ii 080003952 vvvvvv - virginia department of mines ...1 ii 080003952 vvvvvvftithhaz omi a instrument...

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1 II 080003952 ftIThhAZ OM Vvvvvv i a INSTRUMENT PREPARED BY VIRGINIA: ! ORDER RECORDED UNDER CODE OP VIRGMA SECTION 4i)-36126 BEFORE THE VIRGINIA GAS AND OIL BOARD APPLICANT: RELIEF SOUGHT: 84)uitable Production Company POOLING OF INTERESTS IN A 68.69 ACRE SQUARE DRILLING UNIT DESCRIBED IN EXHIBIT A HERETO LOCATED IN THE MORA COAL BED GAS FIELD AND SERVED BY WELL NO. VC-536635 (herein "Subject Drilling Unit" ) PURSUANT TO VA. CODE 68 45.1-361.21 AND 45.1-361.22, FOR THE PRODUCTION OF OCCLUDED NATURAL GAS PRODUCED FROM COALBEDS AND ROCK STRATA ASSOCIATED THEREWITH (herein "Coalbed Methane Gas" or "Gas") VIRGINIA GAS AND OIL BOARD DOCKET NO. VGOR-08/08/19-2305 LEGAL DESCRIPTION: SUBJECT DRILLING UNIT SERVED BY WELL NUMBERED VC-536635 (herein "Well" ) TO BE DRILLED IN THE LOCATION DEPICTED ON EXHIBIT A HERETO, Range Resource)a-Pine Mountain Inc. Tract TB"42 Prater Prater DISTR IAL DISTRICT Buohanah, VIRGINIA (the "Subject Lands" are more particularly described on Exhibit A, attached hereto and made a part hereof) REPORT OF THE BOARD FINDINGS AND ORDER 1. Hearing Date and Place: This matter came on for hearing before the Virginia Gas and Oil Board (hereafter "Board" ) at 9:00 a.m. on August lg, 2008 Southwest Higher Education Center, Campus of Virginia Highlands Community College, Abingdon, Virginia. 2. Appearances: James R. Kaiser of Wilhoit and Kaiser, appeared for the Applicant.

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Page 1: II 080003952 Vvvvvv - Virginia Department of Mines ...1 ii 080003952 vvvvvvftithhaz omi a instrument prepared by virginia:! order recorded under code op virgma section 4i)-36126 before

1

II

080003952ftIThhAZ OMVvvvvv i a

INSTRUMENT PREPARED BY

VIRGINIA:!

ORDER RECORDED UNDER CODEOP VIRGMA SECTION 4i)-36126

BEFORE THE VIRGINIA GAS AND OIL BOARD

APPLICANT:

RELIEF SOUGHT:

84)uitable Production Company

POOLING OF INTERESTS IN A 68.69ACRE SQUARE DRILLING UNITDESCRIBED IN EXHIBIT A HERETOLOCATED IN THE MORA COAL BED GAS

FIELD AND SERVED BY WELL NO.VC-536635 (herein "Subject DrillingUnit" ) PURSUANT TO VA. CODE

68 45.1-361.21 AND 45.1-361.22,FOR THE PRODUCTION OF OCCLUDED

NATURAL GAS PRODUCED FROM COALBEDSAND ROCK STRATA ASSOCIATEDTHEREWITH (herein "Coalbed MethaneGas" or "Gas")

VIRGINIA GAS

AND OIL BOARD

DOCKET NO.VGOR-08/08/19-2305

LEGAL DESCRIPTION:

SUBJECT DRILLING UNIT SERVED BY WELL NUMBEREDVC-536635 (herein "Well" ) TO BE DRILLED INTHE LOCATION DEPICTED ON EXHIBIT A HERETO,Range Resource)a-Pine Mountain Inc.Tract TB"42PraterPrater DISTR IAL DISTRICTBuohanah, VIRGINIA(the "Subject Lands" are moreparticularly described on Exhibit A,attached hereto and made a part hereof)

REPORT OF THE BOARD

FINDINGS AND ORDER

1. Hearing Date and Place: This matter came on for hearing beforethe Virginia Gas and Oil Board (hereafter "Board" ) at 9:00 a.m. on August lg,2008 Southwest Higher Education Center, Campus of Virginia HighlandsCommunity College, Abingdon, Virginia.

