'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung...

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Document is being re-recorded to include the plat. rim ! 41 . 4543& ", I I 'c LJF I V I R G ' I A: BEftlRE THE VIRGINIA GAS AND OII BOARD APPLICANT: CNX GAS COMPAN'I LLC VIRGINIA GAS A')D OIL BOARD DOCKET NO. ) 13-0017-4022 ) ) ) ) ) ) ) RFL EF SOUGHT! PDCI,I'IG OF INTERESTS IN DRILLING UNIT No. SI-114 LOCATED IN 'IHE MIDDLE RIDGE I COALBED METMDNN GAS FIELD P'JRSUANT TO VA. CODE 55 45.1 361.21 AND 45.1 361.22, FOR THE PRODUCTION OF OCCLUDED NATURAL GAS PRODUCED FRON COALBEDS AND ROCK STRATA ASSOCIATED THEREWITH (harem collectively referred to as "Coalbed Methane Gas" ar "Gas") LEGAL DESCRIPTION: DRII,LING UNIT NDMSER 01-114 (h rem "Subject Drrll ng Unrt") IN THE MIDDLE RIDGE I COALBED METHANE GAS 5'IELD MEW GARDEN MAGISIERIAL DIS1RICI EONAKIR UDADR)lNGLE RUSSELL COUN1'I, VIRGINIA (the "S bject Lands" are more par rcular)y descrrbed on E hlbrt "A", etta hed hereto and made a part hereofl REPORT OF THE BOARD FINDINGS AND ORDER 1. Hearrng Date and Place: Thr. came fo r frnal heerrng before the v rgt Go a d o I bo d (h ft "Ba d") r: Srao October 22, 2013 at the at the Russell County Cor.ference C nter, Lebanon, Vrrgrn a. 2. Appearances: Mark. Swartz, Esquire, of he frrm Swartz Law Offrces PLLC, appeared for the Applicant! and Sharon M. B. Prgeou, A srstant Attorney General, was present to advise the Board. 3. Jur sdlctron arid Notrce: Pu suant to Va. Code 55 45.1- 361.1 et ~se ., tire Board funds that lt has julrsdrctron over the suoject matter. Based upon tie evtdence pres nted by Applrcant, the Board also funds that the Applrc t has D ) exercrsed due drlrgence rn conductrng a search of the reasonably avarlable sorrces to determine the rdentrty and whereabouts of gas and orl owners, coal owners, mrneral owners and/or potentral owners, l.e., persons r.dentrfred by Applrcant as havrng (" Owner" ) or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone I, rncludkng Trller, Upper Horsepen, Mzddle Horsepen, War Creek, Beckley, Lower Horsepen, Pocahontas No. S, Pocahontas No. 6, Po ahontas No. 5, Pocahon as No. 4, Po ahontas Vo. 3, Pacahont No. I and va ious unnam d coal seams, coalb ds and ock strat.a assoc ated therewrth (hereafter "subject Format on") rn sub)ect Drlllrng Urrrt underlyrng and Page Number 1.

Transcript of 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung...

Page 1: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

Document is being re-recorded to include the plat.

rim !41 . 4543& ",I I 'c LJF I

V I R G ' I A:

BEftlRE THE VIRGINIA GAS AND OII BOARD

APPLICANT: CNX GAS COMPAN'I LLC VIRGINIA GASA')D OIL BOARD

DOCKET NO.

) 13-0017-4022

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RFL EF SOUGHT! PDCI,I'IG OF INTERESTS INDRILLING UNIT No. SI-114 LOCATED

IN 'IHE MIDDLE RIDGE I COALBED

METMDNN GAS FIELD P'JRSUANT TO VA.CODE 55 45.1—361.21 AND 45.1—361.22,FOR THE PRODUCTION OF OCCLUDED

NATURAL GAS PRODUCED FRON COALBEDSAND ROCK STRATA ASSOCIATED THEREWITH

(harem collectively referred to as"Coalbed Methane Gas" ar "Gas")

LEGAL DESCRIPTION:

DRII,LING UNIT NDMSER 01-114(h rem "Subject Drrll ng Unrt") IN THE

MIDDLE RIDGE I COALBED METHANE GAS 5'IELDMEW GARDEN MAGISIERIAL DIS1RICIEONAKIR UDADR)lNGLE

RUSSELL COUN1'I, VIRGINIA(the "S bject Lands" are morepar rcular)y descrrbed on E hlbrt"A", etta hed hereto and made apart hereofl

REPORT OF THE BOARD

FINDINGS AND ORDER

1. Hearrng Date and Place: Thr. came fo r frnal heerrng beforethe v rgt Go a d o I bo d (h ft "Ba d") r: SraoOctober 22, 2013 at the at the Russell County Cor.ference C nter,Lebanon, Vrrgrn a.

