UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-K

 

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

         EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

        EXCHANGE ACT OF 1934

Commission File No.: 333-141993

 

PETROCORP INC.
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(Exact Name of Registrant as Specified in Its Charter)

 

DELAWARE --------------------------------------------------------- (State or Other Jurisdiction of Incorporation             or Organization)

20-5134664 ----------------------------------------------- (I.R.S. Employer Identification No.)

 

1065 Dobbs Ferry Road, White Plains, New York 10607

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(Address of Principal Executive Offices)

 

(914) 674-4373

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(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:  None

 

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par value $.0001

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes o    No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes o   No x

 

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 o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   o

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

   Large accelerated filer   Accelerated filer   Non-accelerated Filer   Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

   Yes  No x

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of February 28, 2009:  $10,248,000.

 

The number of shares of the registrant’s common stock outstanding as of February 28, 2009:  22,680,000.

 

 

 

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INDEX TO FORM 10-K ANNUAL REPORT

 

 

                    

 

 

 

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FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts are forward-looking statements. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” or similar expressions used in this report.

 

These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by us in those statements include, among others, the following:

 

 

 

 

 

 

 

Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this report.

 

PART I

 

References to “us”, “we” and “our” in this report refer to Petrocorp Inc. together with our subsidiaries.

 

ITEM 1.  BUSINESS.

 

Background

 

We were incorporated as GD Conference Center, Inc. under the laws of Delaware on June 16, 2006. Prior to September 2007, the Company’s business model provided telephonic conferencing services to businesses, organizations and individuals in North America.  Due to capital constraints and because its executives could no longer serve the Company without compensation, the Company decided to change directions.

 

On September 20, 2007, the Company entered the oil and gas exploration and production business with the acquisition of three separate farm-out agreements from James Fitzsimons.  Mr. Fitzsimons also purchased 17,800,000 shares of the Company’s common stock from certain shareholders, resulting in him owning 84.5% of the Company’s then outstanding shares for $454,000.  Mr. Fitzsimons was elected a director of the Company.

 

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On October 19, 2007, the Company amended its certificate of incorporation changing its name to “Petrocorp Inc.” and effected a five for one forward stock split which increased the authorized common stock to 100,000,000 shares at $.0001 par value.  On August 13, 2008, the Company’s board of directors approved a stock dividend on its outstanding common stock.  The ratio for the stock dividend was four shares to each share owned (4:1).  All share and per share amounts have been restated to reflect these common stock transactions.

 

Our Current Business

 

We are an exploration stage Company engaged in the acquisition, exploration and production, if warranted, development of prospective oil and gas properties.  We plan to conduct exploration work on each of our current and future properties in order to ascertain whether any of them possess commercially exploitable quantities of oil and gas reserves.  The Company has significant lease holdings on the North Slope of Alaska, the Canadian Provinces of Alberta and Quebec, permit applications pending in Italy and Netherlands, and oil and gas production in Oklahoma.

 

            Alaska

 

On October 25, 2007, Union Energy (Alaska) LLC (“UEA”), our subsidiary, was the winning bidder for tracts 254, 258 and 259 in the North Slope Areawide 2007 Competitive Oil and Gas Lease Sale.  The leases, covering 14,680 net acres, were issued on August 1, 2008, with a term of seven years and subject to a 12.5% royalty interest in favor of the State of Alaska.  UEA paid a total of $380,021 to the State of Alaska in respect of the leases.  These tracts are contiguous and the Company believes, based upon current available geological data and maps from the public domain, to contain the Kavik gas field, discovered in 1969, which has been evaluated in detail by the U.S. Department of the Interior, U.S Geological Survey ("USGS").

 

On February 27, 2008, UEA was the winning bidder for tracts 922, 923, 927, 988, 989, 990, 991, 992 and 925 in the State of Alaska North Slope Foothills Areawide 2008 Competitive Oil and Gas Lease Sale. The leases, covering 9,600 net acres, were issued on September 1, 2008, with a term of 10 years and subject to a 12.5% royalty interest in favor of the State of Alaska.  UEA paid a total of $59,565 to the State of Alaska in respect of the leases.  These tracts are contiguous and the Company believes, based upon current available geological data and maps from the public domain, to contain the East Kurupa gas field, discovered by Texaco in 1976.  The USGS has been studying the potential for unconventional over-pressured, continuous gas deposits in the Colville basin that contains the Kurupa anticline and is now interpreting the East Kurupa well to have encountered a thick section of over-pressured gas in Brookian strata.

 

The Alaska leases are in areas which the Company believes are promising for gas production although the Company does not make any representations as to their future production, if any.  Furthermore, any gas recovered from our Alaska leases will not be salable unless or until a proposed North Slope gas pipeline is completed.  We have retained Frontier Land Inc. (an established land firm and a member of the American Association of Professional Landmen) to conduct negotiations with other leaseholders regarding their acreage and to acquire other land interests within the vicinity of our tracts.

 

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            Oklahoma

 

On August 12, 2008, the Company acquired from its President, James Fitzsimons, a 50% working interest (41.25% net revenue interest) in the Snake Creek prospect, a 3,200 gross (3,022 net) acre gas development project located in northern Okmulgee County.  The Company reimbursed Mr. Fitzsimons for his historic costs (acreage and drilling) by issuing a secured, non-interest bearing note, payable on demand for $210,917 and assumed responsibility for all further costs.

 

On November 30, 2008, the Company acquired from Mr. Fitzsimons, a 100% working interest (81.25% net revenue interest) in the Spanish Peak prospect, a 2,041 gross (900 net) acre gas development project located in Okmulgee County, Oklahoma.  The Company reimbursed Mr. Fitzsimons for his historic costs (acreage) by issuing a secured, non-interest bearing note, payable on demand for $173,141 and assumed responsibility for all further costs.

 

On March 31, 2009, the Company purchased 171 oil and gas lease interests totaling 3,827 gross (2,666 net) acres in Okfuskee and Okmulgee Counties, Oklahoma from CH4 Energy, Inc., a company controlled by Soladino Investments SA at a cost of $583,823.  The Company reimbursed Soladino for its historic costs (acreage) by issuing a secured, non-interest bearing note, payable on demand for $583,823 and assumed responsibility for all further costs.

 

The Company’s Okfuskee and Okmulgee County oil and gas leases are near oil and gas fields with proved developed production and within the general area of the “Woodford shale play”.  We have retained Keith Summar (a member of the American Association of Petroleum Geologists) as a consultant to assist us in our Oklahoma operations.

 

            Alberta, Canada

 

On May 14, 2008, the Company was the winning bidder in a Crown Land sale for eight contiguous sections (totaling 5,120 acres) of oil sands leases in the Peace River Oil Sands Area of northern Alberta, Canada.  The bids totaled $250,000 and the leases were issued by Alberta Energy on May 15, 2008, with a term of 15 years.

 

            Quebec, Canada

 

On June 23, 2008, the Company received notification from the Province of Quebec that it was the successful applicant for seven oil and gas exploration permits (totaling 121,297 hectares; 299,728 acres) in the Montreal area of the St. Lawrence Lowlands.  The Company paid advance rentals totaling $12,000 to the Province of Quebec and expects that the permits will be formally issued in the spring of 2009 with an initial term of five years.  The Company has committed to a five-year work program following the formal issue of the permits with minimum expenditures of (expressed in Canadian dollars): $0.50 per hectare in the first year; $1.00 per hectare in the second year; $1.50 per hectare in the third year; $2.00 per hectare in the fourth year; and $2.50 per hectare in the fifth year.

 

            Italy

 

On January 20, 2009, the Government of Italy made the preliminary awards of the competitive oil and gas exploration licenses, “Fiorenzuola D'Arda” located in the Po Valley and “Montottone” located in the Marche region, in favor of Mac Oil SpA, our subsidiary.  On March 24, 2009, the Government of Italy made the preliminary award of the competitive oil and gas exploration license, “Melzo” located in the Po Valley, again in favor of Mac Oil SpA. The three Italy licenses cover a net surface area of 115,760 hectares (285,827 acres).

 

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The Company also has two competitive oil and gas exploration license applications pending awaiting adjudication by the Ministry of Economic Development in Italy covering a net surface area of 27,240 hectares (67,259 acres).

 

            Netherlands

 

The Company has one license application pending covering a net surface area of 68,284 hectares (168,602 acres).

 

Internationally, we have retained Daniele Albisetti and Christian Ceppi (members of the Swiss Geological Society, the Società Geologica Italiana (Italian Geological Society) and the Geological Association of Canada) as consultants to assist us in our operations.

 

Competition

 

We operate in a highly competitive industry, competing with major oil and gas companies, independent producers and institutional and individual investors, which are actively seeking oil and gas properties throughout the world together with the equipment, labor and materials required to operate properties. Most of our competitors have financial resources, staffs and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to acquire good acreage positions and drill wells to explore for oil and gas, then, if warranted, drill production wells and install production equipment. Competition for the acquisition of oil and gas acreage is intense. Therefore, we may not be successful in acquiring and developing profitable properties in the face of this competition. No assurance can be given that sufficient oil and gas acreage will be available for acquisition and development.

 

Government Regulation

 

Oil and gas exploration and development companies are subject to various federal, state and local governmental regulations, which may be changed from time to time in response to economic or political conditions and can have a significant impact upon overall operations. Matters subject to regulation include permits for drilling operations, drilling bonds, reports concerning operations, the spacing of wells, unitization and pooling of properties, taxation, abandonment and restoration and environmental protection. These laws and regulations are under constant review for amendment or expansion. Changes in these regulations could require us to expend significant resources to comply with new laws or regulations or changes to current requirements and could have a material adverse effect on us.

 

Oil and Gas Regulation

 

The governmental laws and regulations which could have a material impact on our Company are as follows:

 

            Drilling and Production

 

These types of regulation include permit requirements for the drilling of wells, drilling bonds and reports concerning operations. Most states regulate one or more of the following: (i) the location of wells; (ii) the method of drilling and casing wells; (iii) the rates of production or "allowables"; (iv) the surface use and restoration of properties upon which wells are drilled; (v) the plugging and abandoning of wells; and (vi) notice to surface owners and other third parties.

 

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State laws may regulate the size and shape of drilling and spacing units or proration units governing the pooling of oil and natural gas properties. Some states, including Oklahoma, allow forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases. In some instances, forced pooling or unitization may be implemented by third parties and may reduce our interest in the unitized properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production. These laws and regulations may limit the amount of natural gas and oil we can produce from our wells or limit the number of wells or the locations at which we can drill. Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas and natural gas liquids within its jurisdiction.

 

Environmental Regulation

 

Our activities will be subject to existing federal, state and local laws and regulations governing environmental quality and pollution control. Our operations will be subject to stringent environmental regulation by state and federal authorities including the Environmental Protection Agency ("EPA"). Such regulation can increase the cost of such activities. In most instances, the regulatory requirements relate to water and air pollution control measures.

 

Waste Disposal

 

The Resource Conservation and Recovery Act ("RCRA"), and comparable state statutes, affect oil and gas exploration and production activities by imposing regulations on the generation, transportation, treatment, storage, disposal and cleanup of "hazardous wastes" and on the disposal of non-hazardous wastes. Under the auspices of the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Drilling fluids, produced waters, and most of the other wastes associated with the exploration, development, and production of crude oil, natural gas, or geothermal energy constitute "solid wastes", which are regulated under the less stringent non-hazardous waste provisions, but there is no guarantee that the EPA or the individual states will not adopt more stringent requirements for the handling of non-hazardous wastes or categorize some non-hazardous wastes as hazardous for future regulation.

 

            Air Emissions

 

Our operations are subject to local, state and federal regulations for the control of emissions of air pollution. Major sources of air pollutants are subject to more stringent, federally imposed permitting requirements. Administrative enforcement actions for failure to comply strictly with air pollution regulations or permits are generally resolved by payment of monetary fines and correction of any identified deficiencies.  Alternatively, regulatory agencies could require us to forego construction, modification or operation of certain air emission sources.

