PLTG

Analyst: Lisa Springer, CFA

Initial Report October 15th, 2008

10/03/08

PLTG daily

1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 0.9

Platina Energy Group Inc.

14850 Montfort Drive, Suite 131 Dallas, Texas 75254

0.8 © BigCharts.com

volume

400 300

Tel: 972.458.9600 Fax:480-287-9560 www.platinagroup.com

200 100 0

Aug

Oct

Company Introduction

MARKET DATA

Symbol Exchanges Current Price Price Target Rating Outstanding Shares Market Cap. Average 3-m Volume

Sep

s d n a s u o h T

PLTG OTC BB $0.05 $0.30 Speculative Buy 156.6 Million $6.4 Million 666,715

Source: Yahoo Finance, Analyst Estimates

Platina Energy Group Inc. (OTCBB: PLTG) is an independent exploration and production company with multiple oil and gas lease properties in North America and a proprietary enhanced recovery technology. Headquartered in Dallas, Texas, the Company owns net proven reserves of 2.9 million barrels of oil and 21.6 thousand million cubic feet (MMCF) of natural gas. PLTG operates as a publicly traded company with several wholly owned subsidiaries. The Company’s Company’s strategy is to minimize risk by owning a diversied portfolio of energy sector subsidiaries, includincluding Appalachian Energy Corp., Wildcat Energy Corp., and Platina Exploration. The Company’s Company’s subsidiaries own oil oil and gas leases leases in Hawkins County, Tennessee, in Young County, Texas, in Rusty Creek, Wyoming, in Seminole County, Oklahoma, and in Laurel and Whitley Counties, C ounties, Kentucky. PLTG also holds rights to a proprietary technology, the Thermal Pulse Unit (TPU), designed for cost-eective and eco-friendly oil well stimulation and enhanced oil recovery. On October 2007, in order to coordinate private equity raising activities, the Company formed Applegate Petroleum Management LLC. In line with the Company’s strategy to grow both organically and inorganically, on March 31, 2008, PLTG acquired Enhanced Oil Recovery Inc., a wholly owned subsidiary subsidiary of Utek Corp. Oil Recovery Technology currently has two TPU units deployed and operating successfully in the eld. An independent geologist report on the Company’s Appalachian Basin property states that proven reserves have a present value discounted over 10 years, exceeding $62 million. PLTG has established

Platina Energy Group, Inc. ( OTCBB:PLGT)

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production at increasing levels from its Young County, County, Texas, property. property. The Company’ Company’ss production estimate for its Kentucky properties during the t he month of July was 550 BOE per month with an approximate value of $75,000 per week.

Investment Highlights Inorganic growth strategy to boost growth PLTG is aggressively acquiring drilling properties and related energy assets. The Company formed Wildcat Energy Corp. in January 2008, with plans of acquiring more acreage across Kentucky Kentucky.. Wildcat has already acquired more than 4,700 acres under various arrangements, with a potential of 70 oil/gas well locations. Ten wells have already been drilled, four of which are fully completed and are producing oil and gas on a daily basis. These wells have already posted robust ro bust revenues for the Company. Company. PLTG’s PLTG’s past acquisitions, such as Appalachian Energy Corporation in Tennessee, consist of approximately 50 well sites in the Devonian Shale formation. Studies indicate proven reserves worth more than $60 million in these wells. The Rusty Basin prospect is about 1,600 acres with more than 10 well locations identied. According to third-party reports, the Company has acquired proven producing and non-producing reserves estimated to be worth more than $300 million. Technology acquisition complements production business PLTG is focused on enhancing oil and gas recovery using cost-eective methods. In April 2008, the Company acquired Enhanced Oil Recovery Technology from Utek Corp. The acquisition gives the Company an exclusive worldwide license for a patented technology that uses an electrical submersible pump and a jet pump to separate liquid and gas streams. This allows oil wells with a high gas content to recover the gas versus burning it o. Through its Oil Recovery Technologies subsidiary, the Company purchased rights to a technology used for paran build-up reduction and oil recovery. The Thermal Pulse Unit (TPU) provides a signicantly lowered cost basis per barrel for recovery of heavy oil and avoids the problems associated with CO2 ooding, steam or dangerous open ame heating of oil on the surface. PLTG plans to deploy TPU technology and the recently acquired combination technology in its own elds to enhance production and reduce the production decline curve. It is also exploring potential joint ventures to commercialize these technologies. Increasing energy demand creates opportunities for developing leased properties and unexplored areas Industrial and technological developments have increased the demand for energy resources, including oil and gas. According to the Energy Information Administration, average U.S. oil consumption is projected to reach nearly 26.1 million barrels per day by 2025. However, most existing oil elds are mature, and production from these elds is declining. Hence, there is an urgent need for exploration and development of new properties and work-over of existing wells. PLTG is leveraging its resources by bringing various small energy companies together under one umbrella, with each business run by a local management team compensated on a performance basis.


