070004656

VIRGINIA OAS AND OIL BOARD

VIRGINIA:!

ORDER RECORDED UNDER CODBOF VIRGINIA SECIION 411-561.26

BEFORE THE VIRGINIA GAS AND OIL BOARD

APPLICANT:

RELIEF SOUGHT: POOLING OF INTERESTS IN A 61.43ACRE SQUARE DRILLING UNITDESCRIBED IN MÃMXBXT A HERETOLOCATED IN THE Mmra COAL BEDGAS FIELD AND SERVED BY WELL NO.AM-187 (F-100) (herein

"Subject Drilling Unit" ) PURSUANTTO VA. CODE 55 45.1-361.21AND45.1-361.22, FOR THE PRODUCTION OFOCCLUDED NATURAL GAS PRODUCED FROMCOALBEDS AND ROCK STRATA ASSOCIATEDTHEREWITH (herein 'Coalbed MethaneGas" or "Gas")

LEGAL DESCRIPTION:

SUBJECT DRILLING UNIT SERVED BY WELL NUMBEREDBB-107 (p-100) (herein "Well" ) TO BRDRILLED IN THE LOCATION DEPICTED ON MXMXBXT A,HERETO(5034)mRme zsss)tie pabst Tract

~MIEsawAISBBXBBMBXAL DISTRICT

w *'-, VXBSXSSXA(the "Subject Lands" are moreparticularly described on Mmhibit A,attached hereto and made a part hereof)

) VIRGINIA GAS) AND OIL BOARD)

)

) DOCKET NO.) VQOB-07/10/56-1056))))))))))))))))))

)

)

))

)))

REPORT OF THE BOARD

FINDINGS AND ORDER

1. Hearina Data and place: This matter came on for hearing beforethe Virginia Gas and Oil Board (hereafter "Board" ) at 9:00 a.m. on Octo(ber 16,2007 Southwest Higher Education Center, Campus of Virginia Highlands CammunityCollege, Abingdon, Virginia.

2. Aonearances: gams E. Kaiser of Wilboit amd Kaiser, appeared forthe Applicant.

3. Jurisdiction and Notice: Pursuant to Va. Code 5545.1-361.1RRg , the Board finds that it has jurisdiction over the subject matter. Baaedupon the evidence presented by Applicant, the Board also finds that theApplicant has (1) exercised due diligence in conducting a meaningful search ofreasonably available sources to detezmine the identity and whereabouts of eachgas and oil owner, coal owner, or mineral owner and/or potential owner, i.e.,person identified by Applicant as having ('wner" ) or claiming ("Claimant" )the rights to Coalbed Methane Gas, including all coalbeds and coal seams belowthe Tiller seam including but not limited to the Greasy Creek, Upper Horsepen,

War Creek, Poca 3, Poca 1, and various unnamed coal seams, coalbeds and rockstrata associated therewith (hereafter "Subject Formations" ) in the SubjectDrilling Unit underlying and comprised of Subject Lands; (2) represented ithas given notice to those parties so identified (hereafter sometimes"person(s)" whether referring to individuals, corporations, partnerships,associations, companies, businesses, trusts, joint ventures or other legalentities) entitled by Va. Code %% 45.1-361.19 and 45.1-361.22, to notice ofthe application filed herein; and (3) that the persons set forth in %¹hibik B-3 hereto have been identified by Applicant as persons who may be Owners orClaimants of Coalbed Methane Gas interests in Subject Formationk in theSubjeot 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 3(¹LLhit M. Further,the Board has caused notice of this hearing to be published as required by Va.Code 9 45.1-361.19.B.Whereupon, the Board hereby finds that the notices givenherein satisfy all statutory requirements, Board rule requirements and theminimum standards of state due process.

4. Amendments: M¹hibits ¹-3 & E.5. Dismissals: Mome.

6. Relief Reouested: Applicant requests (1) that pursuant to Va.Code 9 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 M¹hibit B-3 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, ofCoalbed Methane Gas produced from the Subject Drilling Unit estafblished forthe subject Formations underlying and comprised of the subject Lahds,(hereafter sometimes collectively identified and referred to as "welldevelopment and/or operation in the Subject Drilling Unit" ); and, (2) that theBoard designate Ayp¹1¹ehia¹ Maergy Xmc. 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,Ayialac4ianMme¹gy zmc. (hereafter "Unit operator" or "operator" ) is designated as'heUnit Operator authorised to drill and operate the Well in Subject DriliingUnit at the location depicted on the plat attached hereto as M¹(zfbit A,subject to the permit provisions contained in Va. Code 9 45.1-361.27,to 95 4 VAC 25-150 B3 3((M(., Gas and Oil Regulations; to 5 4 VAC 25-160

Virginia Gas and Oil Board Regulations and to the Nora Coal Bed GasField Rules established by the Oil and Gas Conservation Board's Order enteredMarch 26, 1989; all as amended from time to time; and (2) all the inter(setsand estates in and to the Gas in Subject Drilling Unit, including that of theApplioant, the Unit Operator and of the known and unknown persons listed onWeb&it $-3, attached hereto and made a part hereof, and their known andunknown heirs, executors, administrators, devisees, trustees, assigns andsuccessors, both immediate and remote, be and hereby are pooled in the SubjectFormations in the Subject Formation in the Subject Drilling Unit underlyingand comprised of the Subject Lands.