2. Appearances: James R. Kaiser of Wilhoit and Kaiser, appeared forthe Applicant.

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3. Jurisdiction and Notice: Pursuant to Va. Code 5545.1-361.1 et~se ., the Board finds that it has jurisdiction over the subject matger.Based upon the evidence presented by Applicant, the Board also finds that theApplicant has (1) exercised due diligence in conducting a meaningful searchof reasonably available sources to determine the identity and whereaboutz ofeach gas and oil ogner, coal owner, or mineral owner and/or potential owBer,i.e., person idenltified by Applicant as having («Owner«) or claiBing(«Claimant«) the rights to Coalbed Methane Gas in all Pennsylvania-aged coalsfrom the top of the Raven, including all splits to the top of the green andred shales including, but not limited to Jawbone, Greasy Creek, MiddleHorsepen, C-Seam, War Creek, Lower Hcrsepen, X-Seam, Poco 9, Poco 7, Poco 3,Poco 2, and any othlzr unnamed coal seams, coalbeds and rock strata associatedtherewith (hereafter "Subject Formations" ) in the Subject Drilling Unitunderlying and comprised of Subject Lands; (2) represented it has givennotice to those parties so identified (hereafter sometimes "person(s)«whether referring to individuals, corporations, partnerships, associations,companies, businesses, trusts, joint ventures or other legal entities)entitled by Va. Cbde %5 45.1-361.19 and 45.1-361.22, to notice of theapplication filed hbrein; and (3) that the persons set forth in Bxldbit @-3hereto have been identified by Applicant as persons who may be Owners orClaimants of Coalbed Methane Gas interests in Subject 9'ormations in theSubject Drilling Unit who have not heretofore agreed to lease or sell to theApplicant and/or vcluntarily pool their Gas interests. Conflicting Gasowners/claimants in subject Drilling Unit are listed on Bmhibit B. Further,the Board has causmd notice of this hearing to be published as required byVa. Code 5 45.1-361.19.B.Whereupon, the Board hereby finds that the notitesgiven herein satisfy all statutory requirements, Board rule requirements andthe minimum standards of state due process.

4. Amendments: Revised Bxhibit«

5. Dismissals: NONB.

6. Relief Requested: Applicant requests (1) that pursuant to Va.Code 5 45. 1-361.22, including the applicable portions of 5 45.1-361.21, theBoard pool the righty, interests and estates in and to the Gas in the SubjectDrilling Unit, including those of the Applicant and of the known and unknOwnpersons named in Rgibit B-3 hereto and that of their known and unkncwnheirs, executcrs, ad)ninistrators, devisees, trustees, assigns and successofs,both izznediate and remote, for the drilling and operation, includfngproduction, of Coalbed Methane Gas produced from the Subject Drilling Unitestablished for the subject Formations underlying and comprised of theSubject Lands, (hereafter sometimes collectively identified and referred toaa «well development and/or operation in the subject Drilling Unit" ); and,(2) that the Board designate Bquitable Production Company as the UnitOperator.

7. Relief Gtanted: The requested relief in this cause shall be andhereby is granted and: (1) pursuant to va. code 5 45.1-361.21.c.3,Bqeitab().~Production Ccs)pamy (hereafter "Unit Operator" or "Operator" ) is designated asthe Unit Operator authorized to drill and operate the Mell in SubjeptDrilling Unit at the location depicted on the plat attached hereto as BxhibltA, subject to the permit provisions contained in va. code 5 45.1-361.27, gt~ee(.,; to 55 4 VAC 25-150 et ~se ., Gas and Oil Regulations; to 5 4 VAC 25-160

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et ~se ., Virginia Gas and Oil Board Regulations and to the Nore Coal Bed GasField Rules established by the Oil and Gas Conservation Board's Order ent8redMarch 26, 1989; all as amended from time to time; and (2) all the inter8stsand estates in and to the Gas in Subject Drilling Unit, including that of theApplicant, the Unit Operator and of the known and unknown persons listed onNXbibit 8-3, attached hereto and made a part hereof, and their known andunknown heirs, executors, administrators, devisees, trustees, assigns andsuccessors, both i'mmediate and remote, be and hereby are pooled in theSubject Formations in the 8ubject Formation in the Subject Drilling Unitunderlying and comprised of the Subject Lands.

