High Plains Gas Announces 2010 Year End Results
April 18 2011 - 9:03AM
Marketwired
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.
Contact: High Plains Gas, Inc. P.O. Box 1564 Gillette, WY
82717 (307) 686-5030 Email: ir@highplainsgas.com
www.highplainsgas.com IR Agency Contact: Lippert/Heilshorn
& Associates, Inc. Becky Herrick (415) 433-3777
bherrick@lhai.com