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Soaring energy prices to support growth prospects The Company has valued its reserves on a very conservative energy prices base of $70 per barrel oil and $6 per MVF natural gas. Accordingly, Accordingly, the Company believes it can exceed its current revenue forecasts. Also, as production increases and cash ow becomes more predictable, the Company plans to use sophisticated hedge strategies to generate higher prots.

Oil & Gas Industry Outlook The global oil and gas industry generated revenues exceeding $4.3 trillion in 2007 and has produced 17.7% annual growth since 2003. Exploration and production represents about 40% of this market. Increasing global energy demand The U.S. Energy Information Administration (EIA) estimated global oil consumption in 2007 at 85.8 million barrels per day. In the rst six months of 2008, global consumption surged by 370,000 barrels per day from year-ago levels. Exhibit 1: World Oil Consumption

y a D r e p l e r r a B n o i l l i M

90 85 80 75 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: Energy Information Administration

Population and economic growth in developing countries is expected to li energy consumption from 462.7 quaqua drillion British thermal units (Btu) in 2005 to 694.7 quadrillion Btu by 2030.


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Exhibit2: Global energy consumption

750 u t B n o i l l i r d a u Q

600 450 300 150 0 1990

1995

2000

2005

2010

Total Energy Consumption

2015

2020

2025

2030

Natural Gas

Oil


Petroleum consumption by the transportation sector continues to increase in the absence of suitable alternative energy sources. By 2030, out of the total projected consumption increase, 57.9% will come from the transportation sector, and 31.4% will come from the industrial sector. secto r. Exhibit 3: Break-up o world oil consumption by sector, 2005-2030

250 200

u t B 150 n o i l l i 100 r d a u 50 Q

0 2005 Transportation

2010 Industrial

2015

2020

Residential

2025 Electricity

2030 Commercial


U.S. remains the largest energy consumer The U.S. has a huge appetite for energy and spends more than $500 billion annually on energy costs. Average domestic oil consumption (20.7 million barrels per day in 2007) represents about 23.9% of global consumption. However,, a weaker economy and higher oil prices are expected to reduce U.S. oil consumption However co nsumption by about 613,700 Platina Energy Group, Inc. ( OTCBB:PLGT)

4



barrels per day in 2008 and 76,200 barrels per day in 2009. Exhibit 4: Break-up o global consumption by region in 2007

23.9% 30.0%

US Rest of North America (excluding US) South & Central America

4.8% 3.5%

6.4%

Europe & Eurasia Middle East Africa

7.4% 24.0%

Asia Pacific Source: BP Statistical Review 2008

Domestic natural gas consumption, on the other hand, is forecast to rise 2.7% this year and 2.2% in 2009. This growth will come from the residential and commercial sectors in 2008 and the electric power sector in 2009. Despite higher prices in the rst half of 2008, natural gas consumption by the industrial sector rose 3.7% year-overyear.. Consumption by the year t he industrial sector is forecast to rise 1.6% in 2008 and 1.4% in 2009 while consumption for electricity generation is predicted to increase 4.6% in 2009. Dependence on oil imports While U.S. oil consumption has risen, production has h as lagged, resulting in an increased dependence on oil imports. U.S. oil production declined from 5.8 million barrels per day in 2000 to 5.1 million barrels per day in 2007. In contrast, domestic consumption increased to 20.7 million barrels per day from 19.7 million barrels per day over the same period.


