Business News

Platinum Energy Resources, Inc. Reports Financial and Operational Results for the Second Quarter Ended June 30, 2008

SOURCE:

Platinum Energy

2008-08-19 07:00:00

HOUSTON, TX–(EMWNews – August 19, 2008) – Platinum Energy Resources, Inc. (“Platinum

Energy”) (OTCBB: EMWNews.com/mw/http://finance.yahoo.com/q?s=PGRIU”>PGRIU) (OTCBB: PGRI) (OTCBB: EMWNews.com/mw/http://finance.yahoo.com/q?s=PGRIW”>PGRIW), today announced

financial and operating results for the second quarter ended June 30, 2008.

Second Quarter Operational and Financial Highlights


--  Acquired Maverick Engineering, Inc.

--  50% increase in oil and gas sales versus the first quarter of 2008

--  14% increase in production volumes versus the first quarter of 2008

    

Subsequent Events


--  Appointed two independent board members,

--  Hired Chief Operating Officer and Chief Financial Officer

--  Completed registration of shares issued in conjunction with

    acquisition of Tandem Energy Holdings

    

Total revenue for the second quarter of 2008 was $15.8 million, an increase

of 121%, compared to $7.1 million for the first quarter of 2008. Oil and

gas sales were $10.7 million, an increase of 50% over the prior quarter.

The increase in oil and gas sales was driven by a 14% increase in oil and

gas production coupled with improved pricing conditions. Platinum Energy

acquired Maverick Engineering, Inc. (“Maverick”) on April 29, 2008 for an

aggregate purchase price of $9.3 million. Maverick is a provider of project

management, engineering, procurement and construction management services

to the oil and gas industry. For the period April 29, 2008 through June

30, 2008 Maverick generated $5.1 million in service revenue.

Operating income for the second quarter of 2008 was $2.5 million, a 16%

operating income margin, compared to $0.8 million, or an 11% operating

income margin in the first quarter of 2008. Oil and gas production costs

in the form of lease operating expense on a Boe basis increased 4.2% from

$27.53 per Boe during the first quarter to $28.68 per Boe during the second

quarter. The slight increase was due in part to an increased emphasis on

environmental clean-up efforts across Platinum’s oil and gas assets on a

field by field basis. Depletion expense for oil and gas properties

increased approximately $250,000 or 14% during the second quarter compared

to the first quarter due to property additions and an increase in estimated

future development costs related to the Company’s proved undeveloped

locations.

For the quarter, the Company reported a net loss of $7.3 million, or

($0.33) per fully diluted common share driven by a $9.8 million unrealized

mark-to-market (“MTM”) loss on oil and gas derivative instruments. The

Company’s adjusted net income was $2.4 million or $0.11 per fully diluted

common share for the same period. The Company’s adjusted net income to

shareholders excludes the unrealized MTM loss of $9.8 million, of which

$8.2 million was non-cash, from future period oil and natural gas hedges

primarily as a result of higher product prices as of June 30, 2008 compared

to March 31, 2008. A reconciliation of adjusted net income to net income

calculated in accordance with generally accepted accounting principles is

presented at the end of this release.

Cash flow from operations was $3.5 million in the second quarter of 2008, a

627% increase compared to the first quarter of 2008. The Company funded

capital expenditures of $6.6 million related to exploration and development

programs and $1.8 million to acquire oil and gas properties during the

quarter. At June 30, 2008, the Company’s cash position was $7.0 million

with outstanding debt of $17.1 million and stockholders’ equity of $133

million.

The table below summarizes the Company’s key oil and gas operating results

during the three month periods ended June 30, 2008 and March 31, 2008.