2. Appearances: Mark. Swartz, Esquire, of he frrm Swartz Law

Offrces PLLC, appeared for the Applicant! and Sharon M. B. Prgeou,A srstant Attorney General, was present to advise the Board.

3. Jur sdlctron arid Notrce: Pu suant to Va. Code 55 45.1-361.1 et ~se ., tire Board funds that lt has julrsdrctron over thesuoject matter. Based upon tie evtdence pres nted by Applrcant, theBoard also funds that the Applrc t has D ) exercrsed due drlrgence rnconductrng a search of the reasonably avarlable sorrces to determinethe rdentrty and whereabouts of gas and orl owners, coal owners,mrneral owners and/or potentral owners, l.e., persons r.dentrfred byApplrcant as havrng ("Owner" ) or cia).mung ("Clarmant") the rights toCoalbed Methane Gas rn all coal seams below the Jawbone I, rncludkngTrller, Upper Horsepen, Mzddle Horsepen, War Creek, Beckley, LowerHorsepen, Pocahontas No. S, Pocahontas No. 6, Po ahontas No. 5,Pocahon as No. 4, Po ahontas Vo. 3, Pacahont No. I and va iousunnam d coal seams, coalb ds and ock strat.a assoc ated therewrth(hereafter "subject Format on") rn sub)ect Drlllrng Urrrt underlyrng and

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Page 2: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

conprzsed ot Subject lands; (2) represented z.t has given notice tothose parties (hereafter sometimes "person(s)" whether referr ng toznd d al, o po t ons, p rtnershzp, associations, companz s,businesses, trusts, jozi'.t ventures or other legal entities) entitled byVa. Cod. 59 45.1-36).19 and 45.1-361.22, to notice of th Appl tronfiled herein( and (3) that the persons set forth zn their Applicationand Notice of Bearing are persons ident fied by Applicant through (.tsdue diligence who may be 0«mere or Claimants of Coalbed Methane Gasinterests underlying Subject Drilling Unit and that the personsidentified in Exhibi.t E-3 attached hereto are persons identified byApplicant who may be Owners or Claimants of Coalbed Methane Gasinterests zu Subject 6'ormatzon who nave not heretofore agreed to leaseor sell to the Applicant and/or voluntarily pool their Gas z.nterests.Conflzctznq Gas Owners/Claimants z.n Subject Drilling 'unit are listed onExhibit E. Further, the Board has caused notice of this hearing to bepublished as required by Va. Code 5 45.1—361.19.B.Whereupon, the Boardhereby rinds that th otzces given here n satisfy all statutoryrequirements, Board rule requirements and the rznzmum standards of dueprocess.

4. Amenchtents: None

5. D 1 : Nona

6. Relief Requested: Applicant request» (1) that pursuant toV . Cod 9 45.1—361.22, zncludzig the applicable portzo s of Va. Code 645.1-361.21, the Board pool all the rights, interests and estates inand to the Gas zn Subject Drilling Unit, including the pooling of theinterests of the App'«cant and of the ki.own and unknown persons namedzn Exhibit B-3 her to and that of their known and « known heirs,executors, admzn strators, devzsees, trustees, assigns and successors,both immediate and remote, for the drilling and operation, includingproduction, o Coalbed Methane G s, produced from or allocated to theSub) ct Drilling Unit established for the Sub)ac Formation ur.derlyzng

d p d f th 0 bl t 1 ds, (h ft o t *o11 t lyidentified d f rred to as "Nell Develop t nd/or Operation zn theSubject Drzllziq Ui ("), and (2) that the Board designate CNX GasCompany LLC as Unit Operator.

7. Relief Granted: The Applicant's requested relief zn thiscause be and h reby zs granted: (1) Pursuart to Va. Code 9 45.1—361.21.0.3, CNX Gae Company LLC thereafter "Unzt Operator" ) isueslgnated as the Unit Operator authorized to drill and operate theCoalbed Me(han Gas ell zn the Suoject Dr zing Unit at the locatz.ondepz.cted on the plat attached here o as Exhibit A, subjec to thep t p o »o o t n .d zn Va. Code 55 45.1-361.27 et. ~se .; to thMiddle Ridge 1 Coalbed Methane Gas Field Order VGOB 00-1017-0835,effective October 17, 2000) to 55 4 VAC 25 150 et ~se ., Gss and OzlRegulatzonsl and to 55 4 VAC 25 —160 et seq., Vzrgznza Gas and Ozl BoardRegulations, all as amended from time to time, and (2) all theinterests aid estates zn and to the Gas zn Subject Drilling Unzt,including that of the Applicant. and o the known and unkr.own personslisted on Exhibit E-3, attached hereto and made a part hereof, andtheir known and unknown heirs, executors, administrators, devisees,trustees, assigns and successors, both immediate and remote, be andhereby re pooled zn the Subject Formatter: zn the Subject Drilling Uuzt

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()~~~/11 4' ~~PK! '0 mal

underlyzng ond comprzsed of the Sub)ect Lands.

