! )NSIÃtu)BNT PREPARED BY v)NOUNA GAS AND O)l BOARD 140001603 ! vvwwevv:wv oF v)RUBUA sBcfloN 4i1 -lsl 36 V I R G I N I A: BEFORE THE VIRGINIA GAS AND OIL BOARD APPLICANT: RELIEF SOUGHT: CNX Gas Campany LLC POOLING OF INTERESTS IN A 48 63 ACRE SQUARE DRILLING UNIT DESCRIBED IN EXBIBIT A HERETO LOCATED Ih 1HE NQRA COAL BED GAS FIELD AND SERVED BY WELL NO. AB-'78 (herein "Subject Drilling Unit" ) PURSUANT TO VA. COOR 55 45.1 — 361.21 AND 45.1 — 361.22, FQR THE PRODUCTION OF OCCLUDED NATURAL GAS PRODUCED FROM COALBEDS AND ROCK STRATA ASSOC1ATED THEREWITH (herein. "Coalbed Methane Gas" or "Gas") LEGAL DESCRIPTION: SUBJECT DRILLING UNIT SERVED BY WELL NUMBERED AB-78 (herein "Well" ) TO BE DRILLED IN THE LOCATION DEPICTED ON EXHIBIT A HERETO, PRATER QUADRANGLE FRATER DISTRICT BUCNANAN COUNTY, VIRGINIA (the "subject Lands" are more particularly described on Exhibit A, attached hereto and made a part hereof) ) VIRGINIA GAS ) AND QIL BOARD ) ) DOCKET NQ. ) 14-0716-4053 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) REPORT QF 'IHE BOARD FINDINGS AND ORDER 1. Hearing Date and Place. This matter came on for hearing befare the Virginia Gas and Qil Board (hereafter "Board") at 9:00 a.m. an September 16, 2014 at the Russell County Canference Center, Lebanan, Virginia, 2. Appearances: Mark Swaztz, Esquire, of the fzrm Swart.z Law Offices, appeared foz the Applicant; and. Paul Kugleman, Jr., Assistant Att.arney Genera'1, was present to advise the Board. 3. Jurisdictian and Notice: Pursuant to Va. Code 5545.1-361.1 et seq., the Board finds that it has jurzsdzction over the subJect matter. Based upon the evidence presented by Applicant, the Board. also funds that the Applicant has (1) exezcised due diligence in conducting a meaningful search of reasonably available sources to determine the identity and whereabouts of each gas and oil ownez, coal owner, or mineral owner andyor potential owner, i.e., person identified by Applicant as having (" Owner" ) or claimina ("Claimant" ) the rights to Coalbed Methane Gas in all Pennsylvania-aged coals rrom the top of the Raven, including all splits to the top of the green and Page Number 1.
Transcript
!)NSIÃtu)BNT PREPARED BY
v)NOUNA GAS AND O)l BOARD140001603
!vvwwevv:wvoF v)RUBUA sBcfloN 4i1-lsl 36
V I R G I N I A:
BEFORE THE VIRGINIA GAS AND OIL BOARD
APPLICANT:
RELIEF SOUGHT:
CNX Gas Campany LLC
POOLING OF INTERESTS IN A 48 63ACRE SQUARE DRILLING UNITDESCRIBED IN EXBIBIT A HERETO
LOCATED Ih 1HE NQRA COAL BED GAS
FIELD AND SERVED BY WELL NO.AB-'78 (herein "Subject DrillingUnit" ) PURSUANT TO VA. COOR
55 45.1—361.21 AND 45.1—361.22,FQR THE PRODUCTION OF OCCLUDED
NATURAL GAS PRODUCED FROM COALBEDSAND ROCK STRATA ASSOC1ATEDTHEREWITH (herein. "Coalbed MethaneGas" or "Gas")
LEGAL DESCRIPTION:
SUBJECT DRILLING UNIT SERVED BY WELL NUMBEREDAB-78 (herein "Well" ) TO BE DRILLED INTHE LOCATION DEPICTED ON EXHIBIT A HERETO,PRATER QUADRANGLE
FRATER DISTRICTBUCNANAN COUNTY, VIRGINIA(the "subject Lands" are moreparticularly described on Exhibit A,attached hereto and made a part hereof)
) VIRGINIA GAS
) AND QIL BOARD
)
) DOCKET NQ.
) 14-0716-4053)
)
)
)
))
)
))
)
)
)
)
)
)
)
)
))
))
)
REPORT QF 'IHE BOARD
FINDINGS AND ORDER
1. Hearing Date and Place. This matter came on for hearing befarethe Virginia Gas and Qil Board (hereafter "Board") at 9:00 a.m. an September16, 2014 at the Russell County Canference Center, Lebanan, Virginia,
2. Appearances: Mark Swaztz, Esquire, of the fzrm Swart.z Law
Offices, appeared foz the Applicant; and. Paul Kugleman, Jr., AssistantAtt.arney Genera'1, was present to advise the Board.