                                                     Three Months Ended

                                                    June 30,    March 31,

                                                      2008         2008

                                                  ------------ ------------

Production

   Oil (Bls)                                            71,508       58,700

   Gas (Mcf)                                           175,936      177,200

   Boe (Bls)                                           100,831       88,200

   Daily average (Boe)                                   1,108          970



Average Prices:

   Oil ($/Bbl)                                    $     122.22 $      96.83

   Gas ($/Mcf)                                    $      11.11 $       8.19



Production costs: ($/Boe)                         $      28.68 $      27.53

Mid-Year Reserves Analysis

The Company had recorded total proved reserves at December 31, 2007 of 10.2

million Boe at December 31, 2007 and 10.5 million Boe at June 30, 2008. In

order to eliminate the effect of rising prices on our reserves, we

calculated the June 30, 2008 reserves by using the December 31, 2007 oil

and gas prices. This allows us to better evaluate our performance in terms

of reserves added through acquisitions, drilling, and volume revisions.

The Company replaced the 189,070 Boe produced in the first six months, with

approximately 500,000 Boe of new proved reserves. Of the 500,000 new Boe

added during the first six months of 2008, 131,000 proved developed

producing reserves came from acquisitions along the Gulf Coast. These

reserves are classified as proved developed producing. Another 150,000 Boe

came from either new proved undeveloped (PUD) locations identified as a

result of our drilling efforts on our existing PUD locations, or from

better than expected performance on the existing PUD locations we drilled

during the first six months. The remainder of the new reserves was due to

performance improvements across a number of our fields.

“With the registration statement behind us, we can now turn our total focus

to growing our business,” stated Barry Kostiner, Platinum’s Chief

Executive Officer. “We have already made key hires and strengthened our

board to assist us in meeting our goals. In the near term, we will look to

secure a listing on a major exchange, and begin to actively market the

Company to institutional investors and equity analysts across the US. As

our business continues to mature, we expect that Platinum will be well

positioned to capitalize on the strong industry dynamics, which we hope

will highlight the value inherent in Platinum.”

About Platinum Energy

Platinum, based in Houston, Texas, is an oil and gas exploration and

production company that has approximately 37,000 acres under lease in

relatively long-lived fields with well established production histories and

is currently engaged in drilling, developing and exploiting these

properties to provide long-term growth in stockholder value. Through our

wholly-owned Maverick operation, we provide engineering and construction

services primarily for the oil and gas industry.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning

of the safe harbor provisions of the Private Securities Litigation Reform

Act of 1995. In some cases, forward-looking statements can be identified by

words such as “believe,” “expect,” “anticipate,” “plan,” “potential,”

“continue,” “intend” or similar expressions. Forward-looking statements

also include the assumptions underlying or relating to any of the foregoing

statements. Such forward-looking statements are based upon current

expectations and beliefs and are subject to a number of factors and

uncertainties that could cause actual results to differ materially from

those described in the forward-looking statements. The forward-looking

statements contained in this press release may include statements about

future financial and operating results. These statements are not guarantees

of future performance, involve certain risks, uncertainties and assumptions

that are difficult to predict, and are based upon assumptions as to future

events that may not prove accurate. Therefore, actual outcomes and results

may differ materially from what is expressed herein. In any forward-looking

statement in which Platinum expresses an expectation or belief as to future

results, such expectation or belief is expressed in good faith and believed

to have a reasonable basis, but there can be no assurance that the

statement or expectation or belief will result or be achieved or

accomplished. All forward-looking statements included in this press release

are based on information available to Platinum on the date hereof. The

following factors, among others, could cause actual results to differ from

those set forth in the forward-looking statements: volatility of oil and

gas prices, the need to develop and replace reserves, the substantial

capital expenditures required to fund operations, exploration risks,

uncertainties about estimates of reserves, competition, government

regulation, costs and results of drilling new projects, and mechanical and

other inherent risks associated with oil and gas production; and

fluctuations in demand of project management, engineering procurement and

construction management services, as well as other relevant risks detailed

in Platinum’s filings with the Securities and Exchange Commission. Platinum

does not assume any obligation to update the information contained in this

press release.


             PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                (Unaudited)



                            Three Months Ended         Six Months Ended

                                 June 30,                  June 30,

                           2008          2007         2008         2007

                       ------------ ------------ ------------ ------------

REVENUES

Oil and gas sales      $ 10,694,071 $         -- $ 17,828,875 $         --

Service revenues          5,056,682           --    5,056,682           --

                       ------------ ------------ ------------ ------------

  Total revenues         15,750,753           --   22,885,557           --

                       ------------ ------------ ------------ ------------

COSTS AND EXPENSES

Lease and other

 operating expense        2,864,605           --    5,320,911           --

Cost of service

 revenues                 3,959,110           --    3,959,110           --

Marketing, general and

 administrative expense   3,768,613      144,214    5,500,440      299,205

Depreciation, depletion

 and amortization

 expense                  2,577,874           --    4,641,163           --

Accretion of

 abandonment

 obligations                 49,319           --      110,988           --

                       ------------ ------------ ------------ ------------



  Total costs and

   expenses              13,219,521      144,214   19,532,612      299,205

                       ------------ ------------ ------------ ------------



Operating income (loss)   2,531,232     (144,214)   3,352,945     (299,205)

                       ------------ ------------ ------------ ------------



OTHER INCOME (EXPENSES)

Interest income, net of

 interest allocated to

 common stock subject

 to possible redemption

 of $0, $188,991, $0 and

 $366,111, respectively      35,796      756,437      140,183    1,465,362

Interest expense           (230,880)      (5,380)    (244,685)     (23,449)

Change in fair value of

 commodity derivatives   (9,756,171)          --  (11,792,094)          --

Other                       107,816           --      176,927           --

                       ------------ ------------ ------------ ------------

  Total other income

   (expense)             (9,843,439)     751,057  (11,719,669)   1,441,913

                       ------------ ------------ ------------ ------------



Income (Loss) Before

 Income Taxes            (7,312,207)     606,843   (8,366,724)   1,142,708

Provision (Benefit) For

 Income Taxes                    --       28,000      (54,000)      66,000

                       ------------ ------------ ------------ ------------



Net Income (Loss)      $ (7,312,207)$    578,843 $ (8,312,724) $ 1,076,708

                       ============ ============ ============ ============



WEIGHTED AVERAGE NUMBER

 OF COMMON SHARES:

Basic                    22,070,762   15,121,440   22,070,762   15,121,440

                       ============ ============ ============ ============

Diluted                  22,070,762   18,220,150   22,070,762   17,882,548

                       ============ ============ ============ ============



NET INCOME (LOSS) PER

 COMMON SHARE:

Basic                  $      (0.33)$       0.04 $      (0.38)$       0.07

                       ============ ============ ============ ============

Diluted                $      (0.33)$       0.03 $      (0.38)$       0.06

                       ============ ============ ============ ============







                      PLATINUM ENERGY RESOURCES, INC.

      RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO STOCKHOLDERS

              (Unaudited; in thousands except per share data)



Adjusted net income and adjusted net income per share exclude certain items

that management believes affect the comparability of operating results and

are non-GAAP financial measures.  The company discloses these non-GAAP

financial measures as a useful adjunct to GAAP earnings because management

uses adjusted net income available to evaluate the company’s operational

trends and performance relative to other natural gas and oil producing

companies.





                                                     Three Months Ended

                                                    June 30,    March 31,

                                                      2008         2008

                                                  -----------  -----------

Net loss (GAAP)                                   $    (7,312) $    (1,001)

Adjustment:

  Unrealized losses on derivatives                      9,756        2,036

                                                  -----------  -----------

Total adjusted net income (Non-GAAP)                    2,444        1,035



Weighted average common shares outstanding             22,071       22,071



Adjusted earnings per share (Non-GAAP)            $      0.11  $      0.05



Contact:
Thomas J. Rozycki, Jr.
CJP Communications for
Platinum Energy Resources, Inc.
Public & Investor Relations
212-279-3115 x208
[email protected]

Lisa Meier
Chief Financial Officer & Treasurer
Platinum Energy Resources, Inc.
281-649-4549
[email protected]

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