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Exhibit 5: Production and Consumption Consumption o oil in the U.S. (2000-2009)

25

y a d r 20 e p s 15 l e r r 10 a b n 5 o i l l i 0 M

2000 2001 2002

2003 2004

Oil Production

2005

2006 2007 2008 2009

Oil Consumption


Natural gas production increased slightly to t o 55.21 billion cubic feet per day in 2007 from 55.18 billion cubic feet per day in 2000, while domestic consumption declined marginally to 63.17 billion cubic feet per day in 2007 from 63.76 billion cubic feet per day in 2000. However, demand for natural gas continues to far exceed the domestic supply. Exhibit 6: Production and Consumption o natural gas in the U.S. (2000-2009)

y a d r e p s l e r r a b n o i l l i M

70 65 60 55 50 45 2000 2001 2002

2003 2004

Natural gas Production

2005

2006 2007 2008 2009

Natural gas Consumption



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To ll the large supply/demand gap, the U.S. relies heavily on oil imports from the Gulf countries. In 2007, the U.S. imported 4.9 million barrels of oil and 4.6 million cubic feet of natural gas. Any major new oil and gas discoveries in the U.S. would be readily absorbed by the t he domestic market. Supply/demand imbalance fuels price hikes Crude oil prices are determined by global supply and demand. Recent price hikes are the result of consumption growth in emerging markets such as China and India and a reduced supply outlook for no n-OPEC countries. Supply disruptions and geopolitical tensions in countries such as Venezuela, Iraq, Iran and Nigeria are contributing to price volatility. Exhibit 7: Prices trends o crude and natural gas

12

160 l e 120 r r a b 80 r e p $ 40

9 6 3 0

0 2004

2005

2006

2007

2008e

2009e

$ p e r T h o u s a n d C u b i c F e e t

Crude Oil Prices - West Texas Intermediate Spot Average (LHS) Natural Gas - Henry Hub Spot (RHS)


Crude oil prices have increased sharply in 2008, surging from around $70 in 2007 to $100 per barrel in early 2008 to $140 per barrel in June. West Texas Intermediate (WTI) crude oil prices, which averaged $72 per barrel in 2007, are now projected to average $115 per barrel in 2008 and $126 per barrel in 2009. The overall outlook suggests rising demand, tightening supplies and steadily higher oil and gas prices. High prices encourage new exploration activity in the U.S. Soaring oil prices are prompting new domestic exploration and re-development of existing wells across the United States. Exhibit 8 below shows a steady increase in the number of gas and oil rigs working in the U.S. and increased domestic drilling activity.


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Exhibit 8: Working oil and gas rigs in the U.S. 2,000 s 1,600 g n i r f 1,200 o r 800 e b m 400 u N

0

0 0 1 2 0 - 0 - 0 - 0 n p y n a e a a J S M J

2 0 p e S

3 0 y a M

4 0 n a J

4 0 p e S

5 0 y a M

6 0 n a J

6 0 p e S

7 0 y a M

8 8 0 - 0 n p a e J S

Natural Gas

Crude Oil

Source: Baker Hughes North American Rig Report

As of January 2008, 27% of the t he world’s world’s eet of drilling rigs was deployed in the U.S. Exhibit 9: Rigs by region (Till January 2008)

USA

20%

27%

North Sea Middle East

4%

Far East 7%

West Africa

7%

15% 10%

10%

Mexico Brazil RoW

Source: Tenaris, Rig Logix

Worldwide, Worl dwide, 134 new drilling rigs are scheduled for delivery between 2008 and 2010.


