other comprehensive income 294,105 -
Deficit (22,370,058)(2,542,663)
-----------------------
184,444,021 50,599,078
-----------------------
276,150,115 56,569,743
-----------------------
-----------------------
Commitments (Note 17)
See accompanying notes to the consolidated financial statements.


Tuscany International Drilling Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2010 and 2009
----------------------------------------------------------------------------
(expressed in US dollars)
2010 2009
-----------------------
Revenue
Oilfield services 19,394,669 2,983,441

Expenses
Oilfield services 15,084,890 1,807,319
Depreciation 6,715,864 408,503
General and administrative 11,785,590 2,897,958
Stock based compensation (Note 11) 854,005 -
Amortization of financing fees (Note 10) 1,367,987 -
Interest 2,084,438 233,316
-----------------------
37,892,774 5,347,096
-----------------------
Loss before other income (expenses) and income taxes (18,498,105)(2,363,655)

Other Income (Expenses)
Foreign exchange loss (639,414) (153,839)
Interest income 11,886 28,841
Equity loss, net of transaction costs (Note 5) (179,428) -
-----------------------
(806,956) (124,998)
-----------------------

Loss before income taxes (19,305,061)(2,488,653)

Current income taxes (Note 14) 417,382 -
-----------------------

Net loss (19,722,443)(2,488,653)

Deficit - beginning of year (2,542,663) (54,010)
Transaction costs (Note 6) (104,952) -
-----------------------
Deficit - end of year (22,370,058)(2,542,663)
-----------------------
-----------------------
Net Loss Per Share (Note 11)
Basic (0.13) (0.02)
Diluted (0.13) (0.02)
-----------------------
-----------------------

See accompanying notes to the consolidated financial statements.


Tuscany International Drilling Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2010 and 2009
----------------------------------------------------------------------------
(expressed in US dollars)
2010 2009
-----------------------

Net loss (19,722,443)(2,488,653)

Other comprehensive income
Unrealized gains on translating equity portion
of investment 294,105 -
-----------------------
Total comprehensive loss (19,428,338)(2,488,653)
-----------------------
-----------------------


Consolidated Statements of Accumulated Other Comprehensive Income
For the years ended December 31, 2010 and 2009
(expressed in US dollars)
2010 2009
-----------------------
Accumulated other comprehensive income
- beginning of year - -
Unrealized gains on translating equity
portion of investment 294,105
-----------------------
Accumulated other comprehensive income - end of year 294,105 -
-----------------------
-----------------------


Tuscany International Drilling Inc.
Consolidated Statement of Cash Flows
For the years ended December 31, 2010 and 2009
----------------------------------------------------------------------------
(expressed in US dollars)
2010 2009
------------------------
Operating Activities
Net loss (19,722,443) (2,488,653)
Items not affecting cash
Depreciation 6,715,864 408,503
Interest expense on convertible debenture 49,697 68,850
Amortization of financing fees 1,367,987 -
Equity loss 139,314 -
Stock based compensation 854,005 -
Shares issued for services - 75,000
Changes in non-cash working capital (Note 18) 7,477,686 (1,301,043)
------------------------
(3,117,890) (3,237,343)
------------------------
Investing Activities
Acquisition of property and equipment (155,763,107)(43,563,906)
Restricted cash (note 4) (1,930,000)
Proceeds on disposal of term deposits - 11,831,700
Purchase of term deposits - (6,267,553)
Long term investments (1,975,168) -
Changes in non-cash working capital (Note 18) (8,191,598) 1,705,515
------------------------
(167,859,873)(36,294,244)
------------------------
Financing Activities
Advances from shareholders 5,874,620 294,338
Restricted cash (Note 4) (1,398,096) -
Share subscriptions receivable - (100,000)
Proceeds from convertible debenture financing 5,000,000 10,000,000
Proceeds from issuance of share capital, net 75,161,845 30,655,190
Proceeds from issuance of special warrants,
net (Note 13) 59,475,408 -
Proceeds from issuance of long term debt (Note 10) 71,938,693 -
Changes in non-cash working capital (Note 18) 614,823 164,465
------------------------
216,667,293 41,013,993
------------------------

Increase in cash and cash equivalents 45,689,530 1,482,406
Cash and cash equivalents - beginning of year 2,275,773 357,514
------------------------
Cash and cash equivalents - end of year 47,965,303 1,839,920
------------------------
------------------------
Cash Flow Supplementary Information
Interest paid 805,234 -
Income taxes paid 328,122 -
------------------------
------------------------
See accompanying notes to the consolidated financial statements.





Tuscany International Drilling Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2010 and 2009
---------------------------------------------------------------------------
(expressed in US dollars)


1 Description of business

Tuscany International Drilling Inc. (the "Company"), formerly Tuscany International Resources Ltd., formerly 1101428 Alberta Ltd., incorporated under the Alberta Business Corporations Act on April 6, 2004. The Company had no operations until October 2007. The Company is engaged in developing oil and gas drilling and work over operations, initially in South America, which the Company currently considers to be its only geographic segment. In conjunction with the reverse takeover transaction with Cheq-IT Ltd. (see note 6), the company became a publicly listed entity on the Toronto Stock Exchange.

2 Summary of significant accounting policies

The consolidated financial statements of the Company have been prepared by management in accordance with Canadian generally accepted accounting principles ("GAAP") on a going concern basis. The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and be able to discharge its obligations and commitments and realize its assets in the normal course of business. The consolidated financial statements have, in management's opinion, been properly prepared using careful judgment and within the framework of the significant accounting policies summarized below.

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

Cash and cash equivalents

Cash and cash equivalents consists of cash in bank accounts. Highly liquid investments with maturities of three months or less at date of purchase are considered to be cash equivalents.

Inventory

Inventory comprised of spare rig parts and consumables, is recorded at the lower of cost and net realizable value. Cost is determined on a specific item basis.

