PLATINUM ENERGY RESOURCES INC - FORM 10-Q

Attached files

file	filename
EX-32.1 - PLATINUM ENERGY RESOURCES INC	v165702_ex32-1.htm
EX-31.2 - PLATINUM ENERGY RESOURCES INC	v165702_ex31-2.htm
EX-31.1 - PLATINUM ENERGY RESOURCES INC	v165702_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission file number: 000-51553

PLATINUM ENERGY RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Delaware		14-1928384
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

11490 Westheimer Road, Suite 1000		77077
Houston, Texas		(Zip Code)
(Address of principal executive offices)

(281) 649-4500

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be posted pursuant to Rule 405 of Regulation S-T (S 232.405 of this chapter) during the preceeding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer” “large accelerated filer” and “ smaller reporting company ” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated Filer ¨ Accelerated Filer o Non-Accelerated Filer o (Do not check if a smaller reporting company) Smaller reporting company x

Indicated by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 11, 2009, 22,070,762 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

Table of Contents

		Page
PART I- FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4T.	Controls and Procedures	30

PART II- OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Submission of Matters to a Vote of Security Holders	32
Item 5.	Other Information	33
Item 6.	Exhibits	33
Signatures		34

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2009			December 31, 2008
	(UNAUDITED)			*
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	2,284,435		$	3,668,092
Accounts receivable, net of $209,392 and $164,392 allowance for doubtful accounts as of September 30, 2009 and December 31, 2008, respectively
Oil and gas sales		1,967,962			1,629,931
Service		3,357,988			5,255,041
Inventory		410,791			436,477
Fair value of commodity derivatives - current		4,346,453			1,968,186
Prepaid expenses and other current assets		497,680			747,225

Total Current Assets		12,865,309			13,704,952

Property and equipment, at cost
Oil and gas properties, full cost method		205,846,115			204,372,437
Other		5,531,069			5,492,072
Less accumulated depreciation, depletion, amortization and impairment		(149,754,966	)		(145,016,531	)
Property and equipment, net		61,622,218			64,847,978

Other assets
Intangible assets, net		4,397,628			5,061,066
Fair value of commodity derivatives		7,998,398			18,562,702
Real estate held for development		2,700,000			2,700,000

Total Assets	$	89,583,553		$	104,876,698

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable
Trade	$	1,283,900		$	2,551,808
Oil and gas sales		980,397			1,115,114
Accrued liabilities and other		3,704,533			4,437,995
Income taxes payable		186,880			119,770
Current maturities of long-term debt, capital lease obligations and notes payable		16,902,640			13,403,731
Total Current Liabilities		23,058,350			21,628,418

Long-term debt and capital lease obligations, net of current portion		1,142,561			4,687,423
Notes payable - acquisitions		3,361,143			3,231,959
Other accrued liabilities		119,735			148,458
Asset retirement obligation		4,817,625			4,537,243
Deferred income taxes		5,715,055			10,459,000
Total Liabilities		38,214,469			44,692,501

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, 1,000,000 authorized, 0 issued		—			—
Common stock, $.0001 par value; 75,000,000 shares authorized; 24,068,675 issued and 22,070,762 outstanding in each period, respectively		2,407			2,407
Additional paid-in capital		155,139,130			155,100,474
Accumulated deficit		(88,110,989	)		(79,257,220	)
Treasury stock - 1,997,913 shares, at cost		(15,661,464	)		(15,661,464	)

Total Stockholders' Equity		51,369,084			60,184,197

Total Liabilities and Stockholders' Equity	$	89,583,553		$	104,876,698

* Derived from the audited financial statements for the year ended December 31, 2008

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008

Revenues
Oil and gas sales	$	4,703,985		$	10,907,763		$	12,483,989		$	28,736,638
Service revenues		4,766,841			6,219,904			14,774,555			11,276,586
		9,470,826			17,127,667			27,258,544			40,013,224
Costs and expenses
Lease and other operating expense		2,159,876			4,169,678			7,093,775			9,490,589
Cost of service revenues		4,149,891			7,042,055			13,764,777			11,001,165
Marketing, general and administrative expense		1,788,802			1,625,540			6,337,261			7,125,980
Depreciation, depletion and amortization expense		1,683,510			3,118,105			5,479,819			7,759,268
Accretion of asset retirement obligations		80,475			74,296			240,022			185,284

Total costs and expenses		9,862,554			16,029,674			32,915,654			35,562,286

Operating income (loss)		(391,728	)		1,097,993			(5,657,110	)		4,450,938

OTHER INCOME (EXPENSES)
Interest income		4,201			32,194			8,515			172,377
Interest expense		(353,231	)		(276,163	)		(983,848	)		(520,848	)
Change in fair value of commodity derivatives		950,947			17,884,342			(6,927,447	)		(7,244,911	)
Other		3,208			(176,598	)		5,761			329
Total other income (expense)		605,125			17,463,775			(7,897,019	)		(7,593,053	)

Income (Loss) Before Income Taxes		213,397			18,561,768			(13,554,129	)		(3,142,115	)
Provision (Benefit) For Income Taxes		89,086			6,523,502			(4,700,360	)		(1,108,238	)

Net Income (Loss)	$	124,311		$	12,038,266		$	(8,853,769	)	$	(2,033,877	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic		22,070,762			22,070,762			22,070,762			22,070,762
Diluted		22,070,762			22,070,762			22,070,762			22,070,762

NET INCOME (LOSS) PER COMMON SHARE:
Basic	$	0.01		$	0.55		$	(0.40	)	$	(0.09	)
Diluted	$	0.01		$	0.55		$	(0.40	)	$	(0.09	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30, 2009			Nine Months Ended September 30,2008

Cash Flows From Operating Activities
Net loss	$	(8,853,769	)	$	(2,033,877	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debt expense		45,000			—
Depreciation, depletion and amortization of property, plant and equipment		4,816,381			7,759,268
Accretion of asset retirement obligation and debt discount		417,383			278,051
Amortization of intangible assets/write-off of bank loan fees		663,438			—
Stock based compensation		38,656			856,515
Deferred income taxes		(4,743,945	)		(1,058,254	)
Unrealized change in fair value of commodity derivatives		8,186,037			2,521,928
Changes in operating assets and liabilities:
Accounts receivable		1,514,022			(1,410,614	)
Inventory		25,686			(453,480	)
Prepaid expenses and other current assets		249,544			(397,003	)
Accounts payable		(1,402,625	)		2,236,220
Accrued liabilities and other		(762,185	)		(199,316	)
Income taxes payable		67,110			(188,727	)
Commodity derivatives		—			(1,008,566	)
Net cash provided by operating activities		260,733			6,902,145

Cash Flows From Investing Activities

Additions to property and equipment		(1,550,261	)		(16,757,657	)
Acquisition of other businesses - oil and gas properties		—			(7,939,139	)
Acquisition of Maverick, net of cash of $ 621,518		—			(5,640,601	)
Advance payment and costs, Pleasanton transaction		—			2,522,639
Net cash used in investing activities		(1,550,261	)		(27,814,758	)

Cash Flows From Financing Activities

Proceeds of revolving credit facility		1,000,000			9,225,090
Payments, long-term debt and capital leases		(1,094,129	)		(180,029	)
Net cash (used in) provided by financing activities		(94,129	)		9,045,061

Net Decrease in Cash		(1,383,657	)		(11,867,552	)

Cash - Beginning of the Period		3,668,092			16,429,619
Cash - End of Period	$	2,284,435		$	4,562,067

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	752,272		$	239,391
Income taxes	$	70,000		$	99,000
Non-Cash Investing and Financing Activities:
Issuance of notes payable - Pleasanton acquisition	$	—		$	550,000
Asset retirement cost and obligation	$	40,269		$	302,207
Acquisition of oil and gas property - Pleasanton	$	—		$	550,000
Issuance of Cash Flow Notes, net- Maverick transaction	$	—		$	3,034,000
Acquisition of Maverick	$	—		$	3,034,000
Adjustment of purchase price of oil and gas properties	$	—		$	4,640,000

Acquisition of Maverick:
Cash				$	621,518
Accounts receivable					4,296,033
Other current assets					157,303
Property and equipment					1,510,052
Goodwill					5,912,611
Intangible assets					5,522,250
Accounts payable					(634,984	)
Accrued expenses					(1,765,404	)
Accrued payroll					(576,165	)
Term notes and revolving line of credit					(5,223,086	)
Capitalized lease obligations					(524,010	)
Total purchase price					9,296,118
Less: cash consideration paid to sellers					(6,000,000	)
Less: transaction costs					(262,118	)
Non-cash consideration issued to sellers - Cash Flow Notes, net				$	3,034,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

Note 1 - Organization, Business and Operations and Basis of Presentation

Platinum Energy Resources, Inc. and subsidiaries (the “Company” or “Platinum”) considers itself to be in two lines of business as follows:

(i) The oil and gas division operations have approximately 37,000 acres under lease in relatively long-lived fields with well-established production histories. The Company’s properties are concentrated primarily in the Gulf Coast region in Texas, the Permian Basin in Texas and New Mexico and the Fort Worth Basin in Texas;

and

(ii) Engineering and construction services primarily for three types of clients: (1) upstream oil and gas, domestic oil and gas producers and pipeline companies; (2) industrial, petrochemical and refining plants; and (3) infrastructure, private and public sectors, including state municipalities, cities, and port authorities. Maverick Engineering, Inc. (“Maverick”) operates out of facilities headquartered in Victoria, Texas and operates primarily in Texas.

Note 2 – Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements as of September 30, 2009 and for the three and nine months then ended have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited consolidated financial statements. The unaudited interim condensed consolidated balance sheet as of September 30, 2009, unaudited interim condensed consolidated statements of operations for the three months and nine months ended September 30, 2009 and 2008, and the unaudited interim condensed consolidated statements of cash flows for the nine months ended September 30, 2009 and 2008 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three months and nine months ended September 30, 2009 are not necessarily indicative of results to be expected for the year ending December 31, 2009 or for any future interim period. The condensed consolidated balance sheet at December 31, 2008 has been derived from audited consolidated financial statements; however, these notes to the condensed consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the SEC.

Note 3 — Summary of Significant Accounting Policies

Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include volumes of oil and natural gas reserves, abandonment obligations, impairment of oil and natural gas properties, depreciation, depletion and amortization, income taxes, bad debts, derivatives, contingencies and litigation.

Oil and natural gas reserve estimates, which are the basis for unit-of-production depletion and the ceiling test, have a number of inherent uncertainties. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of oil and natural gas that are ultimately recovered. In addition, reserve estimates are vulnerable to changes in wellhead prices of crude oil and natural gas. Such prices have been volatile in the past and can be expected to be volatile in the future.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

The Company uses the full cost method of accounting for exploration and development activities as defined by the SEC. Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country. The Company has defined a cost center by country. Currently, all of the Company’s oil and gas properties are located within the continental United States.