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Exhibit 10: New rigs are scheduled to be delivered between 2008 and 2010 60 48

4

36

13

6 20 13

24 12

28

32

7 11

0 2008

2009

Jackup

Semisub

2010 Drillship

Source: Tenaris, Rig Logix

Platina Energy Group Structure Exhibit 11: Platina Energy Group Structure

Platina Group Structure

Technology Acquisition

Oil Recovery Technologies

Oil Recovery Technologies has bought the proprietary rights for distribution of Thermal Pulse Technology i.e. TPU

Enhanced Oil Recovery Technologies

The Company purchased Enhanced Oil Recovery Technologies, Inc from UTEK Corporation on March 31, 2008. The reason for the acquisition was Electrical submersible pumps "ESP" technology which is to extract oil out of onshore and offshore deep wells.

Lease on Oil Reserves

Appalachian Energy Corp

Wildcat Energy Corp

Platina Energy Corp

50 well sites on 1600 leased acres. The reserves have a value of $ 60 million on a PV 10 basis

Whitley County Field, Laurel County Field and Clinton County Field together have an acreage of 4700 acres with 70 potential well locations of which 10 wells are already drilled successfully out of 4 are fully complete and producing oil daily.

Platina Energy Corp has made several acquisitions by forming joint ventures in Kilgore, Texas and Oklahoma and is producing oil and gas from these wells.


Source: Company Website and Report

Palo Duro Basin

During 2007, consultants were appointed to ascertain the potential reserve holdings in the Palo Duro Basin but the data to date still remains inconclusive.

Rusty Creek, Wyoming

The Rusty Creek has 1,600 acres and currently has one producing well and one re-entry well opportunity. There are additionally another 20 drilling sites on the property for which the Company is evaluating participation

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Subsidiaries Oil Recovery Technologies Oil Recovery Technologies is a wholly owned subsidiary which has acquired certain marketing rights to a proprietary technology, the Thermal Pulse Unit (TPU) enhanced oil and gas recovery technology. TPU enables enhanced recovery of heavy oil at a fraction of the cost of the current state-of-the-art technology. technology. Two units are deployed with positive results, working dierent types of tertiary tert iary recovery. recovery. This German-inspired technology oers a cost-eective and eco-friendly solution for oil recovery and paran buildup reduction. TPU utilizes pressurized nitrogen, which is highly eective in restoring formation pressure and improving oil displacement and uid ow, particularly in wells blocked by paran. TPU creates 350F+ heat and 1500+psi pressures for well cleanup, stimulation and production using hydraulically-driven compressor technology. The Company is exploring opportunities to form joint ventures for TPU, with potential partners specializing in extraction technologies. Appalachian Energy Corporation In January, 2007, the Company acquired oil and gas leases to 55 drilling locations on approximately 1,600 acres in the Devonian Black Shale formation located in the Appalachian Basin of East Tennessee and formed a wholly owned subsidiary, Appalachian Energy Corporation. An independent report estimates the current discounted value of proved reserve associated with this property to be more than t han $60 million. According to third-party forecasts, a 40-50 well program is likely to cost between $12 million and $15 million, and may generate gross production at current prices of $35,000-$42,000 per month per well. Pipeline access and ample compressor capacity are readily available. Wildcat Energy Corp On January 10, 2008, the Company formed Wildcat Energy Corp., which is managed by its CEO and president, Joel Paon. It is headquartered in London, Kentucky. Kentucky. Wildcat has acquired leases located in Laurel and Whitley counties of Kentucky. The Whitley County acreage consists of approximately 1,200 acres and has ve wells, of which two produce natural gas. The Laurel County eld has acreage of 2,700 acres, with 70 potential well localocations and 10 wells drilled successfully. Of these drilled wells, four are fully completed and producing oil and gas. The Clinton County Field consists of 830 leased acres with one shut in gas well. The Company is conducting engineering studies at this site. Platina Exploration Corp. In June 2007, PLTG formed Platina Exploration Corp., which has its headquarters in Dallas, Texas. Platina Exploration has acquired producing interests on multiple leases in Seminole County, Oklahoma, and prospects in Young County, Texas. Texas. Through a joint venture with Buccaneer Energy Energy,, Platina Exploration has spent more than $500,000 evaluating evaluating the potential acquisition of a producing asset with behind the pipe reserves. Young County, Texas The Young County, County, Texas prospect consists of 325 acres. This property has 20 wells with rework potential. During 2008, the Company drilled three additional wells on the property and identied 120 additional well loca tions. PLTG plans plans to expand its operations on this property on a well-by-wel well-by-welll basis.