3. Jurisdictian and Notice: Pursuant to Va. Code 5545.1-361.1 etseq., the Board finds that it has jurzsdzction over the subJect matter.Based upon the evidence presented by Applicant, the Board. also funds that theApplicant has (1) exezcised due diligence in conducting a meaningful searchof reasonably available sources to determine the identity and whereabouts ofeach gas and oil ownez, coal owner, or mineral owner andyor potential owner,i.e., person identified by Applicant as having ("Owner" ) or claimina("Claimant" ) the rights to Coalbed Methane Gas in all Pennsylvania-aged coalsrrom the top of the Raven, including all splits to the top of the green and
Page Number 1.
red shales including, but not limited ta Jawbone, Greasy Creek, C-Seam, WarCreek, Beckley, Low r Hazaepen, X-Seam, Pocahontas r(o. 9, 8, 7, 6, 5, 4, 3,2, and any other unnamed coal seams, coalbeds and rock strata associatedtherewith (hereaftez "subject F'armatian*") in the subject Drilling Unitunderlying and comprised af Subject Lands; (2) represented it has givennatice to those parties sa identified (hereafter sometimes "person(s)"whether referring ta individuals, corpozations, partnerships, associations,companies, businesses, trusts, joint vent. urea or other ).egal entities)entitled by Va. Code %5 45.1-361,19 and 45,1-361,22, to notice af theapplication filed herein; and (3) thar the persons set. furth in Exhibit 8-3hereto have been identified by Applicant as persons w1ia mav be Owners orClaimants of. Caalbed Methane Gas interests in Subject. 2'armations in theSubject Drilling Unit wha have not heretofore agreed to lease az sell to theApplicant and/or voluntaril.y pool their Gas interests. Conflicting GasOwners/Claimants in Subject Dri.lling Unit arE listed on Exhibit 8 Further,'the Board has caused notice of this hearing to be published as required byVa. Code 5 45.1-361.19.B.Whereupon, the Board hereby finds that. the noticesgiven herein satisfy all statutary requirements, Board rule requiiemenrs andthe minimuru standards of state due pi'ocess.
4. Amendments: Revised Exhibit 83
5. Dismissals: Mone
6. Relief Request d: Applicant. requests (1) that pursuant ta Va.Code 5 45.1-361.22, including the applicable portions of 5 45.1-361.21, theBoard pool the rights, interests and estates in and ta the Gas in the subjectDrilling Unit, including those of the Applicant and af the known and unknownpersons named in Exhibit 8—3 here'ta and that of their knawn and unknawnheirs, execurars, admi.nistrators, devisees, trustees, assigns and successars,both immediate and remote, for t.'he dzillinq and operatic~, includinqproduction, af. Coalbed Methane Gas praduced from the Subject. Dzilling Un.itestablished foz the Subject Farmer.iona underlying and comprised of theSubject Lands, (hereafter sometimes collectively identified and referred toas "well development and/oz operation in the subject Drilling Unit )/ and,(2) that the Board designate CME Gas Company LLC as the Unit Operator.
7. Relief Grantedr The requested relief in this cause -hall be andhezeby is granted and: (1) pursuant ta Vs. Cade 6 45.1-361.21.C.3, CMX GasCompany LLC (hereafter "Unit Operator" or "Operator" ) is designated as theUnit operator authorised to drill and operate rhe well in subject DrillingUnit at the loca(.ion depicted an the plat attached hereto as Exhibit A,subject ! o the permit provisions contained in va. code .= 45 .1-361.27, et~me .,; to 56 4 VAC 25 150 et s~e ., Gas and Oil Regulationsr ro 5 4 VAC 25 160et seq., Vizginia Gas and Oil Board Regulations and to the Mora Coal Bed GasFiel.d Rules established by the Oil and Gas Conservation Board' Orde~ enteredMarch 26. 1959: all as amended from time to timer and (2) el 1 the interestsand estates in snd ra the Gas in Subject Drilling Unit, including that of t'eApplicant, the Unit Operator and of the known and unknawn persans listed onExhibit 8-3, attached hereto arrd made a part hereof, and their known andunknown )eire. executors, administrators, devisees, trustees, assigns andsuccessors, bath immediate and ramate, be and hereby are pooled in theSubject Formations in the Subject Foznation in rhe Subject Drilling Unitunderlying and comprised of the Subjecr Lands.
Page Number 2.
Pursuant to the Kara Goal Field Rules promulgated under the authorityaf Va. Code 9 45.1-361.20, the Board has adopted the fallowrng method far thecalculation of production and revenue and allocatian of allowable costs for.the productioz: of Coalbed Methane Gas.
1'or Fzac Nell Gas. — Gas shall be produced from and allocated to onlythe 48.63-acre drilling unit in which the well is located accarding tothe undivided znterests of each Owner/Claimant withrn the unzt, whichundivided interest shall be the ratio (expressed as a percentage) thatthe amount of mineral acreage within each separate tract that is withrnthe subje t Drilling Unit, when platted on the surface, bears to thetot.al mineral acreage, when platted an the surface, cantained withint.he entire 48.63-acre dzillinq unit in the manner set forth in the WoraF) e'1 d Rules.
