Marksmen Resources Ltd.
TSX VENTURE : MA

Marksmen Resources Ltd.

April 30, 2007 13:01 ET

Marksmen Resources Ltd.: Letter of Intent to Acquire Private Oil and Gas Company

CALGARY, ALBERTA--(CCNMatthews - April 30, 2007) - Marksmen Resources Ltd. (TSX VENTURE:MA) ("Marksmen") is pleased to announce it has entered into a Letter of Intent dated April 25, 2007 to acquire a private oil and gas company.

Under terms of the Letter of Intent, Marksmen will issue 11,731,661 common shares at a deemed price of $0.135 per share to acquire 100% of the outstanding shares of the private company. The private company had its independent reserve evaluator, Reliance Engineering Group Ltd., prepare a report and a supplemental report in accordance with NI 51-101 and COGE Handbook standards. The reserve report is dated March 14, 2007, with an effective date of December 31, 2006 and the supplemental report is dated April 27, 2007, with an effective date of December 31, 2007. According to these reports, the private company has proved plus probable gross reserves of 295,433 boe and is currently producing about 42 boe per day. Including the shares to be issued and assumption of the debt of the private company, the total consideration for the acquisition is approximately $3.0 million. As a result, Marksmen is acquiring the proved plus probable reserves at a value of $10.18 per boe. Upon completion of the acquisition, Marksmen's net production will be about 100 boe per day and Marksmen would have approximately 35,758,855 common shares outstanding (prior to the completion of any concurrent financing). The transaction is an arm's length transaction. Further information about the private company's reserves is as follows:



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Light &
Medium Oil Heavy Oil Natural Gas
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Gross Net Gross Net Gross Net
RESERVES CATEGORY (Mbbls) (Mbbls) (Mbbls) (Mbbls) (MMcf) (MMcf)
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PROVED
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Developed Producing 4.8 4.8 - - 464 425
Undeveloped - - - - 116 104
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TOTAL PROVED 4.8 4.8 - - 580 529
Probable - - - - 1,096 957
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TOTAL PROVED + PROBABLE 4.8 4.8 - - 1,676 1,486
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Natural Gas
Liquid Total BOE
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Gross Net Gross Net
RESERVES CATEGORY (Mbbls) (Mbbls) (BOE) (BOE)
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PROVED
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Developed Producing 0.5 0.5 82,633 76,133
Undeveloped - - 19,333 17,333
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TOTAL PROVED 0.5 0.5 101,967 93,467
Probable 10.8 7.6 193,467 167,100
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TOTAL PROVED + PROBABLE 11.3 8.1 295,433 260,567
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Pursuant to the terms of the Letter of Intent, it is anticipated that two directors of the private company will join four of the current five directors of Marksmen for a board totaling six members. In addition, upon completion of the acquisition, the private company will have no convertible securities outstanding. The Letter of Intent contemplates Marksmen granting 1,150,000 options with an exercise price of $0.24 per common share to certain directors of the private company who join the Marksmen board. No lump sum or termination payments will be made by Marksmen in respect of any employment or management contracts of either Marksmen or the private company in respect of the acquisition. There is no finder's fee payable in respect of the acquisition.

The acquisition is subject to a number of conditions including, but not limited to, completion of a concurrent $2,000,000 equity financing in Marksmen, the approval of the acquisition by the respective boards of directors of Marksmen and the private company, satisfactory completion of final due diligence and approval of regulatory authorities. The price of the $2,000,000 financing will be set by the market price of Marksmen's common shares when the financing is announced.

By completing this acquisition, Marksmen will acquire two core natural gas properties at Penhold and Alder Flats. Penhold contains both operated and non-operated conventional shallow sweet gas wells producing from the Edmonton Group while Alder Flats is comprised of operated shallow gas and Belly River oil and gas wells. Both areas benefit from year round access and both also contain significant CBM potential. Based on mapping and successful analogies, there is the potential to drill an additional 8 to 10 locations at Penhold. The Edmonton sands targeted by these wells are shallow, low-risk, and long-life reserves. The wells would be located within easy reach of infrastructure and sales lines. There is also the potential for Marksmen to expand its interests in the area. In addition, completion of the acquisition will allow Marksmen to make the transition from a working interest holder to an operator of oil and gas properties.

The private company has 28 shareholders and it is not anticipated that any one shareholder will hold 10% or more of the common shares of Marksmen after the acquisition. Six of the private company shareholders will receive approximately 75% of the 11,732,661 common shares issued on the acquisition.

In relation to Marksmen's operations, existing Belly River wells at Alder Flats are targeted for re-activation and re-completion after spring break-up.

Marksmen Resources Ltd. is a Calgary based oil and gas company engaged in the development, exploration and production of oil and gas reserves at Nottingham and Antler in southeast Saskatchewan and at Eastmont, Ferrier, Pine Creek, and Penhold in Alberta.

Boe figures may be misleading, particularly if used in isolation. Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to boe at a ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead

On behalf of the Board of Directors

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 Marksmen - 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.

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

Contact Information

  • Marksmen Resources Ltd.
    Peter Malenica
    President & CEO
    (403) 265-7270
    Email: info@marksmen.ca