SOURCE: High Plains Gas

April 18, 2011 09:04 ET

High Plains Gas Announces 2010 Year End Results

-- Total Assets of $47.9 Million at December 31, 2010

-- Outlines 2011 Growth Strategy Including Reactivation Program for Idle Wells

-- Provides 2011 Natural Gas Industry Outlook

GILLETTE, WY--(Marketwire - Apr 18, 2011) - High Plains Gas, Inc. (OTCBB: HPGS) today announced financial results for the twelve months ended December 31, 2010 and provided a 2011 natural gas industry outlook.

Full Year 2010 Financial Summary

On December 1, 2010, the company began operating the Marathon (Pennaco Energy) North and South Fairway Assets in the Powder River Basin, Wyoming area, which were previously operated by Marathon Oil. As such, the financial results for the 2010 period reflect approximately one month of the newly-acquired assets.

For the year ended December 31, 2010, total revenue was $ 2.6 million. Notably, in December 2010, gas revenue from operations increased 22% over December 2009. Net loss for the 2010 year was $5.5 million and included approximately $1.3 million in non-cash charges related to depletion, depreciation and amortization, as well as $30.7 million, primarily in stock, used to acquire the Marathon assets. The company ended the year with $208,823 in cash and $47.9 million in total assets.

Joseph Hettinger, Chief Financial Officer for High Plains Gas, Inc., stated: "High Plains Gas achieved significant milestones during 2010. We acquired the Marathon assets, which improved both our operational capacity as well as our financial foundation. Already in 2011, we have made progress on our objectives as we proceed with the Huber acquisition, which will build our oil and gas assets. We are confident we are well poised for growth in 2011 as we execute on our active acquisition strategy in the Powder River Basin."

Recent Company Highlights

  • Completed the acquisition of the Grams and Mills fields - February 2010
  • Merged into public company named Northern Exploration (OTCBB: NXPN) - October 2010
  • CEP M Purchase subsidiary closes on Marathon Oil Asset Purchase - November 2010
  • Option obtained and exercised for 100% purchase of CEP M Purchase, LLC
  • Appointed majority independent members of Board of Directors
  • Assumed operational control of the North and South Fairway assets - December 2010
  • Reactivation Program initiated with 33 idle wells reactivated the first month of operations
  • Negotiations for Huber Purchase Sale Agreement initiated; agreement signed in February 2011

Brent Cook, Chief Executive Officer of High Plains Gas, stated: "High Plains Gas was extremely active in 2010 and made several key moves in the gas industry. We acquired the necessary base of assets to enable High Plains to become a major E&P player in the Powder River Basin. I believe both our 2010 and our future planned acquisitions demonstrate the momentum we are gaining in growth objectives."

Growth Strategy

  • Acquisitions: Acquire high-quality undervalued or underutilized assets that are expected to increase in value in the long term and create short-term cash flows when properly managed, as exemplified by the company's acquisition of the Marathon assets in 2010.
  • Re-Activation Program: Initiate non-capital intensive reactivation program of approximately 30 wells per month from the 1,100 idle wells in the Marathon portfolio. The company has set a goal of realizing an approximate 1 million cubic feet of gas per day increase each and every month during 2011. The company expects the natural gas production by the end of 2011 to be approaching 25 million cubic feet of gas per day from the North and South Fairway assets alone.
  • Expansion/Development Program: Evaluate and position the company for the expansion and development of future well sites when economics dictate such a move is prudent. High Plains has a very large and developable acreage for future gas drilling.
  • Monetize and create new revenue streams: Monetize underutilized assets into future revenue streams. This ranges from selling acreage that may be untimely to develop, to maximizing royalty streams to capturing deep oil rights.
  • Reduce cost structures: Reducing costs of operations and transportation by efficiently producing, managing and transporting our products. As a new company, High Plains' cost structure is inherently more efficient and the additional production realized from any reactivation helps spread those costs over more gas produced. This means that the company's costs per individual Mcf of natural gas produced decreases. It will be a goal of the High Plains to continue to manage these costs and production levels to be as efficient as possible.

"2010 was devoted largely to developing the company through acquisitions and managing operations efficiently. We are pleased with our ability to stimulate production wells and reactivate idle wells. Looking ahead, the management team will be evaluating the company's success by our ability to use capital effectively and benefit from natural gas price patterns," continued Cook.

Natural Gas Industry Outlook

"The company is cautiously optimistic regarding natural gas prices and believes the long-term trend points to higher prices, based on multiple industry assessments. While this trend bodes well for the company, our approach is to manage operations to be competitive in a lower-priced environment. Our flexibility and acquisition approach lessens the burden of large infrastructure recovery costs. Recent worldwide events such as the tsunami and resulting nuclear disaster in Japan, advancing liquefied natural gas (LNG) and compressed natural gas (CNG) development, reducing rig availability for gas drilling and power generation fuel switching all have placed upward pricing pressures on natural gas. We believe the market forces described above provide High Plains with a fertile environment and strong foundation from which to grow," concluded Cook.

About the Company
High Plains Gas, Inc. is a Gillette, Wyoming based energy company actively engaged in the acquisition, development and production of natural gas primarily in the Powder River Basin. The Company recently acquired CEP - M Purchase LLC, which currently owns the former Marathon "North & South Fairway" assets. These assets consist of 1614 Coal Bed Methane Wells with associated flow lines and over 155, 000 net acres. This combined with the company's existing 92 natural gas wells gives the company a strong foundation in the natural gas industry. High Plains Gas will pursue expansion opportunities for the profitable production and transmission of natural gas. High Plains Gas believes it has unique expertise and experience in the refurbishment and reactivation of wells that produce natural gas from coal bed methane formations that helps position it strategically in the Powder River Basin.

Safe Harbor
Statements made about our future expectations are forward-looking statements and subject to risks and uncertainties as described in our most recent filings made with the US Securities and Exchange commission, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.

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