Long-term investments

Investments where the Company exerts significant influence are recorded on the equity basis whereby the investment is originally recorded at cost and the carrying value is adjusted to include the pro-rata share of the investee's earnings less dividends received. On a periodic basis management assesses the carrying value of long-term investments for indications of impairment. An indication of impairment is an ongoing lack of profitability. An impairment loss is recognized when the carrying value of a long-term investment exceeds the total undiscounted cash flows expected from the investment. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. Foreign exchange gains or losses arising from translation of the Company's equity investment are included in the cumulative translation adjustment account in other comprehensive income.

Property and equipment

Property and equipment is stated at cost less accumulated depreciation. Costs associated with equipment upgrades that result in increased capabilities or performance enhancements are capitalized. Costs incurred to repair or maintain property and equipment are expensed as incurred.

Property and equipment is depreciated based on the estimated useful lives of the asset as follows:



Automotive equipment 3 years Straight-line (15% residual)
Computer equipment 3 years Straight-line
Office furniture and equipment 5 years Straight-line
Rigs and related equipment 10 years Straight-line (20% residual)


Property and equipment is reviewed for impairment when events or changes in circumstances indicate that its carrying value may not be recoverable. The Company's operations and business environment are routinely monitored, and judgement and assessments are made to determine if an event has occurred that indicates possible impairment. If the total of undiscounted cash flows or assessed fair value is less than the carrying value of the asset, an impairment loss is measured as the excess of the carrying amount of the property and equipment over its discounted future cash flows or fair value. Fair value is the amount at which an item could be bought or sold in a current transaction between willing parties, and is normally estimated by calculating the present value of expected future cash flows related to the assets or by relying on a fair value assessment.

Rigs and related equipment are not depreciated until put into service.

Income taxes

The Company follows the liability method of accounting for income taxes. Under this method, income tax liabilities and assets are recognized for the estimated tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax basis, using enacted or substantively enacted income tax rates. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period in which the change is substantively enacted. Valuation allowances are established when necessary to reduce future income tax assets to the amounts that are more likely than not to be realized.

Revenue recognition

Oilfield services revenue is recognized as services are rendered and when collectability is reasonably assured. Losses are provided for in full when first determined.

Stock based compensation

During 2010, the Company established a stock option plan to provide an opportunity for officers, directors and employees of the Company to participate in the growth and development of the Company. Stock options vest (other than with respect to options granted to independent, non-management directors) evenly over a three year period, with the first vesting occurring on the first anniversary of the date of grant. Stock options granted to independent, no-management directors vest 1/3 on the date of grant, 1/3 on the first anniversary of the date of grant and 1/3 on the second anniversary of the date of grant. All stock options expire five years from the date of grant. The Company follows the fair value method of accounting, using the Black-Scholes option pricing model, whereby fair value is established at the date of grant and amortized over the vesting term of the option as stock-based compensation expenses.

Foreign currency transactions and translation

The Company and its subsidiaries functional currency is the United States dollar. The company's subsidiaries are considered to be integrated foreign operations and are translated using the temporal method. Under this method all monetary assets and liabilities denominated in currencies other than the United States dollar are translated into the functional currency at the rate of exchange in effect at the balance sheet date. Non-monetary assets are translated at the rate of exchange prevailing at the date of the transaction. Gains and losses resulting from the translation of assets and liabilities are reflected in the net income or loss of the period.

Revenue and expense accounts are translated at the rates in effect at the time of the transactions, except for depreciation, if applicable, which is translated at the same rate as the related assets.

Net loss per share

Net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. With regard to unexercised warrants in the calculation of diluted net loss per share, dilution is calculated using the treasury stock method, which assumes that all outstanding warrants are exercised, if dilutive, and the assumed proceeds are used to purchase the Company's common shares at the average price of share issuances during the period.

Measurement and uncertainty

The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Estimates and assumptions include the assessment of more likely than not criteria with respect to the completion of proposed business transactions, the provision for doubtful accounts receivable, the estimated useful life of property and equipment for depreciation purposes, the allocation of Foreign VAT recoverable between current and non-current, the allocation of equity and warrant components of share issuance using the Black-Scholes model, the estimated expected interest rate for valuing the liability component of convertible debenture and for accretion purposes, and the tax rates at which temporary differences between the tax bases and accounting bases of assets and liabilities are expected to reverse. By their nature, these estimates are subject to measurement uncertainty, and the effect on the consolidated financial statements of changes in such estimates in future periods could be significant.

Financial instruments

The Company has designated its financial instruments as follows:

a) Cash and cash equivalents and restricted cash are classified as "Held for Trading" and recorded at fair value.

b) Accounts receivable and share subscriptions receivable are classified as "Loans and Receivables". These financial assets are initially recognized at fair value and subsequently measured at values that approximate their amortized cost using the effective interest method.

c) Accounts payable and accrued liabilities, amounts due to shareholders, the convertible debenture, and long-term debt are classified as "Other Financial Liabilities". These financial liabilities are initially recognized at fair value and subsequently measured at values that approximate their amortized cost using the effective interest method.

The Company discloses its financial instruments within a hierarchy prioritizing the inputs to fair value measurements at the following three levels:

- Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;

- Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

- Level 3 - Inputs that are not based on observable market data.

Change in accounting policy

Financing fees

Prior to 2010, the Company's policy was to expense the costs related to the issue of a financial liability as incurred. Transaction costs that are directly attributable to the acquisition or issue of a financial liability are now added to the fair value amount recorded at initial recognition and subsequently are amortized using the effective interest rate method. This change in accounting policy does not have retrospective impact because there were no financial liabilities in prior periods.