Pursuant to the Mzdd). Rzdge I Fz.eld Rules, the Boazc h doptedthe followzng thud for the calculatzon of prod t on and revenue andallocatzon of allowable costs for the productzon of oalbed MethaneGas.

For Frac Well Gas. — Gas shall be produced rom and allocated toonly the 5S.74-acre drzllzng unzt zn whzch the well zs locatedaccordzt:g o the ut'.dzvzded Interests of each Owner/Clazmantwzthzn the unr.t, whzch undzvzded Interest shall be the ratzo(expressed as a percentace) that the amount of mzneral acreage

wzthzn eac). parate tract that zs wzthzn the Subject DrzllzngUnzt, when platted on the sur ace, beazs o th tot I mzneralacreage, when platted an the surface, contazned wzthzn the entzre58.74- re drzllzng unzt zn the manner set o th n the MzddlRzdge I Fraid Rules.

8. Electron and Electron Perzod: In the event any Owner orlazmant named zt. Exbsbit 5-3 hereto does not reach a voluntary

agreem = to share zn the operatzon of the well located zn the Sun)ectDrzllzng Unzt, at a rate of payment mutually agreed to by sard GasOwner or Clazmant and the Unzt Operator, then such person named mayelect one of the optzons set forth zn Paragraph 9 below and must givewrztten nots of h electron of the optzon selected ur.der Paragraph 9to the deszgnated Unzt Operator at the address shown below wzthznth rty (30) days from the date of recezpt of a copy of th 0 d . A

tzmely electron shall be deemed to have been made z.f, on or oefore thelast day of sard 30-day pertod, such elect ng person has delzvered hzswrztten electzon to the deszgnated Unzt Operator at the address shownbelow or has duly postmarked and placed zts wrztten electron zn fzrstclass Unzted States mall, postage prepazd, addressed to he UnztOperator at the address bown below.

9. Electron Ontzo la:

9.1 Oct on I — To Partzcznate In lhe Well Development andOnezatzon of the Dz llznu Unzt: Rr.y Gas Owner or clazmantnamed zn Exhibit 5-3 who does not reach a voluntary agreementwzth the Unzt Operator may elect to partzc pate zo the WellDevelopment and Operatzon zn the Sub)ect Drzllzng Unzt(hereafter "Particzpatzng Operator" ) by agreeing to pay theestzmate of such Partzczpatzt.g Operator's proportzonate partof the actual and reasonable costs of the Well Developmentcontemplated by tl.zs Order for Gas produced pursuant to theMzddle Rzdge I Fraid Rules, zncludzng a reasonable supervzszonfee, o p ti larly t fo th z vzrg. Ga. d 0 IBoard Regulatzon 4 VRC 25-160—100 (herezn "Completec-for-Productzon Costs" ). Purther, a Partzc patzng Operator agreesto pay the estzmate of such Partzc patzng Operator'sproportzonate part of the Completed-for-Productzon Cost as setforth below to the Unzt Operator wzth n forty-fzve (45) daysf on the later of the date of ma lang or the date of recordzngof thzs Order. The Completed-for-Productzon Cost for theSubject Drzllzng Unzt zs as follows:

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completed-for-Production cost: 01114 82s3,ss3.00011143 63S2, 62S .00Tot I 8666,511.00

Any gas 4 waar n !ci cia '.. d ; n n b .—., wno ale .Ithis option tcpt on I) od usta d ai.cl gr e that hc ." r.itialn Vnen ader th s option is for the r proportionate share of'h Apnlican 's e nate of actua - sls and expenses.a'lso und, rstocd by all perscns electinc h s opt on hat hey

re agree nc "o oay tneir proport onat afar. of ,h c ualco" "- nd exper es a decem ned bv the Operator named ir. 'NisBoard Order.

1 Participating Ope ator's proportionate cost hereunder shall bethe re ult obtained by multiplying the Participating

Operators'Interest

rn Unit" times the Completed-for-Production Cost setforth above. Provided, however, that in the .vent a Participati.ngOperator elects to parti.ci.pate and fails or re uses to pay theestimate of hi.s proportionate part of the Completed-for-Production Cost as set forth above, all within the time set fortnherein and in the manner prescr bed in Paragraph 8 of this Order,then such Partici.pating Operator shall be deemed to have electednot to participate and to have elected compensation in lieu ofpar icipstion pursuant to P agraph 9.2 herein.

