CALGARY, ALBERTA--(Marketwired - Apr 29, 2016) - Tuscany Energy Ltd. (TSX VENTURE:TUS). Tuscany is pleased to report on its financial and operating results for the year ended December 31, 2015.
Financial
Tuscany reported oil and natural gas sales of $10.1 million for the year ended December 31, 2015 compared with $17.6 million in 2014. The Company reported cash flow from operations of $1.2 million, compared to $8.1 million for 2014. Lower commodity prices resulted in Tuscany reporting a $2.5 million impairment of its Alberta oil and gas assets for the year, which contributed to a loss of $6.6 million for the year ended December 31, 2015.
Operations
Due to the low heavy oil prices, the Company deferred drilling activities and focused on well optimization and the expansion of infrastructure. This included the addition of higher volume pumps on a number of wells, as well as increasing the capacity of water disposal facilities at both the Macklin and Evesham properties.
In December 2015, the Company drilled a successful exploratory horizontal heavy oil well on a Dina prospect at Winter, Sask. The well was drilled to satisfy Tuscany's flow- through share commitments on shares issued in 2014. The Winter well is a new pool heavy oil discovery that may lead to six offset development wells. The new well produced an average of 67 Bopd in December 2015 and 85.4 Bopd in January 2016 before being shut-in in February until oil prices recover.
Tuscany was also active in abandoning wells in Alberta to improve the Company's Licensed Liability Rating ("LLR"). As a result Tuscany has restored its LLR to above one and recovered its $1.1 million of security from the Alberta Government.
Production
The Company reported average production of 789 BOEd for 2015, slightly higher than the 751 BOEd in the prior year, though lower than the 844 BOEd reported for the first half of 2015. Tuscany was able to maintain its production levels with limited drilling activity.
Strategic Review Process
On December 2, 2015 Tuscany announced that it had initiated a process to identify and examine strategic alternatives for the purpose of enhancing shareholder value. Such review process is ongoing and may include a number of alternatives including a corporate transaction, consisting of a sale or amalgamation of the Company, an asset sale, an issue of new equity or debt instruments or a combination of any of these.
Tuscany has engaged a financial advisor in connection with the comprehensive review and analysis of strategic alternatives.
At December 31, 2015, the Company had a production loan facility with a Canadian financial institution, with a lending limit of $8.5 million, repayable on demand. At December 31, 2015, Tuscany's working capital deficit was $9.1 million including $7.9 million drawn on the facility. The Company is not in compliance with the working capital covenant in its credit facility agreement. Tuscany has obtained a temporary waiver from its lending institution of the breach of its covenants in order to allow it to remedy the breach. The Company has committed to supply the lending institution with a plan to remedy the breach in a timely manner.