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V I R G I N I A:

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y,~".—-".~=NT NO. ~+& —~p~„-. . . i i)z the Cork's Of568

ef Dickerson Gouty ~ ~BEFORE THE VIRGINIA GAS AND OIL BOARD

INST'R'& V,."-&)g P)(&PqP~B P~r

V)R( )AIR ('~J Al~() J)L H~ h ~

APPLICANT:

RELIEF SOUGHT:

Equitable Production Company

POOLING OF INTERESTS IN A 58. 77ACRE SQUARE DRILLING UNITDESCRIBED IN EXHIBIT A HERETO

LOCATED IN THE NORA COAL BED GAS

FIELD AND SERVED BY WELL NO.VC-535602 (herein "Subject DrillingUnit" ) PURSUANT TO VA. CODE

55 45. 1-361.21 AND 45. 1-361.22,FOR THE PRODUCTION OF OCCLUDED

NATURAL GAS PRODUCED FROM COALBEDS

AND ROCK STRATA ASSOCIATEDTHEREWITH (herein "Coalbed MethaneGas" or "Gas")

LEGAL DESCRIPTION:

SUBJECT DRILLING UNIT SERVED BY WELL NUMBERED

VC-535602(herein "Well" ) TO BE DRILLED INTHE LOCATION DEPICTED ON EXHIBIT A HERETO,THE HAGEN ESTATES, INC.54 ACRE FEE TRACTCANEY RZDGE QUADRANGLE

KENADY MAGISTERIAL DISTRICTDICKENSON COUNTY, VIRGINIA(the "Subject Lands" are moreparticularly described on Exhibit A,attached hereto and made a part hereof)

) VIRGINIA GAS

) AND OIL BOARD

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) DOCKET NO.

) VGOB-04/02/17-1260)

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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. onFebruary 17, 2004 Southwest Higher Education Center, Campus of VirginiaHighlands Community College, Abingdon, Virginia.

2. Appearances: James E. Kaiser of Wilhoit and Kaiser, appeared forthe Applicant; and Sharon M. B. Pigeon, Assistant Attorney General, was

present to advise the Board.

3. Jurisdiction and Notice: Pursuant to Va. Code 5545. 1-361.1 et~se . , the Board finds that it has jurisdiction over the subject matter.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 whereabouts ofeach gas and oil owner, coal owner, or mineral owner and/or potential owner,i.e. , person identified by Applicant as having ("Owner" ) or claiming

("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, C-Seam, War

Creek, Beckley, Lower Horsepen, X-Seam, Pocahontas No. 9, 8, 7, 6, 5, 4, 3,2, and any other 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. Code 55 45. 1-361.19 and 45. 1-361.22, to notice of theapplication filed herein; and (3) that the persons set forth in Exhibit B

hereto have been identified by Applicant as persons who may be Owners orClaimants of Coalbed Methane Gas interests in Subject Formations in theSubject Drilling Unit who have not heretofore agreed to lease or sell to theApplicant and/or voluntarily pool their Gas interests. Conflicting GasOwners/Claimants in Subject Drilling Unit are listed on Exhibit B. 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 statutory requirements, Board rule requirements andthe minimum standards of state due process.

4. Amendments: None.

Dismissals: None.

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 rights, 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 Exhibit B hereto and that of their known and unknown heirs,executors, administrators, devisees, trustees, assigns and successors, bothimmediate and remote, for the drilling and operation, including production,of Coalbed Methane Gas produced from the Subject Drilling Unit establishedfor the Subject Formations underlying and comprised of the Subject Lands,(hereafter sometimes collectively identified and referred to as "welldevelopment and/or operation in the Subject Drilling Unit" ); and, (2) thatthe Board designate Equitable Production Company as the Unit Operator.

7. Relief Granted: The requested relief in this cause shall be andhereby is granted and: (1) pursuant to Va. Code 5 45. 1-361.21.C. 3,Equitable Production Company (hereafter "Unit Operator" or "Operator" ) isdesignated as the Unit Operator authorized to drill and operate the Well inSubject Drilling Unit at the location depicted on the plat attached hereto asExhibit A, subject to the permit provisions contained in Va. Code 5 45. 1-361.27, et ~se . , ; to 55 4 VAC 25-150 et ~se . , Gas and Oil Regulations; to 5 4VAC 25-160 et ~se . , Virginia Gas and Oil Board Regulations and to the NoraCoal Bed Gas Field Rules established by the Oil and Gas Conservation Board'sOrder entered March 26, 1989; all as amended from time to time; and (2) allthe interests and estates in and to the Gas in Subject Drilling Unit,including that of the Applicant, the Unit Operator and of the known andunknown persons listed on Exhibit B, attached hereto and made a part hereof,and their known and unknown heirs, executors, administrators, devisees,trustees, assigns and successors, both immediate and remote, be and hereby

are pooled in the Subject Formations in the Subject Formation in the SubjectDrilling Unit underlying and comprised of the Subject Lands.

