Platina Energy Group Inc. (OTCBB: PLTG)

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Today's featured company, Platina Energy Group Inc. (OTCBB: PLTG), has a lot going for it - production, proven reserves, diversification, and technology.  Additionally, its aggressive acquisition strategy and growing pool of management talent help to make Platina stand out from the crowd.  Please take a few moments to examine the profile below.  We think you might find it quite interesting.
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About Platina Energy

Platina Energy Group, Inc. ("Platina" "PLTG") is an independent exploration and production company with multiple oil and gas lease properties in North America and a proprietary enhanced recovery technology.  The Company, headquartered in Cheyenne, Wyoming, owns proved reserves valued in excess of $60 million and is currently producing oil from wells on its Young County prospect in Texas. 

Platina operates as a publicly-traded holding company for several acquired energy firms and properties. The Company’s strategy is to minimize risk by holding a diversified portfolio of energy and related investments. Through its subsidiaries, the Company currently owns oil and gas leases in the Palo Duro Basin in Texas, the Appalachian Basin in Eastern Tennessee and in Young County, Texas. 

With each acquisition, the Company has acquired new management talent as part of various restricted share incentive packages. Through its Permian Energy subsidiary, the Company also holds rights to a proprietary technology, Thermal Pulse Unit (TPU), designed for cost-effective and environmentally friendly oil well stimulation and enhanced recovery. 

An independent geologist report on the Company’s Appalachian Basin property indicates that proved reserves have a present value discounted over ten years exceeding $60 million. Estimated recoverable reserves associated with the Appalachian Basin property are substantially higher than $60 million. The Palo Duro Basin prospect, which is currently being evaluated for development, has been compared to the Barnett Shale discovery. 

Barnett Shale is estimated to contain some 30 trillion cubic feet of natural gas. Management believes Palo Duro could prove to be one of the largest natural gas deposits in North America. Platina has current production at modest levels from its Young County, Texas property and has formed a joint venture with Zone Petroleum for additional drilling expected to lead to greatly increased production from this prospect. 
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Aggressive acquisition strategy enhances long-term growth prospects

Platina is aggressively acquiring drilling properties and related energy assets. Appalachian Energy Corporation was created from a natural gas field acquisition in the Appalachian Basin of Tennessee. It consists of approximately 50 well sites in the Devonian Shale formation. Studies indicate proved reserves valued at more than $60 million. In the Palo Duro Basin Prospect, the Company has acquired over 20,000 acres under various arrangements. According to a Morgan Stanley report and data from a major trade journal, the Palo Duro Basin may be as prolific as one of America’s largest natural gas fields, the Barnett Shale. In 2006, Platina acquired a lease prospect in Young County, Texas that includes currently producing wells and proved reserves worth millions of dollars. Initial production of oil from the Young County prospect is estimated in a 20-50 barrel per day range. Additional drilling is expected to boost production to a 2,500 to 6,000 barrel per month range. 

Through its Permian Energy International subsidiary, the Company owns the rights to a technology for oil recovery and paraffin build-up reduction. The Thermal Pulse Unit (TPU) is a cost-effective and environmentally friendly solution for enhanced oil recovery. It provides a significantly lowered cost basis per barrel for recovery without the problems associated with existing technologies such as CO2 flooding and steaming. Platina plans to deploy TPU technology in its own fields to enhance production and reduce the production decline curve and is also exploring potential joint ventures to commercialize this technology. 

Industrial and technological developments have increased the demand for energy resources, including oil and gas. According to the Energy Information Administration, average US oil consumption is projected to reach nearly 26.1 million barrels per day by 2025. However, most existing oil fields are mature and production from these fields is declining. Hence, there is an urgent need for  exploration and development of new properties and workover of existing wells. Platina is leveraging its resources by bringing various small energy companies together under one umbrella, with each business run by a local management team compensated on a performance basis. 

