In what the chairman calls a "new chapter" for the company, a subsidiary of High Plains Gas Inc. (HPG) has acquired 155,000 net operated acres in the gas-rich Powder River Basin (PRB).

Gillette, WY-based HPG subsidiary Current Energy Partners M Purchase LLC (CEP) completed the acquisition of the coalbed methane (CBM) fields, known as the North and South Fairway assets, from a subsidiary of Marathon Oil Co. for an undisclosed price.

"This acquisition, coupled with our option to purchase the remaining 49% of CEP, marks a new chapter in the growth of High Plains," said Chairman Mark Hettinger. "The Fairway assets are a perfect fit for the experience and expertise the company has in refurbishment and reactivation of coalbed methane wells."

The acquisition includes the gathering lines, transportation rights and production wells (both active and idle). Marathon did not transfer any of its deep oil and gas 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," said Hettinger.

Current production of the acquired assets, which includes more than 1,600 CBM wells, is 17,000 Mcf/d gross (13,600 Mcf/d net). Ninety percent of the acreage position is held by production; average working interest is 97%. The average net revenue interest is 80%, said HPG.

The gas producer trades over the counter; its share price at midday Tuesday was about $1.76. Since the beginning of this month HPG has been making headlines.

On Nov. 1 HPG announced that it had signed a letter of intent with Federated Oil and Gas to purchase the Spotted Horse lease in the PRB, which includes 15 drilled wells, with three of them now producing natural gas. The purchase includes water discharge permits, which allow HPG to buy several other fields adjacent to the leasehold that were shut in because of water discharge limitations, Hettinger said.

Following the Spotted Horse transaction, Aegis Capital was retained as High Plains' investment banker earlier this month to help with some "strategic acquisition targets," Hettinger said at the time. Then the junior producer made a deal to acquire the remaining stake 49% stake in CEP.

Up to now High Plains has concentrated on its Dry Fork Project in the PRB, which the company estimates holds 37 Bcf. Seven wells have been drilled in the Dry Fork leasehold, and the completed wells currently are in the dewatering phase with three wells "beginning to show gas."

"The acquisition of the Marathon assets catapults High Plains into being a significant natural gas producer in the Powder River Basin," said Ed Cabrera, head of Investment Banking for Aegis Capital. "The operating acumen of Mark Hettinger, with the market savvy of Brent Cook, CEO of [CEP], is thrusting High Plains into a rapid growth phase."

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