Marksmen Resources Ltd.

Marksmen Resources Ltd.

August 30, 2010 14:33 ET

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

CALGARY, ALBERTA--(Marketwire - Aug. 30, 2010) - Marksmen Resources Ltd. (TSX VENTURE:MAH) ("the Company or Marksmen") announces the Company's financial and operating results for the quarter ended June 30, 2010. 


    Quarter Ended     Six Months Ended  
Period Ended 30-Jun-10   30-Jun-09     30-Jun-10   30-Jun-09  
Financial ($Cdn)                          
Oil and Gas Revenue $ 131,792   $ 172,233     $ 315,505   $ 408,603  
Funds Flow from Operations   ($277,239 )   ($180,832 )     ($471,987 )   ($317,854 )
  Per Share - Basic   ($0.01 )   ($0.00 )     ($0.01 )   ($0.01 )
Net Income (Loss)   ($420,180 )   ($305,667 )     ($770,029 )   ($652,380 )
  Per Share - Basic   ($0.01 )   ($0.01 )     ($0.01 )   ($0.01 )
Capital Expenditures and Disposals                          
  Oil and Gas Operations $ 4,899   $ 40,013     $ 16,321   $ 84,040  
  Sale of Property $ 0   $ 225,000     $ 0   $ 225,000  
Weighted Average Shares Outstanding                          
  Basic and Diluted   53,689,301     53,689,301       53,689,301     53,689,301  
Average Daily Production (boe per day)   65     78       67     83  
Wells Drilled                          
  Gross   0.00     0.00       0.00     0.00  
  Net   0.00     0.00       0.00     0.00  

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, 2010 was 5,887 boe or an average of 65 boe per day. This compares to a total of 7,117 boe or an average of 78 boe per day in the quarter ended June 30, 2009. Production was less than expected at Penhold due to compressor down time at both Penhold South and Penhold North.

Natural gas production represented 97% of total production and crude oil and liquids was 3% in the three months ended June 30, 2010. This compared to 12% crude oil and 88% of natural gas in the same period of 2009. 

During the second quarter of 2010 Marksmen did not participate in the drilling, completion or work-overs of any wells.

The total production for the six months ended June 30, 2010 was 12,148 boe or an average of 67 boe per day. This compares to an average of 102 boe per day and a total of 14,936 boe for the same period in 2009.

Oil and gas revenue for the quarter ended June 30, 2010 was $131,800 compared to $172,200 in the same quarter of 2009 resulting in a decrease of 24%. 

Operating expenses were $12.88 per boe including transportation expense in the three months ended June 30, 2010 and $12.33 for the first six months of the year. This compares to $12.30 in Q1 of 2009 and $12.65 for the first six months of 2009. 

Operating netbacks were $9.84 per boe in the second quarter of 2010 compared to $12.50 per boe in the same period in 2009. 

The Company reported a net loss of $420,180 or $0.01 per share for the three months ended June 30, 2010. Funds from operations were ($277,300) or $0.00 per share for the same period. The net loss for the six months ended June 30, 2009 was $305,700 or $0.01 per share. Funds from operations were ($180,832) or ($0.00) per share for the same period.

Subsequent Events

On August 11, 2010 the Company completed the transaction (the "Transaction") previously announced on May 10, 2010 whereby substantially all of the Company's assets, excluding its Alder Flats oil and gas property, were sold pursuant to an asset sale agreement dated July 13, 2010. In connection with the Transaction, a private Company ("PrivateCo") acquired and subsequently cancelled the Company's loan facility in the aggregate principal amount of $3,604,000 and accrued interest of $842,271, and the Company issued a promissory note in the amount of $366,000 and 13,333,333 units (the "Units") (on a pre-consolidated basis) to Private Co. Each Unit consists of one common share of the Company and one common share purchase warrant (the "Warrant"). Each Warrant entitles the holder to purchase one common share at a price of $0.15 per share (on a pre-consolidated basis) until August 11, 2013.

In conjunction with the closing of the Transaction, the Company has completed a private placement (the "Private Placement") issuing 58,156,888 subscription receipts (the "Subscription Receipts") for gross proceeds of $669,958. Each Subscription Receipt was deemed to be exchange, without payment of any additional consideration, for one tenth (1/10) of a post-consolidated common share of the Company and one tenth (1/10) of a post-consolidated Warrant upon the satisfaction of certain terms included in the Subscription Receipts, including the filing of the articles of amendment to reflect the consolidation (the "Consolidation") of the common shares and a name change (the "Name Change") from Marksmen Resources Ltd. to Marksmen Energy Inc. 

In conjunction with the closing of the Transaction, the Company consolidated the issued and outstanding common shares of the Company on the basis on one new common share ("New Common Share") for ten common shares. In addition, the exercise price and number of common shares of the Company issuable upon the exercise of outstanding options, warrants and other convertible securities was proportionately adjusted.

Following the completion of the Transaction, the Private Placement (including the conversion of the subscription receipts into common shares) and the Consolidation, the Company has 12,517,951 issued and outstanding New Common Shares on a post-consolidated basis. The approval of the Consolidation and the Name Change to Marksmen Energy Inc. (symbol MAH) occurred on August 23, 2010 upon which the Company's shares began trading.

The Company's new stock option plan was approved on August 11, 2010. On August 18, 2010, 1,050,000 stock options were issued to directors, officers and consultants of the Company at $0.20 per option, exercisable for five years.


As outlined in the Subsequent Events section Marksmen has concluded an Asset Sale Agreement whereby all assets except the Alder Flats properties have been sold, successfully concluded a private placement raising over $650,000, adopted a name change to Marksmen Energy Inc., consolidated the shares on a 10:1 basis, and added two new directors. The previous president and CEO has resigned and has been replaced with a new CEO and a new president.

Marksmen has made significant progress to allow it to explore other opportunities in the oil and gas industry.


Marksmen would like to thank Mr. Peter Malenica for his dedication and service and wishes him well in his future endeavors.

On behalf of the Board of Directors

Tom Rozak, President

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.

Contact Information