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The Palo Duro Basin In February 2007, the Company acquired oil and gas lease options on a prospect consisting of more than 722 acres in Texas. According According to a Morgan Stanley report and a major trade journal, potential potent ial gas recovery associated with the Palo Duro Basin could exceed the prolic Barne Shale discovery. discovery. Platina management believes that the Palo Duro Shale could be one of o f the largest natural gas deposits in North America. Platina has yet to t o drill wells on this property. Rusty Creek, Wyomi Wyoming ng The Company acquired an oil lease in Wyoming encompassing 1,860 acres. The producing well yielded 1,500 barrels of oil per day for the rst 90 days of 1997. However, the last 10 years have witnessed a steep decline in pro ductivity, with yields falling to only 300 barrels per month. There are 20 additional drilling sites on the property, for which the Company is evaluating participation. Exhibit 12: Company’s Developed, Undeveloped and Total Acreage Program

Developed Acreage

Total Acreage

Gross

Net

Gross

Net

Gross

Net

55 0 180 160 446 242

55 0 60 160 446 63

270 722 220 1,440 2,284 1,618

270 722 90 1,440 2,284 421

325 722 400 1,600 2,730 1,860

55 0 60 160 446 63

1,083

784

6,554

5,227

7,637

6,011

Texas - Young County Texas - Palo P alo Duro Basin Oklahoma Tennessee Kentuky Wyoming

Total

Undeveloped Acreage

Source: Company Report


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Business Strategy Exhibit 13 : Business Strategy

Develop Existing Properties

Deploy Local Talent for Assistance

Business Strategy

Cost Reduction through Economies of Scale and Efficient Operations

Pursue Attractive Acquisitions and Joint Ventures

Minimize costs with th e help of technology e.g.: TPU & ESP

Source: Beacon Equity Research

Develop existing properties The Company intends to create near-term reserve and production growth from a number of drilling locations identied at existing acreage. PLTG plans to abstain from exploratory wells and focus instead on drilling wells at already established elds. The execution of management’s strategy is subject to availability of funds. Pursue aractive acquisitions and joint ventures The Company plans to continue to acquire companies it believes can provide competitive advantages and intends to pursue industry joint venture partners. Cost reduction through economies of scale and ecient operations Management expects the Company’s unit cost of production to decline as PLTG develops and expands production from its existing properties. Unit costs will be reduced by utilizing the existing infrastructure over a larger number of wells. PLTG plans to carefully control costs and the timing of its exploration, development and production activities. It will also form joint venture to cut costs.


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Use of cost-eective enhancement technology The Company also plans to market its TPU-enhanced recovery technology to oil and gas property operators as well as owners/leaseholders of stripper wells. PLTG plans to deploy TPUs in its own elds to enhance production and reduce the production decline curve. It is also involved in discussions with other well operators regarding potential on-site installations of trial TPUs. The Company also has rights to inline electrical submersible pump and jet pumps. Electrical submersible pumps (ESP) are oen used to extract oil from onshore ons hore and oshore deep wells. PLTG acquired the rights to this technoltechnology aer it acquired Utek Corp. on March 31, 2008. The advantages of this technology include costs reductions, reduction in power consumption, increased production, improved eciencies and improved safety. Management believes this technology will enable the Company to expand its area of operations in terms of protable recovery of oil and gas from wells, i.e. deep and/or high gas-to-liquid wells. The Company has created a template for producing TPUs; components will be manufactured by several suppliers and then assembled by PLTG at a central location. With this system in place, PLTG is expected to produce two TPU units per day.

