SOURCE: Petro Resources Corporation

November 16, 2007 07:30 ET

Petro Resources Announces Financial Results for Third Quarter and First Nine Months of 2007

HOUSTON, TX--(Marketwire - November 16, 2007) - Petro Resources Corporation (AMEX: PRC) announces today the financial results of operations for the third quarter and first nine months of 2007.

For the three months ended September 30, 2007 and 2006:

--  Revenues for the three months ended September 30, 2007 were
    $1,972,866, up from $37,528 recorded for the same period in 2006. This
    increase is due primarily to the acquisition of Williston Basin properties
    in the first quarter of 2007.
--  Oil and gas production for the quarter was 33,975 barrels of oil
    equivalent (BOE's) or an average of 369 BOE's per day. The Company received
    an average of $58.07 per BOE, net of hedging, for the quarter.
--  Lease operating expenses increased to $890,141 for the third quarter
    of 2007 from $9,517 incurred in the same period of 2006 as a result of the
    acquired interest in the Williston Basin.
--  The Company incurred exploration costs in the period ended September
    30, 2007 of $344,721 compared to $1,276,770 incurred in the quarter ended
    September 30, 2006.
--  Depreciation, depletion and accretion for the three months ended
    September 30, 2007 were $178,484, up from $22,439 for the third quarter of
    2006.
--  General & administrative costs for the quarter ending September 30,
    2007 were $612,323, compared to $522,027 for the quarter ending September
    30, 2006.
    

For the nine months ended September 30, 2007 and 2006

--  Revenues from oil and gas sales for the nine months ending September
    30, 2007 were $4,447,303, up from $1,482,862 for the nine months ending
    September 30, 2006.
--  For the nine months ended September 30, 2007, the Company has produced
    a total of 83,848 BOE's. The Company received an average of $51.85 per BOE,
    net of hedging during the period.
--  Lease operating costs for the nine months ended September 30, 2007
    were $2,352,412 compared to $25,129 for the same period the prior year. The
    increase in lease operating costs was due primarily to the Williston Basin
    property acquisition.
--  Exploration costs declined to $518,310 for the nine months ending
    September 30, 2007 from $1,855,628 for the same period in 2006.
--  The Company had impairment of oil and gas property expense of $15,712
    for the period ending September 30, 2007 down from $140,488 during the
    prior year.
--  General & administrative costs for the period ended September 30, 2007
    were $2,031,637 compared to $2,130,128 for the period ended September 30,
    2006.
    

Complete financials and operational details are available in the Company's 10-QSB filing for the third quarter of 2007 which was filed with the Securities and Exchange Commission on November 14, 2007. A copy can be found on the Company website at www.petroresourcescorp.com.

Plan of Operations

Our plan of operations for the next twelve months is to pursue further exploration and development of the oil and natural gas prospects we currently own, to obtain working capital required to fund such exploration and development, and to acquire additional domestic oil and gas interest. We intend to continue the pursuit of prospects in partnership with established and experienced exploration, development and production companies. We will also continue to establish alliances with unaffiliated third parties in the areas of geological and geophysical services, prospect generation and evaluation and leasing.

Management Comments

Don Kirkendall, President of Petro Resources, said: "We are extremely pleased with results for the first nine months of 2007. The Company is obviously improving performance across all sectors. The impact of the Williston Basin property acquisition is showing its significance to the company as we continue to add production from existing fields and, as expected, these properties have become the cornerstone of the Company's asset base. We expect revenue from oil and gas production to continue to increase through 2008 from not only the Williston Basin but also from the Permian Basin. The Gulf of Mexico exploration program, while not reflected directly in these latest numbers, continues to show excellent results from drilling operations."

About Petro Resources

We are an independent oil and natural gas company engaged in the acquisition, drilling and production of oil and natural gas properties in the United States and the Gulf of Mexico. We have an operating strategy that is based on our participation in oil and natural gas properties and prospects as a non-operator, which means we do not directly manage exploration, drilling or development operations. Instead, we seek to acquire interests in oil and natural gas properties in joint ownership with oil and natural gas companies that have exploration, development and production expertise. Based on that strategy, our plan of operations is to acquire domestic oil and natural gas interests and to obtain the additional working capital necessary to pay our share of the costs to develop or enhance the production from such properties. We have developed or acquired producing oil and natural gas properties in Texas, North Dakota, and Louisiana, as well as in the Gulf of Mexico through our limited partnership interest in Hall-Houston Exploration II, L. P., an oil and natural gas exploration and development partnership. Additionally, we have leasehold acreage in Kentucky, New Mexico and Utah.

Forward-looking Statements

The statements contained in this press release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements, without limitation, regarding the Company's expectations, beliefs, intentions or strategies regarding the future. Such forward-looking statements relate to, among other things: (1) the Company's proposed exploration and drilling operations on its various properties, (2) the expected production and revenue from its various properties, and (3) estimates regarding the reserve potential of its various properties. These statements are qualified by important factors that could cause the Company's actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) the Company's ability to finance the continued exploration and drilling operations on its various properties, (2) positive confirmation of the reserves, production and operating expenses associated with its various properties; and (3) the general risks associated with oil and gas exploration and development, including those risks and factors described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission, including but not limited to the Company's definitive prospectus dated October 30, 2007 filed with the Securities and Exchange Commission on October 31, 2007, and the Quarterly Report on Form 10-QSB for the three months ended September 30, 2007. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

