PetroSearch Announces Repositioning for Accelerated Growth


HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- PetroSearch Corporation (OTC: PSCP - News) announced today that it has sent to its shareholders and will post on its website (http://www.petrosearch.com), a letter outlining a wide range of significant corporate developments, designed to enable the company to further increase shareholder value, along with a comprehensive operations update and current financial information.

In the letter to shareholders, entitled "Repositioning PetroSearch for Accelerated Growth" ("Shareholder Letter"), Company President and CEO Bradley J. Simmons, on behalf of the Board of Directors, detailed Company activities since August 2003, including recent major developments.

The Company announced that it has:

  • Achieved profitability within its first year of drilling operations.
  • Established production and reserves in North Dakota and in Texas.
  • Drilled or is in the process of drilling a total of 16 new wells in Texas, Montana, North Dakota, Mississippi and Oklahoma - with 11 completed or in various stages of completion, 4 dry holes and 1 mechanical failure. Two additional wells are being drilled in Mississippi and Texas at present.
  • Conducted 8 workovers of previously existing wells with successful completion of 6 wells in the Blue Ridge Dome field of South Texas.
  • Relinquished the 44,000 acres acquired through Rocky Ridge PetroSearch in the Williston Basin.
  • Plugged and abandoned the initial well drilled in northern Montana through Great Buffalo PetroSearch, L.L.C. The Company and its joint venture partner, Rock Energy Partners, L.P., still maintain holdings in the vicinity and are evaluating various options for continued development.
  • Begun liquidation of certain properties in Cavalier PetroSearch, L.L.C. because the original plan was modified by subsequent technical information received by the Company.
  • Acquired a leasehold position in 5 states totaling more than 90,000 acres.
  • Obtained an inventory of 264 drilling locations on 94 targeted prospects.
  • Secured significant non-dilutive financing partners to accelerate drilling operations, including a revolving secured credit facility of up to $18 million and a significant institutional joint venture partner.

The Shareholder Letter also disclosed that

  • The Board of Directors had approved a 6.5 to 1 reverse stock split and has received the written consent of a majority of shareholders for this action. This will reduce the total outstanding shares from approximately 115 million to approximately 17.5 million. The Board recognizes that this is a necessary step to align the capital structure with other publicly traded exploration and production companies and is intended to allow the Company to greatly enhance its flexibility in terms of financing possibilities and institutional acceptance.
  • The Board of Directors had also voted to reduce the shares authorized from 1,000,000,000 to 100,000,000.
  • The Company will be reincorporated in the State of Nevada, a more corporate friendly environment with respect to taxation, dividend issuances, and management action. The shares issued pursuant to the "reverse split" formula will be shares of the new Nevada Corporation, PetroSearch Energy Corporation. It is expected that PetroSearch Energy Corporation will be assigned a new symbol and cusip number.
  • Richard Dole will head up PetroSearch Energy Corporation. The Board unanimously approved the appointment of Mr. Dole, a recently announced member of the Board of Directors, to serve as President and Chief Executive Officer of the company.

The Shareholder Letter, along with a comprehensive "Fact Sheet" and the Company's financial statements will be posted on the Company's website at http://www.petrosearch.com.

Management Comments:
According to Mr. Simmons, "the original business model for PetroSearch has been successful beyond our most optimistic expectations. The flow of high quality prospects has exceeded our ability to fully exploit the potential they represent and grow both the company and shareholder equity; this imbalance required some changes in the fundamental structure of the company." He goes on to say; "The entire management team of PetroSearch is excited about these changes and how they significantly increase our ability to exploit the unique business model that is PetroSearch."