A few weeks after the start of the $400,000 promotional campaign for High Plains Gas, Inc. (OTC:HPGS), the stock fell yesterday to a new six-month bottom. The group of promoters keeps sending newsletters on HPGS, while the scheduled for today conference call might be the last chance of the company to announce the purchase of the J.M. Huber’s Powder River Basin coalbed methane assets.
HPGS closed the last session at $0.77 for a share, a 2.53% decline from the previous day close. Yet, much worse was that during the day the share price fell to $0.71, the lowest level for the past half a year and a break of some important support levels. Trading volume was decreasing with around 209,400 traded shares.
According to our database, 35 promotional e-mails on HPGS have been sent this month only, the last ones after market close yesterday evening. The promoters promise again that the stock could rally off the support level, yet the company should better come up with some news about its pending agreement J.M. Huber Corporation to purchase Huber’s Powder River Basin coalbed methane assets. At the beginning of the month, High Plains Gas announced another subsequent amendment of that agreement, but the date on which the agreement should be closed remained June 30, 2011.
The purchase price is $35 million, which the company did not have as of end-March this year and which purchase price if paid will most probably lead to dilution for the shareholders. According to HPGS latest PRs, the company intends to reactivate certain wells within the Fairway methane fields in the Powder River Basin of Northern Wyoming. However, that statement could also not hold the share price up.
The company’s latest quarter statement shows huge working capital deficit and huge operating losses, factors that could prevent HPGS from rising up in the following months.
