Filed pursuant to

Rule 424(b)(1)

Registration No 333-120129

PROSPECTUS

1,211,000 Shares

PRB Gas Transportation, Inc.

Common Stock

The selling shareholders identified in this prospectus are offering 1,211,000 shares of common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling shareholders.

Our common stock is listed on the American Stock Exchange under the symbol ‘PRB’. On August 1, 2005, the reported last sale price of our common stock on the American Stock Exchange was $8.75 per share.

Investing in our common stock involves risks that are described in the “Risk Factors” section beginning on page 6 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

August 15, 2005

TABLE OF CONTENTS

No dealer, sales person or other individual has been authorized to give any information or to make any representations not contained in this prospectus. If given or made, such information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the shares in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this prospectus or in our affairs since the date hereof.

Until September 9, 2005, (25 days after the date of this prospectus), all dealers that buy, sell or trade these securities, may be required to deliver a prospectus.

Prospectus Summary

This summary highlights key aspects of the information contained elsewhere in this prospectus. You should read this entire prospectus carefully, including the historical and pro forma financial statements and the notes to those financial statements included elsewhere in this prospectus. Unless otherwise indicated, the information contained in this prospectus assumes that 411,000 outstanding shares of our Series C Convertible Preferred Stock are converted into an equal number of shares of common stock as of the date of this prospectus.

PRB Gas Transportation, Inc.

General

We own and operate natural gas gathering systems.  We commenced operations in January 2004 upon our acquisition of certain operating assets of TOP Gathering, LLC (“TOP”). In August 2004 we acquired certain operating assets of Bear Paw Energy, LLC (“BPE”) which are located in the same area of Wyoming as the TOP assets.   We charge the gas producer or shipper a fee for gathering, compressing and dehydrating natural gas.  Our gathering systems collect gas at a producer’s wellhead or at a collection point and deliver it to a transmission line owned by a third party.  We do not take ownership of gas that we gather.

Our 4.5 mile TOP system, located in Campbell County, Wyoming, services approximately 50 wells operated by three natural gas producers in the Powder River Basin area of Wyoming.  The wells serviced by this system are approximately two to three years old.  The gathering system has a current throughput capacity of approximately 8 million cubic feet of gas per day and is presently averaging approximately 2 million cubic feet per day or approximately 25% of capacity.

Effective August 1, 2004, we acquired certain operating assets of Bear Paw Energy, LLC also located in Campbell County, Wyoming.   The approximately 200 miles of gathering lines we acquired from Bear Paw service 12 producers of natural gas in the Powder River Basin area of Wyoming.  The wells serviced by these systems are approximately four to five years old.  In April 2004 a portion of the systems was reconfigured to reduce the operating expenses, including compression facilities.  The systems are currently averaging approximately 9.3 million cubic feet per day.

Natural gas wells in the Powder River Basin area typically experience sharp declines in production volume in the first several years of production.  Production then stabilizes and declines more ratably over a gas well’s average life of approximately eight to 10 years.  Many of the wells serviced by our TOP and Bear Paw gathering systems have reached a stable decline phase of production.  We believe that undeveloped reserves in the fields serviced by these systems may provide additional production that may offset future declines and possibly exceed current gas production.

We plan to expand our present operations through a combination of:

•                  enhancing the present gathering systems through operating efficiencies and expanding to servicing additional wells within these systems;

•                  designing and building new gathering systems;

•                  acquiring existing gathering systems;  and

•                  acquiring working interests in properties in areas where there are opportunities to build new gathering systems.

We currently have no agreements for the design of new systems or the acquisition of existing systems.  In general, our acquisition and building criteria focus on the age of the wells serviced or to be serviced by a system and the likelihood of the producers’ continued development of their fields.

On April 12, 2005, we completed our initial public offering of 2,300,000 shares of common stock (including the underwriter’s over-allotment option of 300,000 shares) at $5.50 per share. Our stock is listed for trading on the American Stock Exchange under the symbol ‘PRB.’  We have recorded proceeds of $10,169,158, net of underwriter’s discounts, commissions and expenses including warrants valued at $583,215, as of June 30, 2005.  Invoices for additional offering costs may still be received in the future.

Our executive offices are located at 1401 17th Street, Suite 650, Denver, Colorado 80202 and our telephone number is (303) 308-1330. Our website address is www.prbtrans.com and is currently under construction. Information contained on our website does not constitute a part of this prospectus.  We were incorporated in Nevada on December 31, 2003.

1

The Offering

(1)          Series C preferred stockholders may elect to convert their shares into 411,000 shares of common stock.  Holders of all shares of our Series C preferred stock have advised us that they intend to convert their preferred stock to common stock upon the effectiveness of the registration statement of which the this prospectus is a part.

(2)          Amount gives effect to the assumed conversion of 411,000 shares of Series C preferred stock to common stock on a one-to-one basis and excludes:

•                  390,000 shares of common stock issuable upon exercise of stock options; and

•                  245,000 shares of common stock issuable upon exercise of warrants.

2

Summary historical and pro forma financial data

The tables below present selected historical financial data of TOP Gathering, LLC, our predecessor, and our restated historical financial data and pro forma financial data with respect to the TOP and Bear Paw acquisitions, the latter restated for the year ended December 31, 2004 and the three months ended March 31, 2005, in each case for the periods and as of the dates indicated. We determined during June 2005 that we invoiced a customer (in respect to the Bear Paw acquisition) incorrectly for the period August 2004 through April 2005. We invoiced the customer the difference between the original invoices and the corrected invoices, approximately $304 thousand, in June 2005.  We collected the amount due from this customer during December 2005. As the Company was not previously able to determine if the $304 thousand that was invoiced to the customer during June 2005 was going to be paid or was collectible, the Company had not previously recognized the $304 thousand as revenue. As a result, we have restated our historical financial statements for the year ended December 31, 2004 and the three months ended March 31, 2005, to include the revenues of $162,450 and $105,450, respectively.

We have derived the summary historical financial data for the period from inception through December 31, 2001 and the years ended December 31, 2002 and 2003 from the predecessor audited financial statements of TOP that are included in this prospectus.

We have derived the summary historical financial data for the year ended December 31, 2004 from our restated audited financial statements that are included in this prospectus and include the operating results of the assets acquired from TOP from the January 1, 2004 acquisition date, and the restated operating results of the assets acquired from Bear Paw from the August 1, 2004 acquisition date. For additional information on this matter see Note 2 – Restatement of Results, on page F-11 of the restated Company financial statements for the year ended December 31, 2004, included herein.

