CALGARY, ALBERTA -- (Marketwire) -- 03/08/13 -- Tuscany Energy Ltd. (TSX VENTURE: TUS) ("Tuscany" or the "Company") announces that it has filed its 2012 MD&A, Financial Statements and Annual Information Form on SEDAR. These are also available on the Company's website at www.tuscanyenergy.com.
For the year ended December 31, 2012, Tuscany reported significant production and revenue gains over the prior year, and exited the year with no debt.
The key focus for Tuscany during 2012 was to:
-- increase and optimize its heavy oil production, and-- maintain a positive working capital position.
Due to the weakness of heavy oil prices throughout the year, it was found prudent to focus the bulk of the Company's capital expenditures on upgrading its battery and water disposal facilities. As a result, the Company was able to increase its oil production level at low costs, while simultaneously lowering its future operating costs, due to reduced trucking.
During 2012, Tuscany drilled three horizontal heavy oil wells at its Macklin, Saskatchewan field. The Company now has a total of 19 (net 11.05) horizontal heavy oil wells producing from its key fields in Saskatchewan, with 12 wells at Evesham (7.2 net wells) and 7 wells at Macklin (3.85 net wells).
At the Evesham field, third quarter water disposal upgrading encompassed the deepening and re-completion of a vertical well for water disposal and the connection of this well by pipeline to existing infrastructure. The Macklin expansion in the third quarter included the tie in of an existing water disposal well to the main battery, by pipeline, and reconfiguration of the battery.
As a result of continuing weak heavy oil prices in 2013, we have deferred drilling operations until late spring . The Company plans to further increase its ability to handle water at the Evesham field which will result in increased fluid production and ultimately an increase in oil production early this year.
For the year ended December 31, 2012, revenues increased to $7.5 million compared with $6.1 million in the prior year. Cash flow from operations decreased to $2.7 million from $3.2 million in 2011, due to higher operating costs.
For the three month period, Tuscany's revenues net of royalties decreased to $1.7 million compared with $2.5 million in Q4 2011. This decrease was primarily due to a decline in oil prices compared with Q4 2011, and a reduction of processing fee revenues, partially offset by increased oil and gas production. Cash flow from operations for Q4 2012 decreased to $796,000 compared with $1.7 million in Q4 2011. The decrease in cash flow resulted primarily from a drop in heavy oil prices from $87.78 per barrel to $61.81 per barrel during the quarter.
Tuscany incurred $256,000 of net capital expenditures during the quarter compared with $3.0 million for Q4 2011. For the year ended December 31, 2012, net capital spending was $4.0 million compared with $7.8 million in the prior year. Capital expenditures for the three and twelve month periods ended December 31, 2012, were financed from cash flow from operations, proceeds from sales of Magnum Hunter shares, and non-core property sales.