Marksmen Resources Ltd.

Marksmen Resources Ltd.

August 31, 2009 16:29 ET

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

CALGARY, ALBERTA--(Marketwire - Aug. 31, 2009) - Marksmen Resources Ltd. ("the Company or Marksmen") (TSX VENTURE:MA) announces the Company's financial and operating results for the quarter ended June 30, 2009.


Quarter Ended Six Months Ended
Period Ended 30-Jun-09 30-Jun-08 30-Jun-09 30-Jun-08
Financial ($Cdn)
Oil and Gas Revenue $ 172,233 $ 642,612 $ 408,603 $ 1,111,257
Funds Flow from
Operations $ (180,832) $ 261,753 $ (317,854) $ 347,201
Per Share - Basic $ (0.00) $ 0.00 $ (0.01) $ 0.01
Net Income (Loss) $ (305,667) $ (371,622) $ (652,380) $ (623,826)
Per Share - Basic $ (0.01) $ (0.01) $ (0.01) $ (0.01)
Capital Expenditures and
Oil and Gas Operations $ 40,013 $ 119,200 $ 84,040 $ 474,745
Sale of Property $ 225,000 $ 18,000 $ 225,000 $ 1,022,904

Weighted Average Shares
Basic and Diluted 53,689,301 53,689,301 53,689,301 53,689,301


Average Daily Production
(boe per day) 78 105 83 102
Wells Drilled
Gross 0.00 0.00 0.00 1.00
Net 0.00 0.00 0.00 0.11

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 June 30, 2009 was 7,117 boe or an average of 78 boe per day. Lower production was partially effected by the sale of the Antler property and two shut in wells at Penhold. This compares to an average of 9,587 boe per day in the quarter ended June 30, 2008. Total production for the six months ended June 2009 was 14,936 boe or an average of 82.5 boe per day. This compares to an average of 102 boe per day and a total of 18,590 boe for the same period in 2008.

In June, two of Marksmen's natural gas wells at Penhold were shut in due to lack of compressor capacity at a third party gas plant. This resulted in a loss of production of approximately 18 boe per day. Current discussions with the plant owner indicate that the gas plant will have additional compressor capacity installed by mid September and we anticipate being back on production shortly thereafter.

Natural gas production represented 88% of total production and crude oil and liquids was 12% in the three months ended June 30, 2009. This compares to 13% crude oil and 87% of natural gas in the same period of 2008.

Oil and gas revenue for the quarter ended June 30, 2009 was $172,200 compared to $642,600 in the same quarter of 2008 resulting in a decrease of 72%. This was due primarily to significantly lower natural gas prices.

Operating expenses were $12.30 per boe including transportation expense in the three months ended June 30, 2009 compared to $10.87 per boe for the same period in 2008. This was an increase of $1.43 per boe or 13.2%.

Operating netbacks were $12.50 per boe in the second quarter of 2009 compared to $48.09 per boe in the same period in 2008 resulting in a decrease of $35.59 or 74%.

Cash-flows from operations were ($180,832) in the second quarter and ($317,854) for the six months ending June 30, 2008. This compares to $261,753 and $347,201 in the same periods in 2009.

Reduced revenues, netbacks and cash-flows are directly related to significantly lower prices for natural gas.

In June the Company completed the sale of one of its minor non-operated property as previously outlined in a news release dated June 24, 2009.

Also the company entered into an amended loan agreement with its debenture holders, extending the term from June 27, 2009 to December 31, 2009 as previously stated in a news release dated July 3, 2009.


The unprecedented changes in the global economy in the second half of 2008 continue to have a significant impact on businesses in the oil and gas industry and Marksmen is no exception.

West Texas Intermediate ("WTI") oil prices peaked in July of 2008 at over $145 USD per barrel and declined very sharply to close out the year in the $40 USD per barrel range. In the second quarter of 2009 the price of oil has improved with a high in March for WTI oil of $68 USD. Currently the price for WTI oil is in the $71 USD range.

Natural gas prices ("AECO") peaked in June of 2008 at over $10.50 CDN per mcf and closed out the year in the $6.15 CDN per mcf range. The prices at the end of the second quarter were in the $3.00 CDN per mcf range with current spot prices in the $2.25 CDN per mcf range.

With inventory storage levels for natural gas above the five year average and approaching full capacity in both the USA and Canada there appears to be little likelihood of prices improving in the very near term. Future natural gas commodity prices do indicate that prices are expected to recover during the peak usage months of winter with gas futures for the first quarter of 2010 averaging about $5.24 USD per mcf.

Marksmen is currently actively seeking merger opportunities or property divestment opportunities.

On behalf of the Board of Directors

Peter Malenica, President & CEO

This News Release may contain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein may be forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "proposed", "is expected", "budgets", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. This forward-looking information reflects the Company's current beliefs and is based on information currently available to the Corporation and on assumptions the Company believes are reasonable. These assumptions include, but are not limited to, the actual results of drilling and exploration being equivalent to or better than anticipated or historical results and future costs and expenses being based on historical costs and expenses, adjusted for inflation. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: the early stage development of the Corporation and its projects; general business, economic, competitive, political and social uncertainties; commodity prices; the actual results of current exploration and development or operational activities; competition; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the natural resources industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting the Corporation; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals. Although the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. The Corporation does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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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