We have derived the summary historical financial data for the three months ended March 31, 2005 and 2004 from our restated unaudited financial statements that are included in this prospectus. The operating results for 2005 include the operating results of the assets acquired from both TOP and Bear Paw. The operating results for 2004 include the operating results of the assets acquired from TOP from the January 1, 2004 acquisition date. For additional information on this matter see Note 2 – Restatement of Results, on page F-31 of the restated Company financial statements for the three months ended March 31, 2005, included herein.

We have derived the restated pro forma statement of operations data and other financial data from the restated pro forma financial statements that are included in this prospectus.  They are presented for the year ended December 31, 2004 and give effect to the Bear Paw acquisition as if it occurred as of January 1, 2004, including the effect of recording the invoice corrections noted above in the appropriate period in respect to the period January 1, 2004 through July 31, 2004.  For additional information on this matter see Note 2 – Restatement of Results, on page F-59 of the restated pro forma financial statements included herein.

In the tables below we present restated earnings before interest, taxes, depreciation and amortization, or EBITDA.  EBITDA is a financial measure which we use in our business but that is not calculated and presented in accordance with generally accepted accounting principles, or GAAP. See discussion regarding “Non-GAAP Financial Measure” to “Selected Historical and Pro Forma Financial Data” for a definition of EBITDA and a reconciliation of EBITDA to our income and cash flows from operating activities.

The following tables should be read together with, and are qualified in their entirety by reference to, the historical and pro forma financial statements and the accompanying notes included elsewhere in this prospectus. The tables should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

3

Summary historical and pro forma financial data

Statement of operations data

(1)   Excludes all shares of common stock issuable upon conversion of our preferred stock to common stock.

(2)   For a definition of EBITDA and a reconciliation of EBITDA to our income (loss) and cash flows from operating activities, see “Selected Historical and Pro Forma Financial Data - Non-GAAP Financial Measure.”

(3)   In June 2005 we determined that we incorrectly invoiced a customer for the period August 2004 to April 2005. The contract with this customer was acquired as part of our acquisition of the Bear Paw gas gathering system in August 2004. In June 2005, we invoiced the customer for the difference between the original invoices and the corrected invoices. The customer paid the difference due in December 2005 of approximately $304 thousand. As the Company was not previously able to determine if the $304 thousand that was invoiced to the customer during June 2005 was going to be paid or was collectible, the Company had not previously recognized the $304 thousand as revenue. We have restated our financial statements for the year ended December 31, 2004 and the three months ended March 31, 2005 to include the additional revenue of $162,450 and $105,450, respectively that was collected in December 2005.

4

Balance sheet data

The following table summarizes our unaudited audited balance sheet as of March 31, 2005 on an:

•                           actual basis; and

•                           as adjusted basis to reflect net cash proceeds of $10,752,373 from the sale of 2,300,000 shares of common stock at $5.50 per share in connection with our April 12, 2005 initial public offering, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, and the retirement of the $1,500,000 bank line of credit.

(1)          See note (3) under “ Statement of Operations Data.”

5

Risk Factors

An investment in our common stock involves significant risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in our common stock. If any of the risks described below develop into actual events, our results of operations and financial condition could be adversely affected which could then result in a decline in the market price of our common stock, causing you to lose all or part of your investment.

Risks related to our company and the natural gas industry

We incurred a net loss of $650,538 for the year ended December 31, 2004 and a net loss (unaudited) of $230,169 for the three months ended March 31, 2005.  Our future performance is difficult to evaluate because we have a limited operating history.

Our operations commenced with our acquisition of certain assets of TOP Gathering, LLC as of January 1, 2004 and expanded with our acquisition of certain assets of Bear Paw Energy, LLC effective August 1, 2004.  As a result, we have little historical financial and operating information available to help you evaluate our performance or an investment in our common stock.

To fund our future growth we will require additional capital, which may not be available or may only be available on unfavorable terms.

Our future capital requirements depend on many factors, including development and acquisition opportunities, the availability of debt financing and the cash flow from our operations. To the extent that the funds available are insufficient to meet future capital requirements, we may need to reduce our development activity. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. In the case of equity financings, dilution to our stockholders could result and such securities may have rights, preferences and privileges that are senior to those of the shares offered hereby. If we cannot obtain adequate capital on favorable terms or at all, our business, operating results and financial condition could be adversely affected.

We depend on our chief executive and chief operating officers for critical management decisions and industry contacts.

We do not have employment agreements with any of these individuals and do not carry key person insurance on their lives. The loss of the services of any of these executive officers, through incapacity or otherwise, could have a material adverse effect on our business and would require us to seek and retain other qualified personnel.

Any failure to manage our growth in operations and hire additional qualified employees could materially affect our results of operations and financial condition.

The expected growth of our operations may place a significant strain on our current management resources. To manage this expected growth, we will need to improve our:

•  transaction processing methods;

•      operations and financial systems;

•      procedures and controls; and

•      training and management of our employees.

Competition for personnel is intense, and we cannot assure stockholders that we will be able to successfully attract, integrate or retain, sufficiently qualified personnel. Our failure to attract and retain the necessary personnel or to effectively manage our employee and operations growth could materially affect our results of operations and financial condition.

6

A significant decrease in the supply of natural gas from our customers could materially affect our results of operations and financial condition.

Investments by our customers in the maintenance of existing wells and the further development of their reserves will affect their production rates and the volume of gas we gather.  Drilling activity generally decreases as gas prices decrease. We have no control over our customers’ level of drilling activity, the amount of reserves underlying their wells and the rate at which their production from a well will decline. Drilling activity of our customers is affected by, among other things, prevailing and projected energy prices, demand for hydrocarbons, geological considerations, governmental regulation and the availability and cost of capital.

Any material nonpayment or nonperformance by our key customers could materially affect our results of operations and financial condition.

As of March 31, 2005 we have 13 customers, two of which represent approximately 69% of our revenues. Pennaco Energy, Inc. accounts for approximately 61% of our revenues and Quantum Energy accounts for approximately 8% of our revenues. Two other customers exceeded 5% of our revenues.  Some of our customers may be highly leveraged and subject to their own operating and regulatory risks.  If any of these key customers default on their obligations to us, our financial results would be adversely affected.

Federal, state and local laws and regulations relating to environmental protection and operational safety could require us or our customers to make substantial expenditures and could result in material delays in building new or expanding existing gathering systems.