8 Election and Election Period: In the event any Owner az Claimantnamed in Exhibit B-3 has nat reached a voluntary agreement ta hare in th*operairon of the Nel) 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 farth inParagraph 9 below and must give written notice of his election ot the aptronselected under Paragraoh 9 herein to the designated Unit Operator at theaddress shown below swithin thirty (30) days from the date of receipt of acopy of this Order.. A timely election shall be deemed ta have b en made if,on or. befare the last day of said 30-day peziod, such electing person hasdelivered hzs written election ta the designated Unit Operatoz at the addressshown below or has du).y pastmarked and placed his written election in firstclass United States mail, postage prepaid, addressed to the Unit Operator atthe address shown below.
9. Electtan Options
9 1 Opt.ion 1 — Ta Participate In The Development and Operation of theDrilling Unit: Any Gas Owner or Clarmant named in Exhibit B-3who has not reached a volun! ary agreemen't with t.he Applicant. orUnit Operator may elect to participate in the Well developmentard operation in the Subject Drilling Unit (hereafter"Partrcipatrng Operator" ) by agreeing to pay the estimate of suchParticipating Operator's proportianate part of the actual andreasonable costs, rncluding a zeasanab).e superv.ision fee, af theWell development and operation in the Subject Drilling Unit, asmare particularly set. farth in Virginia Gas and Oil BaazdRegulation 4 VAC 25-160-100 (herein "Completed for ProductianCasts' . Fuzther, a Participating Operator agrees to pay theestimate af such participating operatar's proportionate part oftl.e Estimated, Completed-for-Production Casts as set forth belowto the Unit Operator within forty-five (45) days from the laterof the date of s;ailing or the date of recording af thrs Order.The estimated completed-far-producti on casts for the subjectDrilling Unit ar ae fOllOva:
Any gas owner and/oz claimants named in Exhibit 8-3, who electt?~is op?'ion (Option lj understand and agree that. their initialpayment under this option is for their pzopoztionat.e share of theApplir ant.'s estimate of actual cost.s and expenses. It is alsount(erstood by all persons elect.ing this option that. they areagreeing to pay t'heir proportionate share of the act.ual cost:s andexpenses ss determi?.ed by the Operato- named in this Board Order.
A Participating Operat.or's proportionate cost hereunder shall bethe result obtained by multiplying the Participating Operator's"Percenz of. Unit" as set forth herein in the attached Exhibit B—3times 'the Estimated Comp)eted-for-Production Costs set forthabove. Provided, however, that in the event a ParticipatingOperator elects to participate and. fails or zefuses to pay theestimate of his proportionate par- of the Estimated, Ccmpleted-for-production Costs as set fort.h above, all within the time setforth herein and i.n the manner prescribed in paragraph 8 of thisOzder, then such Participating Opeiatoz shall be deemed t.o havee).ected not to participate and to have elected compensation inlieu of participation pursuant to Paragraph 9.2 hezein
Option 2 — To Receive A Cash Bonus co?.sideration: In lieu ofpazticipating in the Well development and operation in SubjectDrilling Unit under Paragraph 9.1 above, any Gas Owner orClaimant named i.n Exhibit B-3 hereto who has not reached avoluntary agreement with the Unit Operator ma.y elect to accept acash bonus consideration of $5.DD per net mineral acre owned bysuch person, commencing upon entry of this Order and continuingannually unti) commencement of production from Subject DrillingUnit, and thereafter a roya)ty of 1/8th ot 8/8ths [twelve andone —half percent (12.53)] of the net ptoceeds received by theUnit Operator for the sale of the Gas produced from any Wel.ldevelopment and operat).on covered by this Order multiplied bythat person's Interest within Unit as sct forth in Exhibit B-3[foz purposes of this Order, net. proceeds shall be actualproceeds received less post-production costs incurred downstreamof the wellhead, including, but not limit.ed to, gat.haring,compression, treating, transportation and. marketing costs,whether performed. by Unit Operat.or or a third person] as fair,reasonable and equitable compensation to be paid to said GasOwner or Claimant. The initial uas)i bonus shall become due andov?ing when so elected and shall be tendered, paid or escrowedwithin one hundred twenty (120) days of recording of this Order.Thereafter, annual cash bonuses, if any, shall become due andowing on each anniversary of the date of recordinq of this o deri?, the event production from Subject Drilling Unit has nottheretofore commenced, and once due, shall be tendered, paid orescrowed within sixt.y (60) days of said anniversary date. Oncethe init.ial cash bonus and the annual tash bonuses, if any, areso paid or escrowed, said pa.yment(s) shall be satisfact.ion infull for the right, intereats, and claims of such electing personin and to the Gas produced from Subject Eormation in the SubjectLands, except, however, for the 1/8th royalties du hereunder.