3 Future changes in accounting policies

The following new accounting recommendations have been issued by the Canadian Institute of Chartered Accountants ("CICA") but are not yet required to be adopted by the Company:

As of January 1, 2011, the Company will be required to adopt the following CICA Handbook sections:

a) CICA Handbook Section 1582 "Business Combinations" will replace the existing business combinations standard. The new standard requires assets and liabilities acquired in a business combination and contingent consideration to be measured at fair value as at the date of the acquisition. Acquisition costs that are currently capitalized as part of the purchase price will be recognized in the consolidated statement of operations. The adoption of this standard will impact the accounting treatment of future business combinations.

b) CICA Handbook Section 1601 "Consolidated Financial Statements" and Section 1602 "Non-controlling Interests" will replace the former consolidated financial statements standard. These standards establish the requirements for the preparation of consolidated financial statements and the accounting for non-controlling interest (previously referred to as minority interest) in a subsidiary. The new standard requires non-controlling interest to be presented as a separate component of equity and requires net income and other comprehensive income to be attributed to both the parent and non-controlling interest. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

4 Restricted cash

The Company's restricted cash balance of $3,328,096 at December 31, 2010 is comprised of the following:

Under the terms of the Company's senior secured term credit agreement Tuscany is required to maintain a debt service account with sufficient cash to fund, one quarter in advance, interest and principal payments due under the terms of the loan. Under the terms of the loan principal repayments do not commence until 2012. Cash held in the debt service reserve account of $1,398,096 at December 31, 2010 will be used to pay the loan interest due in the first quarter of 2011.

In October 2010, Tuscany deposited $1,930,000 with a bank in Peru as security for a letter of credit issued by the bank in favour of the Peruvian tax authorities. The letter of credit was issued to the tax authorities as security for any VAT that may become payable related to the importation of drilling equipment into Peru.

5 Long-term investments

On May 19, 2010, the Company closed a transaction in which it acquired a 40% interest in Warrior Rig Ltd. ("Warrior"). Warrior is a private oilfield services company specializing in the design, manufacture and service of top drive systems, automated tubular tongs and hydraulic catwalks. As consideration, Tuscany paid $2,000,000 Cdn ($USD 1,902,000) to Warrior for 2,000,000 Common shares of Warrior, and issued 2,398,320 Common shares to shareholders of Warrior in exchange for 3,600,000 Common shares of Warrior The carrying value of the net assets of Warrior on the date of acquisition was $1,734,153 Cdn ($USD 1,649,180). The Company's share of the value of sales contracts in place on the date of acquisition was $1,210,079. This long-term investment has been accounted for using the equity method and the excess of consideration over equity interest in net assets is considered goodwill. The Company's 40% equity share in the earnings of Warrior have been included in the Company's earnings from May 19, 2010, the date of the acquisition.



December 31
2010
---------------
Equity interest in net assets at acquisition (40%) 659,672
Customer contracts 1,210,079
Future income tax liability (338,822)
Excess of consideration over equity interest in net assets 3,336,114
Equity pickup 764,387
Cumulative translation adjustment 294,105
Change in future tax liability 338,822
Amortization of contracts (1,210,079)
---------------
5,054,278
---------------
---------------


6 Acquisition of Cheq-IT

On January 31, 2010, Tuscany International Drilling Inc. entered into an Amalgamation Agreement (the "Agreement") with Cheq-IT Ltd., to effect a reverse takeover transaction. Under the Agreement, Tuscany International Drilling Inc. was to be the continuing entity. This transaction was successfully executed on April 16, 2010 ("the Closing Date"). As a result of the transaction mechanics, the existing shareholders of Tuscany International Drilling Inc. held 148,113,325 shares (99.60%) of the amalgamated entity and the shareholders of Cheq-IT Ltd. held 598,902 shares (0.40%) of the amalgamated entity as of the Closing Date.

As at the effective date of the Amalgamation, holders of Tuscany shares held 148,113,325 Post-Consolidation Company shares, representing over 99% of the outstanding Post-Consolidation Company Shares and holders of Cheq-IT Ltd. Shares held 598,902 Post-Consolidation Company Shares, representing less than 1% of the outstanding Post-Consolidation Company Shares.

Immediately prior to the reverse takeover the book value of Cheq-IT Ltd's net assets was as follows:



Cash 219,845
Goods and services tax recoverable 10,857
Accounts payable and accrued liabilities (166,472)
------------
Book value of net assets 64,230
------------
------------



The book value of the net assets of Cheq-IT Ltd. was accounted for as an increase in share capital of $64,230. Reverse takeover transaction costs were charged to share capital to the extent of cash received of $219,845, resulting in a net decrease of share capital of $155,615. Cash consideration of $104,952 paid to Cheq-IT Ltd in settlement of outstanding Cheq-IT Ltd. options and warrants was accounted for as an increase in deficit.



7 Property and equipment
December 31
2010
-------------------------------------------
Accumulated Net Book
Cost Amortization Value

Automotive vehicles 62,491 23,608 38,883
Computer equipment and software 491,317 97,081 394,236
Leasehold improvements 65,215 1,950 63,265
Office furniture and equipment 132,428 15,565 116,863
Rigs and related equipment 211,179,980 6,986,175 204,193,805
-------------------------------------------
211,931,431 7,124,379 204,807,052
-------------------------------------------
-------------------------------------------

December 31
2009
-------------------------------------------
Accumulated Net Book
Cost Amortization Value

Automotive vehicles 62,491 5,902 56,589
Computer equipment and software 190,015 16,823 173,192
Office furniture and equipment 29,445 2,181 27,264
Rigs and related equipment 49,506,674 383,597 49,123,077
-------------------------------------------
49,788,625 408,503 49,380,122
-------------------------------------------
-------------------------------------------


Included in the cost of rigs and related equipment is $12,604,418 (2009 - $6,224,719) of drilling equipment acquired with non-cash share consideration.

At December 31, 2010, property and equipment includes $132,874,353 (2009 - $32,529,852) of equipment that has not yet been subject to depreciation.

8 Due to shareholders

The amount due to shareholders is comprised of accrued salaries and reimbursable expenses to employee shareholders as well as advances of $5,874,620 (plus accrued interest of $514,823) from Perfco Investments Ltd., a corporate shareholder owned by the Company's Chairman and CEO. The accrued salaries and reimbursable expenses are unsecured, non-interest bearing and do not have set repayment terms. The advances of $5,874,620 from Perfco Investments Ltd. are unsecured and bear interest at 10% per annum.

