October 27, 2005 09:00 ET

Tuscany Successfully Closes on Saskatchewan Acquisition

CALGARY, ALBERTA--(CCNMatthews - Oct. 27, 2005) - Tuscany Energy Ltd. (TSX VENTURE:TUS) is pleased to announce that it has completed the acquisition of all of the petroleum and natural gas assets located in west-central Saskatchewan from a private oil and gas company for an aggregate purchase price of $5.97 million. The purchase price was satisfied with $4,980,000 in cash and the issuance of 2,200,000 common shares priced at $0.45 per share. The acquisition has an effective date of August 1, 2005.

The assets include 100 percent interest in 3.5 net sections with current production rates of approximately 190 net barrels of oil equivalent ("BOE") per day (6 Mcf of natural gas equals 1 BOE) consisting of approximately 105 Bbls per day of 16-degree API oil and 85 BOE of natural gas.

The acquisition was at arms length and there was no finder's fee related to this transaction. The cash portion of the acquisition was paid out of $2.5 million of bank financing, $1.5 million of bridge financing from Humboldt Capital Corporation and $1.0 million of working capital.

An independent evaluation of the properties conducted by McDaniel and Associates Consultants Ltd., effective as of September 1, 2005, assigned proved and probable reserves of 557 MBOE. The reserve estimates have been prepared and presented in accordance with the Canadian standards set out in the Canadian Oil and Gas Evaluation Handbook (COGEH) and National Instrument NI 51-101.

The acquisition parameters, based on the total purchase price of $5,970,000 and the reserves in the McDaniel and Associates Consultants Ltd. report are as follows:

- Proven reserves of 417 MBOE and proven plus probable reserves of 557 MBOE gross (reserves quoted are represented as gross company working interests);

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

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

The transaction is considered by management to be accretive to Tuscany's cash flow, reserves, production and net asset value, all on a per share basis.

Tuscany is pleased with the overall parameters of the transaction and considers the acquisition as a major step forward in establishing a platform for the future success and execution of its business plan. As previously announced on October 5, 2005, Tuscany has identified three additional drilling locations and is currently confirming arrangements with independent drilling contractors and further plans to shoot a 3D seismic program over the lands acquired under this transaction.

Boe Presentation - 6 Mcf of natural gas equals 1 BOE. The term barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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

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

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

Contact Information

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