9.2 Option 2 — To Receive 1 Cash Bonus Consideration: In lieuof participating in tre well Development and operation inSubject Drilling Grit under Paragraph 9.1 above, any GasOwner or Claimant named in bxhibit 8 —I hereto who does notreach a voluntary agreement with the Un t Operator maye ect to accept a cast. bonus cor.sideratioil of 65.00per net mineral acre owned by such persor., commencing uponentry of this Order and continuing annually untilcommencement of production from Subject Drilling Unit, andth . . ft oy lty f I/8th of 8/8th (t Ihalf percent (12.96)j of the net proceeds received by theUnit Operator for the sale o the Coalbed methane Gasp oduced from any Well Development and Operation covered bythis Order multiplied hy that person's Interest in Unit orproportional share of said product on ffor purposes of thisOrder, net proceeds shall be actual proceeds received lesspost-production costs incurred downstream of the we''head,including, but not limited to, gathering, compression,treating, transportation and marxetinq costs, wfietherperforu:ed by Unit Operator o a third personl as fair,reasonable and equ table compensation ro be p id to saidGas Owner or Claimant. Tl.e in t I ash bonus shall becomedue d g h I t d d sh 11 be t ndered, paidor escrowed withio one hundred twenty i1281 day» ofrecording of this Order. Tlereafter, annual cash bonuses,

any, shall become due and owing or. each anniversary ofthe date of recording of th s orde- in the event productionfrom Subject Drilling Uni has not theretofore coumenced,and or.ce due, sha I be tendered, paid or escrowed withinsixty (60) days of said anniversary dare. Once the initialcash bonus and the annual cash bonuses, if any, are so pl id

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Page 5: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

Uvluy. 0 2 2 3 FAL" '0 g g s>, k !) j j sg p)pE () c) g sg

or e ro wed, sub]ect to a final legal determ nation ofowi.ership, said payment(s) shall be satisfaction in fullfo r the right, interests, and claims of h I t gperson in and to the Gss produceo from Subject Eormation inthe Subject Lands, except, howeve, fo th I/8th r yalt>esdue hereunder.

Sub)ect to a final legal determination of ownership, theelection made under this Paragraph 9.2, when so made, shallbe satisfaction in full for the right, interests, andclaims of such electing person in any Well Development andOperation covered hereby and s ch electing person shall bedeer:ed to and hereby does lease and assign, its right,interests, nd cl in and to the Gas produced fsubject Eormation in the sub)ect Drilling Un t to tbeApplicant.

Option 3 — To Share In The Well Development And OperationAs A Non-Participating Person On A Carried Basis And ToReceive Consideration In Lieu Of Cash: In lieu ofparticipating in the Well Development and Operation inSubject Drilling Unit under Paragraph 9.1 above and in lieuo. receiv ng a Cash Bonus Consideration rnder Paragraph 9.2abo ve, any Gas Owner or Claimant named in Nsbibit. N-3hereto who does not. =each a voluntary agreeme t sth theUnit Operator may elect to hare in the Well Developm tand Ooerakion of 3 b) t Drilling Un t on a carr d basis(as a "Carried Well Operator" ) so that the proportionatepart of the Completed-for-Production cost hereby allocableto such Carried Well Operator's nterest is charged garnetsuch Carried Nell Operator's share of product on fromSubject Drilling Unit. Such Carried Well Op rator'sights, i terests, and claims in and to the Gas i.n Subject

Drilling Unit shall be ceemed aod hereby are assigned t.othe Applicant until the proceeds from the sale of sichC d W 11 Op ' of p od t o f o S bj tDrilling Un t (exclusive of any royalty, excess oroverriding royalty, or other non-operating or .on cost-b 9 b rden reserved in any less, assignment thereof oragreement relating thereto coverinq such nterest) equalsthree hundred percent (30DS) for a leased interest or twohundred percent (203%) for an unleased interest (whicheveris applicable) of such Carried Well Operator's share of theCompleted-for-Prodrcti.on Cost allocable to the interest ofsuch Carried Well Operator. When the Applicant recoups andrecovers from such Carried Well Operator's assignedi.te st the amounts provided fo r bo , then, the as g d

interest of such carried Well Operator shall automaticallyrevert b k t . .h Carried Well Oper tor, anc from andafter such reversion, such Carried Well Operator shall betr ated as if it had participated in t lly ui.der Paragraph9.1 above; and thereafter, such p rticipating person shallbe charged th ai.d shall pay his proportionate part of allfurther costs of such Well Development and Operation.

S b) ct to a final legal determination of ownership, theelectioo made rnder this Paragraph 9.3, when so made, shall

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Page 6: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

be satisfaction in fill for the rigl.ts, interests, andalai'us of such elect1ng person in any well Development andOp t o overed hereby a..d such electing person shall edeemed to have and hereby does assign its rignts,

terests, and clai s in d to the Gas produced fromSubject Formation ii, the Subject Drilling Unit ro theApplicant for the period of time during which its interestis carrieo as above provided prior to its reversion nac'c tosuch electing person.

