PARTICLE DRILLING TECHNOLOGIES ANNOUNCES FISCAL 2009 SECOND QUARTER EARNINGS
Houston - May 11, 2009 Particle Drilling Technologies, Inc. (Nasdaq: PDRT) (the "Company") today announced its financial results for the fiscal 2009 second quarter ended March 31, 2009.
Highlights
- 64 holes successfully drilled in 6 1/2 inch size removing 100% of rock with particles
- Customer identified weak zone in seismic data causing cancelation of scheduled well trial
- Working with same customer to identify opportunities in Haynesville and Pinedale
- Currently designing most common sized 9 7/8 inch bit for much broader application
- Company unsuccessful in appealing NASDAQ delisting decision
During the second quarter, the Company has focused all of its efforts on meeting the requirements of its customer's development plans that called for the Particle Impact Drilling ("PID") technology to be on location and drilling in April 2009. Our customer had been shooting seismic in the area that the next trial was to take place. Just before we began mobilizing the PID system from Houston, they identified a potential weak zone in the interval in which they intended using the PID system. The customer deemed that the risk associated with utilizing the PID system while drilling through this weak zone was unacceptable and we were told to suspend the mobilization.
Subsequent to that event, we have been working with this customer and others in evaluating alternative field trial opportunities for the 6 1/2 inch PID bits. Drilling 6 1/2 inch hole in very hard formations is fairly uncommon, which is one of the reasons this customer paid for the development of this size bit.
We continue to work with this customer in evaluating opportunities in both 9 7/8 inch and 6 inch hole sizes. As a result of developing the 6 1/2 inch PID bit, we now understand the viability of removing 100% of the rock with steel particles. We believe that this breakthrough is scalable to other PID bit sizes and will increase bit life well beyond our previous expectations. Bit life had always been a concern and now that we have confirmed this ability, we can do away with the rock ring and the need to remove any rock with mechanical force.
The full scale drilling laboratory we built for developing the 6 1/2 inch bit is completely compatible with developing both smaller and larger size PID bits and will significantly reduce the cycle time for new sizes and the reliability of the performance for new size bits.
As a result of an unfavorable decision in the Company's appeal to NASDAQ, the Company's stock will be delisted on May 12, 2009 and will trade over-the-counter until such time as deficiencies are corrected.
"We are obviously disappointed about the cancelation of our 6 1/2 inch trial but we are at the same time pleased with the significant technical progress we have made in improving the PID bit durability as demonstrated with 100% rock removal by particles alone," stated Jim B. Terry, the Company's President and CEO. "Our new ability to rapidly prototype as a result of having an in-house full scale drilling lab will improve drilling performance while reducing cost and the time required to scale and modify bit sizes. We are all very optimistic and look forward to our next field trial."
As previously announced, the Special Committee of the Board of Directors has retained Parks Paton Hoepfl & Brown, LLP to serve as the Special Committee's financial advisor in connection with its evaluation and review of any potential strategic alternatives, including a strategic industry joint venture, technology licensing arrangement, sale of the company and any other available alternatives. We have yet to determine which particular strategic alternative to pursue, if any, and do not intend to disclose developments with respect to this evaluation unless and until the Board of Directors has approved a course of action or otherwise deemed disclosure appropriate.
Particle Drilling Technologies' financial results reflect its status as a development stage company during the first quarter of fiscal 2009 generating no revenue. The following is a summary of the quarterly results:
Three Months Ended March 31, Six Months Ended March 31,
2009 2008 2009 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $- $- $- $-
Gross profit - - - -
Loss from
operations (1,571,207) (2,339,338) (3,596,023) (5,559,255)
Net loss (1,571,513) (2,329,074) (3,591,295) (5,555,610)
Net loss per
share - basic
and diluted $(0.05) $(0.08) $(0.10) $(0.18)
About Particle Drilling Technologies, Inc.
Particle Drilling Technologies, Inc. (NASDAQ: PDRT) is a development-stage oilfield service and technology company commercializing its patented and patent-pending Particle Impact Drilling system. The company's technology is designed to enhance the rate-of-penetration function in the drilling process, particularly in hard-rock environments. It is headquartered in Houston, Texas. For more information, visit: www.particledrilling.com.
Safe Harbor Statement
Certain statements in this press release that are not historical but are forward-looking are subject to known and unknown risks and uncertainties, which may cause PDTI's actual results in future periods to be materially different from any future performance that may be suggested in this press release. Such risks and uncertainties may include, but are not limited to, PDTI's need to raise equity capital and its ability to obtain equity financing on acceptable terms, if at all, a severe worldwide slowdown in the energy services sector, working capital constraints and the ability of PDTI to successfully complete any strategic alternative. Further, PDTI is a development stage company that operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond PDTI's control such as announcements by competitors and service providers.
