The following is for immediate release in Canada, May 18, 2012
TUSCANY DOUBLES OIL PRODUCTION, REVENUE AND CASH FLOW IN Q1 2012
Calgary, Alberta, May 18, 2012, Tuscany Energy Ltd. (TUS-TSXV) ("Tuscany" or the "Company") is pleased to report that for the three months ended March 31, 2012, it more than doubled oil production, revenues and cash flow from operations, as compared with the same period in the prior year.
Average production rates for the first quarter of 370 BOEd were the highest achieved by the Company, to date. Revenues increased to $2.2 million from $989,000 in Q1 2011. Ninety eight percent of these revenues were derived from oil production.
Cash flow increased to $1.1 million from $400,000 in Q1 2011. The Company ended the quarter with no debt.
The key to Tuscany's current growth is the success of the three recently drilled horizontal oil wells at Macklin, Saskatchewan. The three wells have been on production since late March 2012 and each well is currently producing heavy oil at rates between 90 bopd and 120 bopd. Based on the Company's interpretation of 3D seismic and well information, Tuscany anticipates that at least ten additional wells can be drilled in this pool. The next of the development wells should commence following breakup.
For the quarter, Tuscany's revenues net of royalties increased 126% to $2.2 million compared with $989,000 in the prior year. Cash flows from operations increased 168% to $1.2 million compared with $429,000 in Q1 2011. Net earnings increased to $86,000 compared with a net loss of $300,000 in Q1 2011.
Tuscany incurred $2.4 million of capital expenditures during the quarter compared with $397,000 for Q1 2011. Capital expenditures for the quarter were financed from cash flow from operations and the proceeds from sales of Magnum Hunter shares. At March 31, 2012, Tuscany had working capital of $549,000 compared with net debt of $447,000 at the beginning of the year.
Tuscany sold 326,195 shares of Magnum Hunter during the quarter for net proceeds of $2.2 million. Subsequent to the end of the quarter, Tuscany sold the remaining 100,000 shares of its investment for net proceeds of $595,700.
Tuscany expects WTI oil prices to remain above $90 per barrel through the balance of 2012, as demand for oil continues to be strong. Using current heavy oil discounts, this should result in the Company realizing average prices for its heavy oil production in excess of $65 per barrel for the remainder of the year. At this price the Company believes continued development of the Company'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.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Robert W. Lamond Donald K. Clark
President & CEO Vice President Operations & COO
TUSCANY ENERGY LTD. TUSCANY ENERGY LTD.
Telephone: (403) 269-9889 Telephone: (403) 269-9889
Fax: (403) 269-9890 Fax: (403) 269-9890
TSX Venture: TUS www.tuscanyenergy.com
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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