Our gathering systems are subject to environmental and safety laws and regulations.  The U.S. Bureau of Land Management, or BLM, completed a multi-year review of potential environmental impacts from coal-bed methane development on federal lands in the Powder River Basin in Montana and Wyoming. It issued a report in April 2003 supporting increased coal bed methane development.  In May 2003 environmental and other groups filed four lawsuits in the U.S. District Court for the District of Montana against the BLM alleging that its environmental impact review was not adequate. Plaintiffs seek a court order enjoining coal-bed methane development on federal lands in the Powder River Basin until the BLM conducts additional studies on the environmental impact. We are uncertain as to the outcome of this litigation and if the development of methane gas in the Powder River Basin by our customers is halted or significantly impaired, it could materially and adversely affect our results of operations and financial condition.

Our operations are subject to operational hazards and unforeseen interruptions for which we may be inadequately insured or not insured.

Our operations are subject to operational hazards and unforeseen interruptions such as natural disasters, adverse weather, accidents, fires, explosions, hazardous materials releases, mechanical failures and other events beyond our control. These events might result in a loss of equipment or life, injury or extensive property damage, as well as an interruption in our operations. We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our results of operations and financial condition.

Growing our business by constructing new gathering systems, or expanding existing ones, subjects us to construction risks.

We plan to grow our business by constructing new gathering systems and by expanding existing ones. We have no material commitments for new construction or expansion projects as of the date of this prospectus. The construction of a new gathering system or the expansion of an existing gathering system, by adding  compressor stations or by adding a second gathering line along an existing gathering line, involves numerous regulatory, environmental, political and legal uncertainties, most of which are beyond our control. These projects may not be completed on schedule or at all, or at the budgeted cost. In addition, our revenues may not increase immediately upon the expenditure of funds on a particular project. For instance, if we build a new gathering system, the construction will occur over an extended period of time and we will not receive any material increases in revenues until after completion of the project.  This could adversely affect our results of operations and financial condition.

7

Restrictions in credit agreements may prevent us from engaging in some beneficial transactions.

As we make acquisitions or construct or expand gathering systems, we intend to enter into credit agreements with financial institutions to fund a portion of the capital requirements.  To obtain funds under credit agreements we may be required to accept additional operating restrictions which would impair or prevent us from future transactions we deem to be beneficial for our future growth.

Risks related to our common stock and the offering

The market price of our common stock has been volatile and difficult to predict, and may continue to be volatile and difficult to predict, and the value of your investment may decline.

The market price of our common stock has been volatile since trading commenced on April 12, 2005 and may continue to be volatile. The market price of our common stock will be affected by, among other things:

•      variations in our quarterly operating results;

•  changes in financial estimates by securities analysts;

•  changes in general conditions in the economy or the financial markets;

•  changes in accounting standards, policies or interpretations;

•  other developments affecting us, our industry, clients or competitors; and

•  the operating and stock price performance of companies that investors deem comparable to us.

Any of these factors could have a negative effect on the price of our common stock on the American Stock Exchange, make it difficult to predict the market price for our common stock and cause the value of your investment to decline.

We may be required to rescind the sale of up to $1,233,000 of stock if our private placement of Series C convertible preferred stock is deemed to have violated federal and state securities laws.

In December 2004 we received $1,233,000 from the sale of 411,000 shares of Series C convertible preferred stock. We paid no cash or other commissions or finders’ fees in connection with this offering. This placement might not have been eligible for an exemption from registration under the Securities Act of 1933.  In the absence of such an exemption, investors could bring suit against us to rescind their stock purchases, in which event we could be liable for rescission payments to these investors of up to $1,233,000, exclusive of interest and costs.

Issuance of additional preferred stock could discourage a change in control, reduce the market price of our common stock and result in the holders of preferred stock being granted voting rights that are superior to those of the holders of common stock.

We are authorized to issue preferred stock without obtaining the consent or approval of our stockholders. The issuance of preferred stock could have the effect of delaying, deferring, or preventing a change in control. Management also has the right to grant superior voting rights to the holders of preferred stock. Any issuance of preferred stock could materially and adversely affect the market price of the common stock and the voting rights of the holders of common stock. The issuance of preferred stock may also result in the loss of the voting control of holders of common stock to the holders of preferred stock.

Concentration of share ownership among our existing executive officers, directors and principal stockholders may prevent others from influencing significant corporate decisions.

Our executive officers and directors beneficially own approximately 16.5% of our outstanding common stock. These stockholders, acting together, will have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. This concentration of ownership could be disadvantageous to other stockholders with interests different from those of our officers, directors and principal stockholders.

8

Shares eligible for sale could cause our stock price to decline.

Our officers and directors who beneficially own 1,266,250 shares of common stock, including 168,750 shares issuable upon exercise of stock options, agreed not to sell their shares of common stock without the written consent of our underwriter for 15 months from the closing of our initial public offering on April 12, 2005.  Following the expiration of the lockup agreement with our underwriter, shares of our common stock held beneficially by our officers and directors will remain subject to holding period restrictions on sale or other transfer under Rule 144 of the Securities Act.  We registered the resale of 112,000 of these shares by a separate prospectus concurrent with our initial public offering; we are registering 971,500 of these shares through this prospectus, and plan to register the 168,750 shares underlying currently vested common stock options by September 30, 2005.

All other stockholders who beneficially own 4,077,500 shares of our common stock agreed with our underwriter not to sell their common stock for six months from the closing of our initial public offering.  All of these lockup agreements were subsequently terminated pursuant to minimum trading price clauses. We registered the resale of 3,838,000 of these shares by a separate prospectus concurrent with our initial public offering and are registering 239,500 shares through this prospectus.

We intend to register all common stock issuable upon the exercise of options granted under our equity compensation plan by September 30, 2005 so that these shares may also be freely traded.

Sales of a substantial number of the above shares of common stock after this offering could significantly depress the market price of our common stock.

9

Special Note Regarding Forward-Looking Statements

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and elsewhere in this prospectus.

Other sections of this prospectus may include additional factors which could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We undertake no obligation to update publicly or revise any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

10

Use of Proceeds

We will not receive any proceeds from the sale of the 1,211,000 shares of common stock offered by our selling stockholders.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We currently intend to retain future earnings to finance the operation, development and expansion of our business. We do not anticipate paying cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant.

Market For Our Common Stock

On April 12, 2005, our common stock commenced trading on the American Stock Exchange under the symbol ‘PRB’. The following table sets forth the range of high and low closing sale prices for our common shares, as reported by the American Stock Exchange for the period from April 12, 2005 to June 30, 2005.

