Tuscany Energy Ltd. announces financial and operating results for the year
ended December 31, 2009
CALGARY, April 23 /CNW/ - Tuscany Energy Ltd. (TSXV: "TUS") is pleased to report that the Company has made significant progress towards its objective of building a rapidly growing junior resource company.
During 2009 Tuscany accomplished the following:
- Drilled and completed the second horizontal Dina oil well at Evesham,
Saskatchewan, identifying 363,000 Bbls of proved and probable oil
reserves under less than 25% of Tuscany's prospective lands, with
possibly 30 additional locations.
- Raised $521,000 through the issue of 8.7 million treasury shares by
way of a rights offering.
- Completed the acquisition of Goldmark Minerals Ltd. through the issue
of 12.1 million shares. This transaction added approximately
$1.4 million of working capital to Tuscany.
- Subsequent to the year end, Tuscany completed the construction of a
water disposal system which significantly reduced the operating cost
in the area.
Tuscany completed 2009 in sound financial condition and with proved and probable reserves of 741 MBOE, 85% of which was oil and NGL. The net present value of its reserves at December 31, 2009 was over $17 million at a 10% discount rate, 64% of which were proved reserves (Net present value may not represent the fair value of the assets).
At December 31, 2009 Tuscany had total net debt of $2.7 million and anticipates a significant increase in production and cash flow for 2010.
Exploration and Development
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During 2010, Tuscany will focus on developing an inventory of oil prospects in Alberta and Saskatchewan. The Company's first goal is to develop a production and cash flow base from its Dina oil property at Evesham. Tuscany plans to commence the development drilling of infill horizontal wells at Evesham, after spring break-up, as conditions permit.
In addition to its development operations, Tuscany has agreed to operate jointly with two related companies, Diaz Resources Ltd. and Sharon Energy Ltd., to identify and develop oil properties along similar trends in Alberta and Saskatchewan.
In order to maximize the amount of investment dollars available for reinvestment in exploration and development, Tuscany has agreed to share overhead expenditures with the two companies, in effect, to manage the company within a joint venture group with common goals.
Financial
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During the first nine months of 2009, Tuscany's capital expenditure program was curtailed due to the need to preserve capital. Hence the Company's production levels declined significantly. In the fourth quarter, Tuscany completed a rights offering financing and the merger with Goldmark which together, resulted in approximately $2 million of new working capital for Tuscany. This allowed the Company to increase its capital expenditure program which resulted in positive production growth in Q1 2010.
Tuscany's revenue for 2009 declined to $1.7 million from $4.2 million in 2008. The Company reported a loss of $263,000 compared with earnings of $244,000 a year earlier and a cash flow deficiency of $144,000 compared with cash flow of $1.7 million in 2008.
New oil production, from Evesham, steadily improved oil prices and reduced overhead costs should reverse these losses in 2010 and provide growth for the Company.
Outlook
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Tuscany is very focused on growth through oil exploration and development. With a sound reserve base developed over the past year, Tuscany believes it can achieve significant growth over the next year. Oil prices should remain high as world economies are beginning to show signs of recovery.
The Company's Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2009 may be obtained at the company's website at www.tuscanyenergy.com and at www.sedar.com.
The following is a summary of Financial and Operating Results:
Summary of Financial and Operating Results
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Year ended December 31, 2009 2008
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Financial
Total revenue $ 1,731,707 $ 4,263,605
Cash flow from (used in) operations (144,397) 1,717,012
per share, diluted (0.00) 0.05
Earnings (loss) for the period (263,218) 244,246
per share, diluted (0.01) 0.01
Property, plant and equipment
- net additions 1,276,709 1,621,915
Net Debt 2,733,251 1,910,180
Total shares outstanding at period end 55,299,825 36,550,836
Operations
Production
Gas (Mcf/d) 180 398
Oil (Bopd) 89 118
NGL (Bopd) 1 -
BOEd (6 Mcf equals 1 Bbl) 120 184
Product Prices
Gas ($/Mcf) $ 4.08 $ 8.42
Oil ($/Bbl) $ 52.98 $ 83.86
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Reserves (proved plus probable, future
costs and prices)
Gas (Mmcf) 685.2 816.0
Oil (MBbl) 626.7 496.0
BOE (thousands) 740.9 632.0
Present value, before tax
discounted at 10% $ 17,200,000 $ 10,900,000
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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).
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information: John G. F. McLeod, President, TUSCANY ENERGY LTD., Telephone: (403) 264-2398, Fax: (403) 264-2399; Robert W. Lamond, Chairman, TUSCANY ENERGY LTD., Telephone: (403) 269-9889, Fax: (403) 264-2399; TSX Venture: TUS
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