Value Microcap DD

[2morrowsGains]

PDRT...

PDRT has a patented technology called Particle Impact Drilling (PID)...
http://www.particledrilling.com/drilling_technology/

PID is nearing commercialization and looks to have worldwide potential. In this PowerPoint presentation titled "Evolution Of The PID Revolution", (recenty released on 12/19/07), you'll find EnCana listed on slide 3)...
http://www.particledrilling.com/2007_12_19_Evolution_Images_B.ppt

PDRT recently moved into a new research center that will provide the necessary space to assemble up to 10 PID units at a time and provide ample space for expansion.
Here are a few notes from PDRT's 8/7/07 cc transcript...

- "I really want to stress that what we’re doing is not trivial. Injecting steel particles into a fluid that changes routinely into pressure that changes rapidly and at very high pressures has never been done before in any industry. I will also say that having successfully done that, there may be other applications in the oil field that will benefit from what we have achieved."

- "On the business development front, the company is pleased to announce that it entered into another master service agreement with a very large independent oil and gas company here in the U.S. In total we have commercial agreements in place with 2 independents and master service agreements with another independent and 1 major fully integrated oil and gas company."

- "Remember, we have demonstrated improved performance well after well. We have resisted the urge to go back to the field until we are very confident we will not only continue our well on well performance improvement, but make the leap to full commercialization. We are very confident that we have solved the injection issue which we feel is the sole remaining barrier to commercial success. I will also add that our current customers and those early adopters that we have yet to sign up are fully supportive and these are serious operators that know exactly what they’re doing."

- "Looking forward, when the injector development project is completed, we intend to conduct a successful commercial trial and then add additional PID units subject to demand and available financing. As Jim mentioned, we now have 4 customers with commercial contracts and/or master service agreements and hope to secure a fifth customer in the near future."

- "We continue to believe that it will likely take 2 PID units working for at least 12 days per month to generate enough cash flow to cover fixed cost... (Side Note: This is huge IMO!! Anything over 2 units should be gravy!)...That is assuming of course that the PID systems are commercial and working as designed. With some of the recent testing results we are very encouraged that the date upon which that happens is nearing."

- "I think the EnCana agreement contemplated that they would finance the construction of dedicated capacity and that’s been discussed with most of the operators that we’ve dealt with."
"...EnCana has, from our perspective, a pretty big demand potential for these systems by themselves."

- "The customers we’re talking to right now have anywhere from 8 rigs running a day in the markets we’re looking at to 10 to 15 rigs running a day. There’s significant demand. For us to meet their needs, we’re going to have to ramp up and stage this in a deliberate way, but for each of the customers that we’re talking to there’s more than enough demand for us to fill over the next couple of years."
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001104659%2D07%2D061800%2Etxt&FilePath=%5C2007%5C08%5C13%5C&CoName=PARTICLE+DRILLING+TECHNOLOGIES+INC%2FNV&FormType=8%2DK&RcvdDate=8%2F13%2F2007&pdf=

From Particle Drilling Technology's CFO Chris Boswell (11/06)...

In terms of market size and earnings potential...

- We have identified in excess of $1 billion in revenue potential in just three basins in the domestic market.

- Each PID unit should be capable of generating annual EBITDA of $2.4 million.
Based on our publicly disclosed assumptions, 10 PID units should yield annual EBITDA of approximately $24 million, while 40 units should yield closer to $96 million. While the royalties we are obligated to pay on the technology are not insignificant, they represent the cost of protecting the $1 billion plus market and therefore they have been considered in our business model.
http://seekingalpha.com/article/19676-particle-drilling-technology-s-cfo-responds-to-the-10q-detective

PDRT has approximately 32M shares outstanding and 6.2M in stock options and warrants outstanding with little to no debt.
The company currently has $4.4M in cash and $900k+ in assets for sale which should be all they need to get through 2008.
Institutional Ownership as of 9/30/07 = 38.6%.
Current Stock Price...$2.58

Here's PDRT's President and CEO's background...

Jim B. Terry, President and Chief Executive Officer

Jim B. Terry has served as our President and Chief Executive Officer since January 23, 2006. From January 2003 until September 2005, Mr. Terry served as Vice President, Drilling Services for Weatherford International, one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry, where he led the effort to consolidate, develop and improve the performance of well construction products and services by strategically aligning synergistic product lines in order to improve both their financial and operational performance. His duties at Weatherford included responsibility for all phases of new product and service development from inception through commercialization, which in some cases included securing project funding from customers. Since September 2005, Mr. Terry has served as a consultant to the oil and gas drilling services industry.

From March 1994 until January 2003, Mr. Terry was employed by Halliburton Company, the last three of those years as Director—Advanced Well Construction Systems where he was the lead inventor of a step change advanced well construction system. During this time, he was responsible for all phases of this project which included research and development, engineering, prototyping, field trials and commercialization. During his first six years at Halliburton, he served in various management capacities ranging from new product introduction to regional operations management. During this time he was responsible for, among other things, much of Halliburton’s consolidation effort following its acquisition of Smith International’s Drilling Services Division.

Prior to joining Halliburton in March 1994, Mr. Terry served as Regional Vice President for Smith International in Singapore. He was responsible for all of Smith’s activities in the Asia Pacific, Middle East and East Africa regions.

Mr. Terry began his career at Eastman Whipstock, which was acquired by Baker Hughes in 1990. Following Baker Hughes’ acquisition of Eastman Whipstock in 1990, Mr. Terry joined Smith International. Mr. Terry graduated in 1978 from San Francisco State University with a BA in Business.
http://www.particledrilling.com/management/terry.html

(The notes above are my opinion and some may be taken out of context. All links are provided.)