 

Clean Water Act

 

The Clean Water Act ("CWA") imposes restrictions and strict controls regarding the discharge of wastes, including produced waters and other oil and natural gas wastes, into waters of the United States, a term broadly defined. Permits must be obtained to discharge pollutants into federal waters. The CWA provides for civil, criminal and administrative penalties for unauthorized discharges of oil, hazardous substances and other pollutants. It imposes substantial potential liability for the costs of removal or remediation associated with discharges of oil or hazardous substances. State laws governing discharges to water also provide varying civil, criminal and administrative penalties and impose liabilities in the case of a discharge of petroleum or it derivatives, or other hazardous substances, into state waters. In addition, the EPA has promulgated regulations that may require us to obtain permits to discharge storm water runoff. In the event of an unauthorized discharge of wastes, we may be liable for penalties and costs.

 

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Employees

 

We have no employees as of the date of this report and anticipate that our operations will be conducted primarily through third party consultants and contractors rather than by employees.  We do not anticipate hiring a large number of employees.

 

Internet Website

 

Our website address is http://www.petrocorp.us.

 

Item 1A.  Risk Factors.

 

You should carefully consider the risks described below, which constitute the material risks facing us.  If any of the following risks actually occur, our business could be harmed. You should also refer to the other information about us contained in this Form 10-K, including our financial statements and related notes.

 

Risks Related to Our Business

 

Our exploratory drilling operations may not be successful, our business may fail and investors may lose their entire investment in our Company.

 

There can be no assurance that our future drilling activities will be successful. We may not recover all or any portion of our capital investment in the wells. Unsuccessful drilling activities would have a material adverse effect upon our results of operations and financial condition and would likely result in the ultimate failure of our business operations. The cost of drilling, completing, and operating wells is often uncertain, and a number of factors can delay or prevent drilling operations including: (i) unexpected drilling conditions; (ii) pressure or irregularities in formation; (iii) equipment failures or accidents; (iv) adverse weather conditions; and (iv) shortages or delays in availability of drilling rigs and delivery of equipment. If our exploratory drilling operations are not successful, our business may fail and investors may lose their entire investment in our Company.

 

Oil and gas exploration and development involves many operating risks. If we were to experience any of these problems, it could have a material, adverse effect on our operations and possibly cause us to go out of business and investors to lose their entire investment in our Company.

 

Our exploration activities will be subject to many risks, including the risk that we may not discover commercially productive reservoirs. Exploration for oil and natural gas can be unprofitable, not only from failing to discover reserves, but from productive wells that do not produce sufficient revenues to return a profit. In addition, our exploration activities may be curtailed, delayed or cancelled as a result of other factors, including:

 

•fires;

•explosions;

•blow-outs and surface cratering;

•uncontrollable flows of underground natural gas, oil, or formation water;

•natural disasters;

•facility and equipment failures;

•title problems;

•shortages or delays in the delivery of equipment and services;

•abnormal pressure formations; and,

•environmental hazards such as natural gas leaks, oil spills, pipeline ruptures and discharges of toxic gases.

 

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If any of these events occur, we could incur substantial losses as a result of:

 

•injury or loss of life;

•severe damage to and destruction of property, natural resources or equipment;

•pollution and other environmental damage;

•clean-up responsibilities;

•regulatory investigation and penalties;

•suspension of our operations; or,

•repairs necessary to resume operations.

 

We may be affected by any of these events more than larger companies, since we have limited working capital. We have not obtained any liability insurance for our operations at this time. If we were to experience any of these problems, it could have a material, adverse effect on our operations and could cause us to go out of business and investors to lose their entire investment in our Company.

 

The operations and the potential profitability of oil and gas exploration and development companies often depends upon factors beyond our control. If our operations and potential profitability are negatively impacted because of these factors, our business could suffer and investors could lose all or part of their investment in our Company.

 

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile and potentially subject to governmental price fixing, pegging and controls, or any combination of these and other factors, responding to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds and other expenses have become increasingly difficult, if not impossible, to project. These and other changes and events may materially affect our financial performance.

 

Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. The marketability of oil and gas, which may be acquired or discovered will be affected by numerous factors beyond our control. These factors include, but are not limited to, the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. These factors cannot be accurately predicted. If our operations and potential profitability are negatively impacted because of these factors, our business could suffer and investors could lose all or part of their investment in our Company.

 

The oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring further oil and gas exploration prospects and hiring qualified personnel. If we do not compete successfully in these areas, our operations will likely suffer and our Company will likely be unsuccessful.

The oil and gas industry is intensely competitive, and we compete with other companies that have greater resources. Many of these companies not only explore for and produce oil and natural gas, but also carry on refining operations and market petroleum and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive oil and natural gas properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, these companies may have a greater ability to continue exploration activities during periods of low oil and natural gas market prices. Our larger competitors may be able to absorb the burden of present and future laws and regulations more easily than we can, which would adversely affect our competitive position. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment.  These companies also may be better able to attract the qualified personnel required to run a successful oil and gas exploration company.

 

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Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on us.

 

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment.  Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment.  Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, state, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend material amounts on compliance with environmental regulations.  However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

 

Oil and gas exploration and development activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations.

 

Our oil and gas exploration and development activities will be subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance.

 

Risks Related to Our Company

 

If we do not continue to obtain additional financing, our business will fail.

 

Our current operating funds are less than necessary to commence and complete all intended test wells on the Oklahoma and Alaska properties covered by our oil and gas leases. Therefore, we will need to obtain additional financing in order to complete our business plan.  We currently have limited operations and we have minimal oil and gas sales.

 

As of February 28, 2009, we have cash on hand of approximately $523,000 representing the remaining proceeds of our two financing transactions and loans from our president.  In order to commence and complete all intended test wells on the Oklahoma properties covered by the oil and gas leases, we anticipate that we will need to spend a minimum of $600,000.  Exploration (and if successful, development) of the Alaska prospects is unlikely to commerce until the next decade and it is impossible to forecast these costs at this time.  Nevertheless, we will require substantial additional financing to cover such costs.  Furthermore, we will require additional financing to sustain our business operations if we are not successful in earning revenues once drilling is complete.

 

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We do not currently have any arrangements for financing and may not be able to find such financing. Our ability to obtain additional financing will be subject to a number of factors, including the market price for oil and gas, the success of our initial test wells and general market conditions. These factors will make the timing, amount, terms or conditions of financing uncertain and additional financing may be unavailable to us.  If we do not obtain additional financing, our business will fail.

 

We are a new entrant into the oil and gas industry without a profitable or long operating history. We do not have any significant income producing oil and gas properties and we have limited financial resources. We have not yet commenced our exploration activities nor have we generated any significant revenue since our incorporation. There is no means by which investors can evaluate our potential for success and there is no assurance that we will ever operate profitably.

 

We have a limited operating history and must be considered in the exploration stage. Our Company's operations will be subject to all the risks inherent in the establishment of an exploration stage enterprise and the uncertainties arising from the absence of a significant operating history. Potential investors should be aware of the difficulties normally encountered by oil and gas exploration and development companies and the high rate of failure of such enterprises, especially those with a limited operating history such as ours. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the oil and gas exploration that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in our oil and gas exploration may not result in the discovery of oil and gas reserves. If the results of our exploration do not reveal commercially viable oil or gas reserves, we may decide to abandon our leasehold interests and acquire new oil and gas interests for exploration or cease operations. The acquisition of additional oil and gas interests will be dependent upon us possessing capital resources in order to purchase such interests. If no funding is available, we may be forced to abandon our operations. No assurance can be given that we will ever operate on a profitable basis.

 

Potential investors should be aware of the difficulties normally encountered by new resource companies and the high rate of failure of such enterprises. There is a high risk that our business will fail.

 

Because our directors have other business interests, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to suffer and possibly fail .

 

Our directors intend to spend a minority of their business time providing their services to us. While they presently possess adequate time to attend to our interests, it is possible that the demands on our directors from their other obligations could increase, or the demands of our business operations could increase, with the result that they would no longer be able to devote sufficient time to the management of our business. If this happens, our Company will not likely perform to its potential and may fail.

 

Prospects that we decide to drill may not yield natural gas or oil in commercially viable quantities. If this happens, our business will likely fail and investors would likely lose their entire investment in our Company.

 

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None of our properties covered by the oil and gas leases/permits have yet been fully evaluated by the Company. We will not know for certain, prior to drilling and testing, whether natural gas or oil will be present in those properties or, if present, whether natural gas or oil will be present in sufficient quantities to recover drilling or completion costs or to be economically viable. The cost of drilling, completing and operating any well is uncertain and any wells we drill may not be productive. If we never find commercially viable resources of oil and gas, our business will fail and investors will likely lose their entire investment in our Company.

 

Our Alaska prospects are in areas believed to contain gas, but presently lacking gas transportation facilities .

 

While our Alaska prospects are in areas that are promising for gas discovery, there are no existing pipeline facilities available to transport any gas they may produce to market.  Unless such facilities are built and available to us, our gas would be “stranded gas” with little or no market value.  The Company believes that a pipeline facility will be built within the terms of our leases, however, whether a pipeline is built, the timing of the construction of the pipeline and whether and on what terms the pipeline is made available to transport our gas are all matters beyond our control which could have significant impacts on our future results.

 

James Fitzsimons, our president, owns Soladino Investments SA, a Swiss corporation, that owns approximately 78.5% of our common stock and this interest could conflict with other investors, which could cause other investors to lose all or part of their investment.

 

James Fitzsimons, our president and a director, owns Soladino Investments SA, a Swiss corporation, that owns 17,800,000 shares of our common stock, or 78.5% of the Company’s issued and outstanding shares. Due to this stock ownership, James Fitzsimons is able to substantially influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions.  Such concentration of ownership may also have the effect of delaying or preventing a change in control, which may be to the benefit of our management but not in the interest of the shareholders.  This stock ownership and potential effective control on all matters relating to the business and operations of our Company could eliminate the possibility of shareholders changing the management in the event that the shareholders did not agree with the conduct of the officers and directors. Additionally, the shareholders would potentially not be able to obtain the necessary shareholder vote to effect any change in the course of business of our Company.  This lack of shareholder control could prevent the shareholders from removing from the board of directors any directors who are not managing the Company with sufficient skill to make it profitable, which could prevent us from becoming profitable and cause investors to lose all or part of their investment in our Company.

 

Risks Related to Our Securities

 

If a liquid market for our common stock does not develop, shareholders may be unable to sell their shares.

 

There is currently no liquid market for our common stock and no certainty that a liquid market will develop. While our common stock is quoted for trading on the OTC Bulletin Board, there has only been sporadic trading of our common stock. If a liquid market is not developed for our shares, it will be difficult for shareholders to sell their stock.

 

A purchaser of our stock is purchasing penny stock which limits his or her ability to sell the stock.

 

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Our shares of common stock are considered penny stock under the Exchange Act. The shares will remain penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, thus limiting investment liquidity. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in our Company will be subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stocks such as ours.

 

We do not intend to pay dividends and there will be less ways in which you can make a gain on any investment in our Company.

 

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may likely prohibit the payment of a dividend.

 

Our board of directors is authorized to issue shares of preferred stock, which may have rights and preferences detrimental to the rights of the holders of our common shares .

 

We are authorized to issue up to 1,000,000 shares of preferred stock, $.0001 par value.  To date we have not issued any shares of preferred stock and have no plans to do so.  Our preferred stock may bear such rights and preferences, including dividend and liquidation preferences, as the board of directors may fix and determine from time to time.  Any such preferences may operate to the detriment of the rights of the holders of our common shares.

 

Our Articles of Incorporation provide for indemnification of officers and directors at our expense and limit their liability which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.

 

Our Articles of Incorporation and applicable Delaware law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf.  We will also bear the expenses of such litigation or any of our directors, officers, employees, or agents, upon such person's promise to repay us, therefore, if it is ultimately determined that any such person should not have been entitled to indemnification this indemnification policy could result in substantial expenditures by us, which we will be unable to recoup.

 

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.  In the event that a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities registered in our SB-2, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is are likely to materially reduce the market and price for our shares, if such a market ever develops.

 

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ITEM 1B.  UNRESOLVED STAFF COMMENTS.

 

None

 

ITEM 2.  PROPERTIES.

 

Leasehold Acreage

 

We own interests in developed and undeveloped oil and natural gas acreage in the locations set forth below as of December 31, 2008.  These ownership interests generally take the form of working interests in oil and natural gas leases or licenses that have varying terms.