Page Number 4.
j40001693
Subject to a final legal determination of ownersh)p, the electionmade under this Paragraph 9.2, when so made, shall besatisfaction in full for the right, intezests, and claims of suchelecting person in any well development and opezation covezedhereby and such electing person shall be deemed to have andhereby does assign its right., interests, end claims in and to theGas produced from Subject Formation in the Subject Drilling Unitt.o the Applicant.
9.3. O~tion 3 — To Share In The Development And Opera(.ion As A Non-Participating Person On A. Carried Susie And To ReceiveConsideration In Lieu Of Cash: In lieu of participating in theNell development and operation of Subject Drilling Unit underParagraph 9.1 above and in lieu of receiving a cash bonusconsideration under Paragraph 9.2 above, any Gas Owner orClaimant named in Exhibit B-3 who has not reached a vo)untazyaoreement with the Unit Operator may elect to share 'n the welldevelopment and operation in subject Drilling Unit on a carriedbasis (as a "Carried Nell Operator" ) so that the proportzonatepart of the Completed-for-Production Costs hereby allocable tosuch Carried Nell Operator's interest is charged against suchcarried well operator's share of production from subject. Di'illingUnit. Such Carried Nell Operator.'s rights, interest.s, and claimsin and to rhe Gas in Subject Drilling Unit shall be deemed andhereby are assigned to the Unit Operator until the proceeds fromthe sale of such Carried Nell Operator's share of production fromSubject Drilling Unit (exclusive of any royalty, excess oroverriding royalty, oz other non-operating or non cost-bearingburden reserved in any lease, assignment thereof or agreement.relat.ing thereto coverinq such interest) equals three hundredpe~cent (3003) for. a leased intez.est or two hundred percent(200i) for an unleased interest (whichever is applicable) of suchCarried Nell Operator's share of the Completed-for-ProductionCosts allocable to the interest of such Carried Well Operator.When the Unit Operatoi. recoups and recovers from such. CarriedWell Operator's assigned interest the amounts provided for above,then, the assigned interest of such Carried Well Operator shallautomaticall.y revert back to such Cazzied. Well Operator, and fromand after such reversion, such Carried. Well Operator shall betreated as if it had participated initially under Paragraph 9.1Move; and thezeaftez, such participating person shall be chargedwith and shall pay his proportionate part. of all further cost.s ofsuch well de~elopment and operarion.
Subject. to a final legal determination of ownership, rhe electionmade urdar this Paragraph 9 3, when so made, shall besatisfaction in full for the right, interests, and claims of suchelecting person i.n any Well development and operation coveredhereby and such electing person shall be deemed ro have andhereby does assign his right., interests, and claims in and tc theGas produced from subject pormation ir; the subject Drilling Unitto the Applicant for the period of time during which its interestis carried as above provided prior to its reversion back to such
Page Number 5.
i40001693electing person.
10. Failure to Properly Elect: In the event a. person named inExhibit B-3 hezeto has not reached a voluntary agreement with theApplicant or Unit Operator and faile tO elect within the time, inthe manner, and in accordance with the terms of this Order, one ofthe alteznatives set forth in Paragraph 9 above or which hisinterest qualifies, then such person shall be deemed to have eleci.ednot. to paiticipate in the proposed Well development and operation inSubject Drilling Unit and shall be deemed, subject to any finallegal determination of ownership, to have elected to accept assatisfaction in full for such person's right, interests, and claimsin and to rhe Gas the consideration provided in Paragraph 9 2 abovefor which its intezest qualifies, and shall be deemed to have leasedand/or assigned his right, Interests, and claims in and to said Gasproduced from Subject Formation in Subject Drilling Unit to the UnitOperatOr. Per Ona whO fail to properly elect shall be deemed tohave accepted the compensation and terms set forth herei~ atParagraph 9.2 in satisfaction in full foz the right, interests, andclaim of such person in and to the Gas produced from SubjectFormation underlying Subject Lands.
11. Default Bv Participating Person: In the event a person named inFathibit B-3 elects to participate under Paragraph 9.1, but fails or refusesto pay, to secure the payment or to make an arrangement with the UnitOperator for the payment of such person's propoztionate part of the estimatedCompleted-for-Production costs as set forth herein, all within the time andin the manner as prescribed in this Ozdez, then such person shall be deemedto have withdrawn his election to participate and shall be deemed to haveelected to accept as satisfaction in full for such person's right, interests,and claims in and to the Gas the consideration provided in Paragraph 9.2a'bove foz which his interest qualifies dependinc on the excess burdensattached to such interest:. Whereupon, any cash bonus cons~deration due as aresult of such deemed electio~ shall be tendered, paid or escrowed by UnitOperator within one hundred twenty j12D) days after the last day on whichsuch defaulting person under this Ozdez should have paid his proportionatepart of such cost or should have made satisfactory arrangements foz thepayment thereof. Whar. such cash bonus consideration is paid or escrowed, itshall be satisfaction in full for the right, interests, and claims of suchpersor in and to the Gas underlying Subject Drilling Unit in the SubjectLands covered hereby, except, however, for any I/Sth royalties which wouldbecome due pursuant. to Pazagraph 9.2 hereof.
