Marksmen Energy to Raise $1.2M, Settle $1.9M Insider Debt

Junior Alberta oil and gas producer Marksmen Energy Inc. said it plans a non-brokered private placement of up to 10 million common shares at $0.12 each, targeting $1.2 million in gross proceeds. An over-allotment option, at the company's discretion, could add up to $180,000. The offering has no minimum subscription.

The biggest slice of the raise, up to $1 million, is earmarked to buy non-operated working interests in existing Alberta oil properties operated by a private Alberta oil and gas company. Non-operated here means Marksmen holds a share of the wells' production and costs while the private operator runs the fields. Revenue from the wells moves with crude prices; AlphaScala's commodities analysis follows those swings. Marksmen is in discussions to acquire the interests; no formal agreement has been reached.

The rest of the raise is $96,000 for cash finder's fees of up to 8% of gross proceeds, paid to registered dealers, and $104,000 for working capital and offering costs. Any net proceeds from the over-allotment option, plus finder's fees that go unpaid, go to working capital. The stated priority order puts finder's fees and offering costs ahead of the $1 million earmark; a short raise shows up there first. No minimum means the placement can close at less than the $1.2 million ceiling. Fully subscribed with the over-allotment exercised, the raise would reach $1.38 million.

Conditional on the placement closing, Marksmen has agreed to settle about $1,925,788 in debt and interest owed to Conex Services Inc. by issuing 5.5 million common shares. Conex is wholly owned by Glenn Walsh, an insider who holds more than 10% of the company's outstanding shares. The conversion price, about $0.36 a share, is three times the placement price.

The two prices produce very different share counts. Clearing $1.93 million of debt at the placement price would have required roughly 16 million shares. At the settlement price, the same liability clears with 5.5 million. The settlement retires the debt and its accrued interest without a cash outlay.