Contacts: Jason D. Davis VP & Interim CFO
Particle Drilling Technologies, Inc.
713-223-3031
Jack Lascar / Sheila Stuewe
DRG&E / 713-529-6600
PARTICLE DRILLING TECHNOLOGIES, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
March 31, March 31,
2009 2008 2009 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $- $- $- $-
Operating expenses:
Research and
development 813,521 1,546,200 1,779,183 3,327,012
General and
administrative 756,939 1,434,859 1,903,064 2,913,964
Gain on sale of
assets 747 (641,721) (86,224) (641,721)
Total operating
expenses 1,571,207 2,339,338 3,596,023 5,599,255
Loss from
operations (1,571,207) (2,339,338) (3,596,023) (5,599,255)
Other income (expenses)
Interest income 863 11,803 7,729 47,507
Interest expense (1,169) (1,539) (3,001) (3,862)
Total other income
(expenses) (306) 10,264 4,728 43,645
Net loss $(1,571,513) $(2,329,074) $(3,591,295) $(5,555,610)
Net loss per
common share,
basic and diluted $(0.05) $(0.08) $(0.10) $(0.18)
Weighted average
number of
common shares
outstanding,
basic and diluted 34,651,201 30,851,502 34,595,330 30,819,479
PARTICLE DRILLING TECHNOLOGIES, INC.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
March 31, September 30,
2009 2008
(Unaudited) Audited
ASSETS
Current assets:
Cash and cash equivalents $503,925 $2,296,143
Accounts receivable 10,000 -
Deferred financing costs, net 71,296 -
Prepaid expenses 142,131 260,686
Total current assets 727,352 2,556,829
Property, plant & equipment, net 410,330 1,213,918
Intangibles, net 1,705,780 1,552,266
Other assets 41,144 41,144
Total assets $2,884,606 $5,364,157
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $900,435 $850,944
PIK Note payable, net of discount of
$304,623 $170,377 $-
Short-term notes payable 8,253 84,277
Current portion of long-term debt 4,229 8,651
Accrued liabilities 172,323 353,881
Total current liabilities 1,255,617 1,297,753
Long-term debt 13,203 15,381
Deferred Rent 139,694 135,531
Stockholders' equity:
Common stock, $.001 par value, 100,000,000
shares authorized, 38,743,435 shares
issued and 35,740,349 shares outstanding
at March 31, 2009, and 38,767,018 shares
issued and 35,763,932 shares outstanding
at September 30, 2008 38,743 38,768
Additional paid-in capital 47,369,458 46,217,538
Treasury stock at cost, 3,003,086 shares (1,511,817) (1,511,817)
Deficit accumulated during the development
stage (44,420,292) (40,828,997)
Total stockholders' equity 1,476,092 3,915,492
Total liabilities and stockholders' equity $2,884,606 $5,364,157
PARTICLE DRILLING TECHNOLOGIES, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended March 31,
2009 2008
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $(3,591,295) $(5,555,610)
Adjustments to reconcile net loss to
net cash used in operating activities:
Gain on sale of assets (86,224) (641,721)
Depreciation and amortization expense 156,468 301,824
Amortization of deferred financing costs 6,482 -
Amortization of discount on note payable 13,756 -
Stock-based employee compensation 908,513 1,418,797
Changes in operating assets and liabilities:
Decrease in note receivable - -
(Increase) in accounts receivable (10,000) -
(Increase) Decrease in prepaid expenses 118,556 51,046
Increase (Decrease) in accounts payable 49,491 (259,297)
Increase (Decrease) in accrued liabilities (259,335) 397,457
Decrease in other assets - 11,418
Increase in other liabilities 4,163 60,996
Net cash used in operating activities (2,689,425) (4,215,090)
Cash flows from investing activities:
Payments to purchase property and equipment (85,492) (37,332)
Proceeds from the sale of assets 850,050 686,620
Payments to purchase intangibles (184,727) (83,989)
Net cash used in investing activities 579,831 565,299
Cash flows from financing activities:
Proceeds from borrowings under loan agreements 400,000 -
Proceeds from issuance of common stock - 13,200
Repayments of notes payable (82,624) (82,242)
Net cash provided by (used in)
financing activities 317,376 (69,042)
Net increase (decrease) in cash and
cash equivalents (1,792,218) (3,718,833)
Cash and cash equivalents - beginning
of period 2,296,143 4,461,929
Cash and cash equivalents - end of period $503,925 $743,096
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