Rising demand puts pressure on limited global resources

Demand for energy is driven by a growing world population as well as economic growth. Currently, the world consumes more than 85 million barrels of oil per day. The global population is projected to grow from 6.6 billion currently to 8.2 billion by 2030. Also, the world economy is expected to grow at a 3.8% average annual rate through 2030 (Source: International Energy Outlook 2006). As a result, global energy consumption is forecast to rise from 421 quadrillion British thermal units (Btu) in 2003 to 722 quadrillion Btu in 2030, while natural gas consumption is expected to reach 182 trillion cubic feet. 

Petroleum consumption by the transportation sector continues to rise world-wide in the absence of suitable alternatives to traditional fossil fuels. The products derived from oil, such as motor gasoline, jet fuel, diesel fuel, and heating oil, supply nearly 40% of the energy consumed by households, businesses and manufacturers worldwide. By 2030, 50% of the increase in oil demand is expected to come from the transportation sector alone. The industrial sector is expected to account for another 39% of the projected increase in global oil consumption with the remaining 11% demand growth coming from the  household and commercial sectors.

The United States has a huge appetite for energy, spending over $500 billion annually on oil and gas. America’s need for reliable energy supplies to meet the nation’s growing energy demand plays a pivotal role in US national security and economic policies. 

The United States is the world’s largest consumer of crude oil, using around 25% of the world’s daily supply of crude oil. On average, about 20.6 million barrels are consumed each day and EIA projects consumption will reach 26.1 million barrels per day by 2025. Demand for gasoline reached record levels of 380 million gallons per day in first quarter of 2007. 

Hurricanes Katrina and Rita had a major adverse impact on US oil and gas production, resulting in rig downtime, refinery shutdowns and significantly higher oil and gas prices.  Pump prices have since declined but remain at historically high levels. 

In the last few years, oil consumption by the various sectors of the US economy has remained relatively consistent except for demand from the transportation sector which has increased substantially. EIA forecasts demand from the transportation sector will continue to increase.
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To meet the nation’s rising energy demands, refiners are currently importing about 13 million barrels of crude oil per day  Supply & demand imbalance leads to rising prices

The Market and Exploration

Crude oil and petroleum products are global commodities. Their prices are determined by global supply and demand factors. Energy prices are also impacted by expectations regarding economic growth, change in inventory levels, political factors in the Middle East, civil unrest in Nigeria and Venezuela, natural disasters and other factors. The unexpected losses in both crude oil production and refining capacity in the United States due to hurricanes Katrina and Rita in 2005 affected prices considerably.

Crude oil prices have almost doubled in the last two years, reaching record levels of $77 per barrel in 2006 and currently hovering in a $70 to $74 range. Analysts expect energy prices to stay firm at least in the near-term due to OPEC’s desire to keep crude prices well above $60. Natural gas demand in North America is increasing at about 3% per year however the supply is only increasing at 1%. Supply/demand imbalances are also fueling higher gasoline prices.

The increasing demand for oil, coupled with high energy prices and declining oil and gas production, are necessitating increased exploration activity to meet future demand. There has been a steady rise in the number of gas and oil rigs working in the US. The gain suggests increasing US exploration activity.

Technology advances enable the exploration of deeper waters in the Gulf of Mexico and new discoveries while minimizing the impact on the environment. The growing demand for refined fuel has also led to increased investment in US refineries. According to Oil and Gas Journal (April 2, 2007), investments in US refineries increased 25% to $9 billion in 2006. Refineries are expanding capacity and increasing their ability to produce cleaner gasoline and diesel fuels. According to API, US drilling activity hit a 21-year high in the first quarter of 2007 and was nearly twice the level of first quarter drilling activities recorded during the 1990s.

