CALGARY, ALBERTA--(Marketwire - Aug. 16, 2012) - Tuscany Energy Ltd. (TSX VENTURE:TUS) ("Tuscany" or the "Company") announces that it has filed on SEDAR its Interim Financial Statements and MD&A for the six months ended June 30, 2012.
For the six months ended June 30, 2012, oil production increased to 368 BOEd from 167 BOEd for the same period in 2011. Revenues increased to $4.1 million from $1.9 million and cash flow from operations increased to $1.7 million from $665,000 in 2011. The Company also reported no debt at the end of the period.
In Q1 2012 Tuscany completed a three well drilling program at Macklin, Saskatchewan and placed the wells on production at the end of the quarter. The wells produced at an average rate of 75 bopd (41 bopd net to Tuscany) during Q2 2012 and have subsequently declined to 35 bopd (20 bopd net to Tuscany). This increased the number of horizontal heavy oil wells that the Company has drilled in Saskatchewan to 18 wells in total, with 12 wells at Evesham and 6 wells at Macklin.
During Q2 2012 Tuscany commenced a program to increase the water handling facilities and disposal capacity at both Evesham and Macklin. This included deepening and re-completing existing wells for increased disposal capacity and installing pipelines to handle increased volumes of water.
The Company plans to significantly increase the total fluid production from producing wells which we believe will increase total oil production.
Additional drilling in the area will be delayed until the increased water handling capacity has been completed.
For the quarter, Tuscany's revenues net of royalties increased 119% to $1.9 million compared with $861,000 in the prior year. For the six month period, revenues increased to $4.1 million from $1.9 compared with the same period in the prior year. Cash flow from operations for Q2 2012 increased 151% to $549,000 compared with $236,000 in Q2 2011. For the six month period, cash flow from operations increased to $1.7 million from $665,000.
Tuscany incurred $729,000 of capital expenditures during the quarter compared with $1.2 million for Q2 2011. For the sixth month period, capital spending was $3.1 million compared with $1.6 million for the same period in the prior year. Capital expenditures for the three and six month periods ended June 30, 2012, were financed from cash flow from operations and the proceeds from sales of Magnum Hunter shares.
At June 30, 2012, Tuscany had working capital of $461,000 compared with net debt of $447,000 at the beginning of the year. The Company also had access to a credit facility of $8.5 million, which was undrawn.
Tuscany's sale of its remaining 426,195 shares of Magnum Hunter during March and April 2012 resulted in a taxable gain on the disposition. The Company estimates a tax payable on the gains of $454,000.
Despite WTI oil prices that dipped close to $80 per barrel as recently as June, Tuscany expects WTI oil prices to remain above $90 per barrel through the balance of 2012, as demand for oil continues to be strong and distribution bottlenecks at Cushing, Oklahoma, appear to have been alleviated with the reversal of the Seaway Pipeline. The Seaway Pipeline now allows oil to be delivered from Cushing to the US Gulf Coast. Using current heavy oil discounts, this should result in the Company realizing average prices for its heavy oil production in excess of $60 per barrel for the remainder of the year. At this price the Company believes continued development of Tuscany's heavy oil projects have very positive economics.
Tuscany is focused on growth through oil exploration and development. Tuscany believes it can currently achieve growth by continuing to develop its Dina oil properties at Macklin and Evesham, from working capital and operating cash flows, while minimizing the reliance on bank debt to finance future capital expenditures.
Longer term growth will result from development of new production and reserves from Tuscany's additional heavy oil prospects, developed over the past three years.
Please refer to Tuscany's website at www.tuscanyenergy.com for more information on the Company's Evesham and Macklin fields and other prospects in Alberta and Saskatchewan.
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.