Properties and equipment may include costs that are excluded from costs being depreciated or amortized. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include nonproducing leasehold, geological and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. All costs excluded are reviewed at least quarterly to determine if impairment has occurred.

Derivative Financial Investments

From time to time, the Company may utilize derivative instruments, consisting of puts, calls, swaps, and price collars, to attempt to reduce its exposure to changes in commodity prices. The Company accounts for its derivatives in accordance with the Accounting Standards Codification Topic 815 “Derivatives and Hedging” (ASC 815), (formerly SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”). ASC 815 requires that all derivative instruments be recognized as assets or liabilities in the balance sheet, measured at fair value. The accounting for changes in the fair value of a derivative depends on both the intended purpose and the formal designation of the derivative. Designation is established at the inception of a derivative, but subsequent changes to the designation are permitted. The Company has elected not to designate any of its derivative financial contracts as accounting hedges and, accordingly, has accounted for these derivative financial contracts using mark-to-market accounting. Changes in fair value of derivative instruments which are not designated as cash flow hedges are recorded in other income (expense) as changes in fair value of commodity derivatives.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Recent Accounting Guidance

In July 2009, the FASB issued new accounting guidance under the Accounting Standards Codification (ASC) Topic 105 (ASC 105), (formerly, Statement of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting Codification and the Hierarchy of Generally Accepted Accounting Principles”). Under this guidance, the ASC became the single source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the ASC superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the ASC will become non-authoritative. This Statement is effective for interim and annual periods ending after September 15, 2009. Other than the manner in which new accounting guidance is referenced, the adoption of this guidance did not materially impact the Company’s condensed consolidated financial statements.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

On January 1, 2009, the Company adopted new accounting guidance under ASC Topic 805 (ASC 805) on business combinations, (formerly SFAS No. 141 (R), “Business Combinations” which replaced SFAS No. 141“Business Combinations”). ASC 805 retains the fundamental requirements in SFAS 141, including that the purchase method be used for all business combinations and for an acquirer to be identified for each business combination. This standard defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control instead of the date that the consideration is transferred. ASC 805 requires an acquirer in a business combination, including business combinations achieved in stages (step acquisition), to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. It also requires the recognition of assets acquired and liabilities assumed arising from certain contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. Additionally, ASC 805 requires acquisition-related costs to be expensed in the period in which the costs are incurred and the services are received instead of including such costs as part of the acquisition price. The adoption of ASC 805 did not have a material impact on the Company’s condensed consolidated financial statements. The provisions of ASC 805 will be applied at such time when measurement of a business acquisition is required.

On January 1, 2009, the Company adopted new accounting guidance under ASC Topic 820 (ASC 820) on fair value measurements (formerly SFAS No. 157, “Fair Value Measurements”), as it relates to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the consolidated financial statements on at least an annual basis. ASC 820 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other topics that require or permit fair value measurements and are to be applied prospectively with limited exceptions. The adoption of ASC 820, as it relates to nonfinancial assets and nonfinancial liabilities had no impact on the Company’s condensed consolidated financial statements. The provisions of ASC 820 will be applied at such time as a fair value measurement of a nonfinancial asset or nonfinancial liability is required, which may result in a fair value that is materially different than would have been calculated prior to the adoption of ASC 820.

On January 1, 2009, the Company adopted new accounting guidance under ASC Topic 810 (ASC 810) on consolidation (formerly SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51”). ASC 810 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This topic defines a noncontrolling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. ASC 810 requires, among other items, that a noncontrolling interest be included in the consolidated statement of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. The presentation and disclosure requirements of ASC 810 were applied retrospectively. The adoption of ASC 810 had no impact on the Company’s condensed consolidated financial statements.

On January 1, 2009, the Company adopted new accounting guidance under ASC Topic 815 (ASC 815) on derivatives and hedging (formerly SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133”). ASC 815 requires enhanced disclosures about an entity’s derivative and hedging activities, including (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under ASC 815, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The adoption of ASC 815 had no impact on the Company’s condensed consolidated financial statements.

On January 1, 2009, the Company adopted new accounting guidance under ASC Topic 350-35 (ASC 350-35) on intangibles (formerly FASB Staff Position (FSP) No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”). ASC 350-35 identifies the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset on goodwill and other intangibles in order to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The adoption of ASC 350-35 had no impact on the Company’s condensed consolidated financial statements.

On January 1, 2009, the Company adopted new accounting guidance under ASC Topic 260 (ASC 260) on earnings per share which established that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

On January 1, 2009 the Company adopted new accounting guidance under ASC Topic 815 (ASC 815) on derivatives and hedging which provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument, or embedded feature, is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuations. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In May, 2009 the Company adopted new accounting guidance under ASC Topic 855 (ASC 855) on subsequent events, (formerly, SFAS No. 165, “Subsequent Events”). ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC 855 was effective for interim or annual periods ending after June 15, 2009. Management has evaluated subsequent events to determine if events or transactions occurring through November 11, 2009 (the date at which the financial statements were available to be issued), and has determined that no such events have occurred that would require adjustment to or disclosure in the financial statements.

In June 2009 the FASB issued SFAS No. 166, “Accounting for Transfers of financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. SFAS 166 will be effective January 1, 2010. The adoption of this pronouncement is not expected to have a material impact on the Company’s consolidated financial position and results of operations. This standard has not yet been integrated into the Accounting Standards Codification.

In June 2009 the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 eliminates Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying Interpretation 46(R)’s provisions. The elimination of the qualifying special-purpose entity concept and its consolidation exceptions means more entities will be subject to consolidation assessments and reassessments. SFAS 167 will be effective January 1, 2010. The adoption of this pronouncement is not expected to have a material impact on the Company’s consolidated financial position and results of operations. This standard has not yet been integrated into the Accounting Standards Codification.

In August 2009, FASB issued Accounting Standards Update 2009-05 which includes amendments to Subtopic 820-10, Fair Value Measurements and Disclosures—Overall. The update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this Update clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

In December 2008, the SEC issued the final rule, "Modernization of Oil and Gas Reporting ," which adopts revisions to the SEC's oil and natural gas reporting disclosure requirements and is effective for annual reports on Forms 10-K for years ending on or after December 31, 2009. Early adoption of the new rules is prohibited. The new rules are intended to provide investors with a more meaningful and comprehensive understanding of oil and natural gas reserves to help investors evaluate their investments in oil and natural gas companies. The new rules are also designed to modernize the oil and natural gas disclosure requirements to align them with current practices and changes in technology. The new rules include changes to the pricing used to estimate reserves, the ability to include nontraditional resources in reserves, the use of new technology for determining reserves and permitting disclosure of probable and possible reserves. The Company is currently evaluating the potential impact of these rules. The SEC is discussing the rules with the FASB staff to align FASB accounting standards with the new SEC rules. These discussions may delay the required compliance date. Absent any change in the effective date, the Company will begin complying with the disclosure requirements in our annual report on Form 10-K for the year ending December 31, 2009. On October 30, 2009, the SEC issued Staff Accounting Bulletin No. 113 which revised or rescinds portions of the interpretive guidance included in the section of the Staff Accounting Bulletin Series titled “Topic 12: Oil and Gas Producing Activities” (Topic 12) and revised a technical reference in “Topic 3: Senior Securites” (Topic 3). This update is intended to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The principal changes involve revision or removal of material due to recent SEC rulemaking. The Company is currently evaluating the effects of the new rules regarding the “Modernization of Oil and Gas Reporting” on its financial statements.

Note 4 - Oil and Gas Properties

The following table sets forth the Company’s costs incurred in oil and gas property acquisition, exploration and development activities for the nine months ended September 30, 2009. (stated in thousands):

Balance at December 31, 2008	$	204,372
Acquisition of properties
Proved		—
Unproved		—
Adjustment to purchase price of oil and gas properties		—
Exploration costs		16

Development costs		1,458

Balance at September 30, 2009	$	205,846

The following table sets forth the Company’s capitalized costs relating to oil and gas producing activities at September 30, 2009 (stated in thousands):

	September 30, 2009
Proved oil and gas properties	$	204,583
Unproved oil and gas properties		1,263
		205,846
Accumulated depletion and impairment		(146,758	)

Net capitalized costs at September 30, 2009	$	59,088

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

Note 5 – Derivative Financial Instruments

The Company engages in price risk management activities from time to time. The Company utilizes derivative instruments, consisting of swaps, floors and collars, to attempt to reduce its exposure to changes in commodity prices. The Company accounts for its derivatives in accordance with ASC 815, “Derivatives and Hedging”. The Company has elected not to designate any of its derivative financial contracts as accounting hedges and, accordingly, account for these derivative financial contracts using mark-to-market accounting. Changes in fair value of derivative instruments which are not designated as cash flow hedges are recorded in other income (expense) as changes in fair value of derivatives. The obligations under the derivatives contracts are collateralized by the same assets that collateralize the Senior Credit Facility, and the contracts are cross-defaulted to the Senior Credit Facility. Substantially all of the derivative financial instruments are collateral for the Senior Credit Facility.

While the use of these arrangements may limit the Company's ability to benefit from increases in the price of oil and natural gas, it is also intended to reduce the Company's potential exposure to significant price declines. These derivative transactions are generally placed with major financial institutions that the Company believes are financially stable; however, in light of the recent global financial crisis, there can be no assurance of the foregoing.

For the three months ended September 30, 2009 and 2008, the Company included in other income (expense) realized and unrealized losses related to its derivative contracts as follows (stated in thousands):

	Three Months Ended September 30,
	2009		2008
Crude oil derivative realized settlements	$	93		(2,243	)
Crude oil derivative change in unrealized gains (losses)		858		20,127
Gain (loss) on derivatives	$	951		17,884

For the nine months ended September 30, 2009 and 2008, the Company included in other income (expense) realized and unrealized losses related to its derivative contracts as follows (stated in thousands):

	Nine Months Ended September 30,
	2009			2008
Crude oil derivative realized settlements	$	1,259			(5,009	)
Crude oil derivative change in unrealized gains (losses)		(8,186	)		(2,236	)
Loss on derivatives	$	(6,927	)		(7,245	)

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

Presented below is a summary of the Company’s crude oil derivative financial contracts at September 30, 2009:

Period Ended September 30,	Instrument Type	Total Volumes (bBbl)		Contract Price		Fair Value (stated in thousands)
2010	Swaps		30,000		71.00	$	(2	)
	Swaps		90,000		95.50		1,951
	Puts		90,000		75.00		914
	Puts		90,000		85.00		1,483
2011	Swaps		30,000		95.50		585
	Puts		30,000		75.00		348
	Puts		30,000		85.00		519
	Puts		140,000		80.00		2,062
	Swaps		90,000		95.25		1,631
2012	Swaps		30,000		95.25		514
	Puts		30,000		80.00		459
	Swaps		90,000		95.00		1,433
2013	Swaps		30,000		95.00		448

	Total fair value					$	12,345

Note 6 – Fair Value Measurements

The Company adopted ASC 820 “Fair Value Measurements and Disclosures”, (formerly SFAS No. 157, “Fair Value Measurements”). As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In determining the fair value of its derivative contracts the Company evaluates its counterparty and third party service provider valuations and adjusts for credit risk when appropriate, ASC 820 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:

Level 1:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:

Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that are valued using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter commodity price swaps and interest rate swaps.

