Platinum Energy Resources 10Q 2009 Q2 Quarterly report

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 June 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 organization)		(I.R.S. Employer Identification No.)

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

(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 August 5, 2009, 24,068,675 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	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Submission of Matters to a Vote of Security Holders	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signatures		33

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

CURRENT ASSETS
Cash and cash equivalents	$	2,471,177		$	3,668,092
Accounts receivable, net of $194,392 and $164,392 allowance for doubtful accounts as of June 30, 2009 and December 31, 2008, respectively
Oil and gas sales		1,862,933			1,629,931
Service		2,593,109			5,255,041
Inventory		480,593			436,477
Fair value of commodity derivatives - current		2,722,315			1,968,186
Prepaid expenses and other current assets		504,238			747,225

Total Current Assets		10,634,365			13,704,952

Property and equipment, at cost
Oil and gas properties, full cost method		205,300,801			204,372,437
Other		5,501,762			5,492,072
Less accumulated depreciation, depletion, amortization and impairment		(148,292,502	)		(145,016,531	)
Property and equipment, net		62,510,061			64,847,978

Other assets
Intangible assets, net		4,618,674			5,061,066
Fair value of commodity derivatives		8,764,249			18,562,702
Real estate held for development		2,700,000			2,700,000

Total Assets	$	89,227,349		$	104,876,698

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable
Trade	$	1,268,049		$	2,551,808
Oil and gas sales		892,144			1,115,114
Accrued liabilities and other		3,410,807			4,437,995
Income taxes payable		162,483			119,770
Current maturities of long-term debt, capital lease obligations and notes payable		17,150,111			13,403,731
Total Current Liabilities		22,883,594			21,628,418

Long-term debt and capital lease obligations, net of current portion		1,309,627			4,687,423
Notes payable - acquisitions		3,300,951			3,231,959
Other accrued liabilities		139,626			148,458
Asset retirement obligation		4,747,068			4,537,243
Deferred income taxes		5,640,366			10,459,000
Total Long-term Liabilities		15,137,638			23,064,083

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		155,100,474			155,100,474
Accumulated deficit		(88,235,300	)		(79,257,220	)
Treasury stock - 1,997,913 shares, at cost		(15,661,464	)		(15,661,464	)

Total Stockholders' Equity		51,206,117			60,184,197

Total Liabilities and Stockholders' Equity	$	89,227,349		$	104,876,698

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

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

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008

Revenues
Oil and gas sales	$	4,465,303		$	10,694,071		$	7,780,004		$	17,828,875
Service revenues		4,487,219			5,056,682			10,007,714			5,056,682
		8,952,522			15,750,753			17,787,718			22,885,557
Costs and expenses
Lease and other operating expense		2,203,471			2,864,605			4,933,899			5,320,911
Cost of service revenues		4,281,185			3,959,110			9,614,886			3,959,110
Marketing, general and administrative expense		2,317,738			3,768,613			4,548,459			5,500,440
Depreciation, depletion and amortization expense		1,866,365			2,577,874			3,796,309			4,641,163
Accretion of asset retirement obligations		80,834			49,319			159,547			110,988

Total costs and expenses		10,749,593			13,219,521			23,053,100			19,532,612

Operating income (loss)		(1,797,071	)		2,531,232			(5,265,382	)		3,352,945

OTHER INCOME (EXPENSES)
Interest income		881			35,796			4,314			140,183
Interest expense		(334,726	)		(230,880	)		(630,617	)		(244,685	)
Change in fair value of commodity derivatives		(8,405,839	)		(23,093,171	)		(7,878,394	)		(25,129,253	)
Other		122			107,657			2,553			176,927
Total other income (expense)		(8,739,562	)		(23,180,598	)		(8,502,144	)		(25,056,828	)

Income (Loss) Before Income Taxes		(10,536,633	)		(20,649,366	)		(13,767,526	)		(21,703,883	)
Provision (Benefit) For Income Taxes		3,674,709			(7,577,740	)		(4,789,446	)		(7,631,740	)

Net Loss	$	(6,861,924	)	$	(13,071,626	)	$	(8,978,080	)	$	(14,072,143	)

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	$	(0.31	)	$	(0.59	)	$	(0.41	)	$	(0.63	)
Diluted	$	(0.31	)	$	(0.59	)	$	(0.41	)	$	(0.63	)