                    Consolidated Balance Sheet

                                             Sept. 30, 2007  Sept. 30, 2006

Current Assets
  Cash and cash equivalents                   $   3,153,991  $   4,285,204
    Marketable securities                                 -              -
    Accounts receivable and accrued revenue         719,710         91,344
    Prepaids                                         63,797         11,602
Total current assets                              3,937,498      4,388,150
Property and equipment, net of depreciation,
 depletion and amortization
    Oil and natural gas properties,
     successful efforts accounting
      Unproved properties                        32,815,247      3,728,112
      Proved properties                           5,118,863        527,958
    Furniture and fixtures                           95,512             --
Total property and equipment                     38,029,622      4,256,070
Other Assets
    Deferred financing costs, net of
     amortization of $558,704                     2,930,877             --
    Investment in partnership                     3,892,944      2,293,104
    Deposit                                          10,257         10,257
Total other                                       6,834,078      2,303,361
Total assets                                     48,801,198     10,947,581
Liabilities and Shareholders Equity
Current Liabilities
    Accounts payable                          $   1,374,096  $     216,870
    Accrued liabilities                              21,000          1,300
    Stock payable                                    10,969             --
    Current portion of notes payable              9,762,554             --
Total current liabilities                        11,168,619        218,170
Notes payable, net of current maturities and
 discount of  $2,992,365                         12,984,072             --
Market value of derivatives                         900,215             --
Accumulated production floor payments               207,337             --
Asset retirement obligation                       1,696,650         30,653
Total liabilities                                26,956,893        248,823
Redeemable preferred stock, Series A
 Convertible Preferred                            7,055,931             --
Shareholders’ equity
    Common stock, $0.01 par value                   212,732        196,773
    Additional paid in capital                   21,664,213     14,816,718
    Accumulated deficit                          (7,088,571)    (4,314,733)
Total shareholders’ equity                       14,788,374     10,698,758



             Consolidated Statement of Operations (unaudited)

                      For the three months ended  For the six months ended
                            September 30,              September 30,
                         2007           2006         2007          2006


Revenue
Oil and gas sales    $ 1,972,866     $   37,528   $ 4,347,303    $  88,164
Other                          -              -       100,000            -
Gain (loss) on sale
 of property                   -              -             -    1,394,698
                       1,972,866         37,528     4,447,303    1,482,862
Expenses
  Lease operating
   costs                 890,140          9,517     2,352,411       25,129
  Exploration costs      344,722      1,276,770       518,311    1,855,628
  Impairment of oil &
   gas properties              -              -        15,712      140,488
  Depreciation, depletion
   & accretion           178,483         22,439       488,866       51,322
  General &
   administrative        612,321        522,027     2,031,635    2,130,128
Total expenses         2,025,666      1,830,753     5,406,935    4,202,695

Net gain (loss)
 from operations         (52,800)    (1,793,225)     (959,632)  (2,719,833)

Other income (expenses)
  Interest income         17,504         80,221        91,843      201,465
  Interest expense      (182,679)          (739)     (479,087)      (3,834)
  Loss on derivative
   contract             (365,731)             -    (1,092,432)           -

Net gain (loss) before
 income tax             (583,706)    (1,713,743)   (2,439,308)  (2,522,202)

Provision for income
 tax                           -              -             -            -

Net gain (loss)         (583,706)    (1,713,743)   (2,439,308)  (2,522,202)
Dividend on Series
 A Preferred            (172,095)             -      (334,530)           -

Net loss to
 shareholders           (755,801)    (1,713,743)   (2,773,838)  (2,522,202)

Earnings per share
  Basic and diluted        (0.04)         (0.09)        (0.13)       (0.13)

Weighted average
 common shares
 Outstanding
Basic and diluted     21,273,172     19,677,317    21,253,992   19,041,808




                Consolidated Statement of Cash Flows

                                                    Nine Months Ended
                                                       September 30
                                                   2007            2006
Cash flows from operating activities

  Net gain (loss)                            $ (2,439,308)   $  (2,522,302)
  Adjustments to reconcile net income to
   net cash (used in) provided by
   operating activities:
    Depletion, depreciation and accretion         488,866           51,322
    Amortization included in interest expense     320,432                -
    Impairment                                     15,712          140,488
    Dry hole costs                                479,949        1,850,742
    Issuance of common stock and stock options
     for services                                 876,286        1,370,116
Gain on sale of property                                -       (1,394,698)
  Loss on derivative contracts                    900,215                -
  Accretion of asset retirement obligation              -                -
  Accounts receivable and accrued revenue        (628,366)         (30,407)
     Prepaid expense                              (52,195)         (36,522)
     Accounts payable                             354,091           51,280
     Accrued expenses                              30,669          (97,739)
                                             ------------    -------------
       Net cash provided by (used in)
        operating activities                      346,351         (617,620)
                                             ------------    -------------

Cash flows from investing activities

  Capital expenditures                         (9,140,133)      (7,154,003)
  Acquisition of Williston Basin              (14,397,855)               -
  Investment in partnership                    (1,599,840)        (959,904)
  Investment in marketable securities          (2,000,000)               -
  Proceeds from sale of properties                      -        3,953,785
                                             ------------    -------------
    Net cash used in investing activities     (25,137,828)      (4,160,122)

Cash flows from financing activities

  Issuance of common stock                              -        8,215,000
  Issuance of preferred stock                   2,000,000                -
  Costs to issue preferred stock                  (14,705)               -
  Financing costs                              (2,982,154)               -
  Proceeds from notes payable                           -           20,100
  Proceeds from loan                           26,018,108                -
  Principal payment on loan                    (1,360,985)               -
                                             ------------    -------------
    Net cash provided by financing activity    23,660,264        8,235,100
Net increase (decrease) in cash                (1,131,213)       3,457,358
Cash, beginning of periods                   $  4,285,204    $   3,417,510
                                             ------------    -------------
Cash, end of period                          $  3,153,991    $   6,874,868