9 Convertible debenture

In June 2009, the Company issued a $15,000,000 convertible debenture (the 'Debenture") to Perfco Investments Ltd., a corporate shareholder owned by the Company's Chairman and CEO. Between June and November 2009 the Company was advanced $10,000,000 under this debenture. On December 31, 2009, the $10,000,000 principal outstanding on the Debenture was converted into 10,000,000 Common shares and 10,000,000 share purchase warrants to acquire common shares for $1.00 per Common share. On January 5, 2010, 5,000,000 of the purchase warrants were exercised. On February 12, the Debenture was syndicated; and between February 12, 2010 and March 31, 2010, the remaining $5,000,000 available under the Debenture was advanced to the Company from the syndicated partner, and converted into 5,024,000 Common shares (including 24,000 for accrued interest) and 5,024,000 share purchase warrants to acquire common shares for $1.00 per share, which were subsequently exercised. On June 29, 2010 the remaining $164,203 of accrued interest under the Debenture was converted into 164,203 Common shares. Under the terms of the Debenture 164,203 share purchase warrants to acquire common shares for $1.00 per Common share were also to have been issued but Perfco Investments Ltd., the party entitled to receive the warrants, relinquished them to the Company for cancellation.



December 31 December 31
2010 2009
---------------------------
Convertible debenture - beginning of year 164,465 -
Advances 5,000,000 10,000,000
Equity component of convertible debenture (25,696) (1,216,409)
Accretion 25,696 68,850
Accrued interest 24,000 164,465
Repayments (262) -
Converted to common shares and warrants (5,188,203) (8,852,441)
---------------------------
Convertible debenture - end of year - 164,465
---------------------------
---------------------------
Equity component of convertible debenture
- beginning of year - -
Proceeds from issuance of convertible shares 25,696 1,216,409
Converted to common shares and warrants (25,696) (1,216,409)
---------------------------
Equity component of convertible debenture
- end of year - -
---------------------------
---------------------------

10 Long term Debt
December 31 December 31
2010 2009
---------------------------
Balance, beginning of year - -
Proceeds from long term debt issued 80,000,000 -
Financing fees (10,637,187)
Amortization of financing fees 1,367,987 -
---------------------------
Balance, end of year 70,730,800 -
---------------------------
---------------------------


On August 13, 2010 Tuscany entered into a financing agreement with Credit Suisse. Under the terms of the financing facility the Company received $80,000,000 in three drawdowns and has an option to increase the amount drawn under the facility to $125,000,000 on satisfying certain conditions. The term of the loan is five years with quarterly principal repayments commencing in February 2012. Interest on the loan is at 3-month LIBOR plus 6.5% and is payable quarterly. As at December 31, 2010 $714,685 of interest has been recorded in accounts payable and accrued liabilities.

Fees associated with the financing total $10,637,187 and include $2,575,879 in non-cash warrant consideration. As part of the financing the Company issued a total of 6,400,000 purchase warrants. The warrants expire 2.5 years from the date of grant and are exercisable at $1.50 per warrant. The fair value of the warrants has been calculated using the Black-Scholes option pricing model using the following assumptions.



1,600,000 warrants granted August 13, 2010:
Volatility 66%
Risk free rate 1.56%
Expected life 2.5 years
Expected dividend yield 0%


2,400,000 warrants granted September 10, 2010:
Volatility 66%
Risk free rate 1.58%
Expected life 2.5 years
Expected dividend yield 0%


2,400,000 warrants granted November 3, 2010:
Volatility 62%
Risk free rate 1.49%
Expected life 2.5 years
Expected dividend yield 0%


The Company has used comparative company volatilities. The fair value associated with the warrants issued has been recognised as a financing fee and presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan. For the period ended December 31, 2010, US$1,367,987 was amortized (2009 - $nil).

This credit facility is not subject to financial covenants until the first quarter of 2011.

Principal repayments on the loan amount are required to be made as follows:



To December 31,

------------
US$
------------
2010 -
2011 -
2012 21,333,333
2013 21,333,333
2014 21,333,333
2015 16,000,001
------------
80,000,000
------------
------------


11 Share Capital



Authorized

Unlimited - Common voting shares
Unlimited - Preferred shares, issuable in series,
with rights and privileges to be determined
at the time of issue



Issued and Outstanding
Number Amount
of shares $
--------------------------
Common shares
December 31, 2008 25,150,000 4,660,680
Shares issued for cash (note b) 11,135,000 11,135,000
Shares issued for non-cash consideration (note c) 100,000 100,000
Units issued for cash 20,615,000 20,615,000
Units issued for non-cash consideration (note c) 6,199,719 6,199,719
Units issued on conversion of convertible debenture
(note 9) 10,000,000 10,068,850
Value allocated to warrants - (11,761,720)
Value allocation from exercised warrants - 3,233,138
Share issuance costs - (1,094,810)
Non-cash issuance costs - broker warrants - (345,864)
--------------------------
December 31, 2009 73,199,719 42,809,993
--------------------------
Units issued for non-cash consideration (note c) 4,631,386 6,947,079
Units issued on conversion of convertible debenture
(note 9) 5,024,000 5,049,696
Shares issued for cash (note b) 66,561,804 78,658,305
Shares issued on conversion of convertible debenture
(note 9) 164,203 164,203
Shares issued on acquisition (note 6) 598,902 64,230
Shares issued on conversion of special warrants
(note d) 42,269,501 59,475,408
Shares issued on long-term investment (note 5) 2,398,320 2,965,043
Value allocated to warrants - (15,402,298)
Value allocation from exercised warrants - 12,122,473
Share issuance costs - (3,155,770)
Transaction costs (Note 6) - (219,844)
--------------------------
December 31, 2010 194,847,835 189,478,515
--------------------------
--------------------------


Share Transactions

a) At various times during 2009 and 2010 the Company issued units in return for cash. The units consisted of one Common share and a fixed number of share purchase warrants at a fixed exercise price with a fixed expiry date. The number of share purchase warrants ranged from one-half to one, the exercise price ranged from $1.00 - $1.75 and the expiry dates ranged from 12 to 36 months from the date of issuance.

b) On October 29, 2009, the Company granted existing Warrant holders the granting of New Warrants as consideration for the early exercise of existing warrants. In the event a Warrant holder exercises all, but not less than all, of its existing Warrants prior to February 16, 2010, the Company, as consideration for such exercise, will issue to each such Warrant holder, in addition to the Common shares of the Company issuable on exercise of the Warrants, and for no additional consideration, one New Warrant for each four Warrants exercised. Each New Warrant will entitle the holder thereof to acquire a common share for $1.50.