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)

	Six Months Ended June 30, 2009			Six Months Ended June 30, 2008

Cash Flows From Operating Activities
Net (loss)	$	(8,978,080	)	$	(14,072,143	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization of property, plant and equipment		3,353,917			4,603,546
Accretion of asset retirement obligation and debt discount		276,716			105,306
Amortization of intangible assets/write-off of bank loan fees		442,392			37,617
Deferred income taxes		(4,818,634	)		(7,558,254	)
Unrealized loss on commodity derivatives		9,044,324			21,879,970
Changes in operating assets and liabilities:
Accounts receivable		2,428,930			(3,021,693	)
Inventory		(44,116	)		(453,479	)
Prepaid expenses and other current assets		242,986			(127,334	)
Accounts payable		(1,506,729	)		3,021,210
Accrued liabilities and other		(1,036,020	)		770,259
Income taxes payable		42,713			(172,486	)
Commodity derivatives		—			(1,008,566	)
Net cash provided by (used in) operating activities		(551,601	)		4,003,953

Cash Flows From Investing Activities

Additions to property and equipment		(965,722	)		(10,325,098	)
Acquisition of other businesses - oil and gas properties		—			(7,739,139	)
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		(965,722	)		(21,182,199	)

Cash Flows From Financing Activities

Proceeds of revolving credit facility		1,000,000			7,797,767
Payments, long-term debt and capital leases		(679,592	)		(34,422	)
Net cash provided by financing activities		320,408			7,763,345

Net (Decrease)in Cash		(1,196,915	)		(9,414,901	)

Cash - Beginning of the Period		3,668,092			16,429,619
Cash - End of Period	$	2,471,177		$	7,014,718

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	432,427		$	194,108
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	$	50,278		$	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

June 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 June 30, 2009 and for the three and six 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 June 30, 2009, unaudited interim condensed consolidated statements of operations for the three months and six months ended June 30, 2009 and 2008, and the unaudited interim condensed consolidated statements of cash flows for the six months ended June 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 six months ended June 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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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.

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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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 Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“SFAS No. 133”). SFAS No. 133 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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

Recently Issued Accounting Pronouncements

On January 1, 2009, the Company adopted SFAS No. 141 (revised 2007), “Business Combinations,” (“SFAS 141(R)”), which replaces SFAS No. 141, “Business Combinations,” (“SFAS 141”) but 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. SFAS 141(R) requires an acquirer in a business combination, including business combinations achieved in stages (step acquisition), to recognize the assets acquired, liabilities assumed, and any noncontrolling 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, SFAS 141(R) 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 SFAS 141(R) did not have a material impact on the Company’s condensed consolidated financial statements. The provisions of SFAS 141(R) will be applied at such time when measurement of a business acquisition is required.

On January 1, 2009, the Company adopted SFAS No. 157, “Fair Value Measurements,” (“SFAS 157”) 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. SFAS 157 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 this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions. The adoption of SFAS 157, as it relates to nonfinancial assets and nonfinancial liabilities, had no impact on the Company’s condensed consolidated financial statements. The provisions of SFAS 157 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 SFAS 157.

On January 1, 2009, the Company adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51,” (“SFAS 160”). SFAS 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard 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. SFAS 160 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 SFAS 160 were applied retrospectively. The adoption of SFAS 160 had no impact on the Company’s condensed consolidated financial statements.

On January 1, 2009, the Company adopted SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133,” (“SFAS 161”). SFAS 161 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 SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”), and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The adoption of SFAS 161 had no impact on the Company’s condensed consolidated financial statements.

On January 1, 2009, the Company adopted FASB Staff Position (FSP) No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets,” (“SFAS 142”) in order to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other GAAP. The adoption of FSP FAS 142-3 had no impact on the Company’s condensed consolidated financial statements.

On January 1, 2009, the Company adopted FSP No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 states 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 FSP EITF 03-6-1 did not have a material impact on the Company’s condensed consolidated financial statements.

On January 1, 2009 the Company adopted EITF Issue No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 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 EITF 07-5 did not have a material impact on the Company’s condensed consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”). SFAS 165 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. SFAS 165 is effective for interim or annual periods ending after June 15, 2009. Management has evaluated subsequent events to determine if events or transactions occurring through August 7, 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.

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.