10. Failure to Properly Elect: In the event a person named inRxbibit 8-3 hereto does not reach a voluntary agreement with the Unitoperator and fails to elect within the time, in the manner and inaccordance witt the terms of this Order, one of the alternatives setforth in Paragraph 9 above fo h h h t t q I fice, then suchp o h ll be deemed to have elected not t p rt»p t thpro po d W 11 Development and Operation in Subject Dr lling U it andshall be deemed, subject to a final legal determination of ownership,to have elected to accept as satisfaction in foll for such person'right, interests, and claims in and to the Gas the considerationprovided in Paragraph 9.2 above for which its interest qual fice andshall be deemed to have leased and/or assigned his right, interests,and claims in and to the Gas produced from Subject Fomuation in theSubject Drilling Unit to the Applicant. Persoos who ail to properlyelect shall bi d emed, bje t to f I I g I d t i 1 on ofownership, to have accepted the compensation and terms set forth herein

t Paragraph 9.2 in t f t o f 11 fo th ght, t t , a dIaims of such person n and to the Gas produced from the Subject

Formatio d lying Subject Lands.

11. Default Bv Participatinq Person: In th e t a p rsonnamed in Rxhibxt 3-3 elects to participate under Paragraph 9.1, butfails or refuses to pay, to secure the payment or to make anarrangement with the Unit Operator for the payment of sucn person'proportionate part of the Completed-for-Production Cost as set forthh , 11 Lh th t. d th p b d thOrder, then ecch person shall oe deemed to have withdrawn his electionto participate and shall be deeiced to have elected to accept assatisfaction f 11 fo h p o 'ht, t t, d Iand to the Gas the consideration provided i. Paragraph 9.2 above forwhich his interest qualifies depending on tl.e excess burdens attachedto sucl. interest. Whereupon, any cash bonus considerat on due as aresult of such deemed election shall be tendered, paid or escrowee byUnit Operator within one hundred twenty (120) days after the last dayon which such default ng perso n under this Order should have pain hisproportionate part of such cost or should have made satisfactoryarrangements for the paymei.t thereof. Nhen such cash bonconsideration is paid o" escrowed, it shall be satisfaction in full fothe right, interests, and alarm of cn per on in ai,d to the Gasunderlying Subject Drilling Unit in the Subject Lands covered hereby,except, however, for ar.y rcyalties wl.ich would becor,e due pursuant toParagraph 9.2 hereof.

12. Assignment of Interest: In the event a person named inExhibit R-3 is unable to reach a voluntary agreement to share in theWell Development and Operation contemplated by this Order at a rate ofpayment agreed to mutually by said Owner or Claims t d th U t

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Page 7: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

Operator, or fails to make an election under P racraph 9.1 above, thensub]ect to a final legal determination of owners).zp, such person shallbe deemed -o h and shall have assigned nto Applicant such person'right, znterests, and claims zn and to said well, and other share znprodu.tion ro which such person may be entitled by reason of anyelection or deemed election hereunder zn accordance with the provisionsot this Order governing said election.

13. Unit Operator (or Operator): CNX Gae Company LLC shall beand hereby zs designated as Unit Operator authorised to drill andoperate the Ooalbed Methane Nell zn subject Formation zn sub]ectDrilling Unit, all sub]ect to the permit provzsz.ons contained zn Va.

ode 55 45.1—361.27 et ~se .; SS 4 VAC 25-150 et ~se ., G nd OzlRegul tzons( 55 4 VAG 25-160 et seq., Virginia Gas and Ozl BoardRegulations; the Middle Azdge I Coalbed Gas Field Order VGOB 00-1017-0835, all as am .nded f o t to tz , d 11 elections requzreo bythis 0 d shall be communicated to Unit Operator zn writing at theaddress shown below:

CNX Gae Company LLC24S1 John Nash Blvd.Bluefzeld, NV 24701Attn; Anita D. Duty

14. Commencenent of Operations: Unit Ouerator shall colulrence orc t p t on for the drilling of the well(s) within theSubject Drilling Unit and/o" the well(s) outside the Sub]ect DrillingUn t but from hich pr d t o Ilo t d to th S bj t D 11 gUn t within Seven Hundred and I'hzrty (730) days from rhe date of theOrd r and sh ll pro secute same with due diligence. If Unit Operatorshall not h o o encec and/or prosecuted, then this Order sh 11terminate, xcept for any cash sums then payable hereunder; otherwise,unless sooner terminated by 0 der of the Board, this Order shall expireat 12;00 P.M. on the date on which all wells covered by the Orderand/or all wells from which production zs allocated to the Suu]ectDrzllznq Unit are permanently abandoned and plugqed. However, n the

t pp 1 t k f o th " 0 d ", tb th t b t thfiling of the petition for appeal and the final Order of the Cz.rcuztCourt shall be excluded zn calculating the . o-year period referred toherein.

