Bringing in a little bit of help on the company’s Powder River Basin operations in Wyoming, PRB Energy Inc. said Tuesday it has entered into an agreement with Pearl Investment Co. to create a jointly owned limited liability company (LLC) that will operate PRB’s Recluse Gathering System.

PRB will contribute the Recluse system in exchange for $1.3 million in cash to be paid by Pearl. Each company will have a 50% interest in the LLC. Upon closing of the transaction, Pearl will take over operations of the system and PRB will continue to provide back office services. The transaction is expected to close before the end of the third quarter of 2007 upon the execution of a satisfactory operating agreement.

Located in Campbell County, WY, the Recluse system consists of approximately 80 miles of pipelines that gather coalbed methane (CBM) gas from wells in the Powder River Basin. The system has access to two markets via interconnects with Thunder Creek pipeline and WBI’s Grasslands pipeline. Currently the system gathers 6.8 MMcf/d, which is expected to increase by year-end with new gas currently under contract coming onto the system.

“We are pleased to partner with Pearl as they are familiar with the system and are excited about its potential. Pearl provides engineering, construction and operating expertise that we believe, along with PRB, can optimize the system,” said PRB CEO Robert W. Wright. “In addition, this transaction allows us to reduce our exposure to future capital and operating expenses associated with the system and better positions us to focus our resources on development of our Denver-Julesburg (D-J) Basin property. Our current production rate in the D-J is approximately 1.4 MMcf/d from 17 wells and will continue to increase as we bring additional wells on-line and equip certain wells with pumping units.”

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