As of June 30, 2005, there were approximately 48 record holders of our common stock (excluding individual participants in nominee security position listings). The closing price of our common stock as reported by the American Stock Exchange on August 1, 2005 was $8.75.

11

Selling Security Holders

This prospectus relates to 800,000 shares of common stock and 411,000 shares of common stock issuable to holders of 411,000 shares of our Series C convertible preferred stock.  We will not receive any proceeds from the sale of these securities.

The following tables set forth information regarding the shares of common stock owned beneficially as of March 31, 2005 by each selling security holder and assumes the conversion of all 411,000 shares of  convertible preferred stock into common stock. The selling security holders are not required, and may choose not, to sell any of their shares of common stock.

None of the selling security holders is an officer, director or other affiliate except as indicated below.

(1)          Calculated on the basis of 7,461,000 shares of common stock to be outstanding after the offering without giving effect to the exercise of warrants.

(2)          Individual is an officer, director or 5% or greater stockholder of our company.

12

Sale of Securities Described in this Prospectus

The sale of the securities described in this prospectus may be made from time-to-time in transactions, which may include block transactions by or for the account of the holders, in the over-the-counter market or in negotiated transactions through a combination of these methods of sale or otherwise. Sales may be made at fixed prices that may be changed, at market prices prevailing at the time of sale or at negotiated prices.

A post-effective amendment to the registration statement that includes this prospectus must be filed and declared effective by the Securities and Exchange Commission before a holder may:

•                  sell any securities described in this prospectus according to the terms of this prospectus either at a fixed price or a negotiated price, either of which is not at the prevailing market price;

•                  sell securities described in this prospectus in a block transaction to a purchaser who resells;

•                  pay compensation to a broker-dealer that is other than the usual and customary discounts, concessions or commissions; or

•                  make any arrangements, either individually or in the aggregate, that would constitute a distribution of the securities described in this prospectus.

Our officers and directors who beneficially own 1,252,500 shares of common stock, including 155,000 shares issuable upon exercise of stock options, agreed with our underwriter not to sell 1,238,500 shares of common stock for 15 months from the closing of our initial public offering on April 12, 2005 without the written consent of our underwriter.  Following the expiration of the lockup agreement with our underwriter, shares of our common stock held beneficially by our officers and directors will remain subject to holding period restrictions on sale or other transfer under Rule 144 of the Securities Act.  We registered the resale of 112,000 of these shares by a separate prospectus concurrent with our initial public offering and are registering 971,500 shares through this prospectus.

All other stockholders who beneficially own 4,077,500 shares of our common stock agreed with our underwriter not to sell their common stock for six months from the closing of our initial public offering.  All of these lockup agreements were subsequently terminated pursuant to minimum trading price clauses. We registered the resale of 3,838,000 of these shares by a separate prospectus concurrent with our initial public offering and are registering the 239,500 shares through this prospectus.

Sales of these securities may depress the price of the common stock in any market that may develop.

13

Selected Historical and Pro Forma Financial Data

The tables below present selected historical financial data of TOP Gathering, LLC, our predecessor, and our restated historical financial data and pro forma financial data with respect to the TOP and Bear Paw acquisitions, the latter restated for the year ended December 31, 2004, and the three months ended March 31, 2005, in each case for the periods and as of the dates indicated. We determined during June 2005 that we invoiced a customer (in respect to the Bear Paw acquisition) incorrectly for the period August 2004 through April 2005. We invoiced the customer the difference between the original invoices and the corrected invoices, approximately $304 thousand, in June 2005.  We collected the amount due from this customer during December 2005. As the Company was not previously able to determine if the $304 thousand that was invoiced to the customer during June 2005 was going to be paid or was collectible, the Company had not previously recognized the $304 thousand as revenue. As a result, we have restated our historical financial statements for the year ended December 31, 2004, and for the three months ended March 31, 2005, to include revenues of $162,450 and $105,450, respectively.

We have derived the summary historical financial data for the period from inception through December 31, 2001 and the years ended December 31, 2002 and 2003 from the predecessor audited financial statements of TOP that are included in this prospectus.

We have derived the summary historical financial data for the year ended December 31, 2004 from our restated audited financial statements that are included in this prospectus which include the operating results of the assets acquired from TOP from the January 1, 2004 acquisition date, and the restated operating results of the assets acquired from Bear Paw from the August 1, 2004 acquisition date. For additional information on this matter See Note 2 – Restatement of Results, on page F-11 of the restated Company financial statements for the year ended December 31, 2004, included herein.

We have derived the summary historical financial data for the three months ended March 31, 2005 and 2004 from our restated unaudited financial statements that are included in this prospectus. The operating results for 2005 include the operating results of the assets acquired from both TOP and Bear Paw. The operating results for 2004 include the operating results of the assets acquired from TOP from the January 1, 2004 acquisition date. For additional information on this matter See Note 2 – Restatement of Results, on page F-31 of the restated Company financial statements for the three months ended March 31, 2005, included herein.

We have derived the restated pro forma statement of operations data and other financial data from the restated pro forma financial statements that are included in this prospectus.  They are presented for the year ended December 31, 2004 and give effect to the Bear Paw acquisition as if it occurred as of January 1, 2004, including the effect of recording the invoice corrections noted above in the appropriate period in respect to the period January 1, 2004 through July 31, 2004.  For additional information on this matter see Note 2 – Restatement of Results, on page F-59 of the restated pro forma financial statements included herein.

In the tables below we present restated earnings before interest, taxes, depreciation and amortization, or EBITDA.  EBITDA is a financial measure which we use in our business but that is not calculated and presented in accordance with generally accepted accounting principles, or GAAP. See disclosure regarding “Non-GAAP Financial Measure” to “Selected Historical and Pro Forma Financial Data” for a definition of EBITDA and a reconciliation of EBITDA to our income and cash flows from operating activities.

The following tables should be read together with, and are qualified in their entirety by reference to, the historical and pro forma financial statements and the accompanying notes included elsewhere in this prospectus. The tables should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

14

Selected Historical and Pro Forma Financial Data

Statement of operations data

(1)   Excludes all shares of common stock issuable upon conversion of our preferred stock to common stock.

(2)   For a definition of EBITDA and a reconciliation of EBITDA to our income (loss) and cash flows from operating activities, see “Selected Historical and Pro Forma Financial Data - Non-GAAP Financial Measure.”