Pursuant to the Nore Coal Field Rules promulgated under the authofityof Va. Code 8 45.1-361.20, the Board has adopted the following method for thecalculation of production and revenue and allocation of allowable costs forthe productiOn of Cealbed Methane Gas.

For Free Well Gas. — Gas shall be produced from and allocated to onlythe 68.69 acre drilling unit in which the well is located according tothe undivided interests of each Owner/Claimant within the unit, whjichundivided interest shall be the ratio (expressed as a percentage) thatthe amount of mineral acreage within each separate tract that is withinthe Subject Drilling Unit, when platted on the surface, bears to thetotal mineral acreage, when platted on the surface, contained withinthe entire 68.69-acre drilling unit in the manner set forth in the NbraField Rules.

8. Election and Election Period: In the event any Owner or Claimantnamed in Exhibit 8-3 has not reached a voluntary agreement to share in theoperation of the Well to be located in Subject Drilling Unit, at a rate ofpayment mutually agreed to by said Gas Owner or Claimant and the Applicant orthe Unit Operator, then such person may elect one of the options set forth inParagraph 9 below and must give written notice of his election of the optionselected under Paragraph 9 herein to the designated Unit Operator at theaddress shown below within thirty (30) days from the date of receipt of acopy of this Order. A timely election shall be deemed to have been made ff,on or before the last day of said 30-day period, such electing person hasdelivered his writteb election to the designated Unit Operator at the addr8ssshown below or has duly postmarked and placed his written election in firstclass United States mail, postage prepaid, addressed to the Unit Operator atthe address shown below.

9. Election Ontions:

9.1 Option 1 — To Participate In The Development and Operation of theDrillinc Unit: Any Gas Owner or Claimant named in Exhibit N-3who has not reached a voluntary agreement with the Applicant orUnit Opemator may elect to participate in the Well deveiopme)ntand operation in the Subject Drilling Unit (hereaftmr"Participating Operator" ) by agreeing to pay the estimate of suchparticipdting operator's proportionate part of the actual andreasonable costs, including a reasonable supervision fee, of theWell development and operation in the Subject Drilling Unit, asmore particularly set forth in Virginia Gas and Oil BoardRegulation 4 VAC 25-160-100 (herein "Completed for Production

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Costs" ). Further, a Participating Operator agrees to pay theestimate of such Participating Operator's proportionate part ofthe Estimated, Completed-for-Production Costs as set forth belowto the Unit Operator within forty-five (45) days from the laterof the date of mailing or the date of recording of this Order.The estimated Completed-for-Production Costs for the SubjectDrilling Unit are as follows:

Completed-for-Production Costs: 0017,300.00

Any gas owner and/or claimants named in Exhibit B-3, who electthis option (Option 1) understand and agree that their initialpayment under this option is for their proportionate share of hheApplicaht's estimate of actual costs and expenses. It is alsounderstood by all persons electing this option that they areagreeing to pay their proportionate share of the actual costs mndexpenses as determined by the operator named in this Board Order.

A Participating Operator's proportionate cost hereunder shall bethe result obtained by multiplying the participating operatca'"Intereat within Unit" as set forth herein in the attendEs(hibit B-3 times the Estimated Completed-for-Production Cobtsset forth above. provided, however, that in the event aparticipating operator elects to participate and fails or refusesto pay the estimate of his proportionate part of the Estimated,Completid-for-Production Costs as set forth above, all within thetime set forth herein and in the manner prescribed in Paragraph 8of this Order, then such Participating Operator shall be deeWmdto have elected not to participate and to have electedcompensation in lieu of participation pursuant to Paragraph 9.2herein.