Level 3:

Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). The Company’s valuation models are primarily industry-standard models that consider various inputs including: (a) quoted forward prices for commodities, (b) time value, (c) volatility factors and (d) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Level 3 instruments primarily include derivative instruments, such as commodity price collars and puts. These instruments are considered Level 3 because the Company does not have sufficient corroborating market evidence for volatility to support classifying these assets and liabilities as Level 2.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

As required by ASC 820, assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following table presents information about the Company’s assets and liabilities, measured at fair value on a recurring basis as of September 30, 2009, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. The fair value of derivative financial instruments is determined based on counterparties’ valuation models that utilize market-corroborated inputs.

As of September 30, 2009
(in thousands)

	Level 1		Level 2		Level 3		Total
Oil and natural gas derivatives		—	$	12,345		—	$	12,345

The determination of the fair values above incorporates various factors required under ASC 820. These factors include the impact of our nonperformance risk and the credit standing of the counterparties involved in the Company’s derivative contracts.

Gains and losses (realized and unrealized) included in earnings for the three and nine months ended September 30, 2009 and 2008, are reported in other income (expense) on the Consolidated Statement of Operations.

During periods of market disruption, including periods of volatile oil and natural gas prices, rapid credit contraction or illiquidity, it may be difficult to value certain of the Company’s derivative instruments if trading becomes less frequent and/or market data becomes less observable. There may be certain asset classes that were in active markets with observable data that become illiquid due to the current financial environment. In such cases, derivative instruments may fall to Level 3 and thus require more subjectivity and management judgment. As such, valuations may include inputs and assumptions that are less observable or require greater estimation as well as valuation methods which are more sophisticated or require greater estimation thereby resulting in valuations with less certainty. Further, rapidly changing commodity and unprecedented credit and equity market conditions could materially impact the valuation of derivative instruments as reported within our consolidated financial statements and the period-to-period changes in value could vary significantly. Decreases in value may have a material adverse effect on our results of operations or financial condition.

Cash and cash equivalents, receivables, accounts payable and accrued liabilities were each estimated to have a fair value approximating the carrying amount due to the short maturity of those instruments. Indebtedness under the Company’s secured revolving bank credit facility and loans related to the acquisition of Maverick were estimated to have a fair value approximating the carrying amount since the interest rate is generally market sensitive.

Note 7 – Commitments and Contingencies

Consulting Agreement

Effective with the Tandem acquisition on October 26, 2007, the Company entered into a consulting agreement with Mr. Lance Duncan, for consulting services, including investigation and evaluation of possible future acquisitions for the Company. Under the terms of the consulting agreement, the Company agreed to issue to Mr. Duncan a total of 714,286 shares of the Company’s restricted common stock as consideration over the period of service. These shares are fixed in number (except for stock splits or other recapitalizations). These shares were to be issued in semi-annual installments over the eighteen month term of the agreement beginning with the closing of the Tandem acquisition.

On October 26, 2007, the first installment of 178,572 of irrevocable shares was issued to Mr. Duncan. These shares were valued at $1,250,000 which was charged to operations during the year ended December 31, 2007. The Company was required to issue the remaining 535,714 shares of its common stock in 2008 and 2009. The Company has not issued these shares due to a dispute between the Company and Duncan with respect to other claims that Duncan has raised (See Note 12). $1,098,215 and $1,188,215 is included in other accrued liabilities on the balance sheets dated December 31, 2008 and September 30, 2009, respectively, related to these unissued 535,714 shares of common stock.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

Note 8 - Long-Term Debt and Capital Lease Obligations

The following table sets forth the Company’s long-term debt position as of September 30, 2009 (stated in thousands):

Oil and gas revolving line of credit	(a)	$	13,009
Notes payable - acquisitions	(b)		3,498
Revolving LOC to former shareholders – Maverick	(c)(f)		2,917
Term note to former shareholders - Maverick	(d)(f)		252
Second term note to former shareholders - Maverick	(e)(f)		1,403
Capital lease obligations			328
		$	21,407
Less: Current maturities			16,903
Long-term debt		$	4,504

(a) On March 14, 2008, Tandem and PER gulf Coast, Inc. (“Borrower”) which are wholly owned subsidiaries of the Company, entered into a Senior Secured Revolving Credit Facility (“Senior Credit Facility”) with Bank of Texas (The “Bank ” ). The Senior Credit Facility provided for a revolving credit facility up to the lesser of the borrowing base and $100 million. The initial borrowing base was set at $35 million. The facility is collateralized by substantially all of the Company’s proved oil & gas assets, including the Company's commodity derivatives.

On January 9, 2009, the Borrowers reaffirmed the borrowing base at $35 million and amended the Senior Credit Facility to change the interest rate provisions. Under the amended loan agreement the outstanding debt bears interest at LIBOR, plus a margin which varies with the ratio of the Borrower’s outstanding borrowings against the defined borrowing base, ranging from 2.0% to 2.75 % provided the interest rate does not fall below a floor rate of 4% per annum. In addition, the Borrower is obligated to the bank for a monthly fee of any unused portion of the line of credit at the rate of 0.25% per annum.

Under the terms of revolving line of credit agreement, the Borrower must maintain certain financial ratios, must repay any amounts due in excess of the borrowing base, and may not declare any dividends or enter into any transactions resulting in a change in control, without the bank’s consent.

A financial covenant under the credit facility requires us to maintain a ratio of indebtedness to cash flow of no more than 3 to 1. As of December 31, 2008, the Borrowers were not in compliance with this covenant. The bank agreed to waive the covenant non-compliance issue, subject to the Company’s ratification of the amended credit facility more fully described below.

On June 12, 2009, the Borrowers received a “Notice of Borrowing Base Redetermination and Notice of Event of Default” from the bank. The bank set the new borrowing base at $15 million, shortened the maturity date of the loan from March 14, 2012 to June 1, 2010, raised the floor interest rate from 4% to 4.5%, redefined certain covenant ratios, and requires certain fees paid to grant the waivers necessary to cure the aforementioned covenant defects. The Company executed the Second Amendment to the Senior Credit Facility on June 25, 2009. The Company, as the parent company, is not a co-borrower or guarantor of the line, and transfers from the Borrower to the parent company are limited to (i) $1 million per fiscal year to the parent for management fees, and (ii) the repayment of up to $2 million per fiscal year in subordinate indebtedness owed to the parent. As of September 30, 2009 the $13.0 million outstanding under the revolving line of credit was bearing interest at the bank’s base rate, which, at the time, was 4.5%. As amended, the Senior Credit Facility expires in June 1, 2010. Accordingly, the Company has classified the full $13 million as a current liability.

(b) As part of the acquisition of Maverick the Company agreed to pay $5 million over the next 5 years pursuant to non-interest bearing cash flow notes, subject to certain escrows, holdbacks and post-closing adjustments. The cash flow notes are payable quarterly at the rate of 50% of pre-tax net income generated by the Maverick business on a stand-alone basis in the preceding quarter. Payment can be accelerated by certain events, including change in control of the Company.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

The purchase price was subject to adjustment for any change in working capital as defined in the agreement, between October 31, 2007 and the closing date, as well as other adjustments associated with changes in indebtedness. The cash flow notes were reduced by the amount of the working capital post closing adjustment which was determined by the Company to be $645,596. This amount may be subject to modification as may be agreed between the parties. At the time the acquisition was completed, a discount to present value in the amount of $1,320,404 was recorded and deducted from the cash flow notes as these notes are non-interest bearing for the initial 5 years of their term. As a result, the net carrying value of the notes on April 29, 2008 was $3,034,000 and $3,183,783 at December 31, 2008 and $3,361,143 at September 30, 2009 after the accretion of the discount in the amount of $177,360 during the first nine months of 2009.

It is the Company’s position that Maverick generated a pretax loss during the period April 29, 2008 through December 31, 2008 and the fourth quarter of 2008, and as such the Company was not obligated to make a mandatory payment to the note holders. Generally Accepted Accounting Principles in the United States of America (“GAAP”) require intangible assets to be amortized over their useful lives. In addition, goodwill and intangible assets are evaluated annually for potential impairment. The pretax income as calculated by Robert L. Kovar Services, LLC, as the stockholder representative, did not include amortization expense or impairment charges related to intangible assets and goodwill in accordance with GAAP.

In connection with the Pleasanton acquisition, the Company entered into a settlement agreement for $1,000,000 in order to secure clear title to the properties acquired, of which it paid $450,000 cash and issued a note for the balance in the amount of $550,000. The note bears interest at 12% per annum, and is subject to monthly payments beginning June 1, 2008 of an amount equal to ½ of the net proceeds from production attributable to the Company’s interest in the purchased leasehold or $30,000, whichever is greater, until the note is paid in full. As of September 30, 2009 the unpaid balance of $134,705 is classified as a current liability.

(c) $3,250,000 revolving line of credit, payable to the Maverick former shareholders in monthly interest payments at prime plus 0.25%, principal and unpaid interest due at maturity in September 2010. On December 31, 2008 and June 30, 2009, Maverick was not in compliance with the debt service coverage ratio required under this facility. Maverick obtained a waiver of the obligation to maintain this ratio through September 30, 2009; and, accordingly, the Company has classified the full $2,917,403 outstanding revolving line of credit as a current liability.

(d) Term note, payable to the Maverick former shareholders in monthly principal and interest payments of $10,280 with interest at prime plus .75%, unpaid principal and interest due at maturity in May 2009. Due to the ongoing litigation related to Maverick, this note was not paid on the due date. For more information see Note 12 Litigation.

(e) Second term note, payable to the Maverick former shareholders in monthly interest payments at prime plus 0.50% beginning in April 2008 and beginning in October 2008, principal payments of $23,390 plus interest until maturity in April 2013.

(f) On April 29, 2009, Maverick received a notice of acceleration (the “Acceleration Letter”) with respect to the Notes governed by a Loan Agreement and related Security Agreement originally dated April 30, 2005 and April 29, 2005, respectively. The Acceleration Letter alleges that Maverick failed to comply with certain covenants under the terms of the Loan Agreement and that Maverick failed to make payments due under the Notes. The outstanding principal, accrued interest and late charges alleged to be owed by Maverick in the Acceleration Letter total $4,659,227. The Acceleration Letter also contends that interest continues to accrue at the default rate of 18% per annum. In a separate letter, dated May 1, 2009, Robert L. Kovar Services, LLC, as the stockholder representative for the sellers, purported to terminate the revolving credit facility under the Loan Agreement and demanded turnover of all collateral securing indebtedness under the Loan Agreement, including the Notes.