Pursuant to the Nora Coal Field Rules promulgated under the authorityof Va. Code 5 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 Coalbed Methane Gas.

For Frac Well Gas. — Gas shall be produced from and allocated to onlythe 58.77 acre drilling unit in which the well is located according tothe undivided interests of each Owner/Claimant within the unit, whichundivided 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 58.77-acre drilling unit in the manner set forth in the NoraField Rules.

8. Election and Election Period: In the event any Owner or Claimantnamed in Exhibit B 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 if,on or before the last day of said 30-day period, such electing person hasdelivered his written election to the designated Unit Operator at the addressshown 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 Options:

9.1 Option 1 — To Participate In The Development and Operation of theDrilling Unit: Any Gas Owner or Claimant named in Exhibit B whohas not reached a voluntary agreement with the Applicant or UnitOperator may elect to participate in the Well development andoperation in the Subject Drilling Unit (hereafter "ParticipatingOperator" ) by agreeing to pay the estimate of such ParticipatingOperator's proportionate part of the actual and reasonable costs,including a reasonable supervision fee, of the Well developmentand operation in the Subject Drilling Unit, as more particularlyset forth in Virginia Gas and Oil Board Regulation 4 VAC 25-160-100 (herein "Completed for Production Costs" ) . Further, aParticipating Operator agrees to pay the estimate of suchParticipating Operator's proportionate part of the Estimated,Completed-for-Production Costs as set forth below to the UnitOperator within forty-five (45) days from the later of the dateof mailing or the date of recording of this Order. The estimatedCompleted-for-Production Costs for the Subject Drilling Unit areas follows:

Completed-for-Production Costs: $255, 233.00

A Participating Operator's proportionate cost hereunder shall bethe result obtained by multiplying the Participating Operator's"Interest within Unit" as set forth herein in the attachedExhibit B times the Estimated Completed-for-Production Costs setforth above. Provided, however, that in the event a ParticipatingOperator elects to participate and fails or refuses to pay theestimate of his proportionate part of the Estimated, Completed-for-Production Costs as set forth above, all within the time setforth herein and in the manner prescribed in Paragraph 8 of thisOrder, then such Participating Operator shall be deemed to haveelected not to participate and to have elected compensation inlieu of participation pursuant to Paragraph 9.2 herein.

9.2 Option 2 — To Receive A Cash Bonus Consideration: In lieu ofparticipating in the Well development and operation in SubjectDrilling Unit under Paragraph 9.1 above, any Gas Owner orClaimant named in Exhibit B hereto who has not reached avoluntary agreement with the Unit Operator may elect to accept acash bonus consideration of $5.00 per net mineral acre owned bysuch person, commencing upon entry of this Order and continuingannually until commencement of production from Subject DrillingUnit, and thereafter a royalty of 1/8th of 8/8ths [twelve andone-half percent (12.5%)] of the net proceeds received by theUnit Operator for the sale of the Gas produced from any Welldevelopment and operation covered by this Order multiplied bythat person's Interest Within Unit as set forth in Exhibit B [forpurposes of this Order, net proceeds shall be actual proceedsreceived less post-production costs incurred downstream of thewellhead, including, but not limited to, gathering, compression,treating, transportation and marketing costs, whether performedby Unit Operator or a third person] as fair, reasonable andequitable compensation to be paid to said Gas Owner or Claimant.The initial cash bonus shall become due and owing when so electedand shall be tendered, paid or escrowed within one hundred twenty(120) days of recording of this Order. Thereafter, annual cashbonuses, if any, shall become due and owing on each anniversaryof the date of recording of this order in the event productionfrom Subject Drilling Unit has not theretofore commenced, andonce due, shall be tendered, paid or escrowed within sixty (60)days of said anniversary date. Once the initial cash bonus andthe annual cash bonuses, if any, are so paid or escrowed, saidpayment(s) shall be satisfaction in full for the right,interests, and claims of such electing person in and to the Gasproduced from Subject Formation in the Subject Lands, 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 suchelecting 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 the

Gas produced from Subject Formation in the Subject Drilling Unitto the Applicant.