Pursuant to the Nore Coal Field Rules promulgated under the authorityof Va. Code 9 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 Free Well Gas. — Gas shall be produced from and allocated to onlythe 61.43 acre drilling unit in which the well is located according tothe undivided interests of each Owner/Claimant within the unit, which

undivided 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 61.43-acre drilling unit in the manner set forth in the NeraField Rules.

8. Election and Election period: In the event any Owner or Claimantnamed in EmhLbit $-3 has not reached a voluntary agreement to share in theoperation of the Well to be located in Subject Drilling Unit, at a rate of.payment 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 a copyof this Order. A timely election shall be deemed to have been made if, on orbefore the last day of said 30-day period, such electing person has deliveredhis written election to the designated Unit operator at the address shownbelow or has duly postmarked and placed his written election in first classUnited States mail, postage prepaid, addressed to the Unit Operator at theaddress shown below.

9. Election Ootions:

9.1 Ootion 1 — To Particinate In The Develonment and Qoeiation of theDrillina Unit: Any Gas owner or claimant named in 33$L4bit $-3 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 particulai'lyset 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 date ofmailing or the date of recording of this Order. The estimatedCompleted-for-Production Costs for the Subject Drilling Unit areas follows:

Completed-for-Production Costs: 3403,013.00

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

A Participating Operator's proportionate cost hereunder shall bethe result obtained by multiplying the Participating Operator's"Interest within Unit" as set forth herein in the attached ES($4$it$-3 times the Estimated Completed-for-Production Costs set forthabove. 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-

9.2

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.

Ootion 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 or Claimantnamed in S)shlbit B-S hereto who has not reached a voluntaryagreement with the Unit Operator may elect to accept a cash bohusconsideration of 05.00 per net mineral acre owned by such person,commencing upon entry of this Order and continuing annually untilcommencement of production from Subject Drilling Unit, andthereafter a royalty of 1/8th of 8/Sths [twelve and one-halfpercent (12.5%)] of the net proceeds received by the Unit Operatorfor the sale of the Gas produced from any Well development andoperation covered by this Order multiplied by that person'Interest Within Unit as set forth in Sm(hibit B-3 [for purposes ofthis Order, net proceeds shall be actual proceeds received lesspost-production costs incurred downstream of the wellhead,including, but not limited to, gathering, compression, treating,tzansportation and marketing costs, whether performed by UnitOperator or a third person] as fair, reasonable and eguitablecompensation to be paid to said Gas Owner or Claimant. Theinitial cash bonus shall become due and owing when so elected andshall be tendered, paid oz'scrowed within one hundred twenty(120) days of recording of this Order. Thereafter, annual cashbonuses, if any, shall become due and owing on each anniversary ofthe date of recording of this order in the event production fromsubject Drilling Unit has not theretofore commenced, and once due,shall be tendered, paid or escrowed within sixty (60) days of saidanniversary date. Once the initial cash bonus and the annual cashbonuses, if any, are so paid or escrowed, said payment(s) shall besatisfaction in full for the right, interests, and claims of suchelecting person in and to the Gas produced from Subject Formationin the Subject Lands, except, however, for the 1/8th royalties duehereunder.

Subject to a final legal determination of ownership, the electionmade under this Paragraph 9.2, when so made, shall be satisfactionin full for the right, interests, and claims of such electingperson in any well development and operation covered hereby andsuch electing person shall be deemed to have and hereby doesassign its right, interests, and claims in and to the Gas producedfrom Subject Formation in the Subject Drilling Unit to theApplicant .

9.3. Ontion 3 — To Share In The Develooment And Ooeration As A Nen-particinatina Pez'son 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 undez Paragraph 9.2 above, any Gas Owner or Claimantnamed in mmhibit $-3 who has not reached a voluntary agreementwith the Unit Operator may elect to share in the well developmentand operation in Subject Drilling Unit on a carried basis (as a'Carried Well Operator" ) so that the proportionate part of theCompleted-for-Production Costs hereby allocable to such carriedWe].1 Operator's interest is charged against such Carried WellOperator's share of production from Subject Drilling Unit. SuchCarried Well Operatoz's rights, interests, and claims in and to

