100002486I ut

VIII G IN I A/ BEFORE THE GAS AND OH BOARD

CNX Gas Company LLC on behalf of Reserve CoalProperties and Frankes Estate et al; Ronald AClyborne in VGOB Tract 4.

RELIEFSOUGHT:

Issuance: A Supplemental Order for Disbursement of Escrowed FundsAction: Amending Prior Orders Affecting Drilling, CBM fh40.TttTt 4(Referenced herein as "the Subject Drilling Unit" )

Location: Buchanan Couutv. Virginia

Action Details:

(I) To provide a calculation of funds, Unit Operator has deposited into the Escrow Account forDrilling Unit ~by Tract Subaccounts;

(2) To provide each applicant, in simple terms, a complete month over month RoyaltyAccounting of unit production, costs, taxes and proceeds, depicting variables used in thecalculation of royalty payments to the unit escrow account.

(3) To disburse unit funds to the Applicants. in ~" with their Unit Ownership Interestsrelative to those funds deposited h u ..~pi.ator into Subiect Drilling Unit's

REPORT OF 'I P BOARD

FINDINGS AND ORDER

1. Hetsrinst Date tsad Place: This mauer came on for final I .. e uia Gas and Oil Board (herein"Board") at 9:00 a.m. on February 16, 1993 at the Dickensr onthrence Room, Sduthwest Virginia 4-H Center,Abingdon, VA.

Jo6

2. Asssetsrances: Elizabeth McClanahan, Penn, Stuart, Esk Iktge & Jones appeared for the Unit Operator PocahontasGas Partnership; and Sandra B.Riggs, Assistant Attorney General, was present to advise the Botel.

Jurigdictiost and Notice: Pursuant to Va. Code II 45.1-361.1 er seq., and in particular Va. Code ii 45.1-361.21 and 45.1-361.22,the Board finds that it has jurisdiction over the establishment and maintenance of an escmwaccount, with tract sub accounts, for each of the coalbed methane gas drilling units estt(blished by the Board throughits field rules that are subject to a Board pooling order. Buther, the Unit Opemtor is required to deposit, asapplicable, those funds specified in Va. Code I 45.1-361.21.D.,45.1-361.22.A.2, 45.1-361.22.A.3 and 45.1-361.22.AA into the applicable escrow tract sub accounts. The Board finds that: (I) while it does not havejurisdiction to resolve conflicting claims to the ownership of the Coalbed Methane Gas produced by the UnitOperator from wells located on Subject Drilling Unit, and (2) while it does not have jurisdiction to interpretagreements by and between the Gas owners/claimants aud/or the Unit Operators or to abridge or contravene thepmvisions of such agreements, (3) pursuant to Va. Code I 45.1-361.22.A.5,the Board does have jurisdiction andauthority to disburse ftmds firom the Escrow Account provided the Board has been pmvided with a final decisionof a court of competent jurisdiction adjudicating the ownership of coalbed methane gas as between the conflicting

claimants Ikr an agreement among all claimants owning conflicting estates in the tracts in question or any undividedinterest themin.

4. Prior Proceethssns:

4.1. (a) On February 16, 1993 the Board executed its order pooling interests in the Subject Drilling Unit for theproduction of occluded natural gas pmduced from coalbeds and mck strata associated themwith (herein"Gas") in accordance with the provisions of Va. Code SS 45.1-361.21and 45.1-361.22(herein "PoolingOrder" ). The Pooling Order was filed with the Clerk of the Circuit Court of Buchanan County on April 8,1993,Deed Book 406, and Pages 492 to 511, Instrument Number 000000879. The Board executed itsSupplemental Order Regarding Elections that was filed with the Clerk of the Cucuit Court of BuchananCounty on December 16, 1993, Deed Book 416, Pages 814 to 819 Instrument Number 000003138.

(b) On July 12, 2001, the Board executed its Revised Supplemental Order indicating a Royalty SplitAgreement in Exhibit EE for Tract 4 between Reserve Coal Properties ("Reserve" ) and the Franks Estate etal, Ronald A Clyborne, executed after the original Supplmental Order on April 8, 1993. The RevisedSupplemental Order also adjusted tract acreage inside the unit in the file submitted to the Clerk of the CircuitCourt of Buchanan County on July 12, 2001, Deed Book 527, and Pages 1 to 9 Instrument 010001974.

4.2. To the extent claims to the Gas were in conflict, pursuant to Va. Code S 45.1-361-22payments attributable tosaid conflicting claims were ordered deposited by the Unit Operator into the escrow account established bythe Pooling Orders (herein "Escrow Account" ). According to the Pooling Orders and testimony, the coalestate ownership interests of Reserve Coal Properties and the gas ownership interests of the Franks Estate etal; Ronald A Clyborne in Tract 4 in the Subject Dri)ling Unit were in conflict and became subject to theescrow requuements of the Pooling Order.

4.3. The Unit Operator's Miscellaneous Petinon regarding Tract 4, a copy of which is attached to and made a parthereof, states under oath that Reserve Coal Properties and the Applicants have entered into an agreement withregards to Tract 4 and that by the terms of the agreements, Reserve Coal Pmperties and the Franks Estate,Ronald A Clyborne has entered into a split agreement regarding these tracts and escrow regarding theseindividual conflicting claims detailed herein, is no longer requimd for these parties.