For the year ended December 31, 2009, shares issued for cash includes $10,985,000 of proceeds from the exercise of warrants subject to the offer noted above, resulting in the granting of 2,746,250 share purchase warrants.

For the year ended December 31, 2010, shares issued for cash includes $9,964,720 of proceeds from the exercise of warrants subject to the offer noted above, resulting in the granting of 2,491,180 share purchase warrants.

c) On April 24, 2009, the company issued 6,199,719 units at $1.00 per unit as consideration for the acquisition of drilling equipment with a fair value of $6,199,719. Each unit consists of one Common share and one share purchase Warrant to acquire a Common share for $1.00 which expired 12 months from the date of issue.

On April 24, 2009 the Company issued 100,000 Common shares at $1.00 per share as consideration for past services. Of the $100,000 in fair value of Common shares issued, $75,000 has been recognized as compensation expense in the period and $25,000 has been included in property and equipment.

On January 21, 2010, the Company entered into an agreement to purchase $4,575,383 of tubular equipment. Under the terms of the agreement, Tuscany issued 1,500,000 units at $1.50 per unit, whereby each unit is comprised on one Common share of the Company and 1/2 warrant to acquire Common shares of the Company where each full warrant is exercisable for one Common share at an exercise price of $1.75 and which expire on August 11, 2011.

On February 2, 2010 the Company entered into an agreement to purchase one Gardner Denver 1100E drilling rig for $10,500,000. Under the terms of the agreement, Tuscany issued 1,000,000 units at $1.50 per unit, whereby each unit is comprised on one Common share of the Company and 1/2 warrant to acquire Common shares of the Company where each full warrant is exercisable for one Common share at an exercise price of $1.75 for a period of 18 months from the date grant.

On March 16, 2010, in connection with a non-brokered private placement, the Company issued 131,386 units at $1.50 per unit as consideration for the acquisition of drilling equipment with a fair value of $197,079. Each unit consists of one Common share and one-half share purchase warrant to acquire Common shares of the Company where each full warrant is exercisable for one Common share at an exercise price of $1.75 with an expiry date of 18 months from the date of grant.

On May 4, 2010, the Company issued 2,000,000 Common shares and 1,000,000 share purchase warrants to acquire Common shares for $1.75 per Common share pursuant to an agreement dated December 29, 2009 to acquire a 1500 HP drilling rig.

d) On January 31, 2010, the Company entered into a definitive agreement with Cheq-IT Ltd. whereby the Company, under a plan of arrangement (the "Arrangement"), would acquire all of the issued and outstanding shares of Cheq-IT on the basis of 0.0265 of a Common share of Tuscany, amounting to 598,902 Common shares of Tuscany, for each Cheq-IT Common share (see Note 6). In conjunction with the Arrangement, the Company applied to have its Common shares listed for trading on the facilities of the Toronto Stock Exchange. The Arrangement closed on April 16, 2010, the date the Company's application for listing and trading on the Toronto Stock Exchange was approved, at which time all issued and outstanding special warrants were converted for units of the Company, resulting in the issue of 42,269,501 Common shares and 21,134,750 share purchase warrants to acquire common shares for $1.75 per Common share with an expiry date of 18 months from the date of grant.

e) The warrant component of unit share issuances was valued using the Black-Scholes model with the following assumptions:



Volatility 53% - 80% (2009: 72% - 80%)
Risk free rate 0.56% - 1.67% (2009: 0.44% - 2.05%)
Expected life 1.0 year - 2.5 years (2009: 1.0 year)
Expected dividend yield 0% (2009: 0%)


f) As at December 31, 2009 Cheq-IT Ltd. had 22,600,000 common shares outstanding (2008 - 23,100,000) representing a total equity value of CDN $1,834,517 (2008 - $1,859,517).

Stock Option Plan

The Company may grant options to its employees for up to 14,871,223 Common shares. The option's exercise price equals the average of the market price of the Company's Common shares for the five business days immediately preceding the grant. In general stock options granted expire five years from the date of grant and vest evenly over a period of three years, with the first vesting occurring one year from the date of grant. Stock options granted to independent directors vest evenly over a two year period, with the first vesting occurring on the date of grant. Stock based compensation expense is recognized using the fair value when stock options are granted and is amortized over the options' vesting period. For options granted during the year ended December 31, 2010, the Company used the Black-Scholes option pricing model with the following assumptions:



Volatility 47.9%-62.29%
Risk free rate 2.01%-2.65%
Expected life 5 years
Expected dividend yield 0%


The fair value of options issued during the year ended December 31, 2010 was $6,150,930. A summary of the Company's stock option plan as at December 31, 2010 and the changes in the plan for the year ended December 31, 2010 is presented below. Prior to April 2010 the Company did not have a stock option plan.