Competitive Analysis PLTG competes with other independent exploration and production companies for acquisitions, nancing and other resources. Some of its domestic competitors are described below. Aurora Oil and Gas Corporation Aurora Oil and Gas Corp. is an independent energy company engaged in the exploration, exploitation and development of unconventional natural gas reserves. The company has project areas in the Antrim Shale of Michigan and New Albany Shale of southern Indiana and western Kentucky. The company focuses on shale plays where large acreage blocks can be easily evaluated through a series of low-cost test wells. These shale plays are associatass ociated with relatively low drilling costs compared to conventional exploration and development plays. The Company had proved reserves of approximately 166.6 billion cubic feet of natural gas at year-end 2007 Panhandle Oil and Gas Inc. Panhandle Oil and Gas Inc. (formerly Panhandle Royalty Company) acquires and manages fee mineral acreage and explores and develops oil and gas properties. It has mineral property reserves and other oil and gas interests located in Oklahoma, New Mexico and Texas. The company does not operate any wells, rather it receives production from several thousand small wells. As of September 30, 2007, the company’s principal properties included 254,692 net mineral acres in Oklahoma, New Mexico, Texas and nine other states. The Meridian Resource Corporation (TMR) The Meridian Resource Corporation, founded in 1985 and incorporated in 1990, locates, develops and produces oil and natural gas. It uses 3-D seismic technology to locate reserves. The company owns interest in reserves located in South Louisiana, the Texas Gulf Coast and the Gulf of Mexico. As of December 31, 2007, the company owned interests in leases covering approximately 363,000 gross acres. It owned interest in 121 wells and had proven reserves of approximately 90 billion cubic feet of natural gas equivalent. Platina Energy Group, Inc. ( OTCBB:PLGT)

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GMX Resources Inc. (GMX) GMX Resources Inc., incorporated in 1998, acquires, explores for and develops crude oil and natural gas resources in Texas, Louisiana and New Mexico. Oil production focuses on the Coon Valley Sands in the Carthage, Carth age, North Field of Harrison and Panola counties of East Texas Brigham Exploration Company (BEXP) Brigham Exploration Company is an oil and natural gas exploration, development, and production company. It uses 3-D seismic imaging and other technologies to explore and develop onshore oil and natural gas reserves in the United States. The company owns property interests in the onshore Gulf Coast, including the Vicksburg trend in Brooks County, Texas; the Frio trend in and around Matagorda County, Texas; and joint venture interests in southern Louisiana, the Rocky Mountains and West Texas. As of December 31, 2007, it had estimated natural gas reserves of 140.2 billion cubic feet. Daily production last year averaged 41.6 million cubic feet of natural gas equivalent.

Financial Analysis Financial record For the quarter ended June 2008, PLTG reported revenues of $0.05 million, which was equal to almost half of fullyear FY2007 annual revenues. Signicant quarter-over-quarter revenue growth is anticipated in the second half of 2008 and into 2009 as production gains are realized from the Company’s Kentucky projects. In the month of July alone, oil and gas revenues from Kentucky production activities exceeded all of the Company’s Company’s production revenues from the prior quarter. Operating expenses during the June quarter were higher at $2.0 million and were up four-fold year-over-year. Most of the increase was due to non-cash, stock-based compensation which caused general and administrative expenses to rise substantially. Operating and net losses totaled approximately $2.0 million and $6.0 million, respectively,, for the quarter ended June 2008. spectively Exhibit 15 Selected fnancial data rom income statement Quarter ended June 30, 2008 Revenue Total Operating Expenses Operating Proft / (Loss)

Net Interest Income/(Expense) Net Income / (Loss)

Quarter ended June 30, 2007

Year ended March 31, 2008

Year ended March 31, 2007

$49,180

$7,200

$116,863

$18,200

$2,004,402

$480,921

$2,781,972

$664,468

($1,955,222)

($473,721)

($2,665,109)

($646,268)

($585,150)

($21,391)

($568,045)

