SOURCE: High Plains Gas

December 10, 2010 17:19 ET

High Plains Gas Enters Into a Purchase and Sale Agreement to Sell Natural Gas Wells to Duramax Holdings, LLC for $5.3 Million

Signs Contract Services Agreement to Operate Wells

GILLETTE, WY--(Marketwire - December 10, 2010) - High Plains Gas, Inc. (OTCBB: NXPN) today announced that it has signed a Purchase and Sale Agreement with Duramax Holdings, LLC to sell various gas properties and related assets from its North Fairway assets for a purchase price of $5.3 million. Additionally, High Plains has entered into a Contract Services Agreement to operate the wells associated with the sale for Duramax. 

These assets include approximately 350 natural gas wells spread over five different fields in the North Fairway lease. Production from the wells is estimated to be less than 17% of the total current North Fairway production.

"This sale provides many advantages for High Plains beyond the capital purchase price. With the reduction in the number of wells on the property, we have reduced our bonding requirements by about $2.5 million or 30% and we will also be able to allocate some of the unused capacity on the pipelines," said Mark Hettinger, Chairman of High Plains Gas. "We will also have a consistent revenue stream from our services agreement to operate the wells for Duramax," added Hettinger.

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. Through its wholly-owned subsidiary CEP - M Purchase LLC, the Company owns the former Marathon "North & South Fairway" assets. These assets consist of 1,614 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.

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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