In July 2009, the FASB issued SFAS No. 168, “The FASB Accounting Codification and the Hierarchy of Generally Accepted Accounting Principles” (“SFAS 168"). Statement No. 168 supersedes Statement No. 162 issued in May 2008. Statement No. 168 will become the 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 Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This Statement is effective for our quarterly reporting period ending September 30, 2009. The adoption of Statement No. 168 is not expected to materially impact the Company’s consolidated financial position or 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

June 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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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 six months ended June 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		3

Development costs		926

Balance at June 30, 2009	$	205,301

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

	June 30, 2009
Proved oil and gas properties	$	204,038
Unproved oil and gas properties		1,263
		205,301
Accumulated depletion and impairment		(145,474	)

Net capitalized costs at June 30, 2009	$	59,827

Note 5 – Derivative Financial Instruments

The Company engages in price risk management 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. We account for our derivatives in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. 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. 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 June 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):

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

	Three Months Ended June 30, 2009			Three Months Ended June 30, 2008
Crude oil derivative realized settlements	$	328			(1,849	)
Crude oil derivative change in unrealized gains (losses)		(8,734	)		(21,244	)
Gain (loss) on derivatives	$	(8,406	)		(23,093	)

For the six months ended June 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):

	Six Months Ended June 30, 2009			Six Months Ended June 30, 2008
Crude oil derivative realized settlements	$	1,166			(2,767	)
Crude oil derivative change in unrealized gains (losses)		(9,044	)		(22,362	)
Loss on derivatives	$	(7,878	)		(25,129	)

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

Period Ended June 30,	Instrument Type	Total Volumes (MMBTU/BBL)		Contract Price		Fair Value Asset (stated in thousands)
2010	Swaps		60,000		71.00	$	(55	)
	Swaps		60,000		95.50		1,265
	Puts		60,000		75.00		572
	Puts		60,000		85.00		940

2011	Swaps		60,000		95.50		1,153
	Puts		60,000		75.00		606
	Puts		60,000		85.00		953
	Puts		110,000		80.00		1,439
	Swaps		60,000		95.25		1,048
2012	Swaps		60,000		95.25		978
	Puts		60,000		80.00		811
	Swaps		60,000		95.00		910
2013	Swaps		60,000		95.00		866

	Total fair value					$	11,486

Note 6 – Fair Value Measurements

The Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). As defined in SFAS 157, 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, SFAS 157 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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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.

As required by SFAS 157, 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 June 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 June 30, 2009
(in thousands)

	Level 1		Level 2		Level 3		Total
Oil and natural gas derivatives		—	$	11,486		—	$	11,486

The determination of the fair values above incorporates various factors required under SFAS 157. 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 six months ended June 30, 2009 and 2008, are reported in other income (expense) on the Consolidated Statement of Operations.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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 are 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 June 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

June 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 June 30, 2009 (stated in thousands):

Oil and gas revolving line of credit	(a)	$	13,009
Notes payable - acquisitions	(b)		3,493
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
Notes payable to third party – Maverick	(g)		305
Capital lease obligations			382
		$	21,761
Less: Current maturities			17,150
Long-term debt		$	4,611

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

(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 has 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 has 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 June 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 reclassified 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.

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 3,300,951 at June 30, 2009 after the accretion of the discount in the amount of $117,168 during the first six 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 June 30, 2009 the entire balance of $191,440 is classified as a current liability.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

(c) $3,250,000 revolving line of credit, payable to the Maverick former shareholders in monthly interest payments at prime plus .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.

(e) Second term note, payable to the Maverick former shareholders in monthly interest payments at prime plus ..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.

(g) Note payable to a third party in monthly installments, with interest paid at 12%, principal due at maturity in September 2009, collateralized by the guaranty of the Maverick former majority stockholder and substantially all assets. These notes are collateralized by accounts receivable, a $4,000,000 life insurance policy on the former majority stockholder, and general and limited oil and gas partnership interests owned by the Maverick former majority stockholder.

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

For the Year Ended June 30,
2010	$	16,955
2011		281
2012		281
2013		3,862
	$	21,379

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 June 30, 2009 (stated in thousands):

For the Year Ended June 30,
2010	$	211
2011		160
2012		116
Total minimum lease payments		487
Less: Amount representing interest		(105	)
Current value of minimum lease payments		382
Less: Current maturities		(195	)
	$	187

The effective interest rate on capitalized leases ranges from 5% - 31%.