($195,577)

($5,992,601)

($3,725,278)

($16,165,889)

($1,151,457)

Source: Company Reports, Pink Sheets


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Liquidity and capital requirements As of June 30, 2008, the Company has total assets of $11.7 million and a working capital decit of $3.4 million. Spending on development activities is budgeted at approximately $25 million over the next 12-to-18 months. PLTG’s ability to implement its drill plan and acquire additional leaseholds will depend on securing additional funding and/or forming joint ventures with with other oil and gas operators. The Company plans to pursue debt nancing to fund its 2008/2009 business plan. Exhibit 16: Selected fnancial data rom balance sheet

June 30, 2008 $71,571

Cash & cash equivalents Net working capital

($3,390,419)

Total assets

$11,165,375

Total current liabilities

$5,262,602

Stock holders’ Equity (defcit)

$1,898,126

Source: Company Reports, Pink Sheets

Revenue outlook In the scal year ending April 2009, we expect PLTG’s PLTG’s revenues from oil and gas sales to exceed $2.5 million. We assume a sales mix of 50/50 oil and gas, $90 per barrel oil prices prices and $7 per MCF gas prices. At $2.5 million in revenues, we expect the Company to produce 60% gross margins. We estimate general and adminstrative spending will range around $50,000 per month (excluding debt service) and anticipate the Company will reach operating breakeven in FY2009. However, we think PLTG is likely several quarters away from recording net prots due to greatly increased development spending spending in FY2009. The Company already has proved reserves valued to exceed $60 million, many promising drilling prospects and a low-risk development stratgy, stratgy, so we expect PLTG to rapidly ramp up production in FY2010 and FY2011, resulting in exponential growth in oil and gas revenues over the next three years. We predict oil and gas revenues will rise ten-fold in FY2010 to approximatley $25 $25 million, double again in FY20100 to around $50 million in FY2011, FY2011, and jump 50% in FY2012 to approximately approximately $75 million. We We also expect gross prots to rise faster than sales as economies of scale are realized on volume growth. Rising gross prots will drive growth in cash ow and enable PLTG to self-fund its its development program, commercialize commercialize its TPU and ESP-jet pump technologies, and acquire acquire additional leaseholds and reserves.


15



Our revenue estimates conservatively conservatively assume no licensing fees or sales of PLTG’ PLTG’ss proprietary production enhancement technologies. The Company plans to deploy its TPU and ESP-jet pump technologies on its own properties. If these technologies prove valuable for large scale drilling projects in the leld, PLTG is likely to aract many interested licensees and negotiate technology techn ology licensing arrangements potentially worth millions of additional dollars. Valuation analysis Forward Price/Sales multiples for PLTG’s peer group of domestic, independent exploration and development companies recently averaged averaged around 2.7 2.7 times revenues. The peer peer companies also trade at 8.1 times forward Price/Earnings multiples.


16



Exhibit 17: peer Group Company Name Aurora Oil & Gas Corp. GMX Resources Incorporation Brigham Exploration Company

Ticker Symbol

Market Cap. $ million

Price / (Share $)

2010

2008

2009

2010

NM

0.26

NA

NA

36.67

685.16 17.71

17.71

8.94

5.22

3.30

2.57

8.70

403.02 15.00

15.00

12.99

2.78

2.08

NA

10.24

10.24

5.98

2.75

2.69

2.57

GMXR

BEXP

PLTG.OB

2009

NM

0.08

Average for the peer group Platina Energy Group

2008

P/S

NM

AOG

8.53

PE

0.04

6.33

Source: Reuters, Beacon Research

We think PLTG shares warrant a valuation valuation comparable to its oil and gas industry peers. Although PLTG may be considered somewhat higher risk due to its early development stage and need for additional nancing, we think the Company’s proprietary technologies will give PLTG a meaningful competitive advantage positioning the Company for superior long-term growth. We discount our $25 million FY2010 revenue estimate, then multiply the resulting amount by a 2.7 times forward Price/Sales multiple to derive our $0.30 price target. As a result, we are initiating coverage of Platina Energy Group with a Speculative Buy rating and a $0.30 price target. Achieving its production goals and/or successfully commercializing its production enhancement technologies would position PLTG for sustainable, long-term revenues and EBITDA growth. However, the Company must overcome many obstacles to achieve these goals; some of PLTG’s PLTG’s risk factors are described in the next section.


