Marksmen Resources Ltd.

Marksmen Resources Ltd.

September 29, 2005 17:00 ET

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

COMOX, BRITISH COLUMBIA--(CCNMatthews - Sept. 29, 2005) -


Marksmen Resources Ltd. (TSX VENTURE:MA.A) ("the Company or Marksmen") announces the Company's financial and operating results for the quarter ended July 31, 2005 and reports its progress on a number of corporate and operational fronts.


3 Months Ended July 31 9 Months Ended July 31
2005 2004 2005 2004

($CDN except for shares

Oil and gas revenue(1) $ 212,120 $ 76,270 $ 646,198 $ 92,036

Funds from operations(2) $ 22,224 $ (36,523) $ 211,064 $ (91,378)
Per share - basic(3) $ 0.00 $ (0.00) $ 0.01 $ (0.02)

Net Income (Loss) $ (49,285)$ (36,523) $ (77,168) $ (91,378)
Per share - basic(3) $ (0.00)$ (0.00) $ (0.00) $ (0.02)

Capital expenditures
Oil and Gas $ (6,417)$ 81,069 $ 763,021 $ 809,637
Minerals $ 11,636 $ 50,118 $ 94,371 $ 91,423

Weighted average shares
Basic 14,284,800 4,251,004 14,284,800 4,251,004
Fully Diluted 17,345,103 5,770,809 17,345,103 5,770,809


Total production (boe) 4,018 1,579 12,870 1,919
Average daily
production (boepd) 44 17 47 7

Wells drilled
Gross 0.0 3.0 3.0 7.0
Net 0.0 0.6 0.7 1.4

(1) The Company recommenced oil and gas operations in March 2004.
Revenue in the previous periods has been restated for comparative

(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 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. Marksmen's method of calculating these measures may
differ from other companies, and accordingly, they may not be
comparable to measures used by other companies.

(3) The effect of the exercise of stock options and warrants would be
anti-dilutive for the purposes of calculating the fully diluted
earnings per share.

Total production for the quarter ended July 31, 2005 was 4,018 boe or an average of 44 boe per day compared to 3,732 boe or an average of 42 boe per day in the second quarter of fiscal 2005. Production for the nine months ended July 31, 2005 was 12,870 or 47 boe per day. This compares to production in the nine months ended July 31, 2004 of 1,919 or 7 boe per day. Crude oil production was 2,837 boe or about 71% of total production in the third quarter of fiscal 2005. The remaining 39% of production is attributable to solution natural gas that was produced in conjunction with some of the Company's oil wells in southeast Saskatchewan and natural gas production from the Company's Baldwinton well in west central Saskatchewan. The increase in production realized in 2005 compared to the third quarter of 2004 is attributable to successful drilling operations undertaken during 2004 and the first quarter of fiscal 2005. At July 31, 2005, there were seven wells on production including six wells at Nottingham in southeast Saskatchewan, and the Baldwinton natural gas well.

Between January and September 2005, the Company did not participate in any oil and gas drilling operations. Anticipated drilling operations were delayed by surface access issues at Namao and Riviere in Alberta and by the sale of Romulus Exploration Inc. ("Romulus"), Marksmen's former joint venture operator, to an oil and gas income trust (the "Trust"). With respect to future operations, it is anticipated that the Trust will begin development of the Nottingham property in the last quarter of 2005 or in the first quarter of fiscal 2006. It is also anticipated that Tiberius Exploration Inc. ("Tiberius"), the successor company to Romulus, will begin drilling operations at Riviere and Namao in the fourth quarter. Marksmen previously announced that a vertical exploratory well at Innes West tested oil out of both the Bakken and Frobisher formations. Frac'ing operations in the Bakken formation, which were delayed as a result of the Romulus sale, will be completed sometime in the fourth quarter by Tiberius.

