Marksmen Resources Ltd.
TSX VENTURE : MA

Marksmen Resources Ltd.

May 30, 2006 17:15 ET

Marksmen Resources Ltd.: First Quarter Financial and Operating Results and Update of Activities

CALGARY, ALBERTA--(CCNMatthews - May 30, 2006) - Marksmen Resources Ltd. ("the Company or Marksmen") (TSX VENTURE:MA) announces the Company's financial and operating results for the quarter ended March 31, 2006 and reports its progress on a number of corporate and operational fronts.

Highlights



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Quarter Ended (1)
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Period Ended (1) 31-Mar-06 30-Apr-05
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Financial ($Cdn)
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Oil and Gas Revenue $230,919 $192,328
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Funds Flow from Operations (2) $127,460 $ 39,278
Per Share - Basic $ 0.01 $ 0.00
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Net Income (loss) $(49,078) $(40,581)
Per Share - Basic $ (0.00) $ (0.00)
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Capital Expenditures
Oil and Gas $360,190 $ 82,218
Minerals 0 36,652
--------------------------
$360,190 $118,870
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Weighted Average Shares Outstanding
Basic 23,332,098 14,248,776
Fully Diluted 25,257,098 17,518,443
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Operations
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Average Daily Production (boe per day) 42 42
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Wells Drilled
Gross 1.00 0.00
Net 0.10 0.00
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(1) The Company changed its year end from October 31 to December 31 in
order to make the reporting period of the Company consistent with
other junior oil and gas issuers. In this regard, the quarter ended
March 31, 2006 is compared to the previous year quarter ended April
30, 2005.

(2) Funds from operations and funds from operations per share are not
recognized measures under Canadian generally accepted accounting
principles ("GAAP"). Funds from operations is calculated by taking
net income and adding back non-cash balances such as depletion,
depreciation and accretion, stock compensation expense, future
income taxes and unrealized financial derivative costs. Management
believes that in addition to net income, funds from operations is a
useful supplemental measure to analyze operating performance and
provide an indication of the results generated by the Company's
principal business activities.


Operating Results

Total production for the quarter ended March 31, 2006 was 3,756 boe or an average of 42 boe per day compared to 3,732 boe or an average of 42 boe per day in the quarter ended April 30, 2005. Crude oil production represented about 92% of total production in the three months ended March 31, 2006. The remaining 8% of production is attributable to solution gas that was produced in conjunction with some of the Company's oil wells in southeast Saskatchewan and natural gas production from the Company's Baldwinton well in west central Saskatchewan. At March 31, 2006, there were nine wells on production including seven wells at Nottingham in southeast Saskatchewan, the natural gas well at Baldwinton in west central Saskatchewan, and a light oil well at Innes West in southeast Saskatchewan.

Oil and gas revenue increased from $192,300 in the three months ended April 30, 2005 to $230,900 in the three months ended March 31, 2006. Operating expenses were $9.29 per boe in the three months ended March 31, 2006 compared to $6.26 per boe in the quarter ended April 30, 2005. Included in the operating expenses are a one time third party administrative charge covering the period May 2005 to December 2005. These charges added approximately $2.60 per boe to the first quarter operating expenses. Going forward, the Company expects unit operating costs to be less than the first quarter. Operating netbacks increased by $10.12 per boe or 24.9% from $40.73 in the three months ended April 30, 2005 to $50.85 in the three months ended March 31, 2006. Operating netbacks in the period primarily reflect stronger oil and gas prices.

During the quarter ended March 31, 2006, Marksmen drilled 1 (0.10 net) well. Oil and gas capital expenditures in the first quarter were $360,200 compared to $82,200 in the quarter ended April 30, 2005.

Update of Activities

During the first quarter, Marksmen participated in one well (0.10 net) at Eastmont. As announced on March 28, 2006, the Eastmont well was cased as a potential multi-zone gas producer from the Glauconite and Sunburst formations. A completion rig is expected to be on site in the next few days. Subject to successful completion results, the well will require a short tie-in to a third-party production facility and could to be on production by July 1st. Based on current log indicators and supported by positive test results a follow-up development well in the adjacent drilling spacing unit would be planned for early in Q3.

The first well at Marksmen's Ferrier project was cased as a potential Cardium Burnstick gas producer. Completion operations are expected to commence shortly. This well has the potential to nearly double the Company's current production. Subject to favorable test results, future plans would be to drill a follow-up development well in the adjoining section by mid August. Marksmen has a 14.4% working interest in the first Ferrier well and a 9.6% interest in the follow-up development well.

Marksmen was to participate in a second Ferrier well, an exploratory test, approximately 7 miles north of our recently drilled Cardium Burnstick gas discovery. However, the Operator has postponed the drilling of this well for an indefinite period. Marksmen has reallocated the capital to a new project at Pine Creek near Edson, Alberta more fully described below. Marksmen will again be afforded the opportunity to participate in the Ferrier exploratory well once a definite spud date has been selected.

During the first quarter, Marksmen was successful at two Crown land sales spending nearly $170,000 to acquire an average 15% working interest in 960 gross acres of land at Kaybob South in west central Alberta. This land directly offsets existing Bluesky oil production. Lease work is currently underway to drill two 2,100 metre Bluesky tests as soon as possible. Depending on the results of the initial two wells, there is the potential to drill up to two additional wells on these lands later in the year.

Subsequent to quarter end, Marksmen entered into two new joint ventures which saw the Pine Creek and Woodbend projects both in Alberta, added to the Company's growing inventory of drilling opportunities.

At Pine Creek, approximately 25 miles north of Edson Alberta, Marksmen entered into a farmin agreement under which the Company is committed to participate in a 2800 metre exploratory test targeting multi-zone gas potential in the high deliverability Nordegg, Bluesky, Gething, Notikewin and Viking formations. Under terms of the farmin, Marksmen will pay 25% of certain capital costs to earn 20% working interest in two sections. The play is defined by mapping and 2D and 3D seismic. Subject to surface access and rig availability, the anticipated spud date is on or before July 15th. If successful, the well will be tied-in to a third-party gathering system located approximately 1.2 miles away.

At Woodbend, Alberta, Marksmen participated in a 3D seismic program which earned the Company a 22% working interest in 640 acres of land. This section directly off-sets a well that was drilled in the early 1950's and encountered 30 feet of Ellerslie sand and flowed at a test rate of 2.0 mmcf/d. The well was not completed due the prevailing natural gas prices at that time. The Company is optimistic that it will be in a position to announce a drilling location at Woodbend in the very near future.

At Marksmen's Riviere project, a 3D seismic program was recently shot covering approximately 50% of the Company's lands. Once processed, it is anticipated that the seismic will better define the Ellerslie potential underlying the project lands.

And finally, a natural gas well that was drilled at Namao South near St. Albert, Alberta came on-stream in the last few days producing from the Ellerslie formation. It is expected that the initial production could stabilize in the range of 450 to 600 mcf/day or up to 25 boe per day net to Marksmen.

With working capital of nearly $2.6 million, an undrawn revolving credit facility of $650,000, and several new high impact projects to be drilled, Marksmen is well-positioned to realize significant growth in reserves, production, and cash flow in 2006.



On behalf of the Board of Directors

"Peter Malenica"

Peter Malenica
President & CEO


Statements in this press release may contain forward-looking statements. Except for statements of historical fact, all statements in this press release - including, without limitation, statements regarding future plans and objectives of the Company - are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

References herein to "boe" mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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