(3)   In June 2005 we determined that we incorrectly invoiced a customer for the period August 2004 to April 2005. The contract with this customer was acquired as part of our acquisition of the Bear Paw gas gathering system in August 2004. In June 2005, we invoiced the customer for the difference between the original invoices and the corrected invoices. The customer paid the difference due in December 2005 of approximately $304 thousand. As the Company was not previously able to determine if the $304 thousand that was invoiced to the customer during June 2005 was going to be paid or was collectible, the Company had not previously recognized the $304 thousand as revenue. We have restated our financial statements for the year ended December 31, 2004 and the three months ended March 31, 2005 to include the additional revenue of $162,450 and $105,450, respectively that was collected in December 2005.

15

Balance sheet data

The following table summarizes our unaudited audited balance sheet as of March 31, 2005 on an:

•                       actual basis; and

•                       as adjusted basis to reflect net cash proceeds of $10,752,373 from the sale of 2,300,000 shares of common stock at $5.50 per share in connection with our April 12, 2005 initial public offering, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, and the retirement of the $1,500,000 bank line of credit.

(1)                          See note (3) under “Statement of Operations Data.”

Non-GAAP financial measure

EBITDA is a supplemental financial measure used by our management to conduct and evaluate our business.  We define EBITDA as earnings before interest expense, income taxes, depreciation and amortization.  This definition may not be comparable to similarly titled measures reported by other companies. We are presenting EBITDA because it provides an additional way to view our operations, when considered with both our GAAP results and the reconciliation to net income (loss), which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. EBITDA is presented solely as a supplemental disclosure because we:

•                  believe it is a useful tool for investors to assess the operating performance of our business without the effect of non-cash depreciation and amortization expenses;

•                  believe that investors will find it useful in assessing our ability to service existing or incur additional indebtedness; and

•                  use EBITDA internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of EBITDA has limitations and you should not consider EBITDA in isolation from or as an alternative to GAAP measures such as net income and cash flows.

Our operations are capital intensive, and depreciation and amortization are unavoidable, material costs of doing business.  By eliminating these measures, EBITDA has material limitations as a measure of our performance.

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The following table presents a reconciliation of EBITDA to the most directly comparable GAAP financial measures on a historical basis for each of the periods indicated.

Reconciliation of EBITDA to net income (loss)

(1)                          See note (3) under “Statement of Operations Data.”

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of the financial condition and results of operations in conjunction with the financial statements of TOP, Bear Paw and our historical and pro forma financial statements included elsewhere in this prospectus. Among other things these historical and pro forma financial statements include more detailed information regarding the basis of presentation for the following information. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed in “Risk Factors” and elsewhere in this prospectus.

Overview

We own and operate natural gas gathering systems in the Powder River Basin of Wyoming.  We commenced operations in January 2004 upon our acquisition of certain operating assets of TOP Gathering, LLC (“TOP”).  In August 2004 we acquired certain operating assets of Bear Paw Energy, LLC. (“BPE”) which are located in the same area of Wyoming as the TOP assets.  These assets include two gathering systems, two delivery lines and related land leases and gas gathering and transportation agreements.   We charge a fee for gathering, compressing and dehydrating natural gas.  Our gathering systems collect gas at a producer’s wellhead or at a collection point and deliver it to a transmission line owned by a third party.  To date we have not taken ownership of gas that we gather.

Natural gas wells in the Powder River Basin area typically experience sharp declines in production volume in the first several years of production.  Production then stabilizes and declines more ratably over a gas well’s average life of approximately eight to 10 years.  The majority of the wells serviced by our TOP and Bear Paw gathering systems have reached a stable decline phase of production.  We believe that undeveloped reserves in the fields serviced by these systems may provide additional production that could offset future declines and possibly exceed current gas production.

We plan to expand our present operations by:

•                  enhancing the present gathering systems through operating efficiencies and expanding to servicing additional wells within these systems;

•                  designing and building new gathering systems;

•                  acquiring existing gathering systems;  and

•                  acquiring working interests in properties in areas where there are opportunities to build new gathering systems.

In July 2005, we entered into a letter of intent, subject to a definitive agreement, to develop coal bed methane properties in an area of mutual interest in Wyoming and Montana with Enterra Energy Trust (“Enterra”).  Under the venture, we will have the right to earn up to a 50% working interest in certain properties of Enterra’s recently acquired subsidiary, Rocky Mountain Gas (“RMG”).

Under the terms of the proposed agreement,  we may expend up to $21.8 million by August 31, 2007 to acquire, drill and develop coal bed methane properties, including the RMG properties, in the area of mutual interest.  For any RMG properties we develop or any new properties we acquire within the area of mutual interest, PRB and Enterra will each own a 50% working interest.  Upon the expenditure of the $21.8 million, we will earn a 50% interest in all of the RMG properties as defined in the agreement.   We plan to operate the properties in the area of mutual interest.  By funding the drilling on this acreage, we will also have the opportunity to gather the production on all properties except those currently dedicated to other gatherers. Our cash on hand is sufficient to fund planned expenditures through the end of 2005.  We are currently evaluating various sources of financing to fund future spending.

We currently have no agreements for the design of new systems or the acquisition of existing systems.  In general, our acquisition and building criteria focus on the estimated recoverable reserves remaining behind a system and the likelihood of the producers’ continued development of those reserves.

On April 12, 2005, we completed our initial public offering of 2,300,000 shares of common stock (including the underwriter’s over-allotment option of 300,000 shares) at $5.50 per share and commenced trading on the American Stock Exchange under the trading symbol ‘PRB.’  We received proceeds of $11,273,100 net of underwriter’s discounts, commissions and expenses at closing on April 15, 2005.  Additional costs of the offering, including warrants valued at $583,215,  totaled $1,103,942 at June 30, 2005.

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Also in April 2005, all of our Series A and B preferred shareholders converted their 3,950,000 shares of preferred stock into an equal number of shares of common stock.

At June 30, 2005, we have 7,050,000 shares of common stock outstanding.

Financial operations overview

Our systems gather natural gas for independent natural gas companies in the Powder River Basin area of Wyoming.  Our commercial operations commenced in January 2004 with the TOP acquisition.  We expanded our commercial operations in August 2004 with the Bear Paw acquisition.

The analysis of the results of operations for the three months ended March 31, 2005 reflect the operating results of the assets acquired from both TOP and Bear Paw. The operating results for the comparable period in 2004 include the operating results of the assets acquired from TOP from the January 1, 2004 acquisition date. The analysis of the results of operations for the three years ended December 31, 2003 reflects the pre-acquisition operations of TOP and Bear Paw.  We have included a separate analysis of the results of operations for the gas gathering systems we acquired from Bear Paw for the three years ended December 31, 2003 and for the unaudited seven months ended July 31, 2004 which precede our August 1, 2004 acquisition date.  The analysis of the results of operations for the year ended December 31, 2004 reflects our operations and include the results of the acquired TOP operations from January 1, 2004 and the results of the Bear Paw operations from August 1, 2004.

While we do not discuss our pro forma financial statements below, these statements, and the assumptions made therein, are presented in the unaudited pro forma financial statements included elsewhere in this prospectus. You should review our pro forma financial statements more fully to understand our results of operations.

In June 2005 we determined that we incorrectly invoiced a customer for the period August 2004 to April 2005. The contract with this customer was acquired as part of our acquisition of the Bear Paw gas gathering system in August 2004. In June 2005 we invoiced the customer for the difference between the original invoices and the corrected invoices. The customer paid the difference due in December 2005, approximately $304 thousand. As the Company was not previously able to determine if the $304 thousand that was invoiced to the customer during June 2005 was going to be paid or was collectible, the Company had not previously recognized the $304 thousand as revenue. We have restated our financial statements for the year ended December 31, 2004 and for the three months ended March 31, 2005, to include the additional revenue of $162,450 and $105,450, respectively that were collected in December 2005. We also determined that Bear Paw (the previous owner) also had incorrectly invoiced this customer similarly. Accordingly, we have also restated the pro forma financial statements included herein to include the difference between what Bear Paw invoiced the customer and what could have been invoiced under the contract of approximately $115 thousand for the seven months ended July 31, 2004, through a pro forma adjustment.

Nature of revenues  The amount of revenue we generate will primarily depend on the level of the fees we charge for gathering and the amount of throughput in our pipelines.  Gathering fees are determined by negotiation with the producers or shippers involved.  Our fees are not regulated by any governmental authority.  To date, we have not taken ownership of the gas that we gather.

As of March 31, 2005, we have 13 customers, one of which represents 10% or more of our revenues for the three months ended March 31, 2005.   Some of our customers may be highly leveraged and subject to their own operating and regulatory risks.  If our key customer defaults on their obligations to us, our financial results would be adversely affected.

We have two types of gathering contracts.  Seven of our contracts are currently on a volume only basis where we charge a set fee per thousand cubic feet, or Mcf, of gas gathered. The rates for these contracts vary from approximately $0.37 per Mcf to $0.70 per Mcf, with those below $0.53 per Mcf accounting for less than 3.1% of our revenues for the three months ended March 31, 2005.  One of the producers covered by this type of contract is currently directing its gas to another gathering system.  The balance of our gathering contracts are a combination of a $0.12 per Mcf fee based on volume and an additional fee for each compressor used on the system.  These compression fees are allocated to each producer on the system based on its individual usage volumes and the total usage volumes of gas passing through the system.  In March 2005 the gathering fees under this type of contract ranged from approximately $0.73 per Mcf to $0.84 per Mcf.  These fees will vary monthly depending on the producers’ individual production and the system’s total throughput.  Amounts earned under two of the volume only contracts were classified as related party revenue in 2004 as they were received from a company whose majority shareholder was a shareholder of PRB until September 30, 2004.

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Two of our contracts have thresholds which provide for a reduction in rates.  We assumed a gas gathering contract that commenced in October 2001 to gather and deliver gas for a related party for $0.89 per Mcf until such time as we received a total of 4.5 billion cubic feet, or Bcf, of gas from the shipper.  Thereafter, the transportation fee will be reduced $0.05 for every 5 Bcf of gas received.  The first threshold was reached in June 2004 and accordingly the rate was reduced to $0.84 per Mcf effective July 1, 2004. We estimate that the next threshold will not be reached for at least 10 years. The contract remains in effect as long as our gathering facility remains profitable.  In the event the contract is unprofitable for us, we may terminate the contract with 30 days written notice.  Revenues generated under this contract during the three months ended March 31, 2005 were $67,111.

In addition, we assumed a 10-year gas gathering contract commencing in September 2002 to gather and deliver gas for an unrelated third party for $0.58 per Mcf until such time as the shipper has delivered two Bcf.  Thereafter, the gathering fee will be reduced to $0.52 per Mcf. We reached this threshold in June 2005. After the initial term, either party may terminate the contract with 30 days written notice.  Revenues generated under this contract during the three months ended March 31, 2005 were $63,952.

Gas gathering throughput in our systems is directly affected by the decline rate of the producers’ natural gas reserves.  The effect of this decline rate can be offset by extension of the gathering system to additional fields and our customers’ further development of their fields.  If a decline in demand for natural gas leads to reduced maintenance and development by our customers, it may adversely affect their production and our throughput. The throughput in our systems is not materially affected by seasonality.

Operating expense  Operating expenses include compression, operating agreement expense, site supervision costs, maintenance and operating supplies, property taxes, insurance, land use and surface rights payments and contract services, all of which are relatively fixed costs. Operating expenses also include transportation fees paid to others which vary with the throughput on our gathering lines.

Depreciation and amortization expense  Depreciation and amortization expense relates principally to the depreciation of the gathering systems and related contracts.  These assets are depreciated or amortized over estimated useful lives.

General and administrative expense  General and administrative expense includes compensation expense, professional fees and corporate overhead. We have substantially increased salaried positions and overhead to prepare for the planned expansion of operations. We expect that initially these costs as a percentage of revenue will be higher than desired due to our only recently commencing operations, but as revenue increases we expect these costs to fall within industry ranges.

Interest expense   Interest expense for historical TOP (predecessor) operations relates to a $300,000 note with interest at 7% per annum which we did not acquire when we purchased the gathering system and related assets.

At September 30, 2004 we had a $1,944,480, 8% note payable to Bear Paw which we repaid in full in December 2004.  In addition, we entered into a $800,000 short-term note payable on October 1, 2004 with interest at 12% per annum.  This note was repaid in full in December 2004.  In conjunction with the repayment of these notes, we entered into a $1,750,000 bank line of credit in December 2004 and borrowed $1,500,000 thereunder with fluctuating interest at the JPMorgan Chase Bank prime rate per annum.  The annual interest rate was 5.25% and 5.75% at December 31, 2004 and March 31, 2005, respectively. This bank line of credit matured the earlier of May 31, 2005 or within three days following the funding of the initial public offering and was secured by all of our gathering assets and a pledge of a $1,000,000 certificate of deposit by a preferred stockholder.  In consideration for this $1,000,000 pledge, we agreed to pay the preferred stockholder a monthly fee of 0.529% until the bank line of credit was retired and the pledge was released.