12. Assignment of Interest: In tha event a person named in ExhibitB-3 is unable to zeacl a voluntary agreement to share in the Nelldevelopment and operat.ion. in subject Drilling Unit at a rate of paymentagreed to mutually by said Gas Owner or Claimant and. the Unit Operator, andsaid person elects or fails to elect to dc other than pa ticipate underparagraph 9.1. above in the Well development and operation in Subject DrillingUnit, then such person shall be deemed to have and shaI.I have assigned untoUnit Operator such person's right, interests, and claims in and to said Nell,in subject. Formations in sutject Drilling Unit, and other share in and to Gasproduction to which such person may be ent.it.led by reason of'ny election ordeemed elect~on hereunder in accordance with the. provisions of this Ozder.
Page Number 6.
goverr.zng sard elections.
13. Unit. Operator (or Operator): CNX Gas Company LLC shall be andhereby is designai:ed as Unit Operator authorized ro drill and operate CheWell(s) in Sub)ect Formations in Subject Drilling Unit, all Subject to thepermit pravisions cantained in Va. Code SS 45. 1-361.27 et ~se .; SS 4 VAC 25-150 et ~me ., Gas and Oil Regularionsr SS 4 VAC 25-160 et s~e ,, Virginia Gasand Oil Board. Regulations; Oil. and Gas Conservation Board ("OGCB") Orderestablishzng the Hara Coal Bed Gas Field Pules, entered )(arch 26, 1989r allas amended. from time to time, and all elections required by this Order shallbe cammunzcated to Unit Operator in writing at the address shown below:
CNX Gas Company LLC2481 John Nash Blvd.Bluefield, WV 24701Attn Anita D. Duty
14. Commencement of Operationsr Unit Operator shall commence orcause to commence operations for the drilling of the Nell wzthin SubjectDrzlling Unit within seven hundred r.hizty (730) days fzom the date of thisOrder, and shall prosecute the same with due diligence. If the Unzr Operatorhas not so commenced and/or prosecuted, 'then this order shall tezminate,except for any cash sums then payable hereunder; otherwise, unless soonerterreinated by Order af tie Board, this Order shall expire at 12:00 p.m. onthe date on whir:h rhe well covered by this Order is permanently abandoned andplugged. However, in the even at an. appeal. is taken frere this Ord r, thenthe time between the filing of the PetitiOn. for Appeal and the Final Order ofthe Circuit Court shall be excluded in calculating the tvro-yeaz. periodreferenced herein.
15. Operator's Lien: Unit Operator, in addition to th,. other rightsafforded hereundez, shall have a lien and a right. af set off an the Gasestates, rights, and interests owned by any person subject hereto wno electsto participate under pazagzaph 9,1 in the Subject Drillir g 'Unit to the extentthat casts incurred in the drilling or operation an the Subject Drilling Unitare a charge against such person's znterest. Such liens and right of set offshall be separable as to each separate person and shall remain li.ens untilthe Unit Operator drilling or operating the well(s) has been paid the fullamounts due under the terms of rhis order.
16. Esczaw Provisions:
The Applicant represented to the Board that there are unknown orunlocatable claimants in Tract(s) 2c af the subject Drzllzng Unit; and, t.heUnit Operator has represented to the Board that there are conflzctingclaimanrs Tract{a) 2A, 2B, 2C, 2D, 4 2B in the Subject Drilling Unit whosepayments are subject to the aravisions oi paragraph 16.2 hezeof Therefore,by this Order, the Escrow Agent named herein cr any successor narued by theBoard, is required in Tract(s) 2A, 2B, 2c, 20, 4 2B to establish an interesi-beazing escrow account f'r the Subject Drilling i(nit (herein "EscrowAccount" ), and to receive and ac~aunt to rhe Board pursuant to its agreementfaz the escrowed funds hereafter described in Paragraphs 16 1 and 16.2:
Page Number 7.
