EXHIBIT 5.1

                  [Letterhead of Gibson, Haglund & Johnson]

June 25, 1999

Board of Directors
Pennaco Energy, Inc.
1050 17th Street, Suite 700
Denver, Colorado  80265

Gentlemen:

                   We have acted as counsel to Pennaco Energy, Inc., a Nevada
corporation (the "Company"), in connection with the preparation and filing
with the Securities and Exchange Commission (the Commission") under the
Securities Act of 1933, as amended (the Act"), of the registration statement
on Form S-8 filed by the Company with the Commission on June , 1999 (the
Registration Statement"), with respect to the offering and sale by the
Company of up to 4,500,000 shares (the Shares") of the Company's common
stock, par value $.001 per share, in connection with the Pennaco Energy, Inc.
Stock Option and Incentive Plan (the "Plan").

                   In arriving at the opinion expressed below, we have
examined the Company's Articles of Incorporation and By-Laws, each as amended
to date, the Registration Statement, and the originals or copies certified or
otherwise identified to our satisfaction of such other instruments and other
certificates of public officials, officers and representatives of the Company
and such other persons, and we have made such investigations of law, as we
have deemed appropriate as a basis for the opinions expressed below.

                   Based on the foregoing, and subject to the limitations and
exceptions set forth below, it is our opinion that the Shares will, when
issued and paid for in accordance with the terms of the Plan, be duly
authorized, validly issued, fully paid and nonassessable.

                   For the purposes of the opinion expressed above, we have
assumed that the Registration Statement, and any amendments thereto (including
post-effective amendments), will have become effective.

                   We express no opinion other than as to the federal laws of
the United States of America and the Nevada General Corporation laws. We
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this firm in the prospectus forming part of
the Registration Statement. This opinion is rendered solely for your benefit
in connection with the above matter and may not be relied upon in any manner
by any other person or entity without our express written consent.

                                                    Very truly yours,

                                                    GIBSON, HAGLUND & JOHNSON

                                                    by:  /s/  Gregory V. Gibson
                                                        ------------------------
                                                     Gregory V. Gibson