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

Participating Person On A Carried Basis And To ReceiveConsideration In Lieu Of Cash: In lieu of participating in theWell 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 who has not reached a voluntaryagreement with the Unit Operator may elect to share in the welldevelopment and operation in Subject Drilling Unit on a carriedbasis (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 suchCarried 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 andhereby 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 oroverriding royalty, or other non-operating or non cost-bearingburden reserved in any lease, assignment thereof or agreementrelating thereto covering such interest) equals three hundredpercent (300%) for a leased interest or two hundred percent(200%) for an unleased interest (whichever is applicable) of suchCarried Well Operator's share of the Completed-for-ProductionCosts allocable to the interest of such Carried Well Operator.When the Unit Operator recoups and recovers from such CarriedWell Operator's assigned interest the amounts provided for above,then, the assigned interest of such Carried Well Operator shallautomatically revert back to such Carried Well Operator, and fromand after such reversion, such Carried Well Operator shall betreated as if it had participated initially under Paragraph 9.1above; and thereafter, such participating person shall be chargedwith and shall pay his proportionate part of all further costs ofsuch well development and operation.

Subject to a final legal determination of ownership, the electionmade under this Paragraph 9.3, when so made, shall besatisfaction 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 interestis carried as above provided prior to its reversion back to suchelecting person.

10. Failure to Properly Elect: In the event a person named inExhibit B 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 alternatives set forth in Paragraph 9 above for which his

interest qualifies, 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 finallegal 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 from 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 SubjectFormation underlying Subject Lands.

11. Default By Participating Person: In the event a person named inExhibit B elects to participate under Paragraph 9.1, but fails or refuses topay, to secure the payment or to make an arrangement with the Unit Operatorfor the payment of such person's proportionate part of the estimatedCompleted-for-Production costs as set forth herein, all within the time andin the manner as prescribed in this Order, then such person shall be deemed

to 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 9.2

above for which his interest qualifies depending on the excess burdensattached to such interest. Whereupon, any cash bonus consideration due as aresult 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, itshall be satisfaction in full for the right, interests, and claims of suchperson in and to the Gas underlying Subject Drilling Unit in the SubjectLands 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 Exhibit B

is unable to reach a voluntary agreement to share in the Well developmentand operation in Subject Drilling Unit at a rate of payment agreed tomutually by said Gas Owner or Claimant and the Unit Operator, and said personelects or fails to elect to do other than participate under Paragraph 9.1above in the Well development and operation in Subject Drilling Unit, thensuch person shall be deemed to have and shall have assigned unto UnitOperator such person's right, interests, and claims in and to said Well, inSubject 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 Operator (or Operator): Equitable 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 5% 45. 1-361.27 et seq. ; 55 4 VAC

25-150 et ~se . , Gas and Oil Regulations; 55 4 VAC 25-160 et ~se . , Virginia

Gas and Oil Board Regulations; Oil and Gas Conservation Board ("OGCB") Orderestablishing the Nora 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:

Equitable Production Company1710 Pennsylvania AvenueCharleston, WV 25328Phone: (304) 348-3800Fax: (304) 344-0363Attn: Melanic Freeman

14. Commencement of Operations: 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 terminate,except for any cash sums then payable hereunder; otherwise, unless soonerterminated 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 andplugged. 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 periodreferenced herein.

15. Operator's Lien: 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 extentthat 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.

16. Escrow Provisions:

The Applicant represented to the Board that there are not unknown orunlocatable claimants in Subject Drilling Unit whose payments are subject tothe provisions of Paragraph 16; and, the Unit Operator has represented to theBoard that there are conflicting claimants in Tract (s) 4, 5, 6, 7 of theSubject Drilling Unit whose payments are subject to the provisions ofParagraph 16.2 hereof. Therefore, by this Order, the Escrow Agent namedherein or any successor named by the Board, is required to establish aninterest-bearing escrow account for Tract (s) 4, 5, 6, 7, of the SubjectDrilling Unit (herein "Escrow Account" ), and to receive and account to theBoard pursuant to its agreement for the escrowed funds hereafter described inParagraphs 16.1 and 16.2:

Wachovia BankCorporate Trust PA1328123 South Broad StreetPhiladelphia, PA 19109-1199Attn: Rachel Rafferty

16.1.Escrow Provisions For Unknown or Unlocatable Persons: If any paymentof bonus, royalty payment or other payment due and owing under thisOrder cannot be made because the person entitled thereto cannot belocated or is unknown, then such cash bonus, royalty payment, or otherpayment shall not be commingled with any funds of the Unit Operatorand, pursuant to Va. Code 5 45. 1-361.21.D, said sums shall be depositedby the Unit Operator into the Escrow Account, commencing within onehundred twenty (120) days of recording of this Order, and continuingthereafter on a monthly basis with each deposit to be made, by use of areport format approved by the Inspector, by a date which is no laterthan sixty (60) days after the last day of the month being reportedand/or for which funds are being deposited. Such funds shall be heldfor the exclusive use of, and sole benefit of the person entitledthereto until such funds can be paid to such person(s) or until theEscrow Agent relinquishes such funds as required by law or pursuant toOrder of the Board in accordance with 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 becommingled 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 bemade 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 benefit of, the person entitled thereto until such funds can bepaid to such 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 Company. Applicant is dulyauthorized and qualified to transact business in the Commonwealth ofVirginia;

17.2. Applicant Equitable Production Company has made a delegation ofauthority to Equitable Production Company to explore, develop and

maintain the properties and assets of Applicant, now owned orhereafter acquired, and Equitable Production Company 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 requirementsfor operations in Virginia;

17.4 Applicant Ecpxitable Production Company claims ownership of gasleases, Coalbed Methane Gas leases, and/or coal leases representing98.08t percent of the oil and gas interest/claims in and to CoalbedMethane Gas and 100 percent of the coal interest/claims in and toCoalbed Methane Gas in Subject Drilling Unit; and, Applicant claimsthe right to explore for, develop and produce Coalbed Methane Gasfrom Subject Formations in Subject Drilling Unit in DickensonCounty, Virginia, which Subject Lands are more particularlydescribed in Exhibit Ay

17.5. The estimated total production from Subject Drilling Unitis 300 NNCG. The estimated amount of reserves from theSubject Drilling Unit is 300 MNCG;

17.6. Set forth in Exhibit B, is the name and last knownaddress of each Owner or Claimant identified by the Applicantas having or claiming an interest in the Coalbed Methane Gas inSubject Formation in Subject Drilling Unit underlying and comprisedof Subject Lands, who has not, in writing, leased to the Applicantor the Unit Operator or agreed to voluntarily pool his interests inSubject Drilling Unit for its development. The interests of theRespondents listed in Exhibit B comprise 1.92% percent of the oiland gas interests/claims in and to Coalbed Methane Gas and 0 percentof the coal interests/claims in and to Coalbed Methane Gas inSubject Drilling Unit;

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 inParagraph 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 B hereto the opportunity to recover orreceive, without unnecessary expense, such person's just and fairshare of the production from Subject Drilling Unit. The grantingof the Application and relief requested therein will ensure to theextent possible the greatest ultimate recovery of Coalbed MethaneGas, prevent or assist in preventing the various types of wasteprohibited by statute and protect or assist in protecting thecorrelative rights of all persons in the subject common sources ofsupply in the Subject Lands. Therefore, the Board is entering an

Order granting the relief herein set forth.

18. Mailing Of Order And Filing 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 B pooled bythis 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 are submitted by the Unit Operator to saidDirector and/or his Inspector(s).

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

21. Appeals: Appeals of this Order are governed by the provisions ofVa. Code Ann. 5 45. 1-361.9 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.

/7DONE END EXECUTED this l0 dsy ofg by a majority

of the Virginia Gas and Oil Board

Chairman, Benny�.

Wampler

DONE AND PERFORMED this day othis Board.

AEI, 2&( by Order of

~t(W~&B. k. WilsonPrincipal Executive To The StaffVirginia Gas and Oil Board

10

STATE OF VIRGINIA )COUNTY OF WISE )

Acknowledged on this //l~ day of/gJxwecX~ , wJpD A

personally before me a notary public in and for the Commonwealth of Virginia,appeared Benny Wampler, being duly sworn did depose and say that he isChairman of the Virginia Gas and Oil Board, that he executed the same and wasauthorized to do so.

Notary Public

My commission expires:g ~~

STATE OF VIRGINIA )

COUNTY OF WASHINGTON )

Acknowledged on this l~ day of ~~A~ Z~~ personallybefore me a notary public in and for the Commonwealth of Virginia, appearedB. R. Wilson, being duly sworn did depose and say that he is PrincipalExecutive to the Staff of the Virginia Gas and Oil Board, that he executedthe same and was authorized to do s

Mycommission expire Ps/~D'5Notary Public

11

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Well Coordinates: (Geographic N27)37.032577 -82.456754'

11,655

Lotitude 3T 02' 3'0"

Vo. Rte. 649

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355

Well elevation determined by GPSsurvey from Bhl HLS 1576

See Attached Tract Ownershipinformation Schedule

Area of Vnit = 58.77 Ac.

WELL LOCATION PLAT

kVell Coordinates: (VA St. Plane S. Zone,Calculated from CCC coordinates)N 278, 781 E 845,546

Welf Coordinates: (Clinchfield Cool Co.)S 24,531, 15 W 21,382.61

Production Comoanv WELL NAME AND NUMBER I/C —5356022 4 18 87' QUADRANGLE Canev RidaeTRACT NO. Ls. No. 223058L ELEVATION

COUNTY Oickenson DISTRICT Kenadv SCALE 1

Thi Plat is a new plat ~; an updated plat or a final location platDenotes the location of a well on United States topographic Maps, scale o24,000, latitude and ion itude lines being represented by border lines as shown.

Licensed Land Surveyor

VC-535602 PLATTRACT OWNERSHIP INFORMATION SCHEDULE

1/12/2004

1 . Lease No. 223068LThe Hagan Estates Inc. - surface, coal, oil & gas

54 Acres

Gas 44.14 Ac. 75.11%

2 . Lease No. 223068LThe Hagan Estates Inc. - coal, oil & gas54 Acres

or

Lease No. 241490L / T-624W. H. Aston

213 Acres

ACIN LLC - coal

Alpha Land & Natural Reserves LLC - coal lessee

WBRD LLC - coalDickenson-Russell Coal Company LLC - coal lessee

Pine Mountain Oil &, Gas - oil, gas & CBMGas 1.36 Ac. 2.31%

3 . Lease No. 241490L / T-624W. H. Aston

213 Acres

ACIN LLC - coal

Alpha Land & Natural Reserves LLC - coal lessee

WBRD LLC - coalDickenson-Russell Coal Company LLC - coal lesseePine Mountain Oil & Gas - oil, gas & CBMGas 6.34 Ac. 10.79%

4 . Margaret Meade Boiling, et al - oil & gasLease No. 904576.00ACIN LLC - coal (D-5)Gas 2.69 Ac. 4.58%

5 . Clifford F. Williams, et al - oil & gasLease No. 904576.00ACIN LLC -.coal (D-5)Gas 0.47 Ac. 0.80%

6 . Lease No. 223068LThe Hagan Estates Inc. - surface, oil & gas54 Acres

or

Margaret Meade Boiling, et al - surface, oil & gas

Lease No. 223068LThe Hagan Estates Inc. - coal54 Acres

orLease No. 904576.00ACIN LLC - coal (D-5)Gas 0.78 Ac. 1.33%

7 . Lease No. 223068LThe Hagan Estates Inc. —surface, oil & gas

54 Acresor

Clifford F. Williams, et al - surface, oil & gas

Lease No. 223068LThe Hagan Estates Inc. - coal

54 Acresor

Lease No. 904576.00ACIN LLC - coal (D-5)Gas 0.44 Ac. 0.75%

8 . Lease No. 904576.00ACIN LLC - surface, coal (D-38), oil & gas

Gas 0.06 Ac. 0.10%

9 . Lease No. 223068LThe Hagan Estates Inc. - surface, coal, oil & gas

54 Acresor


10 . Lease No. 223068LThe Hagan Estates Inc. - surface, oil & gas

54 AcresLease No. 223068LThe Hagan Estates Inc. - coal

54 Acresor


EXHIBIT "B"VC-535602

TRACT LESSORLEASESTATUS

INTERESTWITHIN

UNIT

GROSSACREAGE

IN UNIT

The Hagan Estates, Inc.c/o The Gillespie CompanyPO Box 675Tazewell VA 24651

Gas Estate Onlv

Leased223068.01

75. 1 1000000% 44.1400

or


Pine Mountain Oil and Gas Inc.Attn: Richard Brillhart

PO Box 2136Abingdon, VA 24212



Margaret Meade Boiling andDonnie R. Boiling, her husband5512 North Pound Fork RoadPound, VA 24279

Leased223068.01

Leased241490.01T-624

241490.01T-624

I eased-EPC905136.01

2.31000000%

2.31000000%

1 0.79000000%

2.61860300%

1.3600

1.3800

6.3400

1.5380

Bernard Meade andKitty Meade, H/W

4941 Pole Bridge RoadWise, VA 24293

Leased-EPC905136.03

0.65379900% 0.3840

Carl Meadeand Patsy Meade, H/W

Route 2, Box 137-ACoeburn, VA 24230

Unleased 0.65379900% 0.3840

Shirley J. Meade, widow

115 Fairbanks RoadApt f/308,Oakridge, TN 37830

Leased-EPC905136.02

0.21793300% 0.1280

Donald Wayne Meade, singlePO Box 312,Moravian Falls, NC 28654

William Clyde Meadeand Deborah Meade, H/W

PO Box 312,Moravian Falls, NC 28654

Unleased

Unleased

0.21793300%

0.21793300%

0.1280

0.1280

Clifford F. Wiiliams, widow

Rt 2, Box 115Coeburn, VA 24230

Quentin Freeman andLuella Freeman, H/W

3855 S. Atlantic AvenueDaytona Beach Shores, FL 32118

Mary Martha Freeman, widow5400 SW Mapp Rd

Leased-EPC905132.01

Leased-EPC905132.06

Unleased

Page1 of6

0 15984400%

0 15997400%

0 15997400'/

0.0939

0.0940

0.0940

EXHIBIT "B"YC-535602

TRACT LESSORPalm City, FL 34990

LEASESTATUS

INTERESTWITHIN

UNIT

GROSSACREAGE

IN UNIT

Carmen Malley andRonnie Malley, W/H

2423 Pennisula Drive

Daytona Beach, FL 32118

Leased-EPC905132.07

0.08005200% 0.0470

G.T. Smith, single2533 S. Pennisula Drive


Lewis Salyer andMarlese Salyer, H/W

PSC 120 Box R125APOAE09265

Unleased

Unleased

0.08005200%

0.02668400%

0.0470

0.0157

Gary Salyer andSonya Salyer, H/W

515 Ridge AvenueNorton, VA 24273

Leased-EPC905132.07

0.02668400% 0.0157

Shirley Osborne, widow

520 Hopkins StreetKingsport, TN 37664

Leased-EPC905132.03

0.02668400% 0.0157

Rita Matthews andGerald Matthews W/H

921 Mago Vista RoadArnold, MD 21012

Leased-EPC905132.08

0.02668400% 0.0157

Rita Joe Salyer3223 Edgewood RoadKensington, MD 20895

Leased-EPC905132.05

0.02668400% 0.0157

Joe Salyer andCarolyn Salyer, H/W

413 Hobart StreetKingsport, TN 37664

Leased-EPC905132.04

0.02668400% 0.0156

6 Margaret Meade Boiling andDonnie R. Boiling, her husband5512 North Pound Fork RoadPound, VA 24279

Leased-E PC

905136.010.76042400% 0.4460



Leased-E PC

905136.030.1 8985900% 0.1113



Unleased 0.1 8985900% 0.1113


115 Fairbanks RoadApt 4308,Oakridge, TN 37830

Leased-EPC905136.02

0.06328600% 0.0371


Unleased 0.06328600% 0.0371

Page 2 of 6

t n,


TRACT LESSOR



LEASESTATUS

Unleased

INTERESTWITHIN

UNIT

0.06328600%

GROSSACREAGE

IN UNIT

0.0372

or The Hagan Estates inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

7 Clifford F. Williams, widow

Rt2, Box 115Coeburn, VA 24230

Leased-E PC

223068.01

Leased-E PC

905132.01

1 .3333333%

0.14985400%

.7800

0.0879



Leased-EPC905132.06

0.14997600% 0.0880

Mary Martha Freeman, widow

5400 SW Mapp RdPalm City, FL 34990




Unleased

Leased-EPC905132.07

0 14997600%

0.07504900%

0.0880

0.0440



Unleased 0.07504900% 0.0440



Unleased 0.02501600% 0.0147










Leased-EPC905132.02

Leased-EPC905132.03

Leased-EPC905132.08

Leased-EPC905132.05

Leased-E PC

905132.04

0.02501600%

0.02501600%

0.02501600%

0.0250 1 600%

0.02501600%

0.0147

0.0147

0.0147

0.0147

0.0146

Page 3 of 6


I r/

I

TRACT LESSORLEASESTATUS

INTERESTWITHIN

UNIT

GROSSACREAGE

IN UNIT

or The Hagan Estates, Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

8 AGIN, LLC

PO Box 2827Huntingon, WV 25727

Leased-E PC

223068.01

Leased-E PC

904576.00DI-38

.75000000%

0.1 0000000%

0.4400

0.0600

9 AGIN, LLC



10 The Hagan Estates, Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Total Gas Estate

Leased-E PC

905576.00DI-38

Leased-EPC223068.01

Leased-EPC223068.01

Q 89QQQQQQ%

0.89000000%

3.34000000%

100.00000000%

0.5200

0.5200

1.9700

58.7700

Percentage of Unit LeasedPercentage of Unit Unleased

Acreage in Unit LeasedAcreage in Unit Unleased

98.0771 5300%1 .92284700%

57.64101.1290

Page 4 of 6


TRACT LESSOR


LEASESTATUS

Coal Estate Onlv

Leased223068.01

INTERESTWITHIN

UNIT

75.1 1 000000%

GROSSACREAGE

IN UNIT

44.1400

OI'


Pine Mountain Oil and Gas Inc.Attn; Richard Brillhart




AGIN, LLC


Leased223068.01

Leased241490.01T-624

241490.01T-624

Leased-EPC905576.01D-5

2.31000000%

2.31000000%

10.79000000%

4.58000000%

1.3600

1.3800

6.3400

2.6900

5 AGIN, LLC



0.80000000% 0.4700

AGIN, LLC



1.33000000% 0.7800

OI' The Hagan Estates Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Leased-EPC223068.01

1.33333333% 0.7800

AGIN, LLC


Leased-E PC

904576.00D-5

0 75000000% 0.4400

or

OI'

The Hagan Estates, Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

AGIN, LLCPO Box 2827Huntingon, WV 25727

AGIN, LLC


The Hagan Estates, Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Leased-EPC223068.01

Leased-E PC

904576.00DI-38

Leased-E PC

905576.00DI-38

Leased-EPC223068.01

.75000000%

P 1PPPPPPP%

0.89000000%

Q 89000000'/

0.4400

0.0600

0.5200

0.5200

Page 5 of 6

Li(


TRACT LESSOR10 The Hagan Estates, Inc.