First Bank 6 Trust Company38 EaSt Valley Bt.Bristol, VA 24201
16.1. Escrow Provisions Far Unknown ar Unlocatable Persons: If anypayment of bonus, royalty payment or other payment due and owingunder this Order cannot be made because the person entitledthereto cannot be located or is unknown, then such cash bonus,rayalty payment, or other payment shall nat he commingled withany funds of the Unit Operator and, pursuant. to Va, Code 5 45.1-361.21.D, said sums shal.l. be deposited by the Unit Operator intothe Escraw Account, commencing within one hundred twenty (120)days of zecardinq of this Order, and continui.ng thereafter on amonthly I asia with each deposit to be made, by use of a repartformat apnroved by the inspector, by s date which is no laterthan sixty (60) days after the last day of the month beingreported and/ar for which funds are being deposited. Such fundshall be ( e) d for the exclusive use of, and sole benefit af theperson entitled thereto until such funds can be paid ta suchperson(s) or until the Escrow Agent relinquishes such funds asrequired by law ar pursuant to Ordez of the Baard in accordancewith Va. Code 5 45.1-361,21.0,
16.2 Escrow Pravis).ans For Conflicting Claimants: If any payment ofbonus, royalty paymenr., proceeds in excess of ongoing operationalexpenses, or ather payment due and owing under this order cannot bemade becaas* the person entitl.ed thereto cannot be made certain dueto conflicting claims af ownership and/or a defect or claud on thetitle, then such cash bonus, royalty payment, proceeds in excess ofongoinq operational expenses, ar other payment, toger.her withParticipating Operator's Proportionate Costs paid to Unit Operat.orpursuant to Paragraph S.l hereof, if any, (I) shall not becomminq3.ed with any funds of the Unit Operatorr and (2) shall,pursuant ta Va. Code 55 45.1-361.22.A.2, 45.1-361.22.A.3 and 45.1-361.22.A.4, be depasited by the Operator into the Escrow Account.within one hundred twenty (120) days of recording of this Order, andcontinuing thereafter on a monthly basis with each deposit to bemade by a date which is no later than sixty (60) days after the lastday of the month being reported and/or far which funds are subjectto deposit. Such funds shall be held for the exclusive use of, andsole benefit of, the person ent.itled the eto until such funda can bepaid to such person(s) ar until the Escrow Agent relinquishes suchfunds as required by law or pursuant to Order of the Baard.
17. Special Findings: The Board specifically and specially finds:
17.1. Applicant is CEX Gas Company LLC, a Virqinia limited liabilitycompany, is duly authorized and qualified to transact business inthe Commonwealth of Virginia;
17.2. CNX Gas Company LLC has the authority to explore, develop andmaintain the properties and assets, now awned or hereafter aequi ed,consented to serve as Coalbed Methane Gus Unit Operator far Subject
Page Number 8.
140001693Drilling Unit and to faithfully discharge the duties imposed upon itas Unit Operator by statute and regulations
17.3. CEX Gas Company LLC is an operator in the Commonwealth ofVirginia, und has satisfied the Board's requirements for operationsin Virginia;
17.4 Applicant, CEX Gas Company LLC claims ownership of gas leases,Coalbed Methane Gas leases, and/or coal leases representing 78.37D2percent of the oil and gas interest/claims in and to coalbed MethaneGas and 60.2303 percent of the coal interest/claims in and taCaalhed Methane Gas in Subjecr. Drilling Unit; and, applicant. claimsthe right to explore for, develop and produce Caalhed Methane Gasfrom Subject Fozmations in Subject Drilling Unit in BuchananCounty, Virginia, which Subject Lands are more particularlydesczibed in Exhibit Ar
17.5. The estimated total production from Subject Drilling Unitis 125 to 550 MMCF, The estimated amount of reserves from theSubjecr. Drilling Unit is 125 to 558 MCCF;
17.6. Set forth in Exhibit B-3, is the name and last knownaddress cf each Owner or Claimant identified by the Applicantas having or claiming an interest in the Coalbed Methane Gas inSubject F'crmation in .Subject Drilling Unit underlying and comprisedof Subject hards, whc has not, in writing, leased to the Applicantor the Unit. Operator or agreed ta voluntarily paol his ir,terests inSubject Drilling Unit for its development The interests of theRespondents listed in Exhibit B-3 comprise 21.6298 percent of theoil and gas interests/claims in and to Coajbed Methane Gasand 39.7697 percent of th* coal interests/claims in sndto Coalbed Methane Gas in Subject Drilling Unit;
17.7 Applicant's evidence established that the fair, reasonable andequitable compensatian to be paid to any person in lieu of theright. ta participate ir the Wells a e these optioos provided inParagraph 9 above;
17.8 The relic.f requested and granted is just and rea.sonable, issupported by substantial evidence and will afford each personlisted and named in Exhibit B-3 hereto the oppartunitv to recoverar receive, withaut unnecessary expense, such person's just and.fair share of the production from Subject Drilling Unit. Theqr ntinq of the Application and relief requested therein willensure ro the extent possible the greatest ultimate recovery ofCaalbed Methane Gas, prevent or assist in pzeventing the varioustypes of waste prohibited by statute and pzatecr oz assist inpratecting the correlative riqnts of all persons in the subjectcommon sources of supply in the Subject Lands. Therefore, theBeard is entering an Order granting tha relief herein set forth.
18. Mailing Of Order And Filing Of Affidavit: Applicant or itsAttorney shall file an affidavit with the Secretary af th Board within sixty(6UI days after the date af recording of this Order stating that a true and
Page Number 9.
correct copy of said Order was mailed within seven il) days from the date ofits receipt by Unit Operator to each Respondent named in Exhibit B-3 pooledby this Order and whose address is known.