4.4. The Unit Operator gave notice to Reserve Coal Properties and the Applicants that the Board would considerits disbursement authorization at its hearing on August 17, 2010 and consider whether to: (I) amend the

Pooling Order to pmvide for the disbursement a portion of funds on deposit in the Escmw Accountattributable to Tract 4 identified in the attached miscellaneous petition (2) deleui the requirement that the UnitOperator place future royalties attributable to a portion of said Tract 4 relative to the interests of Applicantsidentified in the miscellaneous petition in the Escrow Account, and (3) continua the escrow account underthis docket number because there are other parties under this order subject to continued payments in theescrow.

4.5. Tbe Unit Operator filed the attached accounting for Subject Drilling Unit's Escrow Account with the Board("Accounting" ).

5. Findinttg:

5.1.Va. Code 45.1-361.22.5provides:The Board shall order payment of principal and accrued interests, less escrow account fees. Pom the escrowaccount to conjlicn'ng claimants within thirty days of receipt of notiflcanon of (i) a fina decision of a court ofcompetent jurisdicnon adjudicating the ownership of coalbed methane gas as between them or (ii) anagreement among all claimants owning conflicnng estates in the tracts in question or any undivided interesttherein 77ts amount to be paid to the conflicting claimants shall be determined based on the percentage ofownership interest of the conflicring claimants as shown in the operator's supplemental jiling made pan of thepooling order that established the escrow account, the operator's records ofdeposits attributable to those tractsfor which funds are being requested, and the records of the escrow account for the coalbed methane gasdrilling unit. The interests ofany cotenants who have not entered into an agreement shall remain in the escrowaccount.

5.2 Applicant has certified and represented to the Board that:(1) Reserve Coal Pmperties and the Franks Estate et al, Ronald A Clyborne in Tract 4 are the owners of the

coal and gas acreage estate underlying VGOB Tract 4 of the Subject Drilling Unit QM;

(2) Net interests attributable and to be disbursed to Applicants are shown in Table 1,

item Tram

No

VGOB 4/hooved D/sbofmmera

VGOB4SS0220032802 (Disbammaesa)

Table 1baasmaom Table

A harass ofTrace ia sad 1C

Pme

Iolcfcsl

Amesha 59th Escmwed % ofhaclltst Adfccmcsl Acres Escfowcd pesos

Disbomed Total

Reserve coal proaerdm / ponos 947 / Btocsehh VA 24005—~nisse

Praolres Eswe m sl

aoaald A Ctvbcstm / 9325 Otvmafc view Dave / Edmoada WA

3.47

3.4707 sad% 1.735 19.8513%

3.4700 50.0% 1.735 19.2513%~~~sa

6. Relief Granted:

For the reasons set forth in Paragraph 4 and 5 above, and based upon the Accounting apd Table 1 above, the EscrowAgent is ordered to, within 10 days of receipt of this executed order to disburse funds for the unit and applicants detailedin Table 1 above.

Exhibit E to the Pooling Order, showing owners subject to escrow, is deleted and replaced with the Exhibit E attached tothis order. Further, the Supplemental Order filed in this cause is hereby modified to delete the requirement that paymentsattributable to the conflicting coalbed methane gas ownership interests of those applicants indicated in Table 1 bedeposited by the Unit Operator into the Escrow Account, ttlgL because there are other owners subject to escmw underthe Supplemental Order, the Escmw Agent is directed to continue the Escrow Account fdr Subject Drilling Unit. To theextent not specifically granted herein, any other or further relief is denied.

7. Conclusion:Therefore, the requested relief and all terms and provisions set forth above in Paragraph 6 above be and hereby aregranted and IT IS SO ORDERED.

g. AnuealsiAppeals of this Order are governed by the provisions of Va. Code I 45.1-361.9which provides that any order or decisionof the Board may be appealed to the appropriate circuit court and that whenever a coal owner, coal operator, gas owner,gas operator, or operator of a gas storage field certificated by the State Corporation Commission is a party in such action,the court shall hear such appeal de novo.

9. Effective Date: This Order shall be effective on the date of its execution.

DONE AND EXECUTED this ~3 day ofW~~M, 2010 by a majority of the Virginia Gas and Oil Board.

d

Bradle Lam6ett, Chairman

DONE AND PERFORMED this ~~ day of AM rs M %4 2010 by an Order of this Board.

David E.Asbury Jr.,Principal Executive to the StaffVirginia Gas and Oil Board

COMMONWEALTH OF VIRGINIA )COUNTY OF Vv~gaa G G '

r4"Acknowledged on this~5 day of PA/L~A&010, personally before me a notary public in and for the

Commonwealth of Virginia, appeared Bradley C. Lamitert, being duly sworn did depose and say that he is the Chairman of

the Virginia Gas and Oil Board and David E.Asbury Jr.,being duly sworn did depose and say that he is Principal Executive

to the Staff of the Virginia Gas and Oil Board, that he executed the same and was authorized to do so.

My commission expires: 09j 30 I 2013

Diane J. Davis zfNotary Public ¹174394

IN 'TRUNENT ¹I000:ABRECORDED IN THE CLERK'5 OFFICE OF

BUCHANAiN COUNTY ON

orEPTE%ER 8t 20$ 0 AT 04'.I3PN

8EV'"Rl Y"-. TILLERI CLERK

RECORDED 8Y: &i"".

Transaction Submitted Page 1 of 1

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