Published: January 10, 2012

Open Letter to Shareholders Issued by High Plains Gas CEO Brandon Hargett

Share This Story

GILLETTE, Wyo. - (BUSINESS WIRE) - The following is a letter from High Plains Gas CEO Brandon Hargett to shareholders:

Fellow Shareholders:

2011 was a very busy year for us. High Plains Gas had more than our share of significant accomplishments including the completion and development of the acquisition from Marathon Oil of the "North and South Fairway" , a significant coal bed methane asset in the Powder River Basin. We currently own and operate over 1,650 coal bed methane wells encompassing approximately 155,000 acres and we continue to reactivate shut-in wells on a monthly basis. In the context of plunging natural gas prices, this asset nevertheless realizes revenues of approximately $3-4 million per quarter. Also, we are quite excited about the formation and growth of HPG Services (detailed below). Unfortunately, we also had misses. Most notably, we were unable to secure the adequate funding to complete the Huber acquisition in mid-year.

Our Performance for 2011

I believe that our team has laid the foundation for future prolonged, reproducible, and robust success. In 2010, our management team took over High Plains Gas, Inc in the face of headwinds of faltering natural gas prices and deficiencies in our corporate structure. First off, we have worked and continue to work hard to amplify efficiencies while eliminating internal duplicity. Prudent and responsible corporate reorganization has resulted in streamlined administrative, operations, and accounting teams throughout our company. I now believe that our business processes have improved to the point that they match the level of client service and satisfaction that we have achieved in the past. Moreover, we centralized our accounting operations throughout the divisions, added appropriate internal controls, and strengthened our infrastructure to grow.

While we anticipate real growth in 2012, it is imperative to me that we have the necessary proactive controls, infrastructure, and teams in place to metabolize and catapult the growth.

As we have just culminated an eventful 2011 at High Plains Gas, I would like to take this opportunity to lay out a "state of the union" of our company moving forward into 2012.

In this letter, I intend to focus on the following areas:

I. Emerging Even Stronger: Expansion to Energy Construction and Field Maintenance Services

II. Stability: Growth in Energy Demand, Infrastructure, and Production in our Backyard

III. Culture of Success: Talent and Will Abound

IV. Optimism: The Future is Bright

Emerging Even Stronger: Expansion to Energy Construction and Field Maintenance Services

In the past year, we recognized that the demand for Energy Construction and Field Maintenance Services in our region was booming. The concept is simple, yet elegant. Being a relatively small company, we have the ability to be nimble in strategic direction and, as such, HPG Services was created to provide construction, maintenance, and fabrication services to the energy industry. As the regional energy demand, infrastructure, and production grows, we fully expect to grow into one of the dominant regional players in this industry.

HPG Services has already been catapulted by tremendous growth. We acquired several like regional energy-related construction companies, most importantly Miller Fabrication, which will serve as the entity that operates all of our energy construction and field maintenance services moving forward. Miller Fabrication has recently signed multiple Master Service Agreements with established companies that operate regionally within the energy industry. We are currently in the process of engaging projects in our region, including North Dakota and Wyoming, as well as working to develop our internal resources to capture much larger projects. We have facilities that will enable us to fabricate many of the specialized items necessary for the operations of companies from which we win bids.

Recently, we received approval from the American Society of Mechanical Engineers ("ASME" ) for our code stamp, an important process for building compliant structures used within the energy industry. With over 45 years of combined experience, Mark Hettinger, Chief Operations Officer of High Plains Gas, and Ty Miller, President of Miller Fabrication understand the past, current, and future landscape of energy construction and maintenance business very well. I would like to reiterate the fact that Mark Hettinger was able to take his previous construction and services company, Hettinger Welding, from a small regional welding company to a company generating $200+ million per year in revenue in the absence of our present strong regional infrastructure and engaged management team and dedicated board of directors. To put it plainly, we are bullish on Miller Fabrication for the foreseeable future. Given Master Service Agreements already on the books, I anticipate significant revenue for this division in 2012. As our balance sheet tightens, supported by said growth, my goal is a low debt load and improved operating capital to win bids on larger projects.

Culture of Success: Talent and Will Abound

While our company operates in a region with bountiful natural resources, this past year served to remind me that our most important resource far and away is our people. We have assembled a stalwart team from the field level to the project managers to the account managers. Moral of our team members has significantly improved throughout the past year. At every level and in each division, we are unified by our culture of excellence and integrity. We continue to raise the bar in this regard as we have implemented improved controls at every level, which will serve us well as we continue to grow rapidly. The combination of experience, will, and talent will place us at the forefront of our industry.

Optimism: The Future is Bright

Our management team has every intention of growing High Plains Gas, Inc into a regional power in energy-related construction and field maintenance services. I am confident that we have and will continue to lay out a path for success in 2012. We expect natural gas prices to remain stagnant for the foreseeable future, and, thus, expect the bulk of our immediate growth from Miller Fabrication. The incredible regional growth of the energy sector coupled with our multipronged measures to improve all aspects of our organization will prove as an indicator for sustainable growth.

We, as the management team, will continue to be transparent with our fellow shareholders to affirm our dedication and vision for this great company.

I genuinely thank you for your time and attention.

Respectfully,

Brandon Hargett