Marksmen Resources Ltd.

Marksmen Resources Ltd.

November 27, 2009 16:57 ET

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

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2009) - Marksmen Resources Ltd. ("the Company or Marksmen") announces the Company's financial and operating results for the quarter ended September 30, 2009.

Quarter Ended Nine Months Ended
Period Ended 30-Sep-09 30-Sep-08 30-Sep-09 30-Sep-08
Financial ($Cdn)
Oil and Gas Revenue $ 94,705 $ 507,046 $ 503,313 $ 1,618,303
Commodity Prices
Natural Gas $ 2.58 $ 7.34 $ 3.58 $ 8.30
Crude Oil $ 73.90 $ 121.40 $ 57.15 $ 111.64
Per boe $ 18.19 $52.66 $ 25.03 $ 57.61
Income from
Operations $ 26,282 $ 296,210 $ 240,107 $ 1,062,034
Funds Flow from
Operations $(238,802) $ 38,463 $(556,656) $ 385,654
Per Share - Basic $ (0.00) $ 0.00 $ 0.00 $ 0.01
Net Income
(Loss) $(306,090) $(150,234) $(958,470) $ (774,060)
Per Share - Basic $ (0.01) $ (0.00) $ (0.02) $ (0.01)
Capital Expenditures
and Disposals
Oil and Gas
Operations $ 111,804 $ 174,825 $ 195,364 $ 651,916
Sale of
Properties $ 0 $ 0 $(225,000) $(1,025,189)
$ 111,804 $ 174,825 $ (29,636) ($373,273)
Weighted Average
Shares Outstanding
Basic 53,689,301 53,689,301 53,689,301 53,689,301
Fully Diluted 57,239,301 57,439,301 57,439,301 57,439,301

Average Daily
Natural Gas
(mcf/d) 318 551 395 537
Oil (Bbl/day) 2 11 6 11
NGL (Bbl/day) 1 2 2 2
Combined (Boe/day) 56 105 74 103

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.

Income from operations is not a recognized measure under generally accepted accounting principles ('GAAP"). Income from operations is calculated by taking oil and gas revenue (net of royalties) less production and transportation costs. Management believes that in addition to net income (loss) and funds flow from operations, income (loss) from operations provides a meaningful measure of oil and gas operations.

Operating Results

Total production for the quarter ended September 30, 2009 was 5,173 boe or an average of 56 boe per day. This compares to a total of 9,629 boe or an average of 105 boe per day in the quarter ended September 30, 2008. The total production for the nine months ended September 30, 2009 was 20,109 boe or an average of 74 boe per day. This compares to an average of 103 boe per day and a total of 28,089 boe for the same period in 2008.

Production was lower in the third quarter due to the sale of the Antler property as of June 1, 2009 and the shut-in of two wells at Penhold South due to a third party plant restrictions. Originally, Penhold South's 18 boe per day was to be back on production in September but it was delayed waiting on permits. Recently we have been informed that all permits are in place an additional compression is now being installed and scheduled to be operational in the first half of December.

Natural gas production represented 96% of total production and crude oil was 4% in the three months ended September 30, 2009. This compared to 88 % crude oil and 12% of natural gas in the same period of 2008.

Capital expenditures during the third quarter were approximately $112,000 primarily for the tie-in of one well at Penhold North. This tie-in resulted in increased production of approximately 40 mcf per day but due to gathering system restrictions production was still constrained in the third quarter.

Oil and gas revenue was $ 94,705 or $18.19 per boe in the quarter ended September 30, 2009 compared to $507,046 or $ 52.66 per boe in the quarter ended September 30, 2008.

Operating expenses were $ 12.79 per boe in the three months ended September 30, 2009 compared to $14.21 per boe for the same period in 2008. Operating costs for the nine months ended September 30, 2009 were $11.66.

Operating netbacks were $ 4.81 per boe, for the three months ended September 30, 2009 compared to $30.76 per boe in the three months ended September 30, 2008. On a nine month basis the net back is $14.06.


The unprecedented changes in the global economy that began in the second half of 2008 continues to have a significant impact on businesses in the oil and gas industry and Marksmen is no exception with the third quarter of 2009 being the worst that Marksmen has experienced to date.

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 of 2009 were in the $3.00 CDN per mcf range with prices paid in the third quarter at under $2.60 CDN per mcf. Subsequently we have seen prices in the fourth quarter strengthen to the $3.75 to $4.00 CDN range. Currently the AECO twelve month strip for 2010 is approximately $5.35 per mcf.

Marksmen has a proportionately significant inventory of behind pipe production that requires tie-in and field optimization capital. The Company is unable to realize this potential due to a lack of cash-flow and working capital. In this regard, the Company has been actively pursuing new equity investment and or merger 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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