do The Gillespie CompanyPO Box 675Tazewell, VA 24651

LEASESTATUSL.eased-EPC223068.01

INTERESTWITHIN

UNIT3.34000000%

GROSSACREAGE

IN UNIT1.9700

or AGIN, LLC


Leased-EPC905576.01DI-38

3 34000000% 1.9700

Total Coal Estate 1 00.00000000% 58.7700

Percentage of Unit LeasedPercentage of Unit Unleased

Acreage in Unit LeasedAcreage in Unit Unleased

1 00.00000000%P PPPPPPPP%

58.77000.0000

Page 6 of 6

TRACT LESSOR

EXHIBIT "B-3"VC-535602

UNLEASED OWNERS

LEASESTATUS

I'l/

INTERESTWITHIN

UNIT

GROSSACREAGE

IN UNIT

Gas Estate Onlv

4 Carl Meadeand Patsy Meade, H/W


Unleased 0.65379900% 0.3840

4 Donald Wayne Meade, singlePO Box 312,Moravian Falls, NC 28654

Unleased 0.21793300% 0.1280

4 William Clyde Meadeand Deborah Meade, H/W


Unleased 0.21793300% 0.1280

5 Mary Martha Freeman, widow


Unleased 0 15997400% 0.0940

5 G.T. Smith, single2533 S. Pennisula Drive


Unleased 0.08005200% 0.0470

5 Lewis Salyer andMarlese Salyer, H/W


Unleased 0.02668400% 0.0157

6 Carl Meadeand Patsy Meade, H/W


Unleased 0.18985900% 0.1113

6 Donald Wayne Meade, singlePO Box 312,Moravian Falls, NC 28654

Unleased 0.06328600% 0.037'l

6 William Clyde Meadeand Deborah Meade, H/W


Unleased 0.06328600% 0.0372

7 Mary Martha Freeman, widow5400 SW Mapp RdPalm City, FL 34990

7 G.T. Smith, single2533 S. Pennisula Drive


Unleased

Unleased

0 14997600%

0 07504900%

0.0880

0.0440

7 Lewis Salyer andMarlese Salyer, H/W


Unleased 0 02501600%

1 92284700%

0.0147

1.1290

Page 1 of 1

TRACT

EXHIBIT "E"VC-535602

Listing of Unleased Owners/Claimants requiring EscrowINTEREST

LEASE WITHIN

STATUS UNITLESSOR

GROSSACREAGE

IN UNIT

4 Margaret Meade Boiling and

Gas Estate Donnie R. Boiling, her husband5512 North Pound Fork RoadPound, VA 24279

Leased-EPC905136.01

2.61860300% 1.5380

Bernard Meade and

Kitty Meade, H/W





115 Fairbanks RoadApt «308,Oakridge, TN 37830




Leased-EPC905136.03

Unleased

Leased-EPC905136.02

Unleased

Unleased

Total

0 65379900%

0 65379900%

0.21793300%

0.21793300%

0.21793300%

4.58000000%

0.3840

0.3840

0.1280

0.1280

0.1280

2.6900

OR

4 AGIN LLC

Coal Estate PO Box 2827Huntington, WV 25727

Leased-EPC904576.00Dl-5

4.58000000% 2.6900

Total 4 58000000'/ 2.6900

5 Clifford F. Williams, widow

Gas Estate Rt2, Box115Coeburn, VA 24230

Leased-E PC

905132.010.1 5984400% 0.0939



Mary Martha Freeman, widow


Leased-E PC

905132.06

Unleased

0 15997400%

0.1 5997400%

0.0940

0.0940




Leased-E PC

905132.07

Page 1 of4

0.08005200% 0.0470

r'I I

1Lit

TRACT LESSOR



LEASE WITHIN

STATUS UNIT

GROSSACREAGE

IN UNIT





Unleased

Unleased

0.08005200%

0.02668400%

0.0470

0.0157



Leased-EPC905132.02

0.02668400% 0.0157



Leased-EPC905132.03

0.02668400% 0.0157

Rite Matthews andGerald Matthews W/H


Leased-E PC

905132.080.02668400% 0.0157

Rite Joe Salyer3223 Edgewood RoadKensington, MD 20895



Leased-EPC905132.05

Leased-EPC905132.04

0.02668400%

0.02668400%

0.0157

0.0156

Total 0.80000000% 0.4700

OI'