On June 22, 2005, 100% of the shareholders voted to approve the minerals property spinout and Plan of Arrangement between Marksmen and Signet Minerals Inc. ("Signet"). Under terms of the arrangement, Marksmen's mineral properties will be transferred to Signet while Marksmen will continue to hold the oil and gas assets. Signet, in conjunction with its agent, Pacific International Securities Inc. is currently raising the capital that is required to meet the minimum listing conditions of the TSX Venture Exchange. The agent, on a best-efforts basis, is raising gross proceeds of a minimum of $750,000 and a maximum of $1,500,000 (the "Offering"). Signet will also complete a portion of the Offering on a non-brokered basis. Proceeds of the Offering will be used to finance Signet's drilling program on the Golden Eagle gold property in northwest British Columbia and exploration efforts on Signet's uranium property in the Yukon. The Offering proceeds will also be used to finance other exploration projects developed by Signet and for general operating purposes.

In August 2005, the Company completed a geophysical survey to trace Skarn zone mineralization northwards into the Plateau zone, and to better define the electromagnetic targets in the Plateau zone. The survey, conducted by Aurora Geosciences Ltd., comprised 17.2 kilometers of ground magnetics, 8.2 kilometers of horizontal loop EM and 3.6 kilometers of induced polarization/resistivity surveys.

Also in August 2005, the Company commenced a 1,500 meter diamond drilling program on the Golden Eagle project in northern British Columbia. Until the Plan of Arrangement between the Company and Signet Minerals Inc. is completed, the drilling program at Golden Eagle will initially be undertaken by Marksmen on behalf of Signet in order to take advantage of drill rig availability, and summer access to the property. The Company plans to drill test targets in the Skarn, Tannis, Camp, Carbonate and Plateau zones during this program. Road access to the Skarn and Plateau zones has been established, and drill platforms have been constructed on the Skarn and Tannis zones. Drill platforms have also been constructed on the Camp and Carbonate zones. Drill holes have been completed at Tannis, Camp, and Skarn zones. Assay results will be released once received, evaluated, and confirmed.

Subsequent to the quarter end, the Company announced on September 8, 2005, that Mr. Peter Malenica, P.Eng. was appointed to the position of President & CEO of the Company. Mr. Malenica has also joined the Marksmen Board of Directors. In conjunction with Mr. Malenica's appointment, the Company also announced that the Company's office is relocating to Calgary, Alberta and that Mr. Brian Cebryk became the Chief Financial Officer of the Company.

In connection with his appointment, Mr. Malenica has been granted a stock option to purchase 300,000 common shares at a price of $0.25 per share for a period of five years. The Company is pleased to report that the non-brokered private placement with Mr. Malenica, which was previously announced on September 8, 2005, has closed for total gross proceeds of $150,000. Marksmen issued 500,000 Class A common shares on a flow-through basis at a price of $0.30 per flow-through share. Marksmen has determined that exemptions from the various requirements of TSX Venture Exchange Policy 5.9 are available for the grant of stock options and for the issuance of Class A common shares to Mr. Malenica.

Marksmen is pleased to report that it has drilled its first well on the Company's Riviere prospect. The well was recently cased as a potential multi-zone natural gas well. Marksmen has a 16% working interest in approximately 7,000 (1,120 net) acres. Depending on the completion results, there is the potential to drill up to three follow-on wells at Riviere. The well planned at Namao South has been further delayed as a result of surface access issues.

At the Company's Innes West property, it is anticipated that the frac'ing operation in the Bakken formation will be completed by September 30, 2005. The production characteristics of the Innes West well and the emerging Bakken play in general will be evaluated and, if positive, there is the potential that up to two additional locations will be drilled at Innes West in fiscal 2006.

Since recruiting Mr. Malenica, the Company has identified and is currently in discussion with several parties regarding a number of new farm-in and joint venture opportunities. In addition, two potential acquisitions have been identified and are being evaluated.

The Company anticipates that the Plan of Arrangement with Signet will be completed shortly. Once the spinout is completed, Marksmen will be able to direct its capital and focus to growing the oil and gas side of the business. At the same time, Signet, as a pure mineral exploration company, will be positioned to raise the capital necessary to drill and explore the Company's mineral properties including the Golden Eagle property in northwest British Columbia, the Curie uranium prospect in the Yukon, and to pursue the acquisition of other mineral properties of merit.

On behalf of the Board of Directors

"Brian Cebryk"



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.

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

Contact Information

  • Marksmen Resources Ltd.
    Peter Malenica
    Oil and Gas Operations
    (403) 969-9585
    Marksmen Resources Ltd.
    Kieran Downes
    Spinout or the Mineral Operations
    (250) 729-0529