Marksmen Resources Ltd.

Marksmen Resources Ltd.

April 30, 2009 14:03 ET

Marksmen Resources Ltd.: Year End Audited Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - April 30, 2009) - Marksmen Resources Ltd. ("the Company or Marksmen") (TSX VENTURE:MA) announces the Company's audited financial and operating results for the year ended December 31, 2008.


Year Ended Quarter Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Period Ended 2008 2007 2008 2007
Financial ($Cdn)
Oil and Gas Revenue $ 1,965,931 $1,287,430 $ 347,628 $ 494,089
Funds Flow from Operations(1)$ 261,963 $ 24,330 $ (123,691) $ (2,220)
Per Share - Basic $ 0.00 $ 0.00 $ 0.00 $ 0.00
Net Loss $ (974,737) $ (703,479) $ (215,948) $(254,712)
Per Share - Basic $ (0.02) $ (0.02) $ 0.00 $ (0.01)
Capital Expenditures
Operations $ 2,024,174 $1,791,045 $1,368,928 $495,487
Acquisition 0 1,700,000 0 0
2,024,174 3,491,045
Acquisition of RXO (share
issue) 0 1,438,525 0 0
$ 2,024,174 $4,929,570 $1,368,928 $495,487
Weighted Average Shares
Basic and Diluted 51,733,017 37,557,210 51,733,017 37,557,210
Total Shares Outstanding
(Basic) 53,689,301 49,689,301 53,689,301 49,689,301
Average Daily Production
(boe per day) 100 71 90 107
Reserves (Forecast Prices)(2)
Total Proved Reserves (boe) 285,600 245,700 - -
Total Proved plus Probable(boe) 563,000 670,567 - -
Net Present Value
(P+P NPV 10%) $9,324,000 $8,745,000 - -
Wells Drilled
Gross 4.00 9.00 4.00 2.00
Net 3.89 2.61 3.89 1.11

(1) 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, amortization
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.

(2) Before tax reserves.

Management Comments

The performance of Marksmen Resources in fiscal 2008 was generally an improvement over 2007. Revenue was $1,965,900 in the twelve months ended December 31, 2008 versus $1,287,400 in the year ended December 31, 2007. Funds from operations in 2008 were $261,970 (nil per share) versus $24,330 (nil per share) in 2007. Marksmen's net loss for fiscal 2008 was $974,700 ($0.02 per share) versus a loss of $703,500 ($0.02 per share) the previous year, an increase of 38.5%. Capital expenditures in 2008 were $2.0 million as compared to $1.8 million (excluding the acquisition of the Penhold property of $1.7 million) in 2007.

In January of 2008, Marksmen sold its interest in the Nottingham property which was producing approximately 20 boe per day.

In the first quarter of 2008, Marksmen tied-in one well at Penhold which was drilled and completed in the fourth quarter of 2007. In the last quarter of 2008, the Company drilled 4 wells (3.89 net): one well was a CBM Horseshoe Canyon control well drilled at Penhold, two others were Edmonton Sand wells also drilled at Penhold and one other was an Edmonton Sand well drilled at Alderflats. There are currently a total of seven wells at Penhold and one well at Alderflats waiting on tie-in having the potential of doubling the Company's current production of 100 boe per day.

Production for the twelve month period ended December 31, 2008 averaged 100 boe per day compared to an average of 71 boe per day for the period ended December 31, 2007. Natural gas production was 87% of total production. Production in the fourth quarter averaged about 90 boe per day in 2008 compared to 107 boe per day for the same period in 2007. The quarterly decrease is attributable primarily to the sale of the Nottingham property in the first quarter of 2008.

During the year, the Company obtained a loan facility (the "Loan") in the aggregate principal amount of $3,604,000 with nine participating creditors. The Loan has a term of 12 months maturing in June of 2009, and an interest rate of 12% per annum, payable monthly. The principal amount includes a financing fee of $204,000, which is 6% of the funds advanced. Marksmen also issued 4,000,000 flow-through shares for proceeds of $400,000 to two of the lending group. Funds from the Loan and the share issuance were used to pay off a loan with a Canadian Chartered bank and to complete our 2008 capital program.


World commodity prices increased dramatically in the first half of 2008. Oil prices (WTI) began the year at $95 USD per bbl and peaked in July at over $145 USD per bbl. Natural Gas prices (AECO) started at under $7.00 CDN per mcf and peaked in June at over $10.50 CDN per mcf. The unprecedented changes in the global economy had a significant negative impact on businesses in the oil and gas industry and Marksmen is no exception. Oil prices sharply declined in the second half of the year to close out the year in the $40 USD per bbl range and natural gas dropped to $6.20 CDN per mcf.

Current oil prices have improved somewhat to the $50 USD per bbl range but gas prices continued their sharp decline to present levels in the $3.20 CDN per mcf range. The lower commodity prices, especially for natural gas, will result in lower revenues and cash-flows for Marksmen.

Currently Marksmen is engaged in discussions with its lending group to establish new terms of the loan agreement. In the event that Marksmen is unable to finalize new terms with the lending group it may result in a default on the Loan and the Company may no longer be able to continue as a going concern.

Marksmen is actively seeking merger opportunities which will result in improved growth in reserves, production, balance sheet and cash flow.

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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