SOURCE: Platinum Energy Resources

January 17, 2008 16:10 ET

Platinum Energy Resources, Inc. Announces Initial Implementation of Oil Hedging Strategy

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.

Contact Information

  • Contact:
    Thomas Rozycki
    CJP Communications for
    Platinum Energy Resources, Inc.
    Public & Investor Relations
    212-279-3115 x208
    trozycki@cjpcom.com