Development of new exploration techniques

Oil and gas producers deal with production issues caused by paraffin deposits on a regular basis. The costs associated with remediation and/or rehabilitating wells with a history of paraffin deposits are high. Large number of wells are closed permanently or temporarily due to paraffin problems. Paraffin deposits in drill reduce the flow diameter and oil production. This problem varies with the percentage of paraffin in the crude oil. At least 40% of the approximately 750,000 producing wells in the US have paraffin problems with varying degrees of severity. Platina’s proprietary Thermal Pulse Unit (TPU) technology offers a more affordable solution for enhanced oil recovery. Advantages of the technology which include the ability to handle wet gas, eliminate foaming problems, pump any combination of gas, water and crude/condensate, as well as chemical for injection position this development-stage technology as superior to existing alternative solutions. 
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Platina Divisions

Platina Exploration Corporation ("PEC") is a wholly owned subsidiary of Platina Energy Group.  It was formed to allow its President, Chip Langston to acquire new opportunities into the Company.  Presently, through a JV with Buccaneer Energy, Platina has expended over $500k in resources associated with the evaluation and potential acquisition of a producing asset known as AVL. 

The Company has further provided engineering data supporting debt-financing commitments from Park Cities Bank and CIT for $30 million and $75 million respectively.  Each would be a revolving line of credit with certain milestones for additional advancements over the initial $22 million dollar purchase price.  The end result would be an immediate net cash flow of over $500k per month. The Company is seeking to close the purchase.  This purchase and incremental infra-structure enhancements that would increase production by 20-30% within approximately 90 days. With the AVL acquisition would come additional drilling sites as well as additional 40,000 acres of developmental property. Under the umbrella of PEC, there are several other acquisitions currently being evaluated for purchase.

Permian Energy Corporation is a wholly owned subsidiary that owns representation and distribution rights to certain proprietary and patented technology for oil recovery.  This technology called a thermal pulsing device allows for pressure and steam to be forced down-hole thereby reducing paraffin deposits and decreasing viscosity of the oil for better flow rates.  In fields where there is primarily oil but with some natural gas, this technology can potentially remove the need for a down-hole pump or pump jack.  The Company initially acquired equipment through this subsidiary for additional research and development as well as field deployment.  It is believed that the technology will enhance certain fields that can be acquired by Platina that will greatly enhance productivity. The longer term plan for this technology is to joint venture its proven use with a Company specializing in extraction technologies.  Presently, the Company is in discussions with potential partners for use of this device. 

Appalachian Energy was formed as part of the acquisition of approximately 50 well sites in the Devonian Shale formation.  Subsequent to acquisition, the Company expended resources to provide scientific data for the field by geological and petroleum engineering report.  This report using conservative natural gas price estimates indicates a net present valuation of the field on a PV10 basis to be in excess of $60 million. 

Individual well production estimates extrapolate production at current pricing to be in the $35-42,000 range per month.  Pipeline access crosses the field and ample compressor capacity is readily available and in place.  Drilling permits for the first four sites are in process. Platina’s resident manager of the field estimates that 50 wells can be drilled and completed within 6 months time assuming no major weather delays.

Young County is a lease prospect that the Company acquired in fiscal 2006.  This field includes currently producing wells and proven reserves worth millions of dollars according to independent data.  By industry standards, the Young County prospect would be classified as a stripper well field.  However, initial production of oil based on average pay-zone production data indicates that daily production falls in the 20-50 barrel per day range.  Also, advancements in recovery technology may be able to increase well productivity by 200% or more.

Phase one encompassing approximately 20 well sites has been committed through a third party joint venture agreement.  Under this agreement, Platina estimates that it will have an initial net production allocation in the range of 2,500-6,000 barrels per month.  The first well permits have been issued and drilling is expected to commence by the end of July 2007. Phase two that will have approximately 20 additional well sites is presently available in conjunction with the primary agreement with Zone. Estimated net recovery over time to the investor is approximately 600,000 + Barrels of oil.

The Palo Duro Basin is a shale formation with additional potential pay-zones above it.  The formation is found in West Texas and in parts of Oklahoma.  Until Mitchell Energy established a method for completing this formation by way of the Barnett Shale, it was otherwise previously not producible.  According to a Morgan Stanley report and subsequent recent data published in a major trade journal, the Palo Duro Basin may be as much or potentially more prolific than the Barnett Shale.

Surrounding data for the Palo Duro Basin shale formation suggests that additional engineering and geological studies be conducted on the 20,000,000+ lease acres that Platina controls. The likelihood many millions of dollars of recoverable reserves are very high and the correct data should support the best method for recovery and exploration.
 

