Tuscany has built a large inventory of horizontal oil locations

Transcription

1 TSXV: TUS June 2015

2 TSXV: TUS June Why Buy Tuscany Now? Tuscany has built a large inventory of horizontal oil locations 80 to 191 potential locations in eight areas (1) 34 of potential locations booked in reserve report Tuscany trades at a large discount to 10% NAV (1)(2) Almost 90% of Tuscany s revenue from assets in Saskatchewan World oil price recovery underway (1) (1) Management s estimate and forecast- see Advisories Forward looking statements (2) See page 16 for calculation on NAV

3 Tuscany s Oil Exposure Revenue distribution by product Revenue distribution by province Q TSXV: TUS June

4 Oil Price Collapse Collapse in world oil prices due to; Increase in US Drilling. Success of fracked horizontal tight shale wells. Large increase in North American production. Lack of OPEC cut-back in production. TSXV: TUS June

5 2015 Oil Price Recovery Oil price recovery due to; Large drop in US horizontal drilling. Bakken production peaking. US Oil production peaking. Increasing gasoline demand. TSXV: TUS June

6 US Oil Price vs Oil Rig Count TSXV: TUS June

7 US Oil Price vs Oil Rig Count TSXV: TUS June

8 US Oil Production vs Oil Rig Count TSXV: TUS June

9 Tuscany Overview Oil focussed asset base in Saskatchewan Large horizontal development well inventory Proven development areas - Evesham and Macklin locations offsetting producing wells Balance sheet integrity Strategic low cost land acquisitions to capitalize on geological model TSXV: TUS June

10 Capital Structure (millions unless otherwise indicated) Shares outstanding: 51.0 Fully diluted: 56.9 Management ownership: 34% Net debt (1) $ 7.2 Bank line $ 8.5 Market cap: (at $0.25/share) $ 12.8 Debt/Cash Flow: Q (1)(2) 3.5 X Debt/Cash Flow: Estimate Q (1)(2) (1) Non-GAAP measures see Tuscany s March31,2015 MD&A (2) Cash flow annualized (Cash flow for quarter x 4) TSXV: TUS June X

11 2014 Review Raised $ 5.3 million. Drilled 8 Horizontal Dina oil wells; Two at Evesham, Five at Macklin, and One at Rutland Drilled initial Horizontal Lloydminster well at Morgan. Drilled a Macklin disposal well TSXV: TUS June

12 Operating Highlights ($ thousands Unless otherwise indicated) Q Q Year 2014 Production (BOEd) Oil price ($/Bbl) Revenue 2,630 4,057 17,607 Revenue from oil 93% 91% 92% Cash Flow from operations (1) 509 1,835 8,077 Capital additions 903 1,419 11,525 Net debt (1) 7,211 7,074 6,763 (1) Non-GAAP measures see Tuscany s Q MD&A for definitions TSXV: TUS June

13 TSXV: TUS June Operating Results

14 TSXV: TUS June Operating Results

15 Growth in Reserves and NPV * * * *This does not represent fair market value of the assets or the future net revenue attributable thereto. TSXV: TUS June

16 Net Asset Value Proven Reserves (NPV 10%) (1)(7) Probable Reserves (NPV 10%) (1)(7) Undeveloped land ($50 per acre) (2) Abandonment liability (3) (1.0) (0.02) Net debt (4) (6.7) (0.13) Net Asset Value (basic) (5) Net Asset Value (fully diluted) (6) (1) Reserve values based on McDaniel reserve report as at December 31, 2014 (see Tuscany s AIF for year ended December 31, 2014) (2) Based on Management s estimate of $50 per acre (3) Additional liability not reflected in McDaniel reserve report as at December 31, 2014 (4) As at December 31, 2014 (5) Based on 51.0 million shares outstanding (6) Based on 5.8 million dilutive instruments with an average exercise price of $0.31 per share (7) This does not represent fair market value of the assets or the future net revenue attributable thereto TSXV: TUS June

17 Key Property Location Tuscany s oil assets are concentrated in the heavy oil prone corridor near Lloydminster TSXV: TUS June

18 Well Logs Showing Dina Oil Pay TSXV: TUS June

19 TSXV: TUS June Evesham Dina Oil Play

20 Key Development Factors Significant pay thickness increases oil reserves Large structures provide repeatable development locations Horizontal drilling enhances oil recovery Use of slotted liner reduces capital costs. No frac required Water disposal facilities reduce operating costs Use of natural gas for fuel reduces operating costs Oil prices > US $60 WTI (Cdn. $54) generates expected payouts of less than one year TSXV: TUS June

21 Evesham Dina Oil Pool Vertical wells (1) See Tuscany s AIF dated April 28, 2015 (2) See Advisories Drilling Locations (3) Type curve economics are based on Tuscany s experience in the area and estimates of well performance Tuscany - 60% Working interest (Husky 40%) Drilled 16 Horizontal wells to end of P Reserves MBOE (1) 8 proved and 3 probable locations booked (1) 27 potential locations (2) Production BOEd Q BOEd Type Curve Economics (3) Capex: $840,000 per well Reserve target: 75,000 BOE IP 90 : 80 BOEd TSXV: TUS June

22 Evesham Horizontal Drilling 2-21 Vertical Well Cum Oil = 2,753 bbls 97/15-16 Horizontal Well Cum Oil =47,302 bbls (to April 2015) Grd Level 750 Metres DINA SAND OIL WATER TSXV: TUS June

