Marksmen Energy Inc.
TSX VENTURE : MAH

May 06, 2011 14:37 ET

Marksmen Energy Inc.: Corporate Update

CALGARY, ALBERTA--(Marketwire - May 6, 2011) - Marksmen Energy Inc. ("Marksmen" or the "Company") (TSX VENTURE:MAH) is pleased to announce that, further to the Company's press releases of October 10, 2010 and January 25, 2011, it has entered into a definitive agreement (the "Agreement") with MAR Oil Company ("MAR"), an arm's length private U.S. corporation, and anticipates drilling in the month of May.

Definitive Agreement

Pursuant to the terms of the Agreement, the Company and MAR plan to pursue a light oil development horizontal drilling opportunity in Ohio. In addition to the development drilling opportunity, the Agreement is structured to permit the Company and MAR to develop and explore future prospects in an area of Ohio where one of North America's first giant oil fields was discovered.

Under the terms of the Agreement, Marksmen has agreed to loan US$2,000,000 to MAR which will be used for the drilling of two horizontal wells and other related oil and gas activities. These funds will be repayable to Marksmen by MAR without interest or a fixed repayment schedule. In the event of cost over-runs, the Agreement provides that Marksmen will provide a backstop of up to US$250,000 which will be repaid to Marksmen in first priority over any other MAR debt obligations owed to shareholders. In addition, the Agreement provides that MAR will grant an option to Marksmen to purchase 9,900 common shares of MAR ("MAR Shares") in consideration for US$0.90 (the "Option"). The Option will vest sixty (60) days from the date of the Agreement and will expire on December 31, 2012. Upon exercise of the Option there will be a total of 20,000 MAR Shares outstanding, of which Marksmen will hold 49.5%. In addition, upon exercise of the Option, Marksmen, MAR and its shareholders will enter into a Unanimous Shareholders Agreement to govern their relationship. The Agreement is subject to the approval of the board of directors of Marksmen and the TSX Venture Exchange Inc. ("TSXV").

The Agreement also provides MAR with representation on the board of directors of the Company. Accordingly, Marksmen would like to welcome Mr. Wayne R. Toole to the board of directors of the Company. Mr. Toole is a Petroleum Engineer with 33 years of oil and gas experience. He founded MAR in 2000 and is currently the President and Director of MAR, which he has developed from inception. Mr. Toole was also a founder and President of Palliser Oil & Gas Corp., a private company from 2005 to 2008 and is currently a director of Palliser Oil & Gas Corp. Mr. Toole also founded Zorin Exploration Ltd. and was President and CEO from inception to the sale of the company (1998 to 2004). Mr. Toole also held various marketing and engineering positions with Pembina Resources Ltd., Dome Petroleum Ltd., Hudson Bay Oil and Gas Company, and Esso Resources Ltd.

MAR has assembled and developed a team in the engineering, geological and geophysical disciplines with extensive experience in the Appalachian Basin.

MAR plans to use the funds from Marksmen to horizontally drill on its Ohio mineral holdings in the Appalachian Basin, located in the northeast United States.

The current vertical wells on MAR's property are in a shallow target zone and are producing high quality (43 API) oil with low operating costs. The wells also produce liquids rich natural gas. Substantially greater oil recoveries and much higher productivity are expected from the proposed horizontal wells. MAR intends to drill horizontally through the known pay zone of one of its producing wells directly to the same pay zone in another of its producing wells, guided by its detailed 3D seismic covering the entire route.

MAR has completed surface lease preparation and has received its drilling permit from the State of Ohio. Additionally, MAR has also selected the sub-contractors to drill the wells, including an engineering firm to design the well, a local driller to drill the surface holes, a drilling contractor with a rig capable of the long horizontal legs, directional drillers, well-site geologists, oilfield suppliers and all required ancillary support.

Private Placement

The Company plans to complete a non-brokered private placement of up to 1,666,666 units (the "Units") of Marksmen at a price of $0.30 per Unit for aggregate gross proceeds of up to $500,000 (the "Offering"). The Units will be comprised of one (1) common share and one-half (1/2) of a share purchase warrant ("Warrant") of Marksmen. Each Warrant entitles the holder thereof to purchase one common share for $0.50 expiring 12 months from the date of the closing of the Offering.

Marksmen may pay a commission or finder's fee to qualified non-related parties of to up to 8% of the gross proceeds of the Offering (up to $40,000) and broker warrants (the "Broker Warrants") equal to up to 8% of the number of Units sold in the Offering (up to 133,333). Each Broker Warrant will entitle the holder to acquire one common share at a price of $0.30 per Broker Warrant for a period of up to 12 months from the date of issuance.

The proceeds of the Offering will be used for additional working capital, land acquisition, field equipment and potentially additional drilling pending the results of the two well horizontal light oil tests. Completion of the Offering is subject to regulatory approval including, but not limited to, the approval of the TSXV. The securities issued will be subject to a four month hold period from the date of the closing of the Offering.

Corporate Matters

Marksmen also announces that its board of directors intends to grant stock options to purchase 940,000 common shares of the Company to the Company's directors, officers and consultants, subject to regulatory and TSXV approval. The options will be issued at an exercise price of $0.30 per share or such other price in accordance with the policies of the TSXV, vest as to one-third (1/3) immediately and one-third (1/3) on each of the next two anniversaries of the grant date and have a five year term. Pursuant to applicable securities legislation, the options are subject to a four month hold period.

This news release may contain certain forward-looking information. All statements included herein, other than statements of historical fact, is forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Marksmen's disclosure documents on the SEDAR website at www.sedar.com. Marksmen does not undertake to update any forward-looking information except in accordance with applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Marksmen Energy Inc.
    Erich Boechler
    Chief Executive Officer
    (403) 265-7270
    jm@marksmen.ca