Tuscany Announces Significantly Improved Results for the Year Ended December 31, 2010
19 April 2011 - 7:51PM
Marketwired Canada
Tuscany Energy Ltd. (TSX VENTURE:TUS) announces that it has filed its 2010 MD&A,
Financial Statements, and Annual Information Form ("AIF") on SEDAR. These are
also available on the Company's website at www.tuscanyenergy.com.
Tuscany is pleased to report significant increases in revenue, cash flow and
reserves for the year ended December 31, 2010.
Tuscany's revenue increased by 60% to $2.9 million, cash flow improved to
$450,000 from a working capital deficiency of $144,000, and proved and probable
reserves increased by 64% to $1.2 million barrels of oil equivalent, compared
with the prior year.
The Company anticipates improved results for 2011 as a result of two additional
heavy oil wells, at Evesham, being placed on production, at year end. In
addition, heavy oil prices have increased significantly in the past two months
and should result in higher average prices through the balance of the year.
Operationally the Company has laid the foundation for long term growth by
purchasing new heavy oil prospects at Macklin, Lloydminster, Winter and acreage
on 10 additional oil prospects in Alberta and Saskatchewan.
Focus on Oil
The primary reasons for Tuscany's focus on heavy oil development are:
- The rapid rebound in oil prices from early 2009, partly aided by OPEC oil
production curtailments,
- Increasing use of oil by Far Eastern economies, especially China,
- The variable uses and easy transportation of oil, making it the principal fuel
of choice, and
- The availability of inexpensive leases in Alberta and Saskatchewan, on
repeatable oil exploration prospects.
2010 Highlights
During 2010 Tuscany accomplished the following:
- Drilled and completed three successful Dina horizontal oil wells, and
completed the construction of a salt water disposal facility at Evesham,
Saskatchewan, significantly increasing production from the field while reducing
operating expenses.
- Raised $1.2 million through the issue of flow through shares, late in the year.
- Subsequent to the year end, Tuscany announced its intention to complete a
business combination with Sharon Energy Ltd, whereby Tuscany would acquire all
of the outstanding shares of Sharon by issuing 62.1 million Tuscany shares. At
December 31, 2010 Sharon reported working capital of $8.3 million, investments
valued at $4.0 million and proved and probable oil and gas reserves having a net
present value, using a 10% discount rate, of $2.6 million.
Tuscany completed 2010 in sound financial condition and with proved and probable
reserves of 1.2 MMBOE, 91% of which, on a BOE basis, were oil and NGL reserves.
The net present value of its reserves at December 31, 2010 was $22.9 million at
a 10% discount rate, 64% of which were proved reserves.
Exploration and Development
During 2011, Tuscany will continue to focus on developing its Dina oil property
at Evesham. Tuscany plans to increase the pace of investment and development at
Evesham with six new wells planned for 2011. Initial drilling is planned to
commence after spring break-up, as conditions permit. If the proposed business
combination with Sharon is completed, the pace of drilling will increase
significantly as the company plans to maximize its growth through the
development of this pool.
In order to maximize the amount of investment available for reinvestment in
exploration and development, Tuscany has agreed to share overhead expenditures
with two related companies, in effect, to manage the company within a joint
venture group with common goals. Tuscany is operating jointly with Diaz
Resources Ltd. and Sharon Energy Ltd. to identify and develop oil properties
along similar trends in Alberta and Saskatchewan.
Since the beginning of 2010 Tuscany participated in the acquisition of an
additional 15,110 gross acres (4,530 net acres) and the drilling and completion
of a vertical oil well in the Chambery, Saskatchewan area, through this joint
venture.
Financial
Tuscany's total revenue, net of royalties, increased by 60% in 2010 to $2.9
million from $1.7 million in 2009. The Company reported a loss of $875,000
compared with a loss of $263,000 a year earlier. Tuscany reported cash flow of
$450,000, a significant increase from the previous year, when it reported a cash
flow deficiency of $144,000.
Tuscany incurred $3.0 million of capital expenditures during the year. At
December 31, 2010 Tuscany had total net debt of $4.2 million. Subsequent to the
year end, the company negotiated an increase in its credit facility to $4.6
million.
To view the map associated with this press release, please see the following
link: http://media3.marketwire.com/docs/419tuscany_map.pdf
Business Outlook
Tuscany is focused on growth through oil exploration and development. With a
sound reserve base developed over the past two years, Tuscany believes it can
achieve significant growth over the next year by continuing to develop its
Evesham, Dina oil pool.
In order to accelerate the development of this pool and Tuscany's growth, the
Company has entered into the business combination agreement with Sharon Energy
Ltd. which will provide the combined companies with sufficient working capital
to develop the pool at a significantly accelerated pace.
Management would like to thank its shareholders for their continued support and
we look forward to a year of steady growth.
Summary of Financial and Operating Results
Year Ended
December 31
2010 2009
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Financial (thousands except per share amounts)
Revenue net of royalties $ 2,892 $ 1,732
Cash flow from operations $ 450 $ (144)
per share, diluted $ 0.01 $ (0.00)
Loss for the year $ (877) $ (263)
per share, diluted $ (0.02) $ (0.01)
Property, plant and equipment - additions $ 3,042 $ 1,286
Net Debt $ 4,204 $ 2,733
Total shares outstanding at year end 62,802 55,300
Operations
Production
Oil & NGL (Bbl/d) 117 90
Gas (Mcf/d) 164 180
BOE/d (6 Mcf = 1 Bbl) 144 120
Product Prices
Oil & NGL ($/Bbl) $ 61.70 $ 52.98
Gas ($/Mcf) $ 4.02 $ 4.08
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Reserves
(proved plus probable, future costs and prices)
Gas (MMcf) 600.7 685.2
Oil & NGL (MBbl) 1,050.2 626.7
BOE (Millions) 1,150.3 740.9
Present value, before tax discounted at 10%
(thousands) $ 22,876 $ 17,200
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(i) Non-GAAP Measure. Please see "Non-GAAP Measurements"
ADVISORY: Certain information regarding the Company in this News Release
including management's assessment of future plans and operations may constitute
forward-looking statements under applicable securities laws and necessarily
involve risks including, without limitation, risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks, competition
from other producers, inability to retain drilling rigs and other services,
capital expenditure costs, including drilling, completion and facilities costs,
unexpected decline rates in wells, wells not performing as expected, incorrect
assessment of the value of acquisitions, failure to realize the anticipated
benefits of acquisitions, delays resulting from or inability to obtain required
regulatory approvals and ability to access sufficient capital from internal and
external sources. As a consequence, actual results may differ materially from
those anticipated in the forward-looking statements. Readers are cautioned that
the foregoing list of factors is not exhausted. Additional information on these
and other factors that could effect the Company's operations and financial
results are included in reports on file with Canadian securities regulatory
authorities and may be accessed through the SEDAR website (www.sedar.com) and at
the Company's website (www.tuscanyenergy.com). Furthermore, the forward-looking
statements contained in this news release are made as at the date of this news
release and the Company does not undertake any obligation to update publicly or
to revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required by
applicable securities laws.
Where amounts are expressed on a barrel of oil equivalent (boe) basis, natural
gas volumes have been converted to barrels of oil at six thousand cubic feet
(mcf) per barrel (bbl). Boe figures may be misleading, particularly if used in
isolation. A boe conversion of six thousand cubic feet per barrel is based on an
energy equivalency conversion method primarily applicable at the burner tip and
does not represent a value equivalency at the wellhead. References to oil in
this discussion include crude oil and natural gas liquids (NGLs).
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