19. Availability of Unit Records. The Director shall. provide allpersorrs not subject to a lease with reasonable access to all records forsubject Drilling Unit which are submitted by the Unit operator to saidDi.rector and/or his Inspectorial,
20. Conclusion: Therefore, the requested relief and all terms andprovisions set forth above be and hereby are granted and lT IS SO ORDERED.
21. A~locals: Appeals of this Order are governed by the provisions ofva. Code Ann. 6 45.1-361.9 which provides that any order or decision of theBo~rd 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 thi Application, which is set forth at Paragraph 1above.
Page Number 10.
140001683DONE AND EXECUTED this 24 day of September, 2014 by a ma]ority of the Virginia Gas andOil Board.
Chairman, Bradley C. Lambert
COMMONWEALTH OF VIRGINIACOUNTY OF RUSSELL
Acknowledged on this ~day of&~,2~0l personally before me a notary publicIn and for the Commonwealth of Virginia, appeared Bradley C. Lambert, being duly sworn did „„,»„depose and say that he Is the Chairman of the Virginia Gas and Oil Board, that he execute;" ESSEthe same and was authorized to do so.
o cp,'' NQTARY ',QPiJ0 I.IC
arah Jees~llmer, Notary Public = Q: MrcoMMIsslou: *-262946
My Commission expires: July 31, 2017 "LTH EI ...i"ollnl ~ ~ I
DONE AND PERFORMED this 25 day of September, 2014 by Order of the Virginia Gas and OgBoard.
c.m+wWRick CooperPrincipal Executive to thestaff, Virginia Gas and Oil Board
COMMONWEALTH OF VIRGII4IACOUNTY OF RUSSELL
Acknowledged on this~ day of&~ . WW personally before me a notary publicIn and for the Commonwealth of Virginia, appeared Rick Cooper, being duly sworn diddepose and say that he is the Principal Executive to the staff of the Virginia Gas and OilBoard, that he executed the same and was authorized to do so.
Sarah J~e Gllmer, Notary Public = p: RBG +>B~R4S:I +-262940 Mr COMMISSION: *
9 '. EXPIRES
My Commhmlon expires: July 31, 2017'o.. ALTH Ilt,."
nnnllno '
14000i68<
EEO WELL
!rooroEEE EIEI OELLBXH1B/T A
NQRA F 1 =L Q
UIEI I 7 AB78F QRCE PQQL INC
VGQB —1d —Q715-IJQ53
Form DGG-GG-7Relr, 9/91
Carrpany CNX Gas Comocny LI C Well Name and Number IINIT ARTR
Tr act No. Elevation n„dr angle PRATER
.Eigitolrwruorodbv JEmwE R Dillr JI.ty BIJCHANAN Gistriot PRATFR
This Plat is a new Pint x; an oodatea P lr.rs ~+ . o, 1PPPINRftugfITPPDR.PRIEE
INC PC, EE=JEmm R DIRE Jr,00030s tuzo0300I JArs f IRAIgelsseMbd'IIE01 mIT3300003!EA
Professional Engineei
Page Number 12.
140001693CNX Gas GofytPafty Ll C
Unit A878Tract Identifications(48.63Acre Unil)
F.H. Combs Testamentary Trust, et sl (1010Acre Tract) (War Fork Cosh) —AII MineralsIsland Creek Coal Company —Coal Below Drainage LeasedCNX Gas Company LLC —Oil, Gas and CBM Leased29.29 acres 60.2303%
1A,1B.1C.1D.1E.1F.1G.1H.11.
Ilene Owens —Surface OwnerBarbara Bowman Wagner —Surface OwnerDanny Owens, et ux —Surface OwnerEvelyn M. Belcher —Surfaoe OwnerJack D. Owens Heirs —Surface OvvnerUnknown Surface OwnerJames A. Owens, et al —Surface OwnerUnknown Surface OwnerUnknown Surface Owner
ACIN, LLC-AII Coa! except the Splash Dam SeamPenn Virginia Operating Co.. LLC —Splash Dam SeamAlpha Land Reserves, LLC —All Coal leased except the Splash Dam SeamFlora Stewart Rush —Surface, Oil and GasRange Resources-Pine Mountain, Inc, —Oil, Gas and CBM Leased4.04 acres 8.3076%
2B. AGIN, LLC- All Coal except the Splash Dam SeamPenn Virginia Operating Co., LLC —Splash Darn SeamAlpha Land Reserves, LLC —All Coal leased except the Splash Dam SeamHenry Deal, et al —Oil and GasCNX Gas Company LLC —Oil, Gas and CBM Leased (2/7)Ronald Stacy, st ux —Surface7.03 scms 14.4561%
2C. AGIN, LLC —All Coal except the Splash Dam SeamPenn Virginia Operating Co., LLC —Splash Dam SeamAlpha Land Reserves, LLC —All Coal leased except the Splash Dam SeamMargaret Looney, et al —Oil and GasCNX Gas Company LLC —Oil, Gas and CBM LeasedKenneth D. Coleman —Surface5.74acres 11.8034%
2D. AGIN, LLC —All Coal eiicept the Splash Dam SeamPenn Virginia Operating Co., LLC —Splash Dam SeamAlpha Land Reserves, LLC -All Coal leased except the Splash Dam SeamHenry Deal, et al —Od and GasCNX Gas Company LLC-Oil, Gas and CBM Leased (2r7)Fred Decl, et ux -Surface2.04 acres 4.1950%
2E. ACIN, LLC —All Coal except the Splash Dam SeamPenn Virginia Operating Co., LLC —Splash Dam SeamAlpha Land Reserves, LLC —All Coal leased except the Splash Dsm SeamArnold Deal, et ux —Surface, Oil and GasChlX Gas Company LLC —Oil, Gas and CBM Leased0.49 acres 1.0076%
"This title block is for general informatiorial purposes ouly and does uot reflect an analysis of theseverance deed aud its effect. upon coal bed methane ownership ahd should not be relied upon tor such
purpose."Page 1 of 1
June 12, 2014
Page Number 13.