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Risk Factors Declining energy prices and competing technologies The Company is exposed to risks associated with declines in oil and natural gas prices as well as technology risk. The possibility exists that a competitor may introduce superior production enhancement technologies that would reduce demand for TPU technology ESP- jet pump technology. technology. Long lead times for developing reserves increase risk Developing oil and gas reserves oen involves long lead times, signicant expenditures and many uncertain ties. Natural occurrences such as water water ooding could cause production costs to be substantially higher than estimated. New environmental laws or o r other legislation could co uld make developing the Company’s Company’s energy reserves cost-prohibitive. Investment risk The Company must make signicant investments to develop its oil and gas reserves. Although independent reports suggest PLTG has signicant proved reserves, there is no guarantee that these estimated are accurate or that production can be developed in a timely and/or economic manner. Production from wells naturally declines over time and the Company will be required to make ongoing investments in new properties and resources to maintain its production prole. Competition for resources PLTG must compete with other exploration and production companies for property acquisitions, drilling resources and development capital. Some of these competitors have signicantly greater reserves and much beer access to capital. If prices for oil and gas leaseholds continue to rise, PLTG may nd it more dicult to fund property acquisitions.


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Manageme nt Team Team Blair Merriam President and CEO

Mr. Merriam has been PLTG’s PLTG’s president and CEO since the Company’ Compan y’ss inception. Prior to that, Mr. Mr. Merriam was a director and shareholder of a privately held claim contract company that oered third-party services relating to insurance adjustment adjustment,, including services related to natural resources. From 1999 to 2005, Mr. Merriam served as an oil and gas business consultant.

Dan Thornton Vice-President and Secretary

Mr. Thornton has served as a director and the Company’s vice president of business development secretary since PLTG’s PLTG’s inception. Mr. Thornton has been a director and shareholder of Torii Medical since 2005.

James E. Jack Director

Mr. Jack has been a director of the Company since March 2008. From December 2006 through March 2008, Mr. Jack served as the managing director of the Baron Group USA LLC, an international investment banking rm based in Hong Kong that provides strategic consulting consulting and banking services to large and mid-cap companies in Asia and North America. In June 2006, Mr. Mr. Jack formed J. E. Jack & Partners LLC, a nancial advisory and consulting rm. He continues to serve as a principal. From late 2003 to June 2006, he served as a principal in PentaCap PentaCap LLC, another nancial advisory and consulting rm. From May 2001 to the summer of 2003, Mr. Jack served as CFO and executive vice president of Medallion Financial Corp., a publicly traded company. Mr. Jack received a BBA in accounting from the University of Notre Dame, an MBA from the Edwin L. Cox School of Business at Southern Methodist University, and an honorary Doctor of Law degree from St. Mary’s College in Notre Dame, Indiana.


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You should should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements. We are commied to providing factual information on the companies that are proled. However, we do not provide any assurance as to the accuracy or comcompleteness of the information provided, including information regarding a proled company’s company’s plans or ability to eect any planned or proposed actions. We have no rst-hand knowledge of any proled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no aempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and and related sources which we believe to be reliable. 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In no way has my opinion been inuenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report. Lisa Springer, MBA, CFA - Senior Analyst Lisa serves Beacon Research Partners as a research analyst. She brings to the company over 15 years experience in equity research and investment marketing. Prior to joining Beacon, Lisa worked as an equity analyst for an independent research provider. provider. She has also held positions as investor relations ocer for a NYSE-listed company and director of nancial analysis for a large consulting rm. Lisa earned an MBA from the University of Chicago and is a Chartered Financial Analyst (CFA). (CFA).


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PLTG

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