the Gas in Subject Drilling Unit shall be deemed and hereby areassigned to the Unit Operator until the proceeds from the sale ofsuch Carried Well Operator's share of production from SubjectDrilling Unit (exclusive of any royalty, excess or overridingz'oyalty, or other non-operating or non cost-bearing burdenreserved in any lease, assignment thereof or agreement zelatingthereto covering such interest) eguals three hundred percent(300%) for a leased interest or two hundred percent (200%) for anunleased interest (whichever is applicable) of such Carried WellOperator's share of the Completed-for-Production Costs allocableto the interest of such Carried Well Operator. Any Gas Ownerand/or claimant named in s)m)zibit $-3 who elects tliis option(Option 3) understands and agrees that Completed-for-ProductionCosts are the Operator's actual costs for well development andoperation. When the Unit Operator recoups and recovers from suchCarried Well Operator's assigned interest the amounts provided forabove, then, the assigned interest of such Carried Well Operatorshall automatically revert back to such Carried Well Operator, andfrom and 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 chazgedwith and shall pay his proportionate part of all fuz'ther, coats ofsuch well development and operation.

Subject to a final legal detezmination of ownership, the electionmade under this Paragraph 9.3, when so made, shall be satisfactionin full for the right, interests, and claims of such electingperson in any well development and operation covered hereby andsuch electing person shall be deemed to have and hereby doesassign his right, interests, and claims in and to the Gas produgedfrom Subject Formation in the Subject Drilling Unit to theApplicant for the period of time during which its interest iscarried as above provided prior to its reversion back to suchelecting person.

10.Failure to Pronerlv Elect: In the event a person named in R@96t I-3 hereto has not reached a voluntary agreement with the Applicant orUnit Operator and fails to elect within the time, in the manner, andin accordance with the terms of this Order, one of the alternativesset forth in Paragraph 9 above for which his interest gualifies, thensuch person shall be deemed to have elected not to paz'ticipate in theproposed Well development and operation in Subject Drilling Unit andshall be deemed, subject to any final legal determination ofownership, to have elected to accept as satisfaction in full for suchperson's right, interests, and claims in and to the Gas theconsideration provided in paragraph 9.2 above for which its interestgualifies, and shall be deemed to have leased and/or assigned hisright, interests, and claims in and to said Gas produced from SubjectFormation in subject Drilling Unit to the Unit operator. persons whofail to properly elect shall be deemed to have accepted thecompensation and terms set forth herein at Paragraph 9.2 insatisfaction in full for the right, interests, and claims of sechperson in and to the Gas produced from subject Formation underlyingSubject Lands.

11. Default Bv pazticinatina Person: In the event a person named inRmhibit $-3 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 and inthe manner as prescribed in this Order, then such person shall be deemed to

have withdrawn his election to participate and shall be deemed to have electedto accept as satisfaction in full for such person's right, interests, andclaims in and to the Gas the consideration provided in Paragraph 9.2 above forwhich his interest gualifies depending on the excess burdens attached to suchinterest. Whereupon, any cash bonus consideration due as a result of suchdeemed election shall be tendered, paid or escrowed by Unit Operator withinone hundred twenty (120) days after the last day on which such defaultingperson under this order should have paid his proportionate part of such costor should have made satisfactory arrangements fcr the payment thereof. Whensuch cash bonus consideration is paid or escrowed, it shall be satisfaction infull for the right, interests, and claims of such person in and to the Gasunderlying Subject Drilling Unit in the Subject Lands covered hereby, except,however, for any 1/8th royalties which would become due pursuant to Paragraph9.2 hereof.

12. Assionment of Interest: In the event a person named in Bmhibit B-3 is unable to reach a voluntary agreement to share in the Well developmgntand operation in Subject Drilling Unit at a rate of payment agreed to mutuallyby said Gas Owner or Clain)ant and the Unit Operator, and said person elects orfails to elect to do other than participate under Paragraph 9.1 above in theWell development and operation in Subject Drilling Unit, then such peraonshall be deemed to have and shall have assigned unto Unit Operator sechperson's right, interests, and claims in and to said Well, in SubjectFormations in Subject Drilling Unit, and other share in and to Gas productionto which such person may be entitled by reason of any election or deegedelection hereunder in accordance with the provisions of this Order governingsaid elections.

13. Unit onsrator (or onerator): ASS)alaekiam Bmsxgy Ime. shall be andhereby is designated as Unit Operator authorised to drill and operate thewell(s) in Subject Formations in Subject Drilling Unit, all subject to thepermit provisions contained in Va. Code %% 45.1-361.27 BL SBg : %% 4 VAC 25-150 BL RBS., Gas and oil Regulations; %% 4 vAc 25-160 ~ BBg., virginia gasand Oil Board Regulations; Oil and Gas Conservation Board ("OGCB") Orderestablishing the Nora Coal Bed Gas Field Rules entered Wench 26, 1989; all asamended from time to time, and all elections reguired by this Order shall becommunicated to Unit Operator in writing at the address shown below:

ANPalaek(%am Bmesgy Zmo.P.O Bea 2406Abