-- 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 Information: Contact: Thomas J. Rozycki, Jr. CJP Communications for Platinum Energy Resources, Inc. Public & Investor Relations 212-279-3115 x208 trozycki@cjpcom.com Lisa Meier Chief Financial Officer & Treasurer Platinum Energy Resources, Inc. 281-649-4549 lmeier@platenergy.com