Note 9 – Earnings per Share

Computation of Earnings per Share —The Company accounts for earnings per share in accordance with SFAS No. 128, "Earnings per Share," ("SFAS No. 128") which establishes the requirements for presenting earnings per share ("EPS"). SFAS No. 128 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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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):

	Three Months Ended June 30,
	2009			2008
Numerator:
Net (loss) applicable to common stockholders	$	(6,861,924	)	$	(13,071,626	)

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 earnings (loss) per share	$	(0.31	)	$	(0.59	)

Diluted earnings (loss) per share	$	(0.31	)	$	(0.59	)

	Six Months Ended June 30,
	2009			2008
Numerator:
Net (loss) applicable to common stockholders	$	(8,978,080	)	$	(14,072,143	)

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 earnings (loss) per share	$	(0.41	)	$	(0.63	)

Diluted earnings (loss) per share	$	(0.41	)	$	(0.63	)

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 six months ending June 30, 2009 and 2008. For the Six Months Ended June 30, 2009, options to purchase 156,000 shares of common stock were not considered in calculating diluted EPS because the effect would be anti-dilutive.

Note 10 – Income Taxes

The Company utilizes an asset liability approach to determine the extent of any deferred income taxes, as described in 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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

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 SFAS Statement No. 109. Therefore, the Company has established a valuation allowance of $3.0 million in deferred tax assets at June 30, 2009 and December 31, 2008.

There are no uncertain income tax positions required to be recorded pursuant to FIN 48. 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 June 30, 2009.

Note 11 - Segment Information

With the consummation of the Maverick acquisition, in accordance with 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 six months ended June 30, 2009, three customers accounted for approximately 36%, 13% and 13% 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.

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

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

	Exploration									Consolidated
For the Three Months Ended June 30, 2009:	and Production			Engineering			Parent			Total
Revenues	$	4,477		$	4,475		$	—		$	8,952
Intersegment revenues		—			—			—			—
Total revenues	$	4,477		$	4,475		$	—		$	8,952
Income (loss) before income taxes	$	(8,659	)	$	(798	)	$	(1,080	)	$	(10,537	)
As of June 30, 2009 :
Total assets	$	79,877		$	8,686		$	664		$	89,227

	Exploration									Consolidated
For the Six Months Ended June 30, 2009:	and Production			Engineering			Parent			Total
Revenues	$	7,807		$	9,981		$	—		$	17,788
Intersegment revenues		—			—			—			—
Total revenues	$	7,807		$	9,981		$	—		$	17,788
Income (loss) before income taxes	$	(10,305	)	$	(1,765	)	$	(1,698	)	$	(13,768	)

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 and we estimate the possible loss could range from $60,000 to $250,000. 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. Hyman, a former employee of KD Resources, filed a claim against KD Resources and Platinum Energy stating that he was discharged from KD Resources 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 has until May 11, 2009 to file his initial brief. The Company will then have the opportunity to file a brief which must be done by June 10, 2009. 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 CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(UNAUDITED)

On December 3, 2008, 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. 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, Lance Duncan filed suit against Platinum Energy Resources, Inc. Mr. Duncan is seeking compensation for 515,713 shares of Platinum stock, $13,857.47 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 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 PermSUB 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 PermSUB. Moreover, by attempting to accelerate and collect on the cashflow 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 333rd 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. We do 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 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 six months ended June 30, 2009 as compared to the three and six months ended June 30, 2008

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

(C) We purchased Maverick Engineering on April 29, 2008. Accordingly, since we did not own that business during the full three and six month periods ended June 30, 2008, we have included a comparison of certain summarized historical information of Maverick for the three months ended June 30, 2009 with the three months ended March 31, 2009, in order to provide the reader with certain meaningful analytical data.

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 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 June 30, 2009 as compared to the three months ended June 30, 2008

For the three months ended June 30, 2009 and 2008 , our results of operations included those of the oil and gas entities acquired on and subsequent to October 26, 2007. For the three months ended June 30, 2008 our results contain limited results for Maverick since we purchased the engineering firm on April 29, 2008. See “Business - Growth Strategy” beginning on page 5 and Note 4 to the consolidated financial statements on page F1-14 in our Form 10K for the year ended December 31, 2008. For a comparison of results of operations relating to our oil and natural gas assets, see “Results of Operations - Oil and Gas” below.