Following the payment of the bank line of credit in full in April 2005, the bank released their security interest in our gathering assets and the $1,000,000 certificate of deposit pledged by a preferred stockholder.

We intend to utilize commercial financing when available to support our acquisition and development efforts although we have no such debt at this time.  Interest rate risk exists principally with respect to any future indebtedness that will likely bear interest at floating rates.

Preferred dividend  In January 2004 we issued 2,400,000 shares of Series A 10% convertible preferred stock which pay a 10% annual dividend on a quarterly basis.  Quarterly dividends on this series of preferred stock amount to $125,000.

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In May 2004 we issued 1,550,000 shares of Series B 5% convertible preferred stock which pay a 5% annual dividend on a quarterly basis.  Quarterly dividends on this series of preferred stock amount to $58,125.

In December 2004 we issued 411,000 shares of non-dividend bearing Series C convertible preferred stock at $3.00 per share which are convertible into an equal number of shares of common stock.  For accounting purposes the difference between the share price of $3.00 and $5.50, the offering price per share in our recent initial public offering, is deemed to be compensation to our executive officers and other interested parties, and a deemed dividend to other investors. We recorded deemed compensation expense of $440,750 and a deemed dividend of $586,750 in connection with the issuance of the Series C preferred stock in December 2004.

Holders of all our Series A and Series B preferred stock converted to common stock in April 2005.  All holders of our Series C preferred stock have advised us that they intend to convert their preferred stock to common stock upon the effectiveness of the registration statement of which this prospectus is a part.

Income tax expense  Our predecessor, TOP Gathering, LLC, was organized as a limited liability corporation and was not subject to tax at the company level.  We are subject to federal and state taxation at the corporate level.

Critical accounting policies

Our discussion and analysis of our financial condition and results of operations and those for TOP and Bear Paw are based upon financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions. We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.

Revenue recognition

We recognize revenue in the period that the gas gathering and transportation services are provided.  Our gas gathering and transportation contracts specify the rate that can be charged on a basis of cents per thousand cubic feet or Mcf of natural gas.  Each contract has a separately negotiated rate and terms may vary. Certain of our contracts include separate charges for compression in addition to a transportation fee.  Our revenues will increase or decrease in direct proportion to gas volume delivered over our system. There are measurement points throughout each gathering system which enable the gas to be accurately measured and allocated back to either different operators or wells.

Long-lived assets

We calculate depreciation and amortization based on estimated useful lives and salvage values of our assets. When assets are placed into service, we make estimates with respect to their useful lives that we believe are reasonable. However, factors such as competition, regulation or environmental matters could cause us to change our estimates, thus impacting the future calculation of depreciation and amortization. We evaluate long-lived assets for potential impairment by identifying whether indicators of impairment exist and, if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss, if any, to be recorded is equal to the amount by which a long-lived asset’s carrying value exceeds its fair value. Estimates of future undiscounted cash flows and fair value of assets require subjective assumptions with regard to future operating results and actual results could differ from those estimates. We recorded no impairments of long-lived assets during the year ended December 31, 2004 or the three months ended March 31, 2005 (unaudited).

Abandonment liability

We follow Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations”.  The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of facilities was recorded as of the effective date of the TOP acquisition.  The net estimated costs were discounted to present values using a risk adjusted rate over the estimated economic life of the compressor site.  Such costs were capitalized as part of the cost of the related asset and amortized.  The associated liability is classified as a long-term liability and is adjusted when circumstances change and for the accretion of expense which is recorded as a component of depreciation and amortization.  We have not yet recorded an asset retirement obligation in conjunction with the assets acquired from Bear Paw because sufficient information to make a reasonable estimate of the fair value of the liability is not available.

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Stock-based compensation

We account for employee stock options using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and provide pro forma disclosures of net income (loss) as if a fair value method had been applied in measuring compensation expense. Stock compensation expense, which is a non-cash charge, is measured as the excess, if any, of the fair value of our underlying common stock at the date of grant over the amount an employee must pay to acquire such stock. This compensation cost is amortized over the related vesting periods, generally four years, using an accelerated method.  See “Recent accounting pronouncements”.

Contingencies

In the future, we may be subject to adverse proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We will be required to assess the likelihood of any adverse judgments or outcomes of these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to developments in each matter or changes in approach such as a change in settlement strategy in dealing with these potential matters.

Results of operations

The results of operations for PRB for the year ended December 31, 2004, for the restated unaudited three month periods ended March 31, 2005 and 2004, and for TOP, its predecessor, for the period from inception through December 31, 2001, the years ended December 31, 2002 and 2003 are discussed together below.  The results of operations for the Bear Paw operations for the three years ended December 31, 2003, and the unaudited seven month period ended July 31, 2004 preceding our August 1, 2004 acquisition date, are discussed separately below.

PRB operations

Three months ended March 31, 2005 (unaudited) compared to the three months ended March 31, 2004 (unaudited)

Revenues  Gas gathering revenues were $841,057 for the three months ended March 31, 2005 compared with $398,911 for the three months ended March 31, 2004, an increase of $442,146  or 110.8%.  Revenues from the Bear Paw systems of $708,125 are included in the revenues for the three months ended March 31, 2005 and offset the decrease of $265,979, or 66.6%, experienced for the TOP system.  The TOP decrease was primarily attributable to lower natural gas volumes processed through the gathering system by existing producers and the redirection of one of our producer’s gas to another gathering system.

Operating expenses  Operating expenses totaled $490,792 for the three months ended March 31, 2005 compared with $218,770 for the three months ended March 31, 2004, an increase of $272,022, or 124%. Bear Paw operating expenses of $326,411 are included in operating expenses for the three months ended March 31, 2005.  The decrease for this period excluding the Bear Paw expenses is $54,390, or 24.8%. Approximately $20,290 of this decrease is attributable to a reduction in the number of compressors leased and approximately $49,260 is due to a decrease in gas transportation fees paid based on the lower gas volumes.  These decreases were offset by an increase in property tax of $13,125. We reduced the number of compressors utilized due to the lower natural gas volumes being produced.

Depreciation and amortization Depreciation and amortization totaled $277,454 for the three months ended March 31, 2005 compared with $83,636 for the three months ended March 31, 2004, an increase of $193,818, or 232%.  Bear Paw depreciation and amortization expenses of $191,164 are included in depreciation and amortization expenses for the three months ended March 31, 2005.  The actual increase for this period excluding the Bear Paw expenses is $2,654, or 3.1%, which is attributable to depreciation on office furniture and equipment.