15. Onerator's Lien: Unz.t Operator, zn addition to the otherrights aftorded hereunder, shall have - lien and a rzgnt of set off onthe Gas estates, rights, and nterests owned by any carson sub]ecthereto who elects to participate under Paragraph 9.1 zn the Sub]ectDrilling Unit to tne extent that cos s incurred zn the drilling oroperation on the Sub]ect D filing Unit are chargeable against suchperson's interest. Such liens a d r ght of aet off shall b epar blas to each separate person and shall rem- zn lier.s until tne UnitOperator drilling or operating any we]1 covered hereby has been paidthe fill amounts cue under the terms of this Order.

16. Escrow Provisions:

The Applz.cant represented to the Board tl.at there areunknown or unlocatable claimants zn Txact(e) 1 of the Sub]ect Drzllz.ngUnit whose payments are sub ect to the prov stone of Paragraph 16.1 andthe Unit Operato" has represented to the Boa d that there ere no

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Page 8: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

conflicting claimants in the Sub)ect Drilling Unit whose payments aresub)ec to the provisions of Paragraph 16.2 hereof. Iherefore, by thisOrder, the Escrow Ag t amed herein or any su c o named by theBoard, is required to establish an interest bearing escrow account for1 ct(~ ) 1 of Sub.'ect Drilling UniL fh "E o Account" ), and toreceive and account to the Board pursuant to its aqreement for theescrowed funds hereafter described in Paragraphs 16.1 and 16.2:

First Sank 6 1'rust Company3S E. Valley DriveBristol, VA 24201

Attn: Debbie Davis

16.1. Escrow Provisions For Ui:known or Unloc table Persons: Ifany payment of bonus, royalty payment or other payment dueand owinq under this Order cannot be made because theperson er:titled thereto cannot be located or is unknown,then such cash bonus, royalty payment, or other paymentshall not he commingled wits ny funds of the Unit Operatorand, pursuant to Va. Code 5 45.1—361.21.D, saic sums shallbe deposited by the Unit Operator into the Escrow Account,commencing within one hundred twenty (120) days ofrecord ng of thi. Order, and conLinuing thereafter onmonthly basis with each deposit to be made, by use of areport format approved by the Inspector, by a date which isno late" than sixty (60) days after the I t d y of themonth b g reported and/or for which funds are beingdeposited. Such funds shall be held for the exclusive useof, and sole benefit cf th person entitled thereto untilsuch funds can be paid to such person(s) or until theEscrow Agent relinqui.shee such funds as required hy law orpursuant to Order of the Board in accordance wi.th Va. Code5 45,1-361.21.D.

16.2 Escrow provisions For Conflicting Cls.imants: If anypayment of bonus, royalty paynent, proceeds ir. ex ofonqoing ope ational expenses, or other payment due and owingunder th 0 d ot be made baca th p on entitledthereto cannot be made certain due to coi.flictiog cl i s ofownership and/or a defect or cloud on the title, then suchcasl'. bonus, roya ty payment, proceeds in excess of ongoingoperational expenses, or other payment, toqether withParLic pating Operator's Proportioi.ate Costs paid to UnitOperator pursuant to Paragraph 9.1 hereof, if any, (I) shallnoL b .o ngl d with any fund of the Unit Operator; nd(2) shall, pirsuant to Va. Code 55 45.1—361.22.A.2, 45.1—361.22.A.3 and 45.1-361.22.A.4, be depositec by the Operatorinto the Escrow Account within one hundred twenty (120) daysof recording of this Order, nd continuing there ft r on amonthly basis wi.th each deposit to be made by a date wh h isno later than sixty (60) d y after the last day of th monthbear,g reported and/or or which funds are sub)ect to deposit.Such funds snail be held for the exclusive use of, and solebenefit of, tne person entitled thereto uotil such funds canbe paid to such person(s) or until the Escrow Agent

Page Number 8.

Page 9: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

relznquzshes such funds as requzred by law or pursuant toOrder of the Board.

sneczal Pzndznqs: The Board speczfzcally and speczally funds:

17.1. CRX Gas Company LLC, a Vzrgznza lzmzted lzabzlzty companyzs duly authorzzed and oualzfied to transact buszness zn t'h eCommonwealth of Vzrqznza1

17.2. CRX Gas Company LLC has the authorzty to explore, developand mazntazn the propertzes and assets now owz.ed or 1'.ereafteracquzrec, consented to serve as Coalbed Methane Gas Unztoperator for subject Drzllzng Unzt and to fazthfully dzschargethe dutzes zmposed upon zt as Unzt Operator by statute andrequlatzons;

17.3. CRX Gss Company LLC zs an operator zn the Commonwealth ofVzrgzz.za, and has satzsfzed the Board's requirements foroperatzons zn Vzrgzz.za;

