Tuscany anticipates that the second half of 2015 will be challenging for the industry. Moreover, the current “beggar-thy-neighbor” approach in increasing oil production and resulting low oil prices should lead to major financial catastrophes in energy companies in the U.S. and Canada. The continued low commodity prices should result in management capitulation and major cuts in activity levels, personnel levels and a slump in service industry activity. This in turn will result in a significant reduction in supply. One can therefore anticipate an oil price turn-around within a reasonable period of time.
Until the bottom has been reached however, Tuscany’s plan is to keep all expenditures to a minimum and preserve its assets to permit the recommencement of their active development during the next period of higher oil prices.
Management believes the Company will also benefit indirectly from avoiding any negative repercussions resulting from the recent government change in Alberta, as almost 90% of the Company’s revenue comes from assets in Saskatchewan, which over the intermediate term, Management expects will represent a more certain and stable environment within which to incur substantial capital additions.