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General and administrative expenses  General and administrative expenses totaled $261,502 for the three months ended March 31, 2005 compared with $88,955 for the three months ended March 31, 2004, an increase of $172,547, or 194%. The increase was primarily due to the hiring of professional management and staff that were necessary for operations.  Approximately $106,298 of the increase is attributable to payroll and related expense and approximately $36,150 is attributable to professional and consulting fees.  There was also an increase in rent of approximately $8,400 and an increase in fees related to being a public company of $8,250.

Year ended December 31, 2004 (PRB) compared to year ended December 31, 2003 (TOP predecessor operations)

The results of operations for the year ended December 31, 2003 are derived from the audited financial statements of TOP and the results of operations for the year ended December 31, 2004 are derived from our restated audited financial statements.

Revenues  Gas gathering revenues were $2,531,686 for the year ended December 31, 2004 compared with

$1,998,960 for the year ended December 31, 2003, an increase of $532,726, or 27%.  Revenues from the Bear Paw systems of $1,310,926 are included effective August 1, 2004 and offset the decrease of $778,200, or 39% experienced for the TOP systems.  The TOP decrease was primarily attributable to lower natural gas volumes processed through the gathering system by existing producers.  An additional producer began delivering gas to the system at the end of 2003 which offset some of the decline in 2004.

The decline rates for the all of our systems are consistent and predictable for the age and nature of the wells and meet what we consider to be a stable decline rate.

Operating expenses  Operating expenses totaled $1,314,392 for the year ended December 31, 2004 compared with $1,221,983 for the year ended December 31, 2003, an increase of $92,409, or 8%. Included in operating expenses for the year ended December 31, 2004 are five months of Bear Paw operating expenses which total $493,378.  The decrease for this period excluding the Bear Paw expenses is $400,969, or 33%. Approximately $366,700 of this decrease is attributable to a reduction in the number of compressors leased and approximately $124,750 is due to a decrease in gas transportation fees paid based on the lower gas volumes.  We reduced the number of compressors utilized due to the lower natural gas volumes being produced.  Offsetting this decrease was an increase of approximately $90,500 due to the reclassification of repairs and maintenance, water hauling, site supervision, property insurance, property tax and other expenses previously classified as general and administrative expense by TOP to operating expense classification for PRB financial statements.

Depreciation and amortization Depreciation and amortization totaled $655,763 for the year ended December 31, 2004 compared with $521,945 for the year ended December 31, 2003, an increase of $133,818, or 26%.  Included in depreciation and amortization expenses for the year ended December 31, 2004 are five months of Bear Paw depreciation and amortization expenses which total $318,606.  The actual decrease for this period excluding the Bear Paw expenses is $184,788, or 35%.  This decrease relates primarily to the differences in the estimated useful lives and depreciable bases of the assets under the different owners.

General and administrative expenses  General and administrative expenses totaled $1,183,831 for the year ended December 31, 2004 compared with $155,554 for the year ended December 31, 2003, an increase of $1,028,277, or 661%. The increase was primarily due to the hiring of professional management and staff that were not required for the predecessor TOP operations.  Approximately $439,300 of the increase is attributable to payroll and related expense, $440,750 was deemed compensation expense resulting from the purchase of 176,300 Series C shares by officers and other interested parties, and approximately $122,000 is attributable to professional and consulting fees.

TOP predecessor operations - Year ended December 31, 2003 compared to year ended December 31, 2002

Revenue  TOP revenues were $1,998,960 for the year ended December 31, 2003 compared with $2,097,262 for the year ended December 31, 2002, a decrease of $98,302, or 5%.  The decrease was the result of a combination of factors. One of the producers serviced by TOP had a decline in throughput of 39%. This decrease was offset by an increase in another producer’s volumes as well as the addition of a new producer but these higher volumes had a lower contracted gathering rate.

Operating expenses Operating expenses totaled $1,221,983 for the year ended December 31, 2003 compared with $1,536,914 for the year ended December 31, 2002, a decrease of $314,931 or 21%.  The decrease was attributable to an approximately $337,500 reduction in costs associated with a terminated compressor lease which was offset by an increase in gas transportation fees of approximately $22,500 due to increased gas throughput.

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Depreciation and amortization Depreciation and amortization totaled $521,945 for the year ended December 31, 2003 compared with $1,044,340 for the year ended December 31, 2002, a decrease of $522,395, or 50%.  This decrease was primarily due to the write-off in 2002 of approximately $520,000 in assets associated with an anticipated reduction in compressors.

General and administrative expenses  General and administrative expenses totaled $155,554 for the year ended December 31, 2003 compared with $143,247 for the year ended December 31, 2002, an increase of $12,307 or 9%. The increase was primarily due to increased costs for accounting and legal expenses associated with an audit and preparation of sale documents.

TOP predecessor operations - Year ended December 31, 2002 compared to period from inception through December 31, 2001

Revenues  TOP revenues were $2,097,262 for the year ended December 31, 2002.  As the TOP system was constructed in late 2001 and began operations in February 2002, there were no revenues in 2001.   The system serviced two producers during 2002, with one producer being responsible for approximately 94% of the throughput.

Operating expenses  Operating expenses totaled $1,536,914 for the year ended December 31, 2002. Compression lease expense was approximately $1,207,000 with the balance made up of gas transportation fees.  There was minimal expense of $2,269 recorded in 2001.

Depreciation and amortization  Depreciation and amortization totaled $1,044,340 for the year ended December 31, 2002.   This included the write-off of some assets related to the anticipated reduction in compression of approximately $520,000.

General and administrative expenses  General and administrative expenses totaled $143,247 for the year ended December 31, 2002.  This included payroll expense of approximately $63,000, insurance expense of approximately $32,000 and other corporate overhead items.  There was no general and administrative expense recorded in 2001.

Bear Paw Energy, LLC - Gap, Bone Pile, Antelope Valley and South Kitty operations

We have included a separate analysis of the results of operations for the gas gathering systems we acquired from Bear Paw for the three years ended December 31, 2003 and for the unaudited seven months ended July 31, 2004 and July 31, 2003 which precede our August 1, 2004 acquisition date. The gas gathering systems we acquired from Bear Paw were not operated as a separate division or company.  Accordingly, the financial statements included in this prospectus for these systems only include revenues of the acquired systems and related direct operating expenditures.