Tuscany Energy Ltd. announces improved results and updates operations for the
three months ended March 31, 2010
CALGARY, May 31 /CNW/ - Tuscany Energy Ltd. (TSXV: "TUS") is pleased to report that its Saskatchewan horizontal drilling success is beginning to be reflected in its operational and financial results.
The Company reported significantly improved revenues and cash flows for the first quarter of 2010 compared with the same period in 2009. Tuscany's production increased from 89 BOE/d in Q4 2009 to 151 BOE/d as the second horizontal well at Evesham Saskatchewan was placed on production in the quarter.
As a result of this recent success, Tuscany plans to commence its third development well at Evesham within the next two weeks.
Financial
Revenue for the first three months of 2010 totaled $785,000 compared with $455,000 in the first quarter of 2009. The Company reported cash flow from operations of $231,000 for the quarter compared with $73,000 in the three months ended March 31, 2009. Tuscany reported a loss of $131,000 for the quarter versus a loss of $146,000 for the same period in 2009.
Capital expenditures for the three months ended March 31, 2010 totaled $433,000 compared with $86,000 during the same period in 2009.
At March 31, 2010 Tuscany had a net debt of $3.0 million.
Operations
During the last quarter of 2009, Tuscany drilled and cased its second Dina horizontal oil well 16-16, at Evesham. The well penetrated an excellent porous oil saturated sand section, was successfully completed in January 2010 and commenced producing at approximately 80 Bbls/d. The well is currently producing 65 Bbls/d with a much lower water cut than Tuscany's initial Dina well. A summary of current and cumulative production from the two wells to May 26, 2010 is as follows:
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Current Estimated
Evesham Dina Production Production Rate Cumulative Production
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Evesham 2-21 17 Bbls/d 12,570 Bbls
Evesham 16-16 65 Bbls/d 7,660 Bbls
In addition to the second oil well, Tuscany recompleted one of its Sparky wells as a Dina water disposal well. Production facilities and a pipeline from the oil battery were constructed and water disposal commenced in late March 2010. This facility will substantially reduce the Company's operating costs in this area and enhance the profitability of this project.
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Business Outlook
Oil prices remained very strong during Q1 2010 compared with the extreme weakness in the first half of 2009. Tuscany is primarily an oil producer and plans to continue the development of its heavy oil property at Evesham Saskatchewan, drilling a further four development wells on the property over the balance of 2010.
In addition, to maximize the company's exposure to new prospects while minimizing the overhead expenditures, the Company has entered into a joint venture with two related public companies, Diaz Resources Ltd and Sharon Energy Ltd. Tuscany will share overhead costs with these partners and participate for a 30% interest in all new prospects developed by the group.
To retain the continuity of the joint venture Robert Lamond, President and CEO of both Diaz and Sharon, has been appointed President and CEO of Tuscany. John McLeod will assume the responsibilities of Chief Operating Officer of Tuscany.
The Company, with a solid production base, excellent relatively low risk exploration and development projects and a smaller, compact management team is ideally suited to grow in the current economic environment.
Summary of Financial Operating Results
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Three Months Ended
March 31
2010 2009
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Financial
Revenue net of royalties $ 761,774 455,284
Cash flow from operations 230,826 72,873
per share, diluted - -
Loss for the period (131,047) (145,735)
per share, diluted - -
Property, plant and equipment - additions 432,832 245,436
Net Debt 2,971,029 3,035,434
Total shares outstanding at period end 55,091,825 34,767,836
Operations
Production
Gas (Mcf/d) 200 227
Oil (Bbl/d) 117 125
NGL (Bbls/d) 1 2
BOE/d (6 Mcf equals 1 Bbl) 151 164
Product Prices
Gas ($/Mcf) $ 4.90 $ 4.95
Oil ($/Bbl) $ 67.67 $ 41.59
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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: Robert W. Lamond, Chairman & CEO, TUSCANY ENERGY LTD., Telephone: (403) 269-9889, Fax: (403) 261-4072; John G.F. McLeod, Vice President & COO, TUSCANY ENERGY LTD., Telephone: (403) 264-2398, Fax: (403) 261-4072, TSX Venture: TUS
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