Marksmen Resources Ltd.
TSX VENTURE : MA

Marksmen Resources Ltd.

November 23, 2006 16:02 ET

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

CALGARY, ALBERTA--(CCNMatthews - Nov. 23, 2006) - Marksmen Resources Ltd. ("the Company or Marksmen") (TSX VENTURE:MA) announces the Company's financial and operating results for the quarter ended September 30, 2006 and reports its progress on a number of corporate and operational fronts.



HIGHLIGHTS

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9 Months 12 Months
Quarter Ended (1) Ended Ended
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Period Ended (1) 30-Sep-06 31-Oct-05 30-Sep-06 31-Oct-05
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Financial ($Cdn)
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Oil and Gas
Revenue $ 270,537 $ 224,823 $ 728,684 $ 872,026
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Funds Flow from
Operations (2) $ 78,557 $ 121,088 $ 291,920 $ 332,152
Per Share -
Basic $ 0.00 $ 0.01 $ 0.01 $ 0.02
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Net Income (loss) $ (122,626) $ (82,671) $ (162,687) $ (159,839)
Per Share -
Basic $ (0.01) $ (0.01) $ (0.01) $ (0.01)
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Capital
Expenditures
Oil and Gas $ 1,139,941 $ 183,008 $ 2,646,479 $ 946,029
Minerals 0 140,743 0 235,114
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$ 1,139,941 $ 323,751 $ 2,646,479 $ 1,181,143
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Weighted
Average Shares
Outstanding
Basic 23,787,235 14,316,550 23,787,235 14,316,550
Fully Diluted 25,712,235 17,866,857 25,712,235 17,866,857
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Operations
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Average Daily
Production
(boe per day) 47 35 42 44
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Wells Drilled
Gross 6.00 1.00 8.00 4.00
Net 1.04 0.16 1.29 0.84
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(1) The Company changed its year end from October 31 to December 31 in
order to make the reporting period of the Company consistent with
other junior oil and gas issuers. In this regard, the quarter ended
September 30, 2006 is compared to the previous year quarter ended
October 31, 2005. The nine months ended September 30, 2006 is compared
to the twelve months ended October 31, 2005.

(2) 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 September 30, 2006 was 4,343 boe or an average of 47 boe per day, up approximately 38% from the previous quarter. Average production in the month of September was about 68 boe per day. Crude oil production represented about 77% of total production in the three months ended September 30, 2006. The remaining 23% of production is attributable to solution gas that was produced in conjunction with some of the Company's oil wells in southeast Saskatchewan and natural gas and associated NGL's production from the Company's wells at Ferrier and Eastmont in Alberta. The Ferrier well (Marksmen 14.6%) came on-stream in early August while the Eastmont well (Marksmen 10%) came on-stream in September. Production from the Namao South well (Marksmen 24.5%) continues to prove problematic. However, it is hopeful that the well will continue to clean-up over time and that production will increase and stabilize in the future.

Oil and gas revenue increased 19% from $227,200 in the three months ended June 30, 2006 to $270,500 in the quarter ended September 30, 2006. Oil and gas revenue was $728,700 for the nine months ended September 30, 2006. Operating netbacks in the period declined from $56.32 per boe at June 30, 2006 to $52.33 per boe due primarily to the drop in natural gas prices.

During the quarter ended September 30, 2006, Marksmen drilled 6 (1.04 net) wells including 5 (0.84 net) light oil wells drilled at Nottingham, Innes West, and Antler in southeast Saskatchewan and at Kaybob and Evi in Alberta. An exploratory (0.20 net) well was drilled and cased as a potential natural gas well at Pine Creek, Alberta. Oil and gas capital expenditures in the second quarter were $1.14 million and nearly $2.65 million for the nine months ended September 30, 2006.

Update of Activities

As announced on August 22, 2006, a successful dual leg horizontal well was drilled at Nottingham in southeast Saskatchewan. This well, which encountered light oil in the Tilston formation, was put on production at the end of July. Initial production was approximately 270 barrels of oil per day. This latest well at Nottingham, which is the most successful of the seven wells that Marksmen has drilled at the Nottingham project to date, continues to produce very well. However, production for this well has been cut-back due to capacity issues on a third-party owned pipeline system in southeast Saskatchewan. It is expected that the well will be producing at full capacity by year-end. Marksmen has a 10% working interest in this well.