17.4 CRX Gae Company IIC cia ns ownership of qas leases, CoalbedMethane Gas leases, and/or coal leases representzngPS.0401 percent of the ozl and gas znterest/clazms zn and toCoalbed Methane Gas and 99.D401 percent of the coalznterest/clazms zn and to Coalbed Nether;e Ge zn SubjectDrzzlzng Unztz and, Applzcar.t clazms the rzght to xplorefor, develop and produce Coalbed Methane Gas from Subjectpormatzons n subject Drzllzng Unzt zn Russell County,Vzrqznza, wh ch Subject Lands are more partzcularly descrzbed

Exhibit Az

17.5. Tle estzmated otal productzon from Subject Drzllzng 1,z.ztzs 125 MdCP to 550 Mmcp. The estzmated amount of reservesfrom the Subject Drz.llzng Unct zs 125 MMCp to 55D MMCp;

17.6. S t fo th Rxbibie 9-3, th* * * d 1 *t k

address of each Owner or Clazmant dentzfzed by the Applzcant6 havzng or clazmzng an znterest zn the Coalbed Methane Gas zn

Subj t po t o . 3 bj t Drzllzng Unzt underlyzng andcomprzsed of Subject Lance, who has not, zn wrztznq, le sed tothe Applzcant or the Un t operator. or agreed to voluntarzlypool h s znterests zn Subject Drzllzng Un t for ztsdevelopment. The znterests of the Respondents lusted zn Rxhzbit5-3 comprzse 1.9599 percent of the ozl and gas znterests/clazmszr. and to Coalbed Neth ne Gas ard 1.9599 percen of the coalzrterests/clazms zn and to Coalbed Methane Gas zn SubjectDrzllzng Unz

17.7. Applzcant's evzdence establzshed that the fazr, reasonableand eqzztable compens tron to be pard to any person zn lzezof the rzght to partzczpate zn the Wells are tzose optzonsprov ded zn Paragraph 9 above;

17.8. Tj.e relzef requested and granted zs just and reasonable, zssupported by s bstantzal evzdence and wzll afford each personlusted and named zn Exhibit 9-3 here o the opportunzty torecover or recezve, wzthout u p-, hi s

Page Number 9.

Page 10: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

just and fa r share of the productzon from Subject DrzllzngUnzt. The grantzng of the Appllcatzon and relzef requestedthere n wall ensure to the extent posszble the greatestultzmate recovery of Co ibad Methane Gas, prevent or a tpreventzng th. ous types of waste prob bated by statute andprotect or asszst zn protectlog the cor elatzve rzghts of allpersons zn t)ae subject common sources of supply zn the SubjectLands. Th afore, the Board zs enterzng an order grar.tang therelz.ef herezn set forth.

18. Ma lznq Of Order And Fzlznt( Of A fzdavzt: Applzcant or ztsAttorney shall fzle an affzdavzt wzth the Secretary of the Board wzthznszxty (60) days after the date of recordzng of thzs Orde" statzng thata true and correct copy of sard Order was mazled wzthzn sever. (')) daysfrom the date of zts recezpt by Unzt Operator to each Respondent namedzn Exhzbzt. B-3 pooled by thzs Order and hos ddress zs known.

19. Avazlabzlztv of Unzt R co d: Th Dzrector shall provzdeall pe o ot sub)ect to a lease wzth reasonobl cess to allrecords for subject Dr(llzng Unzt whzch are submztted by the UnztOperato r to sard Dzrector and/or hzs Inspector(s).

20. Concluszon; Therefoze, the requested relzef and all termsand provzszons set forth above he and hereby are granted and IT IS SO

ORDER D.21. ~A eels; Appeals of thus Order are gcverned by the

pro z. ons of Va. Code Ann. 9 45.1—36".9 whzch provzdes that any orderor cieczs1on of the Board may be appealed to he approprzate czrcuztco U 1'..

22. Effectzve Date: Thzs Order shall be effectzve as of thedate of the Board's approval of thus Applzcatzon, whzch zs set forth atParagraph I above.

)0

Page Number 10.

Page 11: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

DONE AND EXECUTED this 22 day of November, 2013 by a majority of tha Virginia Gas and OilBoard.

Chairman, Bradley C. Lambert

DONE AND PERFORMED this 22 day of November, 2013 by Order of the Virginia Gas and Oil

Board.

