SOURCE: High Plains Gas

November 19, 2010 18:00 ET

High Plains Gas, Inc. Converts Note and Is Positioned to Acquire Interest in 155,000 Net Operating Acres Spanning Multiple Gas Fields in the Powder River Basin Known as the Pennaco Energy, or Marathon Oil Company Assets

GILLETTE, WY--(Marketwire - November 19, 2010) - High Plains Gas, Inc. (OTCBB: NXPN) today announced that it has exercised a Convertible Note previously acquired from Current Energy Partners Corporation, a Delaware Corporation ("Current") and its wholly owned subsidiary CEP M Purchase LLC ("CEP") pursuant to which High Plains has acquired a 51% interest in CEP. High Plains also announced that it has entered into an Option Agreement to acquire the remaining 49% interest in CEP.

Convertible Note

The proceeds from the Convertible Note are to be used by Current through its subsidiary CEP M Purchase LLC to purchase a significant resource base and land position from Pennaco Energy, a wholly owned subsidiary of Marathon Oil Company. The assets consist of Pennaco Energy's "North & South Fairway" assets located in the Powder River Basin. These properties represent a significant resource base and land position, encompassing approximately 155,000 net operated acres.

The anticipated acquisition includes the operational capacities including gathering system, compression equipment, transportation rights and production wells (both active and idle). The transaction does not anticipate any transfer of deep oil rights, but is focused upon mineral rights between the surface and depth above the base Tertiary Paleocene Fort Union Formation generally above 2,500 feet. Current and CEP are scheduled to close the transaction by November 2010.

The Convertible Note was purchased for a total of $3,550,000 and for providing assistance with CEP's bonding requirements for these assets. The Convertible Note was convertible at the Company's option into a 51% membership interest in CEP and was converted on November 19, 2010.

Option Agreement

High Plains Gas has also entered into an Option Agreement with Current pursuant to which the Company was granted an option to purchase the remaining 49% interest in CEP for a total consideration of $1,500,000 and 11,250,000 newly issued shares of common stock of the Company. The option expires on January 31, 2011.

Upon exercise of the option as well as conversion of the Convertible Note referenced above, the Company would become 100% owner of CEP, which would essentially constitute 100% ownership of the underlying assets.

These Coal Bed Methane properties represent a significant resource base and land position in the Powder River Basin. 

"The combination of operational control, land position, and associated production presents HPG with the opportunity to establish a major core position in the area," said Mark Hettinger, Chairman of High Plains Gas.

Marathon Oil Company Asset Highlights

  • Production: ~17,000 Mcfpd - Gross/~13,600 Mcfpd-Net
  • Over 1,600 Coal Bed Methane Wells
  • Acreage Position: 155,000 Net Acres ( > 90% Held by Production)
  • Average Working Interest: 97%
  • Average Net Revenue Interest: 80%

"CEP is working hard at securing these valuable assets from Pennaco Energy. We are confident we will get there over the next few days. We could not have done this without the help and support of the High Plains Gas team," said Brent Cook, CEO of CEP. "High Plains brings experience and knowledge of the Powder River Basin and an established track record of success in the reactivation and management of coal bed methane wells. As a united team we will work to maximize the profits of the properties and increase shareholder value for our shareholders," he continued.

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 currently maintains seven active leases in the region with 92 wells producing natural gas. With a strong foundation in the basin and growth as a core value, High Plains Gas will purse expansion opportunities for the profitable production and transmission of natural gas. High Plains Gas also believes it has unique experience and expertise in the refurbishment and reactivation of wells that produce gas from coal bed methane formations.

Cautionary Language:

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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