Platina has been able to capitalize on years of relationships with innovative suppliers of new technology for treating heavy hydrocarbons both on the surface and in down hole formations.  Platina has recently signed agreements with ABI Technology and BI-Comp, Inc. to secure marketing and distribution rights to a revolutionary compressor/pump called a Thermal Pulse Dynamic Lifting Unit (TPU). The unit employs “off the shelf” components in the most simplistic and user friendly manner. This is the safest machine of its kind in the market place.

Recent News from Platina

Platina Energy Group, Inc. (OTCBB: PLTG) (FRANKFURT: O5Y) is pleased to announce an independent estimated reserve report for its P. Hawkins Gas Lease in Tennessee performed by a petroleum engineer and further collaborated by a local geologist. This report indicates over a $60 million net present value based on the industry standard of a ten-year discounted analysis. This report does not take into account recent energy price fluctuations or the ability to hedge pricing in the futures market that could significantly increase this valuation. Furthermore, this report is for the P. Hawkins Lease alone and does not represent the potential reserves from other properties. The net asset value per share for the estimated P. Hawkins reserves alone is significantly higher than the current share price, giving the Company considerable potential hidden value not capable of being reflected in SEC approved GAAP accounting.

Platina Energy Group, Inc. (Symbol OTCBB: PLTG), (Symbol Frankfurt: 05Y.F), (Symbol Berlin: 05Y.BE), (Symbol Xetra: 05Y.DE) (Symbol Stuttgart: 05Y.SG) is pleased to announce that it has filed using expedited service for drilling permits located on its Young County prospect in Texas. Platina has also engaged the drilling services of a local contractor on a joint venture basis. The drilling of the new wells is expected to begin before the end of June, 2007. Platina looks forward to enhancing its current production from this field by the addition of the new wells.

Platina Energy Group, Inc. (OTCBB: PLTG), (Symbol Frankfurt: 05Y.F) is pleased to announce that it has signed a deal to exercise its option to acquire a major stake in the Hall and Kirkpatrick leases located in Swisher and Hale county, Texas. The acquisition represents a substantial increase to its current holdings in the Palo Duro Basin, raising the company's leased acreage by approximately 920 acres. As mentioned in a previous press release, a Morgan Stanley report compares Palo Duro Basin to Barnett Shale, the largest natural gas play in Texas. Mr. Blair Merriam, the CEO of the Company states, 'We are pleased to have signed a deal for these options in particular, based on our opinion that these locations have the best potential.' 

Blair Merriam, President and CEO 
Blair Merriam, by virtue of his entrepreneurial skills and significant experience in the natural resources sector, has executed a number of acquisitions for restricted common share interests in the Company. Under his direction, the Company initiated its production and is on track for production capacity gains through new drilling and additional acquisitions.

Chip Langston, Director 
Chip Langston, the President of Platina Exploration Corporation, was recently appointed Director of Platina Energy Group in June, 2007. Mr. Langston, a CPA and financing expert, has deep knowledge of the oil and gas industry. He serves as a consultant for Texas Standard Oil Company and Buccaneer Energy Corporation. Texas Standard Oil Company purchased all the assets of Freeport McMoran Oil and Gas Royalty Trust in 2001. He is also an investor in  Langston Energy LLC. 

Steve Eversole, President of AEC 
Steve Eversole is President of Appalachian Energy Corporation. He owns drilling and operating licenses in Kentucky and Tennessee and has been actively handling drilling operations for Platina’s current lease holdings. Mr. Eversole is currently involved in discussions with potential investment partners for the development of the Appalachian Energy properties which he believes to be worth more than the current market value of the entire Company.

Dan Thornton, Vice-President and Secretary 
Mr. Thornton has significant prior work experience with publicly-listed companies and is well-suited to handle the day-to-day administrative operations of the Company. He is also significantly involved in providing computer skill interfaces for technological advancements and plays key roles in managing the Company’s bookkeeping and reporting requirements.
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Financial Highlights For  Platina

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