Exhibit BUnit AB78
Docket ¹VGOB 14-071¹4053Llsl sf all OwnereiClaima nts
(48.63Acm Unit)
44000168
Acnw, In UnR
Percentof Unil
I. COAL QWNERSHtP
Tracret 00 seecms
(1) Frsdrkk H. Combs 8, Testamentary Tms!. et aI
dc War FOrk Ccel Pa/lnerchio(1010 Acre Tmci/
c/o Jahn C. Inch, Agerc4710 Hunterwood GalsRichmond, TX 77459
29 29 toms 6D.2ZI3%
R~ol~paii I Tor
War Fork Coal Partnershipc/0 John C. Irvln. Agent4710 Hunlervmod CircleRhhmond. TX 77469
Tract 02A .4.04acres
(1) AGIN LLCc/0 Western Pocahonlas Properties LPP.O. Box 28271035 Thinl Avenue. Suite 300Hunlingmn. WV 25727
5.3076%
Tract flxs 7 01 acres
(1) AGIN LLCc/o Western Pocshcotss Pmperlies LPP,C. Box 26271035 Third Avenue,Sutta 300HuntirEton, WV 25727
Tmc r 020 - 5 74 acme
7 03 acres 14.4561%
(I) AGIN LLC
do Western Pocshontas Properties LPP.O Box 28271035 Third Avenue, Suite 300Huniington, WV 25727
Tract 020 - 2.04 aares
5.74 acnra 11.8034%
(1) ACIN LLC
do Western Poca bonis s Props rbas lPP.O. Box 28271035TMrd Avenue. Suite 300Hun5nglon, WV 25727
Tcsci 02E. 0 40 acres
4.1950%
(1) ACI/I LLC
do Weslem Pocahontss Proper0ss LPP.O, Box 23271035Third Avenue, Suite 30D
Hun0ngtcn. WV 25727
0. QIL 6 GAS OWNERSHIP
0.49 sofas 1.0076%
Trw;rer- 00 00 acrea
(1) Fredrick H, combs il, Tsstsmemary Trust, et al
do War Fork Coal psrtnershrp/fpfp Acrf Tact)do Jahn C. Irvin. Agent4710 HunlerWOOd CirrJeFashmond, TX 7'/450
602303%
Page 1 of6
Page Number )4.6/DEDI4
Extdbit 6Unil AB76
Docket 8 VGOB 14.87154563List of alt Owners(Claimants
(48.53 Acre Unit)
14)00016JD
Rnvaffiea pard rO,
War Fork Cmd PartnershipCfo JOhn C. Irvin, Agent4ir10 Hunterwocd DiodeRighthand, TX 77468
Acres in unitPerCSmOf tlnit
Tmct eka - 4.04 auras
(1) Flora Stewart RushPO Box 535Vansent, VA 24555
4.04 acres 8.3076%
oil 6 Gas Esfasts feased by Range Resoumes.pfne elouomfn, fnc,
Traol II2S - T.aa acres
(1) Hers)I Desi, et st.(Rufuf 6 Euruce Deal Heirs. DevrssesSumsssors or A ss&5vs)
(8 Awe Tract)
(s) Rtffus F. Desi Hslfs. Dsvlsess,Successors of Assig fix
7.03 ecrtw 144581%
(fu1 ) Eunlce E. Deal Raines airs, Devisaes,Successors of Asslgfrs
(a.i.l) Henry DealP.Q Box107
Vansanl, VA 24656
1 00 acresfn of703acres
(a.1.2) ktagsterw Deal10320ld Wagon Rd.Vansant, VA 24656
1.00 acmetn or 7.03 acres
(S.1.3) Ccfena Afgueara140 Catk I sneBoems, TX 78006
1.00 acres1(T ct T.03acres
2.0&52%
(a 1.4) Donald Deal Heirs, DevtseemSuccessors or Assigns
(s.1.4.1) Ruby Owens Deal Helm, Devisees,Successors or Assigrw
