Contact Information: Contact: Thomas Rozycki CJP Communications for Platinum Energy Resources, Inc. Public & Investor Relations 212-279-3115 x208 trozycki@cjpcom.com
Platinum Energy Resources, Inc. Announces Initial Implementation of Oil Hedging Strategy
| Source: Platinum Energy Resources
NEW YORK, NY--(Marketwire - January 17, 2008) - Platinum Energy Resources, Inc. ("Platinum
Energy") (OTCBB : PGRIU ) (OTCBB : PGRI ) (OTCBB : PGRIW ) announced today that
it has initiated implementation of its oil hedging strategy through the
purchase of long-dated put options on the price of crude oil.
The company has purchased put options on the New York Mercantile Exchange
(NYMEX) on a total of 410,000 barrels of crude oil in 2010 and 2011 at an
average price of $80 / barrel. This is in addition to a $71 swap on 120,000
barrels in 2009 and a ceiling price of $67 on 150,000 barrels in 2008 which
were previously executed.
By purchasing monthly put options for an average price of $7.40 / barrel,
Platinum keeps all upside from prices exceeding the put option strike
prices averaging $80 / barrel, while receiving payment for each month that
has a lower settlement. The options are carried as an asset on the books of
Platinum, and will accrue additional value if the price of oil falls, while
losing value if the market rises.
Commenting on the benefits of the company's hedging and financing strategy,
Tim Culp, Chairman, said, "We will seek to have a line of credit in place
in the first quarter that will facilitate the continued expansion of our
drilling and development program. We believe the use of put options will
enable us to negotiate favorable credit terms while reducing our exposure
to a potential earnings hit from derivative losses in the event of price
spikes."
Barry Kostiner, CEO, further added, "This is a departure from our original
strategy of selling oil forward at a fixed price. Buying puts gives the
company flexibility to put on hedges beyond the typical volume constraints
established by our banking partners. We expect to enter into additional
fixed price sales and put option purchases in the future. Our strategy is
to use energy price hedging to lock in profits for our shareholders, while
preserving the upside from increasing production."
About Platinum Energy
Platinum Energy, based in Montvale, New Jersey, is an oil and gas
exploration and production corporation that completed its first
acquisition, Tandem Energy, on October 26, 2007. Platinum Energy is seeking
to build a portfolio of assets using multiple acquisitions subsequent to
its first. Platinum Energy's strategy calls for the use of hedge financing
to maximize profit and reduce risk resulting from volatile energy markets.
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 Energy 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 Energy on the date hereof.
The following factors, among others, could cause actual results to differ
from those set forth in the forward-looking statements: business conditions
in the U.S. and abroad; changing interpretations of generally accepted
accounting principles; outcomes of government reviews; inquiries and
investigations and related litigation; continued compliance with government
regulations; legislation or regulatory environments, requirements or
changes adversely affecting the businesses in which Platinum Energy is
engaged; fluctuations in oil and gas prices and in customer demand;
management of rapid growth; intensity of competition; general economic
conditions; as well as other relevant risks detailed in Platinum Energy's
filings with the Securities and Exchange Commission. Platinum Energy does
not assume any obligation to update the information contained in this press
release.