Weighted Average
Number of Options Exercise Price($Cdn)
--------------------------------------------
Outstanding - beginning of year - -
Granted 8,550,000 1.39
Forfeited (250,000) 1.16
--------------------------------------------
Outstanding - end of year 8,300,000 1.40
--------------------------------------------
--------------------------------------------
Exercisable at December 31, 2010 366,667 -
--------------------------------------------
--------------------------------------------

Average Remaining Life
Exercise Price ($Cdn) Options Outstanding (in years)
----------------------------------------------------------------------------
$0.96 500,000 4.59
$1.00 100,000 4.63
$1.20 100,000 4.75
$1.26 700,000 4.47
$1.48 6,900,000 4.88
--------------------------------------------
--------------------------------------------
8,300,000 4.82
--------------------------------------------
--------------------------------------------



Contributed Surplus
2010
----------
Balance - beginning of year -
Value of expired warrants 1,795,727
Stock based compensation 854,005
----------
Balance - end of year 2,649,732
----------
----------


Per Share Amounts

Loss per share is calculated by dividing net loss by the weighted average number of Common shares outstanding during the period. Diluted loss per share is calculated using the treasury stock method, which assumes that all in-the-money stock options and share purchase warrants are exercised and the assumed proceeds are used to purchase the Company's Common shares at the average market price during the period. The weighted average number of common shares outstanding for the years ended December 31, 2010 and 2009 are as follows:



December 31
-------------------------
2010 2009
-------------------------
Basic 157,253,124 148,113,325
Diluted 157,438,348 148,113,325



The diluted weighted average number of common shares outstanding as at December 31, 2010 excludes 32,066,623 share purchase warrants and 6,900,000 stock options as they are anti-dilutive. The diluted weighted average number of common shares outstanding as at December 31, 2009 excludes 34,388,969 share purchase warrants as they are anti-dilutive.



12 Warrants
Weighted average
Number of warrants exercise price
---------------------------------------
December 31, 2008 5,140,000 1.00
Granted 40,233,969 1.03
Exercised (10,985,000) 1.00
---------------------------------------
December 31, 2009 34,388,969 1.04
Granted 37,365,623 1.59
Exercised (33,394,571) 1.00
Expired (6,293,398) 1.23
---------------------------------------
December 31, 2010 32,066,623 1.68
---------------------------------------
---------------------------------------


The following is a summary of the outstanding warrants as of
December 31, 2010.

Estimated grant
Number of Exercise price date fair value
warrants $ $ Expiry date
----------------------------------------------------------------------------
2,216,180 1.50 1,042,791 February 16, 2011
750,000 1.75 373,602 August 11, 2011
500,000 1.75 249,068 August 14, 2011
65,693 1.75 32,725 September 15, 2011
21,134,751 1.75 9,659,664 October 15, 2011
1,000,000 1.75 458,000 November 19, 2011
1,600,000 1.50 564,917 February 13, 2013
2,400,000 1.50 746,542 March 10, 2013
2,400,000 1.50 1,264,418 May 3, 2013
---------------------------------------------------------
32,066,624 1.68 14,391,727
---------------------------------------------------------
---------------------------------------------------------


13 Special warrants

On February 12, 2010, the Company completed a brokered and non-brokered private placement in which a total of 42,269,501 special warrants were sold for gross proceeds of $63,404,252. Each special warrant was convertible for units of the Company upon approval of the Company's application for listing and trading on the Toronto Stock Exchange. Each special warrant entitled the holder to one Common share and 1/2 warrant to acquire common shares of the Company, where each full warrant is exercisable for one Common share at an exercise price of $1.75, with an expiry date of 18 months from the date of grant.

The Company's application for listing and trading on the Toronto Stock Exchange was approved on April 16, 2010, at which time all issued and outstanding special warrants were converted for units of the Company, resulting in the issue of 42,269,501 Common shares and 21,134,750 share purchase warrants.

14 Income taxes

The tax effect of temporary differences that give rise to significant components of the deferred income tax liabilities and deferred income tax assets are presented below:



December 31, 2010 December 31, 2009
-------------------------------------
Deferred income tax assets:
Property, plant and equipment 3,391,836 -
Loss carry forwards 11,551,977 566,457
Financing fees 938,580 279,210
Capital losses 333,080 -
Working capital 1,151,054 -
-------------------------------------
17,366,527 845,667
Valuation allowance (17,033,037) (845,667)
-------------------------------------
Total deferred income tax assets 333,490 -
-------------------------------------
-------------------------------------

December 31, 2010 December 31, 2009
-------------------------------------
Deferred income tax liabilities:
Long term debt 327,644 -
Other 5,846 -
-------------------------------------
Total deferred income tax liabilities 333,490 -
-------------------------------------
Net deferred income tax liabilities - -
-------------------------------------
-------------------------------------


The classification of net deferred income tax liabilities recorded on the balance sheets is as follows:



December 31, 2010 December 31, 2009
-------------------------------------
Deferred income tax liabilities:
Current - -
Long-term - -
- -
-------------------------------------
-------------------------------------


As at December 31, 2010, the Company had accumulated tax losses of approximately $15,088,000 in Canada, $22,285,000 in Columbia, $1,229,000 in Brazil and $348,000 in Guyana that can be carried forward and applied against future taxable income. Of the total losses, $2,600,000 will expire at the end of 2029 and $12,500,000 will expire at the end of 2030, and substantially all have been offset by a valuation allowance due to the uncertainty of their realization.



December 31, 2010 December 31, 2009
-------------------------------------
Loss before income taxes (19,305,061) (2,488,653)
Income tax rate 28% 32%
-------------------------------------
Expected income tax expense (5,405,417) (796,369)
Ecuador/Columbia minimum tax 250,043 -
Non-deductible stock based compensation 239,122 -
Statutory and effective tax rate differences 26,900 -
Non-deductible transaction costs - 88,588
Change in valuation allowance 5,055,891 707,781
Other permanent differences 250,843 -
-------------------------------------
417,382 -
-------------------------------------
-------------------------------------



15 Financial instruments

The Company's financial instruments included in the balance sheet are comprised of cash, accounts receivable, accounts payable and accrued liabilities, due to shareholders, a convertible debenture and long-term debt.

a) Fair values

The fair value of a financial instrument is the estimated amount that the Company would receive or pay to settle a financial asset or liability as at the reporting date. The fair values of the Company's financial instruments do not differ significantly from their carrying values.

The Company has estimated the fair value amounts using appropriate valuation methodologies and information available to management as of the valuation dates. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it was practicable to estimate that value:

- Cash and cash equivalents, restricted cash, accounts receivable, share subscriptions receivable, accounts payable and accrued liabilities and amounts due to shareholders - The carrying amounts approximate fair value because of the short maturity of these instruments.