The Company and Maverick have asserted claims in litigation against the holders of the Notes, Robert L. Kovar Services, LLC, Robert L. Kovar, individually, and others. The litigation is in its early stages and, accordingly, the Company cannot predict the outcome of these matters.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

Annual maturities of indebtedness at September 30, 2009 are as follows (stated in thousands):

For the Twelve Months Ended September 30,
2010	$	16,903
2011		281
2012		281
2013		3,942
	$	21,407

The following is a schedule of future minimum lease payments under capitalized leases together with the present value of the net minimum lease payments at September 30, 2009 (stated in thousands):

For the Twelve Months Ended September 30,
2010	$	194
2011		143
2012		64
Total minimum lease payments		401
Less: Amount representing interest		(73	)
Current value of minimum lease payments		328
Less: Current maturities		(169	)
	$	159

The effective interest rate on capitalized leases ranges from 1% - 27%.

Note 9 – Earnings per Share

Computation of Earnings per Share —The Company accounts for earnings per share in accordance with ASC 260 “Earnings Per Share”, (formerly SFAS No. 128, "Earnings per Share"), which establishes the requirements for presenting earnings per share ("EPS"). ASC 260 requires the presentation of "basic" and "diluted" EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method. When a loss from continuing operations exists, as in the periods presented, potential common shares are excluded in the computation of diluted EPS because their inclusion would result in an anti-dilutive effect on per share amounts.

Reconciliations between the numerators and denominators of the basic and diluted EPS computations for each period are as follows (in thousands, except per share data):

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

	Three Months Ended Sept. 30,
	2009		2008
Numerator:
Net income applicable to common stockholders	$	124,311	$	12,038,266

Denominator:
Denominator for basic net income per share — weighted-average shares outstanding		22,070,762		22,070,762
Effect of potentially dilutive common shares:
Warrants		—		—
Employee and director stock options		—		—
Denominator for diluted net income per share — weighted-average shares outstanding and assumed conversions		22,070,762		22,070,762

Basic net income per share	$	0.01	$	0.55

Diluted net income per share	$	0.01	$	0.55

	Nine Months Ended Sept. 30,
	2009			2008
Numerator:
Net (loss) applicable to common stockholders	$	(8,853,769	)	$	(2,033,877	)

Denominator:
Denominator for basic (loss) per share — weighted-average shares outstanding		22,070,762			22,070,762
Effect of potentially dilutive common shares:
Warrants		—			—
Employee and director stock options		—			—
Denominator for diluted (loss) per share — weighted-average shares outstanding and assumed conversions		22,070,762			22,070,762

Basic (loss) per share	$	(0.40	)	$	(0.09	)

Diluted (loss) per share	$	(0.40	)	$	(0.09	)

The Company has determined that the warrants contained in the units sold in its initial public offering would be antidilutive and thus excluded the effects of the warrants for the three and nine months ending September 30, 2009 and 2008. On October 23, 2009 the warrants expired by their own terms. None of the original warrants were exercised. For the nine months and three months ended September 30, 2009 and 2008, options to purchase 156,000 and 110,000 shares of common stock, respectively, were not considered in calculating diluted EPS because the effect would be anti-dilutive.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

Note 10 – Income Taxes

The Company utilizes an asset liability approach to determine the extent of any deferred income taxes, as described in ASC Topic 740 “Income Taxes” (ASC 740), (formerly, SFAS No. 109, “Accounting for Income Taxes.”) This method gives consideration to the future tax consequences associated with differences between financial statement and tax bases of assets and liabilities.

At December 31, 2008, the Company had, subject to the limitation discussed below, $17.3 million of net operating loss carryforwards for U.S. purposes. These loss carryforwards will expire from 2026 through 2028 if not utilized.

In addition to any Section 382 limitations, uncertainties exist as to the future utilization of the operating loss carryforwards under the criteria set forth under ASC 740. Therefore, the Company has established a valuation allowance of $3.0 million on its deferred tax assets at September 30, 2009 and December 31, 2008.

There are no uncertain income tax positions required to be recorded pursuant to ASC 740. The Company files income tax returns in the U.S. (federal and state jurisdictions). Tax years 2006 to 2008 remain open for all jurisdictions. The Company’s accounting policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. The Company does not have an accrued liability for interest and penalties at September 30, 2009.

Note 11 - Segment Information

With the consummation of the Maverick acquisition, in accordance with ASC Topic 280 “Segment Reporting”(ASC 280), (formerly, SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”), the Company considers itself to be in two lines of business - (i) as an independent oil and gas exploration and production company and (ii) as an engineering services company.

(i)

The Company sells substantially all of its crude oil production under short-term contracts based on prices quoted on the New York Mercantile Exchange (“NYMEX”) for spot West Texas Intermediate contracts, adjusted by agreed-upon increases or decreases which vary by grade of crude oil. The majority of the Company’s natural gas production is sold under short-term contracts based on pricing formulas which are generally market responsive. From time to time, the Company may also sell a portion of the gas production under short-term contracts at fixed prices. For the nine months ended September 30, 2009, three customers accounted for approximately 39%, 15% and 12% of the Company’s crude oil and natural gas revenues. The Company believes that the loss of any of its oil and gas purchasers would not have a material adverse effect on its results of operations due to the availability of other purchasers.

(ii)

Maverick provides engineering and construction services primarily for three types of clients: (1) upstream oil & gas, domestic oil and gas producers and pipeline companies; (2) industrial, petrochemical and refining plants; and (3) infrastructure, private and public sectors, including state municipalities, cities, and port authorities. Maverick operates out of facilities headquartered in Victoria, Texas and operates primarily in Texas. The types of services provided include project management, engineering, procurement, and construction management services to both the public and private sectors, including the oil and gas business in which the Company is engaged.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

The following table presents selected financial information for the Company’s operating segments (stated in thousands):

	Exploration								Consolidated
For the Three Months Ended September 30, 2009:	and Production		Engineering			Corporate			Total
Revenues	$	4,714	$	4,756		$	—		$	9,471
Intersegment revenues		—		—			—			—
Total revenues	$	4,714	$	4,756		$	—		$	9,471
Income (loss) before income taxes	$	730	$	(240	)	$	(277	)	$	213
As of September 30, 2009 :
Total assets	$	80,750	$	8,801		$	33		$	89,584

	Exploration									Consolidated
For the Nine Months Ended September 30, 2009:	and Production			Engineering			Corporate			Total
Revenues	$	12,521		$	14,738		$	—		$	27,259
Intersegment revenues		—			—			—			—
Total revenues	$	12,521		$	14,738		$	—		$	27,259
Income (loss) before income taxes	$	(9,574	)	$	(2,045	)	$	(1,975	)	$	(13,554	)

Note 12 — Litigation

From time to time, the Company is party to certain legal actions and claims arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not anticipate these matters to have a materially adverse effect on the financial position or results of operations of the Company.

On January 16th, 2008, Exxon Mobil Corporation filed a petition in the 270th District Court of Harris County, Texas, naming the Company as a defendant along with Tandem Energy Corporation, a Colorado corporation (“Old TEC”), and a third party, Merenco Realty, Inc., demanding environmental remediation of certain properties in Tomball, Texas. In 1996, pursuant to an assignment agreement, Exxon Mobil sold certain oil and gas leasehold interests and real estate interests in Tomball, Texas to Old TEC’s predecessor in interest, Merit Energy Corporation. In 1999, Old TEC assigned its 50% undivided interest in one of the tracts in the acquired property to Merenco, an affiliate of Old TEC, owned 50% by our Chairman of the Board, Tim Culp. In October 2007, the Texas Railroad Commission notified Exxon Mobil of an environmental site assessment alleging soil and groundwater contamination for a site in the area of Tomball, Texas. Exxon Mobil believes that the site is one which was sold to Old TEC and claims that Old TEC is obligated to remediate the site under the assignment agreement. Exxon Mobil has requested that the court declare the defendants obligated to restore and remediate the properties and has requested any actual damages arising from breach and attorneys’ fees. The Company believes that Exxon Mobil’s claim that Old TEC is responsible for any remediation of such site is without merit and we intend to vigorously defend ourselves against this claim. However, no assurance can be given that we will prevail in this matter. In October 2007, The Company acquired substantially all the assets and liabilities of Old TEC. Merenco was not acquired by us in the acquisition and the Company's Chairman, Tim Culp, continues to have a 50% ownership interest in Merenco.

On November 11, 2008, Mr. Miles Hyman, a former employee of KD Resources, LLC, filed a claim against KD Resources, LLC and Platinum Energy stating that he was discharged from KD Resources, LLC in retaliation for informing a supervisor that an accounting employee had a prior conviction for fraud and embezzlement, which he claims to be in violation of the Sarbanes-Oxley Act of 2002, Section 806, Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud. In December, 2008, the Department of Labor (“DOL”) dismissed the complaint as not being timely filed. On or about January 8, 2009, Mr. Hyman appealed the ruling of the DOL. On January 16, 2009, the DOL filed an Order to Show Cause whereby Mr. Hyman must show why his case should not have been dismissed. Mr. Hyman had 30 days to respond to the Order to Show Cause. On February 14, 2009, Mr. Hyman filed his response to the Order to Show Cause stating that he failed to file within the required time because he was engaged in negotiations with the Respondents. On March 18, 2009, the Department of Labor dismissed Mr. Hyman’s claim for failure to file within the 90-day filing period. Mr. Hyman has filed a Petition for Review of the Decision and Order Dismissing Complaint issued March 18, 2009. A Notice of the Appeal was filed April 10, 2009 which was granted. Mr. Hyman filed his initial brief and the Company filed its brief. It is The Company's intention to argue that Mr. Hyman was never an employee of Platinum Energy Resources or any of its subsidiaries; as such we are not liable for any issues between Mr. Hyman and his employer, KD Resources. It is the Company's further contention that the only reason Platinum Energy is listed in this action is because it is a public company and Mr. Hyman needs a public company in order to obtain his status under the Sarbanes-Oxley Act.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

On December 3, 2008, Mr. Robert Kovar, the Company’s Chief Operating Officer, delivered his letter of resignation, effective on December 3, 2008, and filed a lawsuit against us in the district court of Victoria County, Texas claiming that he had Good Reason (as defined in his Employment Agreement) to terminate his employment. In the lawsuit Mr. Kovar is seeking declaratory relief and claims he is entitled to a severance payment under his Employment Agreement, accelerated vesting of his stock options and accelerated payment of the cash flow note issued to him in connection with the purchase by the Company of Maverick Engineering, Inc. in April 2008. It is the Company’s contention that Mr. Kovar resigned his position without good reason and is therefore, not entitled to severance or accelerated vesting of options. It is the Company’s additional conviction that the Cash Flow Note has been cancelled and that Platinum Energy in no longer obligated to make any payments thereunder, pursuant to the terms of Mr. Kovar’s employment agreement. The Company believes that Mr. Kovar did not have Good Reason to resign and that the lawsuit has no merit. The Company intends to vigorously defend itself in this action.