On a consolidated basis we had a net loss of approximately $6.9 million during the three months ending June 30, 2009 compared to a net loss of approximately $13.1 million during the comparative period ending June 30, 2008. The primary component in the losses during both periods was related to the change in the fair value of our commodity hedge positions during the periods reported. 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.

At the consolidated level, variances for Marketing, general and administrative expense, Cost of service revenues, and DD&A between the two comparative periods are primarily a function of the fact that we did not own Maverick for a majority of the period. Please refer to the “Results of Operations-Oil and Gas”, and “Results of Operations-Engineering Services (Maverick)” for further discussion.

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 June 30, 2009 was $989,000 as compared to approximately $694,000 for the three months ended June 30, 2008. The increase was due primarily to an increase in legal and accounting costs related to the internal investigation, and to the increase in legal fees associated with ongoing litigation.

We also incurred unrealized losses of $3.6 million for the three months ended June 30, 2009, as compared to losses of $1.6 million in the comparable 2008 period on the decrease 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 six months ended June 30, 2009 as compared to the six months ended June 30, 2008

For the six months ended June 30, 2009 and 2008, our results of operations included those of the oil and gas entities acquired on and subsequent to October 26, 2007. For the six months ended June 30, 2008 our results contain partial results for Maverick since we purchased the engineering firm on April 29, 2008. See “Business - Growth Strategy” beginning on page 5 and Note 4 to the consolidated financial statements on page F1-14 in our Form 10K for the year ended December 31, 2008. For a comparison of results of operations relating to our oil and natural gas assets, see “Results of Operations - Oil and Gas” below.

On a consolidated basis we had a net loss of approximately $9.0 million during the first six months ending June 30, 2009 compared to a net loss of approximately $14.1 million during the comparative period ending June 30, 2008. The primary component in the losses during both periods was related to the change in the fair value of our commodity hedge positions during the periods reported. 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.

At the consolidated level, variances for Marketing, general and administrative expense, Cost of service revenues, and DD&A between the two comparative periods are primarily a function of the fact that we did not own Maverick during most of the 2008 period. Please refer to the “Results of Operations-Oil and Gas”, and “Results of Operations-Engineering Services (Maverick)” for further discussion.

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 six months ended June 30, 2009 was $1.6 million as compared to approximately $1.4 million for the six months ended June 30, 2008. The increase was due primarily to an increase in legal and accounting costs related to the internal investigation, and to the increase in legal fees associated with ongoing litigation.

We also incurred unrealized losses of $3.9 million for the six months ended June 30, 2009, as compared to $1.6 million in the comparable 2008 period on the decrease 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 June 30, 2009 as compared to the Three Months Ended June 30, 2008

Our revenues from oil and gas sales for the three months ended June 30, 2009 were $4.5 million. Oil and gas sales for the three months ended June 30, 2008 were $10.7 million. The 58% decrease in oil and gas revenues was due to a decrease in commodity prices offset partially by a slight increase in production on a Boe basis during the three months ended June 30, 2009. The average oil price for the three months ended June 30, 2009 was $55.51 compared to $122.22 for the three months ended June 30, 2008. The average gas price for the three months ended June 30, 2009 was $2.95 per Mcf compared to $11.11 for the three months ended June 30, 2008. Production on a Boe basis increased 2% from 100,831 Boe’s during the three months ended June 30, 2008 to 103,265 Boe’s during the three months ended June 30, 2009.

Oil and gas production costs in the form of lease operating expense on a Boe basis decreased 25% from $28.68 per Boe during the three months ended June 30, 2008 to $21.43 per Boe during the three months ended June 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 34% or approximately $667,000, during the three months ended June 30, 2009 compared to the three months ended June 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 unrealized losses of approximately $4.8 million for the three months ended June 30, 2009 as compared to unrealized losses of approximately $21.5 million during the three months ended June 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 Six Months Ended June 30, 2009 as compared to the Six Months Ended June 30, 2008

Our revenues from oil and gas sales for the six months ended June 30, 2009 were $7.8 million. Oil and gas sales for the six months ended June 30, 2008 were $17.8 million. The 56% decrease in oil and gas revenues was due to a decrease in commodity prices offset partially by an increase in production on a Boe basis during the six months ended June 30, 2009. The average oil price for the six months ended June 30, 2009 was $46.43 compared to $110.77 for the six months ended June 30, 2008. The average gas price for the six months ended June 30, 2009 was $3.16 per Mcf compared to $9.64 for the six months ended June 30, 2008. Production on a Boe basis increased 10% from 189,069 Boe’s during the six months ended June 30, 2008 to 207,822 Boe’s during the six months ended June 30, 2009.