5 ACIN LLCCoal Estate PO Box 2827

Huntington, WV 25727

Leased-EPC904576.00Dl-5

Total

0.80000000%

0.80000000%

0.4700

0.4700

6 Margaret Meade Bolting andGas Estate Donnie R. Boiling, her husband

5512 North Pound Fork RoadPound, VA 24279



Leased-EPC905136.01

Leased-EPC905136.03

0,76042400%

0.1 8985900%

0.4460

0.1113



Unleased 0.1 8985900% 0.1113

Page 2 of 4

TRACT



LEASE WITHIN

STATUS UNITLESSOR

GROSSACREAGE

IN UNIT


115 Fairbanks RoadApt ¹308,Oakridge, TN 37830

Leased-EPC905136.02

0.06328600% 0.0371


Unleased 0.06328600% 0.0371



Unleased 0.06328600% 0.0372

OI' The Hagan Estates Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Leased-EPC223068.01

Total

1 3333333%

1.330DDDDD /o

.7800

0.7800

OR

6 AGIN LLCCoal Estate PO Box 2827


I eased-EPC904576DI-5

1 33000000% 0.7800

Total 1.330DDDDD% D.7$DD

7 Clifford F. Williams, widowGas Estate Rt2, Box115

Coeburn, VA 24230

Leased-E PC

905132.010.14985400% 0.0879



Leased-E PC

905132.060.14997600% 0.0880

Mary Martha Freeman, widow5400 SW Mapp RdPalm City, FL 34990




Unleased

Leased-E PC

905132.07

0.14997600%

0.07504900%

0.0880

0.0440





Unleased

Unleased

0.07504900%

0.02501600%

0.0440

0.0147

Gary Safyer andSonya Salyer, H/W


Leased-EPC905132.02

Page 3 of 4

0.02501600% 0.0147

TRACTLEASESTATUSLESSOR


Listin of Unleased Owners/Claimants requiring Escrowis Ing oINTEREST GROSS

WITHIN ACREAGEUNIT IN UNIT

Shirley Osborne, widow520 Hopkins StreetKingsport, TN 37664

Leased-E PC

905132.030.02501600% 0.0147



Leased-E PC

905132.080.02501600% 0.0147


Joe Salyer andCarolyn Salyer, HNV


Leased-E PC

905132.05

Leased-EPC905132.04

0.02501600%

0.02501600%

0.0147

0.0146


Leased-E PC

223068.01

Total

.75PPPDPP%

P.75PPPPPP%

0.4400

0.4400



Leased-E PC P.75PPPP00% 0.4400

or The Hagan Estates Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Leased-E PC

223088.01

Total

.75000000%

P.75PPPPPP%

0.4400

0A400

Tl.fr'TQI IiaLtI'T gor i"II-;p~~~rf

r i/r- t/L kjsI'iI. I PILI

TATF i I DI

VIRGiNIA: IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT OF 0ICKENSON COUNTY,presented in said office, and upon the certificate of acknowledgment thereto annexed, admitted to$ tax imposed by Sec. 58.1-802.

2~ This deed was this dayo'clock pM, after payment of

oigni imedihisdaieto: Zi~~P BY:

Page 4 of 4

TRACT LESSOR



LEASE WITHIN

STATUS UNIT

GROSSACREAGE

IN UNIT


115 Fairbanks RoadApt ¹308,Oakridge, TN 37830

Leased-EPC905136.02

0.06328600% 0.0371

Donald Wayne Meade, singlePO Box 312,Moravian Falls, NC 2S654

Unleased 0.0632S600% 0.0371



Unleased 0.06328600% 0.0372

or The Hagan Estates Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Leased-E PC

223068.01

Total

1 3333333%

1.33000000%

.7800

0.7800

OR



Leased-EPC904576Dl-5

1 .33000000% 0.7800

Total 1.33000000% 0.7800

7 Clifford F. Williams, widowGas Estate Rt2, Box115

Coeburn, VA 24230

Leased-EPC905132.01

0.14985400% 0.0879



Mary Martha Freeman, widow5400 SW Mapp RdPalm City, FL 34990

Leased-EPC905132.06

Unleased

0.14997600%

0.14997600%

0.0880

0.0880




Leased-EPC905132.07

0 07504900% 0.0440

G.T. Smith, single2533 S. Pennisula DriveDaytona Beach, FL 32118

Unleased 0 07504900% 0.0440



Unleased 0.02501600% 0.0147



Leased-E PC

905132.020.02501 600% 0.0147

Page 3 of 4

or


The Hagan Estates Inc.c/o The Gillespie CompanyPO Box 675Tazewell, VA 24651

Leased-EPC223088.01

Total

75000000%

P.76PPPPPP%

0.4400

0.4400

PP Off f"tLD QV ~ i L~I+

VIRGINIA: IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT OF DICKENSON COUNTY,~ /~, 2~ This deed was this daypresented in said office, and upon the certificate of acknowledgment thereto annexed, admitted to record at gg~ o'clock BM, after oavment of

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P~r )AIR Al~() I p~„-. · PDF fileRelief Granted: The requested relief in ... calculation of production and revenue and allocation of allowable costs for ... operation of the Well