 

                                                                      Developed Acreage              Undeveloped Acreage     

State or Country	Gross	Net	Gross	Net
Alaska			24,280	24,280
Oklahoma	1,504	752	4,875	2,057
Canada			286,713	286,713
Italy (1)
Netherlands (2)
Total	1,504	752	315,868	313,050

 

(1)  On January 20, 2009, the Government of Italy made the preliminary awards of the competitive oil and gas exploration licenses, “Fiorenzuola D'Arda” located in the Po Valley and “Montottone” located in the Marche region, in favor of Mac Oil SpA, our subsidiary.  On March 24, 2009, the Government of Italy made the preliminary award of the competitive oil and gas exploration license, “Melzo” located in the Po Valley, again in favor of Mac Oil SpA. The three Italy licenses cover a net surface area of 115,760 hectares (285,827 acres).

 

The Company also has two competitive oil and gas exploration license applications pending awaiting adjudication by the Ministry of Economic Development in Italy covering a net surface area of 27,240 hectares (67,259 acres).

 

(2)   One license application pending covering a net surface area of 68,284 hectares (168,602 acres).

 

Leasehold Acreage Costs

 

We have capitalized leasehold acreage costs in developed and undeveloped oil and natural gas acreage in the locations set forth below as of December 31, 2008.

                                                                                                                   Capitalized Acreage Costs

State or Country	Developed	Undeveloped
Alaska		$    442,086
Oklahoma (1)	$     304,053	215,997
Canada		277,129
Italy		228,868
Netherlands		25,760
Total	$    304,053	$ 1,189,840

 

(1)  On March 31, 2009, the Company purchased 171 oil and gas lease interests totaling 3,827 gross (2,666 net) acres in Okfuskee and Okmulgee Counties, Oklahoma from CH4 Energy, Inc., a company controlled by Soladino Investments SA at a cost of $583,823.  The Company reimbursed Soladino for its historic costs (acreage) by issuing a secured, non-interest bearing note, payable on demand for $583,823 and assumed responsibility for all further costs.

 

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Oil and Gas Drilling Activity

 

We own working interests in one gross (.5 net) producing oil well and two gross (1.0 net) producing gas wells at December 31, 2008.  Of the three gross productive wells one had dual completions.  At December 31, 2008, we had six gross wells in progress.  The Company currently does not yet have sufficient production records to compute the quantities of proved oil and gas reserves as required by SEC Regulation S-X, Rule 4-10(a).

 

Corporate Offices

 

Our office is located at 1065 Dobbs Ferry Road, White Plains, NY 10607 and our telephone number is (914) 674-4373.  Should we require a regular permanent office we will attempt to locate one in the vicinity of our leases and we believe that suitable properties are available at reasonable costs.

 

ITEM 3.  LEGAL PROCEEDINGS.

 

We currently have no legal proceedings pending nor have any legal proceeding been threatened against us or any of our officers, directors or control persons of which we are aware.

 

ITEM 4.  SUBMISSION of MATTERS to a VOTE of SECURITY HOLDERS.

 

No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise during the Company’s fourth quarter.

 

PART II

ITEM 5.  MARKET for REGISTRANT’S COMMON EQUITY and ISSURER PURCHASES of EQUITY SECURITIES.

 

Stock Split/ Dividends

 

On October 19, 2007, the Company effected a five for one forward stock split which increased the authorized common stock to 100,000,000 shares at $.0001 par value.  On August 13, 2008, the Company’s board of directors approved a stock dividend on its outstanding common stock.  The ratio for the stock dividend was four shares to each share owned (4:1).

 

Market Information

 

Our common stock trades on the Over the Counter Bulletin Board under the symbol “PTCP”.  The following table sets forth for the periods indicated the high and low prices per share of our common stock as quoted by the OTCBB, respectively:

 

 

 

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(1)  There were no trades in our common stock until May 2008.

 

Reports to Shareholders

 

We plan to furnish our shareholders with an annual report for each fiscal year ending December 31 containing financial statements audited by our independent certified public accountants.  Additionally, we may, in our sole discretion, issue unaudited quarterly or other interim reports to our shareholders when we deem appropriate.  We intend to maintain compliance with the periodic reporting requirements of the Securities Exchange Act of 1934.

 

Holders

 

As of February 28, 2009, we had five shareholders of record and 22,680,000 common shares issued and outstanding.  The number of holders does not include the shareholders for whom shares are held in a "nominee" or "street" name.

 

Dividend Policy

 

We have not declared or paid any dividends on our common stock to date.  We anticipate that any future earnings will be retained as working capital and used for business purposes.  Accordingly, it is unlikely that we will declare or pay any such dividends in the foreseeable future.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

None

 

Recent Sales of Unregistered Securities

 

On December 27, 2007, the Company sold 800,000 shares of its common stock to one investor at $.625 per share (an aggregate of $500,000).  On March 18, 2008, the Company sold 800,000 shares of its common stock to one investor at $1.25 per share (an aggregate of $1,000,000).  The shares were sold in transactions exempt from registration under Regulation S of the Securities Act of 1933, as amended.  The shares are not registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.  The purchasers of the shares represented that they were acquiring the shares for their own account, for investment, and that the purchasers were not US Persons within the meaning of Regulation S.  The Company has no obligation to register the resale of the shares under the Securities Act.  The proceeds from the sale of the shares will be used for working capital purposes.

 

 

 

ITEM 6.  SELECTED FINANCIAL DATA.

 

Not applicable

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ITEM 7.  MANAGEMENT’S DISCUSSION and ANALYSIS of FINANCIAL CONDITIONS and REULTS OF OPERATION.

Overview

We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could be incorrect.  In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements.  We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.  Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include the following:

•	our ability to raise additional capital and secure additional financing;
•	anticipated trends in our financial condition and results of operations;
•	our ability to hire and retain key employees;
•	Risks related to diverting management’s attention from ongoing business operations.

 

Background

 

Prior to September 2007, the Company’s business model provided telephonic conferencing services to businesses, organizations and individuals in North America.  Due to capital constraints and because its executives could no longer serve the Company without compensation, the Company decided to change directions.

 

Plan of Operation

 

Our plan of operation for 2009 is to continue drilling test wells on our Oklahoma oil and gas leases.  We anticipate the cost of these programs will be approximately $600,000, however, this figure could be reduced, possibly substantially, by third-party working interest participation, arising particularly as a result of spacing and pooling applications and hearings.

 

We anticipate spending approximately $50,000 in 2009 geologically evaluating our oil and gas exploration permits in the Province of Quebec.

 

During 2009 we also anticipate spending $100,000 on administrative expenses, including fees payable in connection with our compliance reporting obligations as a public company, such as legal, accounting and audit fees.

 

Total expenditures in 2009 therefore could be at least $750,000.  While we have cash on hand to cover most of these expenses, we could require additional funding.  We anticipate that additional funding will be provided in the form of equity financing from the sale of our common stock or loans from directors. We cannot provide investors with any assurance that additional funds will be raised.  Currently, we do not have any arrangements in place for future equity financings.

 

We are in the process of determining our personnel needs. We intend to hire consultants over the course of the next twelve months.  To attract qualified personnel, we intend to offer percentages of the Company’s working interest in its oil and gas properties.

 

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Results of Operations

 

For the year ended December 31, 2008, we had revenues of $24,151, oil and gas exploration costs of $28,297 and incurred a loss of $346,414, as compared to no revenues and a loss of $61,124 in 2007. Salaries in 2008 were $120,000 as compared to $10,000 in 2007.  Professional fees in 2008 were $156,368 as compared to $20,600 in 2007.  General and administrative expenses for 2008 were $29,599 as compared to $5,648 in 2007.  In addition, we incurred interest expense of $30,633 in 2008 as compared to $6,076 in 2007.  The increase in our 2008 expenses is the result of the Company changing its business plan from telephonic conferencing services to the oil and gas sector.  The Company recorded a $16,929 impairment charge in 2007 related to its telephonic equipment.

 

Liquidity and Capital Resources

 

Our Company's principal cash requirements are for exploration expenses which we anticipate will rise as we proceed to determine the feasibility of developing our current or future property interests.  As of December 31, 2008, we had cash of $556,035 and negative working capital of $215,378.  Our net cash provided by financing activities from June 19, 2006 (inception) to December 31, 2008 was $2,288,158

 

In March 2008 we raised $1,000,000 from the sale of 800,000 shares of our common stock at $.625 per share.  This sale was to an unaffiliated party, completed pursuant to an exemption from registration under the Securities Act of 1933, as amended, by Regulation S issued thereunder.

 

At December 31, 2008, the Company has a $734,058 note payable to Soladino Investments SA , a Swiss corporation owned by our president, Mr. Fitzsimons.  The note is secured by the Company’s oil and gas leases, is non interest bearing and payable upon demand.

 

On March 31, 2009, the Company purchased 171 oil and gas lease interests totaling 3,827 gross (2,666 net) acres in Okfuskee and Okmulgee Counties, Oklahoma from CH4 Energy, Inc., a company controlled by Soladino Investments SA at a cost of $583,823.  The Company reimbursed Soladino for its historic costs (acreage) by issuing a secured, non-interest bearing note, payable on demand for $583,823 and assumed responsibility for all further costs.

 

We anticipate that additional funding will be provided in the form of equity financing from the sale of our common stock or loans from directors. We cannot provide investors with any assurance that additional funds will be raised.  Currently, we do not have any arrangements in place for future equity financings.

 

Seasonality and Inflation

 

We do not believe that our business will be seasonal to any material extent except that exploratory operations, particularly in Alaska, may be hampered by severe winter weather conditions.  Since energy costs are a key component of inflation, we do not believe that our results will be materially impacted by inflation in the current fiscal year.

 

Critical Accounting Policies

 

Financial Reporting Release No. 60 of the SEC encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of the financial statements.  There are no material revenue generating activities that give rise to significant assumptions or estimates. Our most critical accounting policies relate to the accounting and disclosure of related party transactions. Our financial statements filed as part of this annual report include a summary of the significant accounting policies and methods used in the preparation of our financial statements.

 

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Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

ITEM 7A.  QUANTITATIVE and QUALITATIVE DISCLOSURES about MARKET RISK.

 

Not applicable.

 

ITEM 8.  FINANCIAL STATEMENTS and SUPPLEMENTARY DATA.

 

Our financial statements for the years ended December 31, 2008 and 2007, and the reports thereon of Li & Company, respectively are included in this annual report.

 

ITEM 9.  CHANGES in and DISAGREEMENTS with ACCOUNTANTS on ACCOUNTING and FINANCIAL DISCLOSURE.

 

None.

 

ITEM 9A(T).  CONTROLS and PROCEDURES.

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As required by Rule 13a-15 under the Exchange Act, our management, including James Fitzsimons, our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2008.  Based on that evaluation, Mr. Fitzsimons concluded that as of December 31, 2008, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Section 404 of the Sarbanes-Oxley Act of 2002 requires that management document and test the Company’s internal control over financial reporting and include in this Annual Report on Form 10-K a report on management’s assessment of the effectiveness of our internal control over financial reporting.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.  Under the supervision and with the participation of our management, including James Fitzsimons, our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on that evaluation, our management concluded that our internal control over financial reporting is effective, as of December 31, 2008.

 

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This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

 

Changes in Internal Controls over Financial Reporting.

 

During the fiscal year ended December 31, 2008, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B.  OTHER INFORMATION.

 

We do not have any information that was required to be reported on Form 8-K during the fourth quarter.

 

PART 1II

 

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS and CORPORATE GOVERNANCE.

 

Our directors and officers as of February 28, 2009 are:

 

 

 

(1)  Mr. Siedow was appointed CFO on March 16, 2009 effective March 1, 2009.

 

James Fitzsimons has been a director of our Company since September 20, 2007.  Mr. Fitzsimons is an elected member of the Schweizerische Vereinigung von Petroleum-Geologen und Ingeneuren (Swiss Association of Petroleum Geologists and Engineers) and during the past five years has been employed by Reta Holding SA of Paradiso, Switzerland, also serving on the board of directors of Kapital Finanz und Treuhand Gesellshaft (Capital Finance and Trust Company) a licensed and regulated asset and fund management company and a full member of SECA (Swiss Private Equity & Corporate Finance Association).  Mr. Fitzsimons has been active in the mineral extraction industry for over 15 years, and has been involved in the Oklahoma oil and gas industry for over five years.  Mr. Fitzsimons received a Bachelor of Laws degree from University College London.  His industry knowledge comes from direct experience of the oil and gas business both in Europe and the United States.

 

Stephen M. Siedow has been a director of our Company since December 2007.  Mr. Siedow is a member of the American Institute of Certified Public Accountants and the Colorado Society of Certified Public Accountants.  From 1974 to 1982 he was with the audit department of Ernst & Young, Certified Public Accountants in Denver, Colorado and in 1982, he formed Stephen M. Siedow, PC a professional accounting firm providing auditing, management consulting and tax services to corporations, partnerships and individuals.  Mr. Siedow specializes in public and SEC accounting and has experience in industries including construction, mining, oil and gas, and mergers/acquisitions.

 

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Frank J. Hariton has been secretary of our Company since September 2007 and is an attorney in private practice in New York State.  Mr. Hariton received his BA (1971) and JD (1974 from Case Western Reserve University.

 

Family Relationships

 

There are no family relationships among our officers or directors.

 

Involvement in Certain Legal Proceedings

 

None of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates that are required to be disclosed pursuant to the rules and regulations of the SEC other than as set forth in “Item 13. Certain Relationships and Related Transactions, and Director Independence” below.  None of the directors, director designees or executive officers to our knowledge has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.

 

Term of Office

 

The term of office of the current directors shall continue until new directors are elected or appointed.

 

Committees of the Board and Financial Expert

 

We do not have a separately-designated audit or compensation committee of the Board or any other Board-designated committee. Audit and compensation committee functions are performed by our Board of Directors. We will form such committees in the future as the need for such committees may arise. In addition, at this time we have determined that we do not have an “audit committee financial expert” as defined by the SEC on our Board.

 

Code of Ethics

 

Due to its small size, the Company has not adopted a code of ethics.  The Company will adopt a code of ethics for our senior officers, including our principal executive officer, principal financial officer, principal accounting officer or controller and any person who may perform similar functions.  As required by SEC rules, we will report the nature of any change or waiver of our code of ethics.

 

 

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ITEM 11.  EXECUTIVE COMPENSATION.

 

Compensation of Executive Officers

 

The following table sets forth information concerning the compensation of our named executive officers for the fiscal years ended December 31, 2008 and 2007; provided, however, any payments to these officers were paid as consultants, not employees, of the Company, as the Company has not yet hired full or part-time employees. We may, once we are operational, implement employee benefits that will be generally available to all employees and subsidiary employees, including medical, dental and life insurance benefits and a 401(k) retirement savings plan.  Except as listed below, there were no bonuses, other annual compensation, restricted stock awards or stock options/SARs or any other compensation paid to the named executive.

 

Name and Principal Position		Year	Salary        ($)	Bonus      ($)	Stock Award ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
James Fitzsimons, CEO, President, CFO and Director (1)		2008	$120,000							$120,000
		2007	$-0-							$-0-
Stephen M. Siedow, Director (2)		2008 2007	$-0- $-0-							$-0- $-0-
Frank J. Hariton, Secretary (3)		2008	$-0-							$-0-
		2007	$-0-							$-0-
Peter Destler, former CEO, President, and Director (4 )		2007	$-0-							$-0-
Deborah Destler, former VP, Secretary and Director (4)		2007	$-0-							$-0-

 

 

(1 )		James Fitzsimons has been the Company’s CEO, President and CFO since December 17, 2007 when Mssrs. Peter Destler and Deborah Destler resigned.  Mr. Fitzsimons was first elected a director of our Company on September 20, 2007.
(2 )		Stephen M. Siedow has been a director since December 2007.  Mr. Siedow was appointed CFO on March 16, 2009 effective March 1, 2009.  The Company paid Mr. Siedow $77,700 for accounting/consulting fees in 2008 and $2,300 in 2007.
(3 )		Frank J. Hariton has been the Company’s secretary since September 2007.  Mr. Hariton was paid $26,500 for legal services in 2008 and $16,000 in 2007.
(4)		On December 17, 2007 Mssrs. Peter Destler and Deborah Destler resigned as officers and directors of our Company.  Fees paid to Peter Destler and Deborah Destler in 2007 were as consultants to the Company.  Deborah Destler is the sister-in-law of Peter Destler.

 

Compensation of Directors

 

The Company has no standard arrangements in place or currently contemplated to compensate the Company’s directors for their service as directors or as members of any committee of directors.

 

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Employment Agreements

 

We do not have employment agreements with any of our executive officers or directors.  We have verbal understandings with our executive officers regarding monthly retainers and reimbursement for actual out-of-pocket expenses.

 

Termination of Employment

 

There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in the Summary Compensation Table set forth above that would in any way result in payments to any such person because of his or her resignation, retirement or other termination of such person’s employment with us.

 

Employee Benefit Plans

 

None

 

Indemnification of Directors and Executive Officers and Limitation of Liability

 

Pursuant to the General Corporation Law of Delaware our Certificate of Incorporation provides that no director will have any personal liability to us or to any of our shareholders for monetary damages for breach of fiduciary duty as a director; provided, however, that this exclusion does not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to us or our shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under §174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit.

 

ITEM 12.   SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT and RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners

 

The following table sets forth, as of February 28, 2009, the stock ownership of (i) each of our named executive officers and directors, (ii)all executive officers and directors as a group, and (iii) each person known by us to be a beneficial owner of 5% or more of our common stock.  No person listed below has any option, warrant or other right to acquire additional securities from us, except as may be otherwise noted.  We believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them except as stated therein.

 

 

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Name and Address		Amount & Nature
of Beneficial		of Beneficial		Percent
Owner (1)		Ownership (2)		of Class
James Fitzsimons  (3)		17,800,000		78.50%
Selnaustrasse 3
8001 Zurich
Switzerland
Stephen M. Siedow		-0-		-0- %
13047 W. Iliff Drive
Lakewood, CO  80228
Frank J. Hariton		-0-		-0- %
1065 Dobbs Ferry Road
White Plains, NY  10607
Soladino Investments SA  (3)		17,800,000		78.50%
Via Quadrellas 4
CH-7500 St.
Moritz, Switzerland
All officers and directors
as a group (3 persons)		17,800,000		78.50%

 

(1 )		Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities.  Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by him.
(2 )		The beneficial ownership percent in the table is calculated with respect to the number of outstanding shares 22,680,000 of the Company’s common stock as of February 28, 2009, and each stockholder’s ownership is calculated as the number of shares of common stock owned plus the number of shares of common stock into which any preferred stock, warrants, options or other convertible securities owned by that stockholder can be converted within 60 days.
(3 )		Soladino Investments SA is a Swiss corporation owned by James Fittzsimons .

 

The term “named executive officer” refers to our principal executive officer, our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers at the end of 2008, and two additional individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as executive officers of the Company at the end of 2008.

 

Changes in Control

 

We know of no contractual arrangements which may at a subsequent date result in a change of control in the Company.

 

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ITEM 13.  CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS, and DIRECTOR INDEPENDENCE.

 

Certain Relationships and Transactions with Related Persons

 

On August 12, 2008, the Company acquired from its president, James Fitzsimons, a 50% working interest (41.25% net revenue interest) in the Snake Creek prospect, a 3,200 gross (3,022 net) acre gas development project located in northern Okmulgee County, Oklahoma.  The first well on this acreage, the Snake Creek #1, spaced on 160 acres, has been successfully drilled and completed.  The Middle Dutcher zone was fracture stimulated and is in production.  The Company reimbursed Mr. Fitzsimons for his historic costs (acreage and drilling) by issuing a secured, non-interest bearing note, payable on demand for $210,917 and assumed responsibility for all further costs.

 

On November 30, 2008, the Company acquired from Mr. Fitzsimons, a 100% working interest (81.25% net revenue interest) in the Spanish Peak prospect, a 2,041 gross (900 net) acre gas development project located in Okmulgee County, Oklahoma.  The Company reimbursed Mr. Fitzsimons for his historic costs (acreage) by issuing a secured, non-interest bearing note, payable on demand for $173,141 and assumed responsibility for all further costs.

 

On December 1, 2008, James Fitzsimons transferred his 78.5% stock ownership in Petrocorp Inc. and three outstanding promissory notes (totaling $734,058) to Soladino Investments SA (“Soladino”), a Swiss corporation owned by Mr. Fitzsimons.  The Company issued Soladino a $734,058 note, which is secured by the Company’s oil and gas leases, is non interest bearing and payable upon demand.

 

On March 31, 2009, the Company purchased 171 oil and gas lease interests totaling 3,827 gross (2,666 net) acres in Okfuskee and Okmulgee Counties, Oklahoma from CH4 Energy, Inc., a company controlled by Soladino Investments SA at a cost of $583,823.  The Company reimbursed Soladino for its historic costs (acreage) by issuing a secured, non-interest bearing note, payable on demand for $583,823 and assumed responsibility for all further costs.

 

During the year ended December 31, 2008, the Company imputed interest expense related to these notes of $30,274.  Interest was imputed at an implied rate of 6% and the amounts were recorded as capital contributions by the Company.

 

The Company was provided management services by its president, Mr. Fitzsimons during 2008 at no cost.  The Company recorded the $120,000 estimated value of these services as compensation expense and as a capital contribution.

 

Director Independence

 

Our current directors are James Fitzsimons and Stephen M. Siedow.  We are not currently subject to corporate governance standards defining the independence of our directors.  We have not yet adopted an independence standard or policy, although we intend to do so in the near future. Accordingly, the Company’s Board currently determines the independence of each Director and nominee for election as a Director.  The Board has determined that none of the Company’s directors currently qualifies as an independent director.  We do not list the “independent” definition we use on our Internet website.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES and SERVICES.

 

Audit Fees

 

The aggregate fees billed by the Company’s auditors for professional services rendered in connection with the audit of the Company’s annual financial statements and reviews of the financial statements included in the Company’s Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2008 and 2007 were $14,000 and $7,500, respectively.

 

Audit Related Fees

 

None

 

25

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Tax Fees

 

None

 

All Other Fees

 

None

 

Pre-Approval Policies and Procedures

 

The board of directors has not adopted any pre-approval policies and approves all engagements with the Company’s auditors prior to performance of services by them.

 

PART 1V

 

ITEM 15.  EXHIBITS and FINANCIAL STATEMENT SCHEDULES

 

The following exhibits are filed with this report, except those indicated as having previously been filed with the Securities and Exchange Commission and are incorporated by reference to another report, registration statement or form.  As to any shareholder of record requesting a copy of this report, we will furnish any exhibit indicated in the list below as filed with this report upon payment to us of our expenses in furnishing the information.

 

Exhibit Number	Exhibit Description
3.1	Certificate of Incorporation (Incorporated by reference to like numbered exhibit to the Company’s Registration Statement on Form SB-2 File Number 333-141993).
3.2	Bylaws (Incorporated by reference to like numbered exhibit to the Company’s Registration Statement on Form SB-2 File Number 333-141993).
3.3	Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 5, 2007).
4.1	Specimen Stock Certificate (Incorporated by reference to like numbered exhibit to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007 filed on April 11, 2008).
10.1	Consulting Agreement, dated March 12, 2008, between the Company and Keith G. Summar ( Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007 filed April 11, 2008).
21	Description of Subsidiaries.  **
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.  **
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.  **
32.1	Certificate (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Chief Executive Officer.  **
32.2	Certificate (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Principal Financial Officer.  **

 

•         ** Filed herewith.

 

26

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: April 7, 2009

 

PETROCORP INC.

 

                                                                                By /s/ James Fitzsimons       

                                                                                                      James Fitzsimons

                                                                                                      CEO and President

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title		Date
/s/ James Fitzsimons          James Fitzsimons		Director, CEO and President	April 7, 2009
/s/ Stephen M. Siedow          Stephen M. Siedow		Director and CFO	April 7, 2009

 

 

 

 

 

 

 

 

F-5

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Exhibit 21

 

SUBSDIARIES

 

Union Energy (Alaska), LLC, an Alaska limited liability company.

 

Mac Oil SpA, an Italian public limited liability company.

 

Petrocorp Italia SRL, an Italian limited liability company.

 

Union Energy (Alberta), LLC, a Colorado limited liability company.

 

Petrocorp (Oklahoma), Inc. an Oklahoma corporation