O C C I-C~ARick CooperPrincipal Executive to thestaff, Virginia Gas and Oil Board

COMMONWEALTH OF VIRGINIACOUNTY OF RUSSELL

n oy

Acknowledged on this 2+day of 4 Vdyrf, ~kpersonally before me a notary publicin and for the Commonwealth of Virginia, appeared Bradley C. Lambert, being duly sworn diddepose and say that he is the Chairman of the Virginia Gas and Oil Board and appeared RickCooper, being duly sworn did depose and say that he is Principal Executive to the staff of theVirginia Gas and Oil Board, that they executed the same and was authorized to do so.

r O~~Diane J. Davis, Nota/'Public174394

My Commission expires: September 30, 2017

Innlulllr,;"YLE J Dgj,"o

PUBLIC=*:REG, et7439'I .*-MY ootsllss QN

Page 12: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

IN 284.578.80E 989,'116.89 N 284,52120

BEMIri05 AHO OISIMICES 70 OTHERWELLS WiTHH 2,500'RMSUS OF CSM-BRNACBM-BHB~ H 5'Jes" E 1982.1 ICSM-SHIIIA N 41'4'24'

1834.76'BL1.8014

N 47'45'19" 2 709 72'CBM.9015 H 81'0'47" E

2324.73'SM-BJ11S

5 47'5V21" E229165'BII-BJIMA5 25'8'I' m27

IUi'BM

BKSI 5 0' 2'1" W 86.07'

991,015.37

Clm-SJR3 5 25'44'2 ~" W 1565 54'8

CBM BJN34 5 62'22'SS" WN78.29'BM-811345 8?58'58" W 132112?

NVA344 H 78'5?48'23SS.BS'BLI.BIH2

N 70'5341" W 2435 05'C/CBH.SH13 H 55'58'40" W

636.J9'elt-BHH3

H 35 Mi'59" W 2595 7'I'

//

//

0 rmEXHIBIT A

MIDDLE RIDGE FIELDUNIT 811141

FORCE POOLINGVGOB-13-0917-8022

Form OGO-GO-7Rev. 9/91 Licensed Professional Engine

cmrpany CNX Gas Comlanv LLC We

Tract No. ElevationCounty RUSSELL District NEW GARDEN

This plat is a new plat 2 : on updoted p

Name and Nunoer UNIT 81114

Quadrangle HONAEER

TDIDTI sigggg Ery Jsmss R D,BSJr.," 'b<I BTTIJuhat Ro=idenTrust ACES BusinessRstrresentativSASrssg. BeBRICEENGINE ERTNG AND LANDGEFTTITEYING INC PCVmw. KV O.VO.UK lU.KU.J m'IUU

Page 13: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

CNX GBB ComPany LLCUN)T 6(-t(4

Trad Identgicatlons(58.74Acre Unit)

1. Laths F. Vandyke, et al (199.00Acre Tract) - All MineratsHarold Keen Caal Company- Ag Coal LeasedCNX Gas Company LLC —Oil, Gas and CBM Leased (97.5894%)38.17acres 81.5784%

IA. Virginia Resources, LLC - Surface18. Claude Hart —Surtace1C. Unknown Surface Owner

2. Reserve Coal Properties Company- CoalCNX Gae Company LLC-Oil snd GasReserve Coal Praperties Campany - Surface21 09 scree 35.9040%

Buckhom Coal Company (Richard E. Phigippi, et al 128.22 Acre Tract) —FeeHarold Keen Coal Company- Coal in Kennedy and Big Fork Seams LeasedCNX Gas Company LLC- CBM Leased1.33acres 2.2842%

8uckhom Caal Company Tr. 19 (kl ossa Miller 54.00 Acre Tract) —FeeKnox Creek Coal Company- Above Drainage Coal LeasedReserve Coal Properties Company- Below Dmtnags Coai LeasedCNX Gas Company LLC —Oil, Gas and Cgld Leased0.15acres 02554%

"This title block ss far 8enerel informational purposes only end does not reflect enanalysis of the severance deed end its ef'fart upon coal bed eethene ovnership endshould ncc be relied upon far such purpose."

Page 1 af 1August 8, 2013

Page Number 13

Page 14: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

Ekhmlt SU it 81.114

VSO 8tl ISS617-4022List of 48 Ow tlofs/Cla/Asttts

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(a4) BobaeOun59m East wmr RoadT . AZ 85716

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(b)CWW Hymn 0 I s.S 7 Awg

569a e11/108 of 35.t7 a

5 69 at17/108 of 38 17 acme

6 89 amos17/108 m3617

588 acres17/108 Itl 36 t7 me

5 ao'I 7/I W Of 36 17 mtea

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Page Number 19

Page 15: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

5 hibh 5Unit Sl 114

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7 02 21.le

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Pag 2M4 tl30/13

Page Number lg

Page 16: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

md Ibn 8tlnlt St-114

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Page 17: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

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V 0 DIM tS-891TA022Lmt fwI Owner Iclalmmte

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Pag 4of4

Page Number 34)

7GOI13

Page 18: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

.j;,> 0 ( 'i.'4mt."0468

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Page NUm)tey 1$

Page 19: 'c - Virginia Department of Mines, Minerals & Energy...Applrcant as havrng ("Owner") or cia).mung ("Clarmant") the rights to Coalbed Methane Gas rn all coal seams below the Jawbone

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