On December 3, 2008, Mr. Lance Duncan filed suit against Platinum Energy Resources, Inc. Mr. Duncan is seeking compensation for 515,713 shares of Platinum stock, $13,857 for use of his private plane, and consummation of an agreement to purchase a drilling rig for the sum of $2,478,000. On December 21, 2008, Platinum filed a general denial. A Scheduling Order has been accepted by opposing counsel and approved by the Judge assigned to this matter. The Company believes that Mr. Duncan’s claims are without merit and the Company intends to vigorously defend itself against these claims.

On April 16, 2009, the Company received a written notice of acceleration from Robert L. Kovar Services, LLC, as the stockholder representative, claiming that the Company failed to make timely mandatory prepayments in the amount of $110,381 due under the terms of the Cash Flow Notes. On April 29, 2009, Maverick received a notice of acceleration (the “Acceleration Letter”) with respect to the Notes governed by a Loan Agreement and related Security Agreement originally dated April 30, 2005 and April 29, 2005, respectively. The Acceleration Letter alleges that Maverick failed to comply with certain covenants under the terms of the Loan Agreement and that Maverick failed to make payments due under the Notes. The outstanding principal, accrued interest and late charges alleged to be owed by Maverick in the Acceleration Letter total $4,659,227. The Acceleration Letter also contends that interest continues to accrue at the default rate of 18% per annum. In a separate letter, dated May 1, 2009, Robert L. Kovar Services, LLC, as the stockholder representative for the sellers, purported to terminate the revolving credit facility under the Loan Agreement and demanded turnover of all collateral securing indebtedness under the Loan Agreement, including the Notes. The Company and Maverick have asserted claims in litigation against the holders of the Notes, Robert L. Kovar Services, LLC, Robert L. Kovar, individually, and others. The litigation is in its early stages and, accordingly, the Company cannot predict the outcome of these matters.

On April 29, 2009, Maverick received a notice of acceleration (the “Acceleration Letter”) with respect to the Notes. The Acceleration Letter alleges that Maverick failed to comply with certain covenants under the terms of the Loan Agreement and that Maverick failed to make payments due under the Notes. The outstanding principal, accrued interest and late charges alleged to be owed by Maverick in the Acceleration Letter total $4,659,227. The Acceleration Letter also contends that interest continues to accrue at the default rate of 18% per annum. In a separate letter, dated May 1, 2009, Robert L. Kovar Services, LLC, as the stockholder representative for the sellers, purported to terminate the revolving credit facility under the Loan Agreement and demanded turnover of all collateral securing indebtedness under the Loan Agreement.

On May 3, 2009, Platinum and Maverick Engineering. Inc. filed suit against Robert L. Kovar Services, LLC (“RKS”), Robert L. Kovar (“Kovar”), Rick J. Guerra (“Guerra”), and Walker, Keeling, & Carroll. L.L.P. (“WKC”) collectively (the Defendants”) alleging, among other things, a suit for declaratory judgment asking the court to declare that Platinum and Maverick are entitled to indemnification from the former Maverick stockholders, including Guerra and Kovar, for any damages they suffer as a result of a default on any note contained in the Maverick and Perm SUB Merger Agreement. In addition, Platinum and Maverick have asked the Court to declare that WKC has breached the merger agreement by not stepping down as the Merger Escrow Agent. Platinum and Maverick have also sued to recover costs of court and attorneys’ fees. It is Platinum and Maverick’s position that the former Maverick Stockholders are obligated under the Merger Agreement to indemnify Platinum and Maverick for any damages they suffer as a result of any breach of contract by Maverick, including a default on any liability existing before the merger of Maverick and Perm SUB. Moreover, by attempting to accelerate and collect on the cash flow notes and assumed bank debt discussed in the Merger Agreement, WKC has created a conflict of interest and must resign as the Merger Escrow Agent. Therefore, Platinum and Maverick intend to offset any liability they may face in defaulting on payment of the cash flow notes or the assumed bank debt via the Defendants’ indemnity obligations. Since this litigation is in its early stages, the Company cannot predict the outcome of these matters.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(UNAUDITED)

In October, 2009, Platinum and Maverick Engineering filed a Second Amended Petition with the following Causes of Action against the Defendants: Kovar fraudulently induced Platinum to enter into the Merger Agreement; Common-Law Fraud; Statutory Fraud; Breach of Fiduciary Duty; Tortious Interference with Merger Agreement; Civil Conspiracy; and Breach of Contract. As this case is still in the discovery phase of litigation, at this time, it is impossible for the Company to provide an informed assessment of the likelihood of a favorable or unfavorable outcome in this case.

On July 14, 2009, SNP Associates filed suit in the 333 rd District Court of Harris County, Texas against Maverick Engineering, Inc, Platinum Energy Resources’ wholly owned subsidiary. SNP is seeking a Declaratory Judgment, Permanent Injunction, and damages for alleged “trade name infringement.” The suit claims that SNP has the legal right to the name “Maverick Engineering” and that SNP has suffered damages as a result of two engineering firms having the same name. The Company does not believe that any of SNP’s claims have merit and the Company intends to vigorously defend itself against these claims. However, no assurance can be given that the Company will prevail in this matter.

On October 14, 2009, Maverick Engineering filed suit in Harris County against CITGO Refining & Chemical Company, LP for Breach of Contract. According to the Petition, Maverick provided engineering services to CITGO and CITGO has refused to pay for those services. Maverick is suing for $357,538 plus damages, costs, attorney fees, interest, and other relief. While Maverick has performed all terms, conditions, and covenants required under its contract with CITGO, it is too early in this litigation to be able to predict the outcome.

On October 20, 2009, Lisa Meier filed suit for breach of her employment contract. According to the Petition, Ms. Meier resigned for “good cause” and she is seeking severance pay. On June 10, 2009, Ms. Meier delivered to the Board of Directors of Platinum Energy Resources, her second notice of intent to resign for “Good Reason.” Ms. Meier’s first notice was submitted on October 23, 2008, less than three months after entering into her employment agreement, and subsequently withdrawn. The Board of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did not exist. This matter is currently is the early phase of litigation. The Company believes that Ms. Meier’s claims are without merit and the Company intends to vigorously defend itself against these claims. However, no assurance can be given that we will prevail in this matter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings.

On October 26, 2007, we acquired substantially all of the assets and assumed substantially all of the liabilities of Tandem Energy Corporation ("Tandem"). Prior to that time, we were a blank check company with no operations and no net revenues. On April 29, 2008 we acquired 100% of the stock of Maverick Engineering, Inc. ("Maverick"), a full-service engineering services company.

Set forth below are:

(A) A discussion of the results of operations for Platinum Energy Resources, Inc. ("Platinum") for the three and nine months ended September 30, 2009 as compared to the three and nine months ended September 30, 2008

(B) A discussion of the results of operations for our oil and gas operations for the three and nine months ended September 30, 2009 as compared to the three and nine months ended September 30, 2008

(C) We purchased Maverick Engineering on April 29, 2008. Accordingly, since we did not own that business during the full nine month period ended September 30, 2008, we have included a comparison of certain summarized historical information of Maverick for the three months ended September 30, 2009 compared with the three months ended June 30, 2009 in order to provide relevant information. No comparison is presented for the comparable nine month periods ending September 30, 2009 and 2008, because of the lack of relevance.

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and related Notes thereto included elsewhere in this report.

Overview

With the consummation of the Maverick acquisition, we consider ourselves to be in two lines of business - (i) as an independent oil and gas exploration and production company and (ii) as an engineering services company.

In our oil and gas operations, we conduct oil and natural gas exploration, development, acquisition, and production. Our basic business model is to find and develop oil and gas reserves through development activities, and sell the production from those reserves at a profit. To be successful, we must, over time, be able to find oil and gas reserves and then sell the resulting production at a price that is sufficient to cover our finding costs, operating expenses, administrative costs and interest expense, plus offer an acceptable rate of return on our capital investment. We sell substantially all of our crude oil production under short-term contracts based on prices quoted on the New York Mercantile Exchange (“NYMEX”) for spot West Texas Intermediate contracts, less agreed-upon deductions which vary by grade of crude oil. The majority of our natural gas production is sold under short-term contracts based on pricing formulas which are generally market responsive. From time to time, we may also sell a portion of the gas production under short-term contracts at fixed prices.

(ii)

Through our wholly-owned Maverick operation, we provide engineering and construction services primarily for three types of clients: (1) upstream oil and gas, domestic oil and gas producers and pipeline companies; (2) industrial, petrochemical and refining plants; and (3) infrastructure, private and public sectors, including state municipalities, cities, and port authorities. Maverick operates out of facilities headquartered in Victoria, Texas and operates primarily in Texas. The types of services provided include project management, engineering, procurement, and construction management services to both the public and private sectors, including the oil and gas business in which we are engaged as described above. Maverick is based in south Texas with offices in Corpus Christi, Victoria, and Houston.

From time to time, we may make strategic acquisitions in our oil and natural gas business if we believe the acquired assets offer us the potential for reserve growth through additional developmental drilling activities. However, the successful acquisition of oil and natural gas properties requires assessment of many factors, which are inherently inexact and may be inaccurate, including future oil and natural gas prices, the amount of recoverable reserves, future operating costs, future development costs, failure of titles to properties, costs and timing of plugging and abandoning wells and potential environmental and other liabilities.

We believe that the economic climate in the domestic oil and gas industry continues to be suitable for our business model. As has been demonstrated by recent market events, oil and gas prices are typically volatile and are subject to market fluctuations. We continue to believe, however, that supply and demand fundamentals in the energy marketplace provide us with the economic incentives necessary for us to assume the risks we face in our search for oil and gas reserves. While profit margins remain currently favorable at today’s prices, we cannot guarantee that rising finding costs, production costs, and depletion expense will not affect our future success. With the recent decline in market prices of oil and natural gas and increases in these costs may have an even greater impact on our profit margins. Specifically, our revenue, cash flow from operations and future growth depend substantially on many factors, including those beyond our control, such as economic, political and regulatory developments and competition from other sources of energy. Because of these factors, we continuously seek ways to reduce exposure to the volatility in oil and natural gas prices. Our strategy is to hedge a portion of our expected future oil and natural gas production, using a mixture of calls, puts, forward contracts and other derivative instruments, to reduce our exposure to fluctuations in commodity price. In April 2008, we entered into derivative transactions to put 360,000 barrels of oil to the counter party at the rate of 10,000 barrels per month in the period January 2010 through December 2012 at prices between $95.00 and $95.50 per barrel. The actual price of oil upon delivery over the future periods will be determinant of the actual gain of loss to be realized by the Company and cannot be predicted at this time.

Furthermore, like all businesses engaged in the exploration and production of oil and natural gas, we face the challenge of natural production declines. As initial reservoir pressures are depleted, oil and natural gas production from a given well decreases. Thus, an oil and natural gas exploration and production company depletes part of its asset base with each unit of oil or natural gas it produces. Consequently, key to our success is not only finding reserves through developmental drilling and strategic acquisitions, but also by exploiting opportunities related to our existing production. For example, we have two fields, the Ira Unit located in Scurry County, Texas, and the Ballard Unit located in Eddy County, New Mexico which we believe contain substantial opportunities to expand and enhance their existing waterflood capabilities. These projects will require capital in the form of money and expertise.