- Long-term debt - The fair value of the long-term debt is not based on observable market data and is a level 3 in the fair value hierarchy.

b) Credit risk

The Company is exposed to credit risk resulting from the possibility that parties may default on their financial obligations. The maximum exposure of the Company to credit risk at December 31, 2010 is the total of cash, restricted cash and accounts receivable of $58,969,540. The Company's credit risk exposure on cash is minimized substantially by ensuring that cash is held with credible financial institutions. The Company's accounts receivable are related to customers with signed contracts and there are no receivables considered uncollectible. The accounts receivable are not considered by management to be exposed to significant credit risk.

As at December 31, 2010, the Company had accounts receivable of $22,335 (2009 - nil) that were greater than 90 days for which no provision had been established, as the Company believes that this amount will be collected.

Interest rate risk

The Company is exposed to interest rate price risk to the extent that the long term debt has a variable interest rate component. Changes in market interest rates affect the interest rate on this financial instrument.

If the long term debt is held to maturity, a 1% increase or decrease in the interest rate as of December 31, 2010 would result in an estimated change in operations and comprehensive loss of $2,900,000 (2009 - $6,261).

c) Currency rate risk

Currency rate risk is the risk that the fair value of, or future cash flows from, the Company's financial instruments will fluctuate due to changes in foreign exchange rates. The Company is exposed to fluctuations in the following currencies, Colombian pesos (COP), Canadian dollars (CDN $), Brazilian Real (BRL) and Guyanese Dollars (GYD).

The Company is exposed to currency rate risk to the extent that CDN $3,574 of cheques issued in excess of cash and CDN $960,957 of accounts payable and accrued liabilities are denominated in Canadian dollars. A 10% increase or decrease in the value of the United States dollar against the Canadian dollar as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $88,160 (2009 - $131,808).

The Company is also exposed to currency rate risk to the extent that COP 1,796,813,509 of cash, COP 7,307,056,164 of accounts receivable and COP 9,471,445,504 of accounts payable and accrued liabilities is denominated in Colombian pesos. A 10% increase or decrease in the value of the United States dollar against the Colombian peso as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $17,459 ($22,339).

The Company is exposed to currency rate risk to the extent that BRL 1,240,089 of cash. A 10% increase or decrease in the value of the United States dollar against the Brazilian Real as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $67,660 (2009 - nil).

The Company is exposed to currency rate risk to the extent that GYD $1,548,501 of cash. A 10% increase or decrease in the value of the United States dollar against the Guyanese dollar as of December 31, 2010 would result in an estimated change in net loss and comprehensive loss of $714 (2009 - nil).

The Company does not currently hedge its foreign currency exposure.

d) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet a demand for cash or fund its obligations as they come due. Liquidity risk also includes the risk of the Company not being able to liquidate assets in a timely manner at a reasonable price. The Company meets its liquidity requirements by anticipating operating, investing and financing activities and ensuring there are enough funds to cover these activities through debt financing and the issuance of common shares. Accounts payable are due for payment in accordance with credit terms established by the Company's suppliers; generally between 30 and 90 days from receipt of invoice. The amount due to shareholders is not subject to repayment terms and the long term debt has a maturity date of August 13, 2015.

The following maturity analysis shows the remaining contractual maturities for the Company's financial liabilities:



2011 2012 2013 2014 2015
-------------------------------------------------------
Accounts payable and
accrued liabilities 14,332,388 - - - -
Income taxes payable 89,260
Due to Shareholders 6,553,646 - - - -
Interest payments on
long term debt 5,442,248 4,910,448 3,445,266 1,993,999 542,733
Principal payments on
long term debt - 21,333,333 21,333,333 21,333,333 16,000,001
-------------------------------------------------------
26,417,542 26,243,781 24,778,599 23,327,333 16,542,734
-------------------------------------------------------
-------------------------------------------------------


16 Related party transactions

During the year ended December 31, 2010, the Company entered into the following related party transactions:

a) The Company is party to a sublease agreement for its head office in Calgary, Alberta. The sublease is with a company whose parent has a director that is also a director of Tuscany. During the year ended December 31, 2010, Tuscany paid $CDN 119,706 in occupancy costs associated with this sublease.

b) On January 5, 2010 the Company issued 5,000,000 Common shares to Perfco Investments Ltd., a corporate shareholder owned by the Company's Chairman and CEO pursuant to the exercise of share purchase warrants.

c) On April 21, 2010 the Company issued 4,000,000 Common shares to a director of the Company pursuant to the exercise of share purchase warrants.

d) On June 29, 2010, the Company issued 164,203 Common shares to Perfco Investments Ltd, a corporate shareholder owned by the Company's Chairman and CEO.

e) On June 29, 2010, the Company issued 100,000 Common shares to a director of the Company pursuant to the exercise of share purchase warrants. Also on June 29, 2010, the Company issued 120,852 Common shares to Perfco Investments Ltd., a corporate shareholder owned by the Company's Chairman and CEO, pursuant to the exercise of share purchase warrants and in settlement of $120,852 of accrued salary and reimbursable expenses due to the Company's Chairman.

f) During the nine months ended December 31, 2010, the Company purchased $2,807,591 of drilling equipment from Loadcraft Industries, a company whose President, CEO and majority owner is also a director of Tuscany.

g) During the period from May 19, 2010 to December 31, 2010, the Company purchased $339,190 of drilling equipment from Warrior Rig Ltd., a company in which Tuscany obtained a significant influence ownership interest during the second quarter (see Note 5),

h) On February 1, 2010, Perfco Investments Ltd., a corporation owned by the Company's Chairman and CEO, advanced the Company $5,000,000. On July 30, 2010 Perfco Investments Ltd. advanced the Company an additional $874,620. The advances are unsecured, bear interest at 10% per annum.

i) During the fourth quarter of 2010, the Company recorded $573,500 of revenue from a company whose chairman is a director of Tuscany.