During 2005, Marksmen participated in a vertical exploratory well at Innes West in southeast Saskatchewan. A follow-up well was drilled and cased in late July. The well encountered several metres of potential oil pay in the Alida formation. Completion results, however, encountered non-commercial quantities of oil, and the well will be abandoned prior to year end.

Marksmen participated in a vertical development well at Antler in southeast Saskatchewan. The well, which was drilled and cased in September, encountered oil pay in the Midale formation. Marksmen has a 20% working interest in this well, which was put on production in mid-October at an initial rate of approximately 40 boe per day.

A well was drilled at Kaybob South in west central Alberta in early July. Unfortunately, the well did not encounter economic quantities of oil and was subsequently abandoned. Notwithstanding the disappointing results, Marksmen has a 25% working interest in an independent location on lands west of the first well. Marksmen is currently considering a cash offer for a portion of its interests in the Kaybob project.

As previously reported on August 22, 2006, Marksmen spud a 1,800 metre exploratory test at Evi, approximately 200 miles north of Edmonton. Although the well encountered the primary targets, the completion operations did not indicate economic quantities of oil and the well was subsequently abandoned.

In late July, Marksmen drilled and cased a 2,800 metre exploratory test at Pine Creek, approximately 25 miles north of Edson, Alberta. The well has been completed and results are currently being evaluated. Marksmen has earned a 20% working interest in the well and one adjacent section.

In fiscal 2005, Marksmen raised $2.775 million of flow-through financing. Of the total financing, Marksmen is required to spend $1.775 million on exploratory projects by December 31, 2006. In order to manage the risk-reward associated with the financing, the Company elected to spread the capital over a number of projects in various areas.

To date, Marksmen has participated in 8 gross (1.29 net) wells including 2 exploratory (0.40 net) wells at Evi and Pine Creek. In addition, the Company incurred exploration expenditures at seismic programs at Riviere and Woodbend. Marksmen also drilled 6 development (0.89 net) wells at Eastmont, Ferrier, Kaybob South, Nottingham, Innes West, and Antler. Drilling results to September 30, 2006 include 2 oil (0.30 net) wells at Nottingham and Antler in southeast Saskatchewan, 2 natural gas (0.245 net) wells at Eastmont and Ferrier, and 3 (0.54 net) dry holes at Kaybob South, Innes West, and Evi. Depending on the completion results, there is also one potential natural gas (0.20 net) well at Pine Creek.

Outlook

Plans are currently underway to drill wells at Eastmont and Woodbend prior to year end subject to resolving certain land issues and the availability of equipment. A follow-up development (0.10 net) well is planned at Eastmont and an exploratory (0.22 net) well is also scheduled at Woodbend. The Eastmont well is a follow-up location to a Sunburst natural gas well that came on-stream in September 2006. The Woodbend project lands directly offsets a well drilled in the early 1950's that encountered 30 feet of Ellerslie sand and flowed at a test rate of 2.0 mmcf/. The well was not completed due to the prevailing natural gas prices at that time. The seismic program shot earlier in the year identified two potential locations at Woodbend.

Wells scheduled for the first quarter of 2007 include a horizontal light oil development well at Nottingham, a vertical development well at Antler, and an exploratory natural gas well at Riviere. Subject to favorable completion results at the recently drilled exploratory well at Pine Creek, there is also the potential to drill a follow-up development location on the adjacent section in the first quarter of 2007.

The well at Nottingham will be the eighth well drilled on the Nottingham property by Marksmen. In addition, there are up to six additional horizontal locations that could be drilled on these project lands; Marksmen would have up to a 20% working interest in these wells. Assuming that the current producer at Antler demonstrates favorable production rates, there is the potential for up to three follow-up locations at Antler with the first well to be drilled late in the first quarter of 2007. Seismic shot at Riviere earlier in the year has identified two potential Ellerslie locations. The first location is planned for January 2007.

On behalf of the Board of Directors

"Peter Malenica"

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 the Company - 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.

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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