(A) - Results of Operations – Platinum

For the three months ended September 30, 2009 as compared to the three months ended September 30, 2008

On a consolidated basis we had net income of approximately $0.1 million during the three months ending September 30, 2009 compared to net income of approximately $12.0 million during the comparative period ending September 30, 2008. The primary components of the change in net income between the two periods was related to the change in the fair value of our commodity hedge positions during the periods reported and to the change in commodity pricing. For further discussion regarding the income generated by the changes in fair value and commodity pricing, refer to our discussion of “Results of Operations - Oil and Gas” later in this section.

With respect to our results of operations excluding our oil and natural gas assets and the engineering services business (Maverick), we had no net operating revenues during the 2009 or 2008 periods. Our general and administrative expenses other than those attributable to our oil and natural gas assets and our engineering services business for the three months ended September 30, 2009 was $277,000 as compared to approximately $841,000 for the three months ended September 30, 2008. The decrease was due primarily to a decrease in legal and accounting costs related to our filing of the S-1 in 2008 for the registration of the shares issued in conjunction with the TEC purchase.

We also incurred unrealized gains of $465,000 for the three months ended September 30, 2009, as compared to gains of $1.7 million in the comparable 2008 period on the increase in the value of certain put options on crude oil we purchased in December 2007 and January 2008 for an aggregate of $3,035,000. We have experienced great volatility in the value of these derivative instruments as a result of the fluctuation in the price of crude oil.

For the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008

On a consolidated basis we had a net loss of approximately $8.9 million during the first nine months ending September 30, 2009 compared to a net loss of approximately $2.0 million during the comparative period ending September 30, 2008. The primary components of the change in net income between the two periods was related to the change in the fair value of our commodity hedge positions during the periods reported and to the change in commodity pricing. For further discussion regarding the losses generated by the changes in fair value, refer to our discussion of “Results of Operations - Oil and Gas” later in this section.

With respect to our results of operations excluding our oil and natural gas assets and the engineering services business (Maverick), we had no net operating revenues during the 2009 or 2008 periods. Our general and administrative expenses other than those attributable to our oil and natural gas assets and our engineering services business for the nine months ending September 30, 2009 was $2.0 million as compared to approximately $3.1 million for the nine months ending September 30, 2008. The higher expense during the 2008 period was due primarily to an increase in legal and accounting costs related to our filing of the S-1 in 2008 for the registration of the shares issued in conjunction with the TEC purchase.

We also incurred unrealized losses of $3.5 million for the nine months ending September 30, 2009, as compared to a gain of $142,000 in the comparable 2008 period related to the change in the value of certain put options on crude oil we purchased in December 2007 and January 2008 for an aggregate of $3,035,000. We have experienced great volatility in the value of these derivative instruments as a result of the fluctuation in the price of crude oil.

(B) - Results of Operations - Oil and Gas

For the Three Months Ended September 30, 2009 as compared to the Three Months Ended September 30, 2008

Our revenues from oil and gas sales for the three months ended September 30, 2009 were $4.7 million. Oil and gas sales for the three months ended September 30, 2008 were $10.9 million. The 57% decrease in oil and gas revenues was due to a decrease in commodity prices combined with a decrease in production on a Boe basis during the three months ended September 30, 2009. The average oil price for the three months ended September 30, 2009 was $65.07 compared to $115.40 for the three months ended September 30, 2008. The average gas price for the three months ended September 30, 2009 was $3.54 per Mcf compared to $9.53 for the three months ended September 30, 2008. Production on a Boe basis decreased 19% from 115,038 Boe’s during the three months ended September 30, 2008 to 93,014 Boe’s during the three months ended September 30, 2009. Commodity prices are affected by factors beyond our control. National and global demand and supply issues are the primary components affecting the price of oil and gas we receive as a company. The decline in production between the periods is primarily related to the normal decline we expect to see assuming no continuous drilling program.

Oil and gas production costs in the form of lease operating expense on a Boe basis decreased 36% from $36.25 per Boe during the three months ended September 30, 2008 to $23.22 per Boe during the three months ended September 30, 2009. The decrease was due primarily to an attempt to control costs in marginally economic areas due to lower commodity prices. The lower commodity prices also resulted in lower production taxes, another component of lease operating expense. Other factors outside management control, such as third party service availability and the availability of adequate technical and field staff, could have an adverse effect on lease operating costs in the future.

Depletion expense for oil and gas properties decreased 52% or approximately $1.4 million, during the three months ended September 30, 2009 compared to the three months ended September 30, 2008. The decrease was related to a lower carrying value of our oil and gas properties as a result of the ceiling test write down recorded as of December 31, 2008 and to the 19% decrease in production between the comparative periods.

We also incurred a gain of approximately $951 thousand for the three months ended September 30, 2009 as compared to a gain of approximately $17.9 million during the three months ended September 30, 2008 on the value of certain hedge contracts on crude oil and natural gas. As actual commodity prices increase, the estimated future realized value decreases against the prices at which the hedges were purchased.

For the Nine Months Ended September 30, 2009 as compared to the Nine Months Ended September 30, 2008

Our revenues from oil and gas sales for the nine months ended September 30, 2009 were $12.5 million. Oil and gas sales for the nine months ended September 30, 2008 were $28.7 million. The 57% decrease in oil and gas revenues was essentially due to a decrease in average commodity prices. The average oil price for the nine months ended September 30, 2009 was $52.17 compared to $112.44 for the nine months ended September 30, 2008. The average gas price for the nine months ended September 30, 2009 was $3.28 per Mcf compared to $9.60 for the nine months ended September 30, 2008. Production on a Boe basis decreased 1% from 304,107 Boe’s during the nine months ended September 30, 2008 to 300,836 Boe’s during the nine months ended September 30, 2009.

Oil and gas production costs in the form of lease operating expense on a Boe basis decreased 24% from $31.21 per Boe during the nine months ended September 30, 2008 to $23.58 per Boe during the nine months ended September 30, 2009. The decrease was due primarily to an attempt to control costs in marginally economic areas due to lower commodity prices. The lower commodity prices also resulted in lower production taxes, another component of lease operating expense. Other factors outside management control, such as third party service availability and the availability of adequate technical and field staff, could have an adverse effect on lease operating costs in the future.

Depletion expense for oil and gas properties decreased $2.7 million, or 37%, during the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. The decrease was related to a lower carrying value of our oil and gas properties as a result of the ceiling test write down recorded as of December 31, 2008.

We also incurred losses of approximately $6.9 million for the nine months ended September 30, 2009 as compared to losses of approximately $7.2 million during the nine months ended September 30, 2008 on the value of certain hedge contracts on crude oil and natural gas.

Supplemental Oil and Gas Information

The following information is intended to supplement the unaudited condensed consolidated financial statements included in this report with data that is not readily available from those statements.

	Three Months Ended September 30,
	2009		2008
Production
Oil (Bls)		62,201		73,554
Gas (Mcf)		184,878		248,904
Boe (Bls)		93,014		115,038

Average Prices
Oil ($/Bbl)	$	65.07	$	115.40
Gas ($/Mcf)	$	3.54	$	9.53

Average Lifting Cost
Per Boe	$	23.22	$	36.25

	Nine Months Ended September 30,
	2009		2008
Production
Oil (Bls)		201,900		203,769
Gas (Mcf)		593,617		602,029
Boe (Bls)		300,836		304,107

Average Prices
Oil ($/Bbl)	$	52.17	$	112.44
Gas ($/Mcf)	$	3.28	$	9.60

Average Lifting Cost
Per Boe	$	23.58	$	31.21

For the three months ended September 30, 2009 as compared to the three months ended June 30, 2009

Revenues for the three months ended September 30, 2009 and the three months ended June 30, 2009 were $4.8 million and $4.5 million, respectively. Gross margin performance for these periods was 12.6% and 4.4%, respectively. The improvement in third quarter gross margin is attributable to elimination of non-billable positions, resulting in improved personnel utilization. Third quarter gross margin also benefited from an increase in total revenue volume, while fixed costs remained flat, and by the replacement of certain lower margin Industrial business with higher margin work for new clients. Engineering services reported pretax losses of $239,973 and $798,520 in the three months ended September 30, 2009 and the three months ended June 30, 2009 respectively.

Liquidity and Capital Resources

In connection with our initial public offering consummated on October 28, 2005, we sold (i) 14,400,000 units to the public, with each unit consisting of one share of our common stock, $0.0001 per share, and one warrant expiring October 23, 2009 to purchase one share of common stock at an exercise price of $6.00 per share and (ii) to the representatives of the underwriters a five year option to purchase up to a total of 720,000 units in the aggregate at a per unit price of $10.00. The units issuable upon exercise of this option are identical to those offered in the public offering except that the warrants included in the option have an exercise price of $7.50. The underwriters’ unit purchase option may be exercised for cash or on a “cashless” basis, at the holder’s option, such that the holder may use the appreciated value of the option (the difference between the exercise prices of the option and the underlying warrants and the market price of the units and underlying securities) to exercise the option without the payment of any cash. On October 23, 2009 the warrants expired by their own terms. None of the original warrants were exercised.

The following additional events occurred or had an impact during the nine months ended September 30, 2009 or may have an impact on our liquidity in future periods:

a. On March 14, 2008, two of our oil and natural gas operating subsidiaries, Tandem Energy Corporation and PER Gulf Coast, Inc. entered into a new credit facility with the Bank of Texas, establishing a revolving line of credit with an initial borrowing base of $35 million. The revolving line of credit is secured by the oil and gas properties and will be used to facilitate the execution of our drilling and acquisition programs. The line bears interest at the bank’s base rate or LIBOR, plus a margin which varies with the ratio of the outstanding borrowings against the defined borrowing base, ranging from 1.50% to 2.25%. These oil and gas subsidiaries can choose periodically to change the interest rate base which applies to outstanding borrowings. Under the terms of revolving line of credit agreement, they must maintain certain financial ratios, must repay any amounts due in excess of the borrowing base, and may not declare any dividends or enter into any transactions resulting in a change in control, without the bank’s consent. As the parent company, we are not a co-borrower or guarantor of the line, and transfers from the oil and gas operations to us are limited to (i) $1 million per fiscal year for management fees, and (ii) the repayment of up to $2 million per fiscal year in subordinate indebtedness owed to us.

A financial covenant under the credit facility requires us to maintain a ratio of indebtedness to cash flow of no more than 3 to 1. Although, as of September 30, 2009, we were in compliance of all bank covenants, as of December 31, 2008 we were not in compliance regarding the indebtedness to income ratio. The bank agreed to waive the covenant non-compliance issue subject to the payment of additional fees and other terms more fully described below.