Oil and gas production costs in the form of lease operating expense on a Boe basis decreased 15% from $28.14 per Boe during the six months ended June 30, 2008 to $23.79 per Boe during the six months ended June 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 $1.2 million, or 29%, during the six months ended June 30, 2009 compared to the six months ended June 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 unrealized losses of approximately $3.9 million for the six months ended June 30, 2009 as compared to unrealized losses of approximately $23.5 million during the six months ended June 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 June 30,
	2009		2008
Production
Oil (Bls)		69,769		71,508
Gas (Mcf)		200,973		175,936
Boe (Bls)		103,265		100,831

Average Prices
Oil ($/Bbl)	$	55.51	$	122.22
Gas ($/Mcf)	$	2.95	$	11.11

Average Lifting Cost
Per Boe	$	21.43	$	28.68

	Six Months Ended June 30,
	2009		2008
Production
Oil (Bls)		139,699		130,215
Gas (Mcf)		408,739		353,125
Boe (Bls)		207,822		189,069

Average Prices
Oil ($/Bbl)	$	46.43	$	110.77
Gas ($/Mcf)	$	3.16	$	9.64

Average Lifting Cost
Per Boe	$	23.79	$	28.14

For the three months ended June 30, 2009 as compared to the three months ended March 31, 2009

Revenues for the three months ended June 30, 2009 and the three months ended March 31, 2009 were $4.5 million and $5.4 million, respectively. Gross margin performance for these periods was 4.4% and 1.8%, respectively. The improvement in second quarter gross margin is attributable to adjustments in staffing levels and elimination of non-billable positions as a result of the current economic slowdown. These staffing level adjustments led to improved personnel utilization in the second quarter. In addition, second quarter gross margin was positively impacted by an improved business mix, as the oil and gas, infrastructure and survey businesses contributed a higher proportion of second quarter revenues. Engineering services reported pretax losses of $798,520 and $1,056,053 in the three months ended June 30, 2009 and the three months ended March 31, 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 28, 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. If circumstances warrant and in the event that any holders of the unit purchase option choose to exercise all or a portion of the unit purchase option on a cashless basis, we will receive no cash proceeds but would be required to issue additional units. In addition we can give no assurance that any of the warrants included in the units sold to the public will be exercised and result in any proceeds to us.

The following additional events occurred or had an impact during the six months ended June 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 June 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 June 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. Ms. Meier is a certified public accountant. Ms. Meier earned a Bachelor of Business Administration from the University of Texas at Austin and a Master of Professional Accountancy from the University of Texas at Austin in 1996. 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.

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 June 30,

2010	$	342,500
2011		231,000
2012		45,000

	$	618,500

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 June 30, 2009 we have incurred capital expenditures of approximately $878,000, primarily related to projects begun in 2008 but not completed until 2009.

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 SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS No. 133 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. 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 June 30, 2009 and 2008 we reported net losses of $8.4 million and 23.1 million , respectively, on the change in value of our derivative contracts. For the six months ended June 30, 2009 and 2008 we reported net losses of $7.9 million and $25.1 million respectively, on the change in value of our derivative contracts.

Asset Retirement Obligation

We follow the provisions of SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 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 Pronouncements

See Recent Accounting Pronouncements 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 June 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 June 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 June 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

There were no changes in internal control over financial reporting that occurred during the second 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.

Platinum v. Robert L. Kovar Services, et al

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. These litigations are in its early stages and, accordingly, the Company cannot predict the outcome of these matters.

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.

On July 22, 2009, William Blain delivered to the Board of Platinum Energy Resources, Inc. (the “Company”) a written notice of his intent to resign from his position on the Board of Directors of the Company effective July 22, 2009.

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: August 7, 2009	By:	/s/ Al Rahmani
		Al Rahmani Interim Chief Executive Officer

	By:	/s/ Michael Cunningham
		Michael Cunningham Interim Chief Financial Officer

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Platinum Energy Resources (PGRIU) Inactive 10-Q2009 Q2 Quarterly report

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