The above transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

17 Commitments

As part of the Company's acquisition of 40% of Warrior (see Note 5), the Company will make available to Warrior a $3,000,000 Cdn revolving loan, bearing interest at a rate of prime plus 4% per annum and having a term of three years.

At December 31, 2010, the Company had $4,441,145 to be paid pursuant to rig construction contracts related to the Company's two rigs that have been deployed into Brazil.

At December 31, 2010, the Company had contractual obligations related to office leases of $CDN 24,616 per month (approximately $USD 24,750) for its office in Calgary, Canada, 13,705,000 Colombian pesos per month (approximately $USD 7,160) for its office in Bogota, Colombia, $USD 3,340 per month for its office in Quito, Ecuador, 19,599 Brazilian real per month (approximately $USD 11,762) for its office in Rio de Janerio, Brazil and 19,734 Brazilian real (approximately $USD 11,843) for its office in Manaus, Brazil. The office lease in Calgary expires April 30, 2021, the office lease in Colombia expires February 28, 2013, the office lease in Ecuador expires August 14, 2012, the office lease in Rio de Janerio, Brazil expires May 31, 2012 and the office lease in Manaus, Brazil expires September 30, 2013.



18 Supplementary cash flow information

Changes in non-cash working capital

-----------------------
2010 2009
-----------------------
Operating activities
Accounts receivable (5,411,756) (1,936,263)
Inventory (860,682) -
Prepaid expenses and deposits (488,780) (509,704)
Foreign VAT recoverable 2,509,589 (82,756)
Accounts payable and accrued liabilities 11,729,315 1,227,680
-----------------------
7,477,686 (1,301,043)
-----------------------
-----------------------
Investing activities
Accounts payable and accrued liabilities (2,829,068) 3,990,640
Foreign VAT recoverable (5,362,530) (2,285,125)
-----------------------
(8,191,598) 1,705,515
-----------------------
-----------------------
Financing activities
Share subscriptions receivable 100,000 -
Accrued interest on convertible debenture - 164,465
Accrued interest on shareholder advance 514,823 -
-----------------------
614,823 164,465
-----------------------
-----------------------


19 Capital management

The Company's capital is comprised of convertible debenture and shareholders' equity less cash and cash equivalents and restricted cash. Management regularly monitors total capitalization to ensure flexibility in the pursuit of ongoing initiatives, while ensuring that shareholder returns are being maximized. The overall capitalization of the Company is outlined below:



December 31, 2010 December 31, 2009

Convertible debenture - 164,465
Long-term debt 70,730,800 -
Shareholders' equity 184,444,021 50,599,078
Cash and cash equivalents (47,965,303) (2,375,773)
Restricted cash (3,328,096) -
-------------------------------------
Total capitalization 203,881,422 48,387,770


Management is focused on several objectives while managing the capital structure of the Company. Specifically:

a) Ensuring Tuscany has the financing capacity to continue to execute on opportunities to increase overall market share through fleet construction programs and strategic acquisitions that add value for our shareholders;

b) Maintaining a strong capital base to ensure that investor and creditor confidence is secured;

c) Maintaining balance sheet strength and financial discipline, ensuring Tuscany's strategic objectives are met, while retaining an appropriate amount of leverage;

d) Ensuring the Company is in compliance with the terms of its credit facility by monitoring compliance with debt covenants; and

e) Safeguarding the entities ability to continue as a going concern, such that it provides returns for shareholders and benefits for other stakeholders.

20 Subsequent events

Subsequent to December 31, 2010 the company issued 2,179,930 Common shares in connection with the exercise of 2,179,930 warrants for gross proceeds of $3,269,895.

21 Comparative figures

Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

About Tuscany

Tuscany, a corporation headquartered in Calgary, Alberta, is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Ecuador, Brazil and Peru.

READER ADVISORY

Statements in this press release contain forward-looking information including, without limitation, components of cash flow and earnings. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Tuscany. These risks include, but are not limited to: the risks associated with the oil and gas industry, commodity prices and exchange rate changes, regulatory changes, successful exploitation and integration of technology, customer acceptance of technology, changes in drilling activity and general global economic, political and business conditions. Industry related risks could include, but are not limited to; operational risks, delays or changes in plans, health and safety risks and the uncertainty of estimates and projections of costs and expenses and access to capital. The risks outlined above should not be construed as exhaustive. The reader is cautioned not to place undue reliance on this forward-looking information. Tuscany does not undertake any obligation to update or revise any forward-looking statements except as expressly required by applicable securities laws.

Readers are further cautioned that the preparation of financial statements in accordance with Canadian generally accepted accounting principles ("GAAP") requires management to make certain judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Cash flow from operations and gross margin are not recognized measures under GAAP. Management of Tuscany believes that, in addition to net income, cash flow from operations is a useful supplemental measure as it demonstrates an ability to generate the cash necessary to repay debt or fund future growth through capital investment. Gross margin is a measure that provides shareholders and potential investors additional information regarding the profitability of the Company's rigs and is used by management to help assess rig performance. Readers are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with GAAP as an indication of Tuscany's performance. Tuscany's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to measures used by other companies. For these purposes, Tuscany defines cash flow from operations as cash provided by operations before changes in non-cash operating working capital.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Contact Information

  • Tuscany International Drilling Inc.
    Walter Dawson
    Chairman and CEO
    (403) 265-8258
    (403) 265-8793 (FAX)
    or
    Tuscany International Drilling Inc.
    Reg Greenslade
    President
    (403) 265-8258
    (403) 265-8793 (FAX)
    or
    Tuscany International Drilling Inc.
    Matt Moorman
    Executive Vice President Finance and Business Development
    (403) 265-8258
    (403) 265-8793 (FAX)
    or
    Tuscany International Drilling Inc.
    Bruce Moyes
    CFO
    (403) 265-8258
    (403) 265-8793 (FAX)
    or
    Tuscany International Drilling Inc.
    100, 522-11th Avenue S.W.
    Calgary, Alberta