On June 12, 2009, the Company received a “Notice of Borrowing Base Redetermination and Notice of Event of Default” from the bank. The bank set the new borrowing base at $15 million, shortened the maturity date of the loan from March 14, 2012 to June 1, 2010, raised the floor interest rate from 4% to 4.5%, redefined certain covenant ratios, and required certain fees paid to grant the waivers necessary to cure the aforementioned covenant defect. The Company executed the Second Amendment to the loan agreement on June 25, 2009. The Company, as the parent company, is not a co-borrower or guarantor of the line, and transfers from the Borrower to the parent company are limited to (i) $1 million per fiscal year to the parent for management fees, and (ii) the repayment of up to $2 million per fiscal year in subordinate indebtedness owed to the parent. As of September 30, 2009 the $13.0 million outstanding under the revolving line of credit was bearing interest at the bank’s base rate, which, at the time, was 4.5 %. As amended the Senior Credit Facility expires on June 1, 2010. Accordingly, we have reclassified the entire $13 million as a current liability.

b. On April 29, 2008, the Company completed the acquisition of Maverick, a provider of project management, engineering, procurement, and construction management services to both the public and private sectors, including the oil and gas business in which the Company is engaged. The aggregate consideration paid in the merger was $6 million in cash and $5 million to be paid over the next 5 years pursuant to non-interest bearing cash flow notes, subject to certain escrows, holdbacks and post-closing adjustments. The cash flow notes were reduced for a working capital post closing adjustment which was determined by the Company to be $645,596. This amount may be subject to modification as may be agreed between the parties. At the time the acquisition was completed, a discount to present value in the amount of $1,320,404 was recorded and deducted from the cash flow notes as these notes are non-interest bearing for the initial 5 years of their term. In addition, the sellers agreed to satisfy and assume Maverick's bank indebtedness in the aggregate amount of $4,889,538 consisting of a $2,960,155 revolving line of credit maturing April 2008, a $1,584,375 term note due April 2011, and $345,008 oil and gas note due May 2009 (collectively referred to as the “Notes”), using a portion of the cash received by them at closing. Following the closing, the Company was indebted to the sellers for these amounts under the identical terms of the bank loan agreements. On April 30, 2008, Maverick entered into extension and modification agreements with the sellers pursuant to which sellers agreed to defer principal payments of the $1.6 million term loan for six months and extend the maturity date to April 2013. The sellers also agreed to extend the maturity date of the revolving line of credit to 2010. In addition, as of December 31, 2008, Maverick was not in compliance with the debt service coverage ratio contained in the loan agreements. On August 14, 2008, the sellers waived the Company's obligation to maintain this ratio through September 30, 2009. Accordingly, we have reclassified $2,917,403 of the Notes from long term debt to current.

On April 16, 2009, the Company received a written notice of acceleration from Robert L. Kovar Services, LLC, as the stockholder representative, claiming that the Company failed to make timely mandatory prepayments in the amount of $110,381 due under the terms of the cash flow notes. The cash flow notes are payable quarterly at the rate of 50% of pre-tax net income, as defined in the merger agreement, generated by the Maverick business on a stand-alone basis in the preceding quarter. It is the Company’s position that Maverick generated a pretax loss during the period April 29, 2008 through December 31, 2008 and the fourth quarter of 2008, and as such the Company was not obligated to make a mandatory payment to the note holders. Generally Accepted Accounting Principles in the United States of America (“GAAP”) require intangible assets to be amortized over their useful lives. In addition, goodwill and intangible assets are evaluated annually for potential impairment. The pretax income as calculated by Robert L. Kovar Services, LLC, as the stockholder representative, did not include amortization expense or impairment charges related to intangible assets and goodwill in accordance with GAAP.

c. On August 11, 2008, we entered into an employment agreement with Lisa Meier pursuant to which Ms. Meier was appointed as chief financial officer and treasurer of the Company. The employment agreement provided for an initial five year term, a $250,000 base annual salary, increasing by 5% annually, an annual bonus as determined by the Board or a compensation committee of the Board which, in the event the Company has positive cash flow, would be at least $50,000 a performance bonus based on certain predetermined budgeted goals.

In addition, under terms of the employment agreement, Ms. Meier was granted 50,000 incentive stock options to purchase shares of the Company’s common stock with an exercise price equal to the closing price on August 11, 2008, the date of grant, and will be granted an additional 50,000 stock options each year thereafter during the term of her employment. All options will be issued pursuant to the Company’s 2006 Long Term Incentive Plan and will be subject to a four year vesting schedule, with one-quarter of such options vesting on each anniversary of the date of grant, beginning August 11, 2009. Upon a change in control of the Company, the employment agreement provides that all options granted to Ms. Meier will immediately vest.

Pursuant to the employment agreement, if Ms. Meier’s employment is terminated by the Company without cause or Ms. Meier terminates her employment for good reason, she will receive an 18 month severance package. If, however, Ms. Meier’s employment is terminated by us for cause or Ms. Meier terminates her employment without good reason, she will receive no severance package.

Ms. Meier agreed that during the term of her employment with us and for an 18 month period thereafter, she would not compete with the Company nor solicit our employees. If Ms. Meier breaches any of these obligations, she would forfeit her right to any severance payments and benefits to which she otherwise would be entitled.

On October 23, 2008, Ms. Meier, delivered to the Company a communication indicating her intention to resign her employment with the Company. On November 13, 2008, Ms. Meier delivered a subsequent communication to the Company indicating her election to remain with the Company in her current position.

On June 10, 2009, Ms. Meier, delivered to the Company a written notice pursuant to her Employment Agreement with the Company dated as of August 11, 2008, of her intention to terminate her employment with the Company. Ms. Meier contends that her resignation is for "Good Reason" as defined in her Employment Agreement in Section 11(c)(i) and Section 11(c)(iv). The Company does not believe Ms. Meier has grounds to claim “Good Reason” as defined in her employment agreement.

On October 20, 2009, Lisa Meier filed suit for breach of her employment contract. According to the Petition, Ms. Meier resigned for “good cause” and she is seeking severance pay. On June 10, 2009, Ms. Meier delivered to the Board of Directors of Platinum energy Resources, her second notice of intent to resign for “Good Reason.” Ms. Meier’s first notice was submitted on October 23, 2008, less than three months after entering into her employment agreement, and subsequently withdrawn. The Board of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did not exist. This matter is currently is the early phase of litigation. We believe that Ms. Meier’s claims are without merit and we intend to vigorously defend ourselves against these claims. However, no assurance can be given that we will prevail in this matter.

d. The Company is obligated for minimum salaries pursuant to all executive and non-executive employment agreements as follows. This table excludes the cost of employee health benefits, payments of bonuses that are either discretionary or contingent upon performance criteria and stock based compensation arrangements. Furthermore, the table does not reflect the terms of Ms. Meier’s employment contract since her resignation was submitted and accepted in June, 2009. However, there can be no assurance that the Company will not be required to pay her under the terms of her employment agreement associated with her assertion of resignation for “Good Reason”:

Period Ending September 30,

2010	$	342,500
2012		190,000

	$	532,500

Capital Expenditures - Oil and Gas Development

The reserve report prepared as of December 31, 2008 assumes that we will not spend any capital expenditures in 2009 to exploit oil and gas opportunities. Our primary focus since the beginning of the year has been to control our operating costs. As cash flow allows, we may commence a limited drilling or workover program in order to stem the natural decline associated with our current production. The execution of any capital program is dependent on the availability of technical and field staff, product pricing, rig availability and an implementation of corporate strategy. Through September 30, 2009 we have incurred capital expenditures of approximately $1.4 million, primarily related to projects begun in 2008 but not completed until 2009. Additionally, we drilled one successful well in our Ball/Bird field in Palo Pinto County, Texas.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of Regulation S-K promulgated under the Securities Exchange Act of 1934.

Critical Accounting Policies:

Use of Estimates

Full Cost and Impairment of Assets

We account for our oil and natural gas exploration and development activities using the full cost method of accounting. Under this method, all costs incurred in the acquisition, exploration and development of oil and natural gas properties are capitalized. Costs of non-producing properties, wells in the process of being drilled and significant development projects are excluded from depletion until such time as the related project is developed and proved reserves are established or impairment is determined. At the end of each quarter, the net capitalized costs of our oil and natural gas properties, as adjusted for asset retirement obligations, is limited to the lower of unamortized cost or a ceiling, based on the present value of estimated future net revenues, net of income tax effects, discounted at 10%, plus the lower of cost or fair market value of our unproved properties. Revenues are measured at unescalated oil and natural gas prices at the end of each quarter, with effect given to cash flow hedge positions. If the net capitalized costs of oil and natural gas properties exceed the ceiling, we are subject to a ceiling test write-down to the extent of the excess. A ceiling test write-down is a non-cash charge to earnings. It reduces earnings and impacts stockholders’ equity in the period of occurrence and results in lower DD&A expense in future periods.

There is a risk that we will be required to write down the carrying value of our oil and natural gas properties when oil and natural gas prices decline. If commodity prices deteriorate, it is possible that we could incur impairment in future periods.

Depletion

Provision for depletion of oil and natural gas properties under the full cost method is calculated using the unit of production method based upon estimates of proved developed oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. The cost of any impaired property is transferred to the balance of oil and natural gas properties being depleted.

Significant Estimates and Assumptions

Oil and Gas Reserves

(1) Reserve engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact manner. The accuracy of a reserve estimate depends on the quality of available geological and engineering data, the precision of the interpretation of that data, and judgment based on experience and training. We have historically engaged an independent petroleum engineering firm to evaluate our oil and gas reserves. As a part of this process, our internal reservoir engineer and the independent engineers exchange information and attempt to reconcile any material differences in estimates and assumptions.

(2) Reserves which can be produced economically through application of improved recovery techniques (such as fluid injection) are included in the proved classification when successful testing by a pilot project, or the operation of an installed program in the reservoir, provides support for the engineering analysis on which the project or program was based.

(3) Estimates of proved reserves do not include the following: (A) oil that may become available from known reservoirs but is classified separately as indicated additional reserves; (B) crude oil, natural gas, and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics, or economic factors; (C) crude oil, natural gas, and natural gas liquids, that may occur in undrilled prospects; and (D) crude oil, natural gas, and natural gas liquids, that may be recovered from oil shales, coal, gilsonite and other such sources.

Valuation of proved undeveloped properties

Placing a fair market value on proved undeveloped properties, commonly referred to as “PUDs” is very subjective since there is no quoted market for them. The negotiated price of any PUD between a willing seller and willing buyer depends on the specific facts regarding the PUD, including:

·	the location of the PUD in relation to known fields and reservoirs, available markets and transportation systems for oil and gas production in the vicinity, and other critical services;

·	the nature and extent of geological and geophysical data on the PUD;

·	the terms of the leases holding the acreage in the area, such as ownership interests, expiration terms, delay rental obligations, depth limitations, drilling and marketing restrictions, and similar terms;

·	the PUDs risk-adjusted potential for return on investment, giving effect to such factors as potential reserves to be discovered, drilling and completion costs, prevailing commodity prices, and other economic factors; and

·	the results of drilling activity in close proximity to the PUD that could either enhance or condemn the prospect’s chances of success.

Provision for DD&A

We have computed our provision for DD&A on a unit-of-production method. Each quarter, we use the following formulas to compute the provision for DD&A.

·	DD&A Rate = Current period production, divided by beginning proved reserves

·	Provision for DD&A = DD&A Rate, times the un-depleted full cost pool of oil and gas properties

Reserve estimates have a significant impact on the DD&A rate. If reserve estimates for our properties are revised downward in future periods, the DD&A rate will increase as a result of the revision. Alternatively, if reserve estimates are revised upward, the DD&A rate will decrease.

Hedging Activities

From time to time, we utilize derivative instruments, consisting of swaps, floors and collars, to attempt to reduce our exposure to changes in commodity prices and interest rates. We account for our derivatives in accordance with ASC 815 “Derivatives and Hedging”, (formerly SFAS No. 133,” Accounting for Derivative Instruments and Hedging Activities”, as amended). ASC 815requires that all derivative instruments be recognized as assets or liabilities in the balance sheet, measured at fair value. The accounting for changes in the fair value of a derivative depends on both the intended purpose and the formal designation of the derivative. Designation is established at the inception of a derivative, but subsequent changes to the designation are permitted. We have elected not to designate any of our derivative financial contracts as accounting hedges and, accordingly, account for these derivative financial contracts using mark-to-market accounting. Changes in fair value of derivative instruments which are not designated as cash flow hedges are recorded in other income (expense) as changes in fair value of derivatives. Hedging is a strategy that can help a company to mitigate the volatility of oil and gas prices by limiting its losses if oil and gas prices decline; however, this strategy may also limit the potential gains that a company could realize if oil and gas prices increase.

For the three months ended September 30, 2009 and 2008 we reported net gains of $858,000 thousand and $17.9 million , respectively, on the change in value of our derivative contracts. For the nine months ended September 30, 2009 and 2008 we reported net losses of $8.2 million and $7.2 million respectively, on the change in value of our derivative contracts.

Asset Retirement Obligation

We follow the provisions of ASC Topic 410 “Asset Retirement and Environmental Obligations”( ASC 410), (formerly, SFAS No. 143, “Accounting for Asset Retirement Obligations”). ASC 410 requires us to recognize a liability for the present value of all legal obligations associated with the retirement of tangible, long-lived assets and capitalize an equal amount as a cost of the asset. The cost of the abandonment obligations, less estimated salvage values, is included in the computation of depreciation, depletion and amortization.

Recent Accounting Guidance

See Recent Accounting Guidance in Note 3 within the financial statements in Item 1 for a description of Recent Accounting Pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.

Interest Rate Risk

At September 30, 2009 our oil and gas subsidiaries had approximately $13 million in outstanding borrowings associated with their credit facility with a major bank and our engineering services subsidiary had $4.6 million in outstanding borrowings under a revolving credit facility and term notes with the selling shareholders from whom we acquired Maverick, our engineering services business. To the extent we have debt outstanding, we will be subject to risk of interest rate changes that would impact our future results of operations and cash flows.

Price Risks

See Note 5 within the financial statements in Item 1 for a description of our price risks and price risk management activities.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of management, including the Company ’ s principal executive officer and principal financial officer, of the effectiveness of the disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of September 30, 2009. Based on that evaluation, the Company’s Principal executive officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2009

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the time periods required by the Commission’s rules and forms. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures that, by their nature, can provide only reasonable assurance regarding management’s control objectives. Management does not expect that its disclosure controls and procedures will prevent all errors and fraud. A control system, irrespective of how well it is designed and operated, can only provide reasonable assurance, and cannot guarantee that it will succeed in its stated objectives.

Changes in Internal Control Over Financial Reporting

On September 15, 2009, Michael Cunningham stepped down as Platinum’s Interim Chief Financial Officer and was succeeded by Steven Chaloupka as the Chief Financial Officer. On October 15, 2009, Mr. Chaloupka resigned as the Company’s Chief Financial Officer. No reason was given by Mr. Chaloupka for the resignation. Otherwise, there were no changes in internal control over financial reporting that occurred during the third quarter of 2009 that have materially affected, or are reasonably likely to affect materially, our internal control over financial reporting.

OTHER INFORMATION

Item 1. Legal Proceedings.

On November 11, 2008, Mr. Miles Hyman, a former employee of KD Resources, LLC, filed a claim against KD Resources, LLC and Platinum Energy stating that he was discharged from KD Resources, LLC in retaliation for informing a supervisor that an accounting employee had a prior conviction for fraud and embezzlement, which he claims to be in violation of the Sarbanes-Oxley Act of 2002, Section 806, Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud. In December, 2008, the Department of Labor (“DOL”) dismissed the complaint as not being timely filed. On or about January 8, 2009, Mr. Hyman appealed the ruling of the DOL. On January 16, 2009, the DOL filed an Order to Show Cause whereby Mr. Hyman must show why his case should not have been dismissed. Mr. Hyman had 30 days to respond to the Order to Show Cause. On February 14, 2009, Mr. Hyman filed his response to the Order to Show Cause stating that he failed to file within the required time because he was engaged in negotiations with the Respondents. On March 18, 2009, the Department of Labor dismissed Mr. Hyman’s claim for failure to file within the 90-day filing period. Mr. Hyman has filed a Petition for Review of the Decision and Order Dismissing Complaint issued March 18, 2009. A Notice of the Appeal was filed April 10, 2009 which was granted. Mr. Hyman filed his initial brief and the Company filed its brief. It is The Company's intention to argue that Mr. Hyman was never an employee of Platinum Energy Resources or any of its subsidiaries; as such we are not liable for any issues between Mr. Hyman and his employer, KD Resources, LLC. It is the Company's further contention that the only reason Platinum Energy is listed in this action is because it is a public company and Mr. Hyman needs a public company in order to obtain his status under the Sarbanes-Oxley Act.

On December 3, 2008, Mr. Robert Kovar, our Chief Operating Officer, delivered his letter of resignation, effective on December 3, 2008, and filed a lawsuit against us in the district court of Victoria County, Texas claiming that he had Good Reason (as defined in his Employment Agreement) to terminate his employment. In the lawsuit Mr. Kovar is seeking declaratory relief and claims he is entitled to a severance payment under his Employment Agreement, accelerated vesting of his stock options and accelerated payment of the cash flow note issued to him in connection with the purchase by the Company of Maverick Engineering, Inc. in April 2008. It is our contention that Mr. Kovar resigned his position without good reason and is therefore, not entitled to severance or accelerated vesting of options. It is our additional conviction that the Cash Flow Note has been cancelled and that Platinum Energy in no longer obligated to make any payments thereunder, pursuant to the terms of Mr. Kovar’s employment agreement. We believe that Mr. Kovar did not have Good Reason to resign and that the lawsuit has no merit. We intend to vigorously defend ourselves in this action.

On December 3, 2008, Mr. Lance Duncan filed suit against Platinum Energy Resources, Inc. Mr. Duncan is seeking compensation for 515,713 shares of Platinum stock, approximately $14 thousand for use of his private plane, and consummation of an agreement to purchase a drilling rig for the sum of $2,478,000. On December 21, 2008, Platinum filed a general denial. A Scheduling Order has been accepted by opposing counsel and approved by the Judge assigned to this matter. We believe that Mr. Duncan’s claims are without merit and we intend to vigorously defend ourselves against these claims.

On May 3. 2009, Platinum and Maverick Engineering. Inc. filed suit against Robert L. Kovar Services, LLC (“RKS”), Robert L. Kovar (“Kovar”), Rick J. Guerra (“Guerra”), and Walker, Keeling, & Carroll. L.L.P. (“WKC”) collectively (the Defendants”) alleging, among other things, a suit for declaratory judgment asking the court to declare that Platinum and Maverick are entitled to indemnification from the former Maverick stockholders, including Guerra and Kovar, for any damages they suffer as a result of a default on any note contained in the Maverick and Perm SUB Merger Agreement. In addition, Platinum and Maverick have asked the Court to declare that WKC has breached the merger agreement by not stepping down as the Merger Escrow Agent. Platinum and Maverick have also sued to recover costs of court and attorneys’ fees. It is Platinum and Maverick’s position that the former Maverick Stockholders are obligated under the Merger Agreement to indemnify Platinum and Maverick for any damages they suffer as a result of any breach of contract by Maverick, including a default on any liability existing before the merger of Maverick and Perm SUB. Moreover, by attempting to accelerate and collect on the cash flow notes and assumed bank debt discussed in the Merger Agreement, WKC has created a conflict of interest and must resign as the Merger Escrow Agent. Therefore, Platinum and Maverick intend to offset any liability they may face in defaulting on payment of the cash flow notes or the assumed bank debt via the Defendants’ indemnity obligations. Since this litigation is in its early stages, the Company cannot predict the outcome of these matters.

On July 14, 2009, SNP Associates filed suit in the 333 rd District Court of Harris County, Texas against Maverick Engineering, Inc, Platinum Energy Resources’ wholly owned subsidiary. SNP is seeking a Declaratory Judgment, Permanent Injunction, and damages for alleged “trade name infringement.” The suit claims that SNP has the legal right to the name “Maverick Engineering” and that SNP has suffered damages as a result of two engineering firms having the same name. The Company does not believe that any of SNP’s claims have merit and we intend to vigorously defend ourselves against these claims. However, no assurance can be given that the Company will prevail in this matter.

On October 14, 2009, Maverick Engineering filed suit in Harris County against CITGO Refining & Chemical Company, LP for Breach of Contract. According to the Petition, Maverick provided engineering services to CITGO and CITGO has refused to pay for those services. Maverick is suing for $357,538.16 plus damages, costs, attorney fees, interest, and other relief. While Maverick has performed all terms, conditions, and covenants required under its contract with CITGO, it is too early in this litigation to be able to predict outcome.

On October 20, 2009, Lisa Meier filed suit for breach of her employment contract. According to the Petition, Ms. Meier resigned for “good cause” and she is seeking severance pay. On June 10, 2009, Ms. Meier delivered to the Board of Directors of Platinum energy Resources, her second notice of intent to resign for “Good Reason.” Ms. Meier’s first notice was submitted on October 23, 2008, less than three months after entering into her employment agreement, and subsequently withdrawn. The Board of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did not exist. This matter is currently is the early phase of litigation. We believe that Ms. Meier’s claims are without merit and we intend to vigorously defend ourselves against these claims. However, no assurance can be given that we will prevail in this matter.

Item 1A. Risk Factors.

There have been no material changes to the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein:

Exhibit Number		Exhibit Description

31.1		Section 302 Certification of Principal Executive Officer

31.2		Section 302 Certification of Principal Financial Officer

32.1		Section 906 Certification of Principal Executive and Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PLATINUM ENERGY RESOURCES, INC.

Date: November 11, 2009	By:	/s/ Al Rahmani
		Al Rahmani Interim Chief Executive Officer and Principal Financial Officer

Attached files

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