23 Evesham Dina Production Estimated Bbls to payout a well at $60 US WTI oil (1) * Shut-in, waiting on water disposal pipeline * * (1) Estimated payouts assumes a capital cost of $840,000, current foreign exchange rates, $17/Bbl operating costs and 3% royalty TSXV: TUS June

24 Macklin Dina Oil Pool Tuscany 100 % WI. Drilled 14 Dina oil wells to year end 2014 Three shut-in Dina oil wells 3D seismic and geological control. 2P Reserves ,590 BOE (1) 9 proved and 8 probable booked locations (1) 43 potential locations (2) Production BOEd Q BOEd Type curve Economics (3) Capex: $840,000 per well Reserve target: 75,000 BOE IP 90 : 100 BOEd TSXV: TUS June

25 Macklin Type Curve - Well Economics WTI$70US/Bbl Payout 0.6 years ROI 78% WTI $60US/Bbl ($54cdn at well) Payout < 1.0 year ROI 50% Type Wells generates an NPV10% of $2.3 million based on McDaniel January 1, 2015 price forecast WTI $50US/Bbl Payout 2 years ROI 21% Months on production Type curve based on the performance of all Tuscany s wells drilled in the pool to date. Economic assumptions: Drill & equip $840,000 Operating cost $12/Bbl, Royalty 3% US exchange $0.83 Cdn./$1.00 US TSXV: TUS June

26 TSXV: TUS June Winter Dina Location

27 Winter Dina 3D Seismic Type Log W3 TSXV: TUS June

28 TSXV: TUS June Winter Type Log

29 Macklin Sparky Play Sparky Pool Outline TSXV: TUS June

30 Maclin Sparky and Dina Pool Outlines Dina wells Sparky wells TSXV: TUS June

31 Macklin Sparky Logs 4-14 on prod; Aug, March 2015 cum: MSTB 2-22 on prod; June, March 2015 cum: 42.4 MSTB TSXV: TUS June

32 TOTAL DEVELOPMENT POTENTIAL Potential horizontal locations LOW CASE HIGH CASE EVESHAM (Dina) EVESHAM (Cummings) 2 4 MACKLIN (Dina) MACKLIN (Sparky) MORGAN (Lloydminster) PROVOST ( 2 Properties) 2 6 Lloydminster (Lloydminster) 6 6 WINTER (Dina) TOTAL * 19 Proven and 15 Probable locations are included in the McDaniel December 31, 2014 Reserve Report. See Tuscany s AIF dated April 28, (Please refer to the Drilling locations Advisories at the end of the presentation) TSXV: TUS June

33 Analyst Coverage Acumen Capital Financial Partners Limited Trevor Reynolds Industrial Alliance Securities Inc. Michael Charlton TSXV: TUS June

34 Advisories Forward looking statements This presentation contains a summary of managements assessment of historical financial and operating results and should be read together with the annual information form, annual report, Q interim report, MD&A and consolidated financial statements of the Company and other information and financial reports which have been filed on SEDAR from time to time. Certain of the statements contained herein including, without limitation, management's assessment of potential drilling locations, world oil price recovery, estimated debt to annualized quarterly cash flow, type curve economics, estimated Bbls to payout an Evesham well, future plans and operations, drilling plans and the timing thereof, plans to finance continuing exploration and development expenditures, expected effects of low oil prices, timing thereof and resulting plan and expected commodity prices may be forward looking statements. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue" and similar expressions may be used to identify these forward looking statements. These statements reflect Management's beliefs at the date of the report and are based on information available to Management at that time. Forward looking statements involve significant risk and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including, but not limited to, 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, 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 and the risk factors outlined under "Risk Factors" in the Company s Annual Information Form, annual report and elsewhere in information filed on SEDAR. 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 exhaustive. Additional information on these and other factors that could affect Tuscany's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( or at Tuscany's website ( Although the forward looking statements contained herein are based upon what Management believes to be reasonable assumptions Management cannot assure that actual results will be consistent with these forward looking statements. Investors should not place undue reliance on forward looking statements. These forward looking statements are made as of the date hereof and the Company assumes no obligation to update or review them to reflect new events or circumstances except as required by applicable securities laws. TSXV: TUS June

35 Advisories Drilling locations Disclosed herein are possible drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are derived from the McDaniel Report and are drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on prospective acreage and an assumption as to number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have any attributed reserves or resources. Of the possible development locations identified herein, 19 are proved locations, 15 are probable locations and are unbooked locations. Unbooked locations have been identified by management as an estimation of our future drilling activities based on an evaluation of applicable geological, seismic, engineering, production and reserves information. There is no certainty that we will drill all unbooked locations, and if drilled, there is no certainty that such locations will result in addition oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will also be dependent upon the availability of capital, regulatory approvals, seasonal restrictions, commodity prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relatively close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir therefor there is more uncertainty whether wells will be drilled in such locations and, if drilled, there is more uncertainty that such wells will result in additional reserves, resources or production. BOE Presentation The term barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in this report are derived by converting gas to oil in the ratio of six Mcf of gas to one Bbl of oil. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. TSXV: TUS June

36 For further information, please visit: TSXV: TUS Suite # th Avenue S.W. Calgary, AB T2P 2Y5 Tel: (403) Fax: (403)

37 Macklin TSXV: TUS June Tuscany s management team.

38 Macklin Macklin 93/ W3 Electric Driver for PC Pump. TSXV: TUS June

39 Macklin Slotted liner awaiting installation. TSXV: TUS June

40 Evesham TSXV: TUS June Evesham W3 Battery

41 Evesham Evesham Battery with Drilling Rig on 97/15-16 TSXV: TUS June

42 Macklin Macklin 2-33 Battery. TSXV: TUS June