9.2 Opticn 2 - To Receive A Cash Bonus Consideration: In lieu ofparticipating in the Well development and operation in Subj4ctDrilling Unit under Paragraph 9.1 above, any Gas Owner orClaimant named in Exhibit B-3 hereto who has not reached avoluntary agreement with the Unit Operator may elect to accept acash bonus consideration of 05.00 per net mineral acre owned bysuch perbon, commencing upon entry of this Order and continufngannually until commencement of production from Subject DrillingUnit, and thereafter a royalty of 1/8th of 8/Sths [twelve andone-half percent (12.5%)] of the net proceeds received by EheUnit Operator for the sale of the Gas produced from any Welldevelopment and operation covered by this Order multiplied bythat pereon's Interest Within Unit as set forth in Exhibit E-3(for purses of this Order, net proceeds shall be actualproceeds received less post-production costs incurred downstreamof the wellhead, including, but not limited to, gatheri+,compression, treating, transportation and marketing costa,whether [erformed by Unit Operator or a third person) as fair,reasonable and equitable compensation to be paid to said GasOwner or Claimant. The initial cash bonus shall become due abdowing when so elected and shall be tendered, paid or escrowadwithin one hundred twenty (120) days of recording of this Ordet.

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Thereafter, annual cash bonuses, if any, shall become due andowing o)n each anniversary of the date of recording of this orderin the event production from Subject Drilling Unit has nottheretofore commenced, and once due, shall be tendered, paid orescrowed within sixty (60) days of said anniversary date. Oncethe initial cash bonus and the annual cash bonuses, if any, areso paid or escrowed, said payment(s) shall be satisfaction infull for the right, interests, and claims of such electing peisonin and to the Gas produced from Subject Formation in the SubjectLands, except, however, for the 1/8th royalties due hereunder.

Subject to a final legal determination of ownership, the electionmade under this Paragraph 9.2, when so made, shall besatisfaCtion in full for the right, interests, and claims of muchelecting person in any well development and operation coveredhereby and such electing person shall be deemed to have andhereby does assign its right, interests, and claims in and to theGas produced from Subject Formation in the Subject Drilling Unitto the Applicant.

9.3. Option 3 - To Share In The Development And Operation As A Wbn-

Participating Person On A Cafried Basis And To Recel(veconsider)ation In Lieu of cash: In lieu of participating in ):heNell deVelopment and operation of Subject Drilling Unit un8erParagra+ 9.1 above and in lieu of receiving a cash bonusconsidefation under Paragraph 9.2 above, any Gas Owner orClaimant named in Nxhibit B-3 who has not reached a voluntsryagreement with the Unit Operator may elect to share in the w911developsmnt and operation in Subject Drilling Unit on a carr)edbasis (as a "Carried Well Operator" ) so that the proportionatepart of the Completed-for-Production Costs hereby allocable tosuch Carried Well Operator's interest is charged against sgchCarried Well Operator's share of production from Subject DrillingUnit. Such Carried Well Operator's rights, interests, and claimsin and to the Gas in Subject Drilling Unit shall be deemed 4ndhereby are assigned to the Unit Operator until the proceeds fromthe sale of such Carried Well Operator's share of production fromSubject Drilling Unit (exclusive of any royalty, excess :oroVerridiag royalty, or other non-operating or non cost-bearingburden reserved in any lease, assignment thereof or agree~trelating ther~to covering such interest) equals three hundredpercent (300%) for a leased interest or two hundred perce)nt(200%) fer an unleased interest (whichever is applicable) of s+hCarried Well Operator's share of the Completed-for-productipnCosts allocable to the interest of such Carried Well Operate(r.Any Gas Owner and/or Claimant named in Bxhibit B-3 who elecksthis optjon (Option 3) understands and agrees that Completed-fc)r-Productidn Costs are the Operator's actual costs for we)(ldevelops}nt and operation. When the Unit Operator recoups andrecovers from such Carried Well Operator's assigned interest theamounts provided i'r above, then, the assigned interest of suchCarried Well Operator shall automatically revert hack to sunhCarried Well Operator, and from and after such reversion, suchcarried Nell operator shall be treated as if it had participated

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initially under Paragraph 9.1 above; and thereafter, suchparticipating person shall be charged with and shall pay hisproportionate part of all further costs of such well developamntand operation.

Subject to a final legal determination of ownership, the electionmade under this Paragraph 9.3, when so made, shall besatisfaotion in full for the right, interests, and claims of Suchelecting person in any Well development and operation coveredhereby and such electing person shall be deemed to have andhereby does assign his right, interests, and claims in and to theGas produced from Subject Formation in the Subject Drilling Unitto the Applicant for the period of time during which its intelestis carried as above provided prior to its reversion back to suchelecting person.

10. Failure to Properly Elect: In the event a person named inSmhibit $-8 hereto has not reached a voluntary agreement with theApplicant or Unit Operator and fails to elect within the time, inthe manner, and in accordance with the terms of this Order, one ofthe alte+atives set forth in Paragraph 9 above for which hisinterest <plalifies, then such person shall be deemed to have electednot to participate in the proposed Well development and operation'., inSubject Drilling Unit and shall be deemed, subject to any fihallegal determination of ownership, to have elected to accept assatisfaction in full for such person's right, interests, and claimsin and to the Gas the consideration provided in paragraph 9.2 abovefor which its interest qualifies, and shall be deemed to have leaSedand/or assigned his right, interests, and claims in and to said gasproduced fz'om Subject Formation in Subject Drilling Unit to the UnitOperator. Persons who fail to properly elect shall be deemed tohave accepted the compensation and terms set forth herein atParagraph 9.2 in satisfaction in full for the right, interests, andclaims of such person in and to the Gas produced from SubjSctFormation uuderlying Subject Lands.

11. Default Bv Participating Person: In the event a person named inSxhibit B-3 elects to participate under Paragraph 9.1, but fails or refugesto pay, to secure the payment or to make an arrangement with the UnitOperator for the payment of such person's proportionate part of the estimafedCompleted-for-Production costs as set forth herein, all within the time andin the manner as prfscribed in this Order, then such person shall be decriedto have withdrawn hl.s election to participate and shall be deemed to haveelected to acCept as satisfaction in full for such person's right, interestis,and claims iu and to the Gas the consideration provided in Paragraph 9.2above for which his interest qualifies depending on the excess burdeiisattached to such intierest. Whereupon, any cash bonus consideration due as'result of such deemed election shall be tendered, paid or escrowed by UnitOperator within one hundred twenty (120) days after the last day on whichsuch defaulting person under this Order should have paid his proportionatepart of such cost or should have made satisfactory arrangements for thepayment thereof. When such cash bonus consideration is paid or escrowed, ftshall be satisfaction in full for the right, interests, and claims of suchperson in and to the Gas underlying Subject Drilling Unit in the Subjebt

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Lands covered hereby, except, however, for any 1/8th royalties which wouldbecome due pursuant to Paragraph 9.2 hereof.

12. Assignment of Interest: In the event a person named in BxhibitB-3 is unable to reach a voluntary agreement to share in the Welldevelopment and operation in Subject Drilling Unit at a rate of pay%antagreed to mutually by said Gas Owner or Claimant and the Unit Operator, andsaid person elects or fails to elect to do other than participate udderParagraph 9.1 above in the Well development and operation in Subject DrillingUnit, then such person shall be deemed to have and shall have assigned untoUnit Operator such Person's right, interests, and claims in and to said Wz)ll,in subject Formations in subject Drilling Unit, and other share in and to 'Gasproduction to which such person may be entitled by reason of any election ordeemed election hereunder in accordance with the provisions of this Ordergoverning said elections.

13. Unit Ookrator (or Operator): Bquitable Production Company shallbe and hereby is designated as Unit Operator authorized to drill and operatethe Well(s) in Subject Formations in Subject Drilling Unit, all subject tothe permit provisions contained in Va. Code 55 45.1-361.27 et ~se .; %5 4 fZAC

25-150 et ~se ., Gas and Oil Regulations; 55 4 VAC 25-160 et ~se ., VirginiaGas and Oil Board Regulations; Oil and Gas Conservation Board ("OGCB") Orderestablishing the Mora Coal Bed Gas Field Rules entered March 26, 1989; all asamended from time to time, and all elections required by this Order shall becommunicated to Unit Operator in writing at the address shown below:

Bqui table Pz'educ'ti on Ccs6)anyLakd AdministrationP.O. Box 23536Pittsburgh, PA 15222Attna Ãikki Atkison

14. Commence(sent of Onerations: Unit Operator shall commence orcause to commence Operations for the drilling of the well within SubjectDrilling Unit within seven hundred thirty (730) days from the date of thisOrder, and shall prosecute the same with due diligence. If the Unit Operatorhas not so commenced and/or prosecuted, then this order shall terminatie,except for any cash sums then payable hereunder; otherwise, unless soccerterminated by Order of the Board, this Order shall expire at 12:00 p.m. onthe date on which the well covered by this Order is permanently abandoned 4)ndplugged. However, in the even at an appeal is taken from this Order, tHenthe time between the filing of the Petition for Appeal and the Final Order ofthe Circuit Court shall be excluded in calculating the two-year periodteferenced herein.

15. Operator's I ien: Unit Operator, in addition to the other rightsafforded hereunder, shall have a lien and a right of set off on the Gasestates, rights, and interests owned by any person subject hereto who electsto participate under Paragraph 9.1 in the Subject Drilling Unit to the extehtthat costs incurred in the drilling or operation on the Subject Drilling Unitare a charge against such person's interest. Such liens and right of set offshall be separable as to each separate person and shall remain liens untilthe Unit Operator drilling or operating the Well(s) has been paid the fullamounts due under the terms of this Order.

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16. Escrow Provisions:

The Applicant represented to the Board that there are unknown or unlocatableclaimants in Subject Drilling Unit whose payments are subject to theprovisions of Paragraph 16.1 hereof in the Subject Drilling Unit; and, theUnit Operator has represented to the Board that there are conflictingclaimants in the Subject Drilling Unit whose payments are subject to theprovisions of Paragraph 16.2 hereof. Therefore, by this Order, the EscrowAgent named herein or any successor named by the Board, is required toestablish an interest-bearing escrow account for the Subject Drilling Unit(herein "Escrow Acoount"), and to receive and account to the Board pursuantto its agreement I'r the escrowed funds hereafter described in ParagrWphs16.1 and 16.2:

Wachovia Bank, N.A.VA7515P.O. Box 14061Roanoke, VA 24038Attn: Judy Barger

16.1. Escrow Provisions For Unknown or Unlocatable Persons: If anypayment of bonus', royalty payment or other payment due and owingunder this Order cannot be made because the person entit((edthereto cannot be located or is unknown, then such cash bo+s,z'oyalty payment, or other payment shall not be commingled withany funds of the Unit Operator and, pursuant to Va. Code 5 45;1-361.21.D, said sums shall be deposited by the Unit Operator ihtothe Escrow Account, commencing within one hundred twenty (120)days of recording of this Order, and continuing thereafter on amonthly basis with each deposit to be made, by use of a reportformat approved by the Inspector, by a date which is no laterthan sikty (60) days after the last day of the month bebungreported and/or for which funds are heing deposited. Such fuadsshall be held for the exclusive use of, and sole benefit of theperson entitled thereto until such funds can be paid to suchperson(s) or until the Eecrow Agent relinquishes such funds asrequired by law or pursuant to Order of the Board in accordaacewith Va. Code 5 45.1-361.21.D.

16.2 Escrow Provisions For Conflicting Claimants: If any payment ofbonus, royalty payment, proceeds in excess of ongoing operationalexpenses, or other payment due and owing under this Order cannot bemade because the person entitled thereto cannot be made certain dueto conflicting claims of ownership and/or a defect or cloud on thetitle, then such cash bonus, royalty payment, proceeds in excess ofongoing operational expenses, or other payment, together withParticipating Operator's Proportionate Costs paid to Unit Operatorpursuant to Paragraph 9.1 hereof, if any, (1) shall not beconsaingled with any funds of the Unit Operator; and (2) shall,pursuant to Va. Code 55 45.1-361.22.A.2, 45.1-361.22.A.3 and 45.1-361.22.A.4, be deposited by the Operator into the Escrow Accountwithin one hundred twenty (120) days of recording of this Order, andcontinuing thereafter on a monthly basis with each deposit to be

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made by a date which is no later than sixty (60) days after the lastday of the month being reported and/or for which funds are subjectto deposit. Such funds shall be held for the exclusive use of, andsole benef'it of, the person entitled thereto until such funds caa bepaid to sqch person(s) or until the Escrow Agent relinquishes Suchfunds as required by law or pursuant to Order of the Board.

17. Special Findings: The Board specifically and specially finds:

17.1. Applicant is Equitable Production C~any. Applicant is dulyauthorised and qualified to transact business in the Commonwealth ofVirginia;

17.2. Applicant Equitable producti.on C~any has made a delegation ofauthority to Equitable Production C~ to explore, develop andmaintain the properties and assets of Applicant, now owned orhereafter acquired, and Equitable Production C~ has acceptedthis delegation of authority and agreed to explore, develop andmaintain those properties and assets, and has consented to serve asCoalbed Methane Gas Unit Operator for Subject Drilling Unit and tofaithfully discharge the duties imposed upon it as Unit Operator bystatute and regulations;

17.3. Applicant Equitable Production Company is an operator in theCommonwealth of Virginia, and has satisfied the Board's requiremebtsfor operati'ons in Virginia;

17.4 Applicant Equitable Production Company claims ownership of gasleases, Coalbed Methane Gas leases, and/or coal leases representing0.00% percent of the oil and gas interest/claims in and to CoalbedMethane Gas and 91.29% percent of the coal interest/claims in and toCoalbed Nethane Gas in Subject Drilling Unit; and, Applicant clajms

.the right to explore for, develop and produce Coalbed Methane Gasfrom subjec't Formations in subject Drilling Unit in Bucheman county,Virginia, which Subject Lands are more particularly described inExhibit Az

17.5. The estimated total production from Subject Drilling Unit is 230MMCG. The estimated amount of reserves from the Subject DrillingUnit is 230 MMCG;

17.6 Set forth in Exhibit B-3, is the name and last known address ofeach Owner or Claimant identified by the Applicant as having ,orclaiming an interest in the Coalbed Nethane Gas in Subject Formationin Subject Drilling Unit underlying and comprised of Subject Lande,who has not, in writing, leased to the Applicant or the UnitOperator or agreed to voluntarily pool his interests in SubjectDrilling Unit for its development. The interests of the Respondentslisted in Exhibit B-3 comprise 10'ercent of the oil and ghsinterests/claims in and to Coalbed Methane Gas and $ .71% percent ofthe coal interests/claims in and to Coalbed Methane Gas in SubjectDrilling Unit;

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17.7 Applicant's evidence established that the fair, reasonable andequitable compensation to be paid to any person in lieu of theright to participate in the wells are those options provided'nParagraph 9 above;

17.8 The relief requested and granted is just and reasonable, issupported by substantial evidence and will afford each personlisted and named in Exhibit $-3 hereto the opportunity to recoveror receive, without unnecessary expense, such person's just andfair share of the production from Subject Drilling Unit. Thegranting of the Application and relief requested therein willensure to the extent possible the greatest ultimate recovery ofCoalbed Methane Gas, prevent or assist in preventing the varioustypes of waste prohibited by statute and protect or assist inprotecting the correlative rights of all persons in the subjbctcommon sources of supply in the Subject Lands. Therefore, theBoard is entering an Order granting the relief herein set forth.

18. Nailing Of Order And Piling Of Affidavit: Applicant or itsAttorney shall file an affidavit with the Secretary of the Board within sixty(60) days after the date of recording of this Order stating that a true andcorrect copy of said Order was mailed within seven (7) days from the date ofits receipt by Unit Operator to each Respondent named in Exhibit $-3 pool.edby this Order and whose address is known.

19. Availability of Unit Records: The Director shall provide allpersons not subject to a lease with reasonable access to all records forSubject Drilling Unit which is submitted by the Unit Operator to saidDirector and/or his Inspector(s).

20. Conclusion: Therefore, the requested relief and all terms indprovisions set forth above be and hereby are granted and IT IS SO ORDERED.

21. Abpeals: Appeals of this Order are governed by the provisions ofVa. Code Ann. 5 45.3-361.9 which provides that any order or decision of theBoard may be appealed to the appropriate circuit court.

22. Effective Date: This Order shall be effective as of the date ofthe Board's approval of this Application, which is set forth at Paragraph 1above.

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DONE AND EXECUTED this l day of &sr

, 2008, by a majority of theVirginia Gar sud Oil Board.

Chainusn, Bede[ R Wamyfer

DONE AND PERPORMED THIS J day of Dc+to4~T, 2008, by Order of the

David E.AsburyPrmoipsl Bxscuh

Virginia Gss aud Oil Board

STATE OF VIRGINIACOUNTY OF WASHINGTON

Acknowledged on this f day of /M~ , 2008, personallybefore me a notary public in and for the Commonwealth of virginia,appeared Barmy R. Wampler, heing duly sworn did depose and say that heis Chairman of the Virginia Gas and Oil Board, and appeared David E.Ashury, Jr. heing duly sworn did depose and say that he is PrincipalExecutive to the Staff of the Virginia Gas and Oil Board that theyexecuted the same arhd were authorised to do so.

174394

My commission mgmes: September 30, 2009

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EXNSIT "M"VtAI30636

1 GaSe Fdond, Th»h» of I» UrdeasedMals of Yelow Polder Lumbar

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82.7100

Fakvmw Umlmloro Go»Sa .18Ha»Fern HSi LaneIhohmond, VA 24228

Faneew Umbed r

Leased ToCNX Qas

2.177500%

John C. kvkr, khp»8ktl General Partner4710 H seer»sod Ckokr18ohmond, TX 77488

Cmol C. Irvln 8John C. Irvh III wfh

4710~ClrdeRkrhmond. TX 77488

rederlek Hennon Combs IIT~. rr TntotKely Comb Neoassay, TrumoeP.O. Sox 841Tasowsl, VA 24851

'Leased To 0.725833%CNX Gss

*Leased ToCNX Ges

OA883

P.O. Sox 1404Abkr0don, VA 24212

John W. Pobst Jr.Sox 88Ravms, PA 1883

Vklkue Loe Unwkdr

PhSS Unueok wfh

4324 SouS Selt OrkmVeeadsle, WA ND87

Rkhmd K. Pobst3780 Undue RoadLso Velss. NV 85103

Csa»rlne PabstCIO Lynn R. Oteok111PashNo SnetCartmvSe, GA 30120

'Leased ToCNX Ges

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~ToCNX Gas

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KXNSIT "54"VC-63663S

Mamdah E.Jennln0s2418 West IJndan SheetNash@So, TN $7212

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CNX See Com0any, LLCASn: Lasts K. Anht0hm2481 John Nash Stvd.Same, WV 24701

TOTAL SAS SSTATS 100JN0000% 4%%$0

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4710 H mtansood ChtdsRkhmond, TX 774SI

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'CNX lass Company, LLCAtat: Lasts K. Asdngam2481 John Nash Shd.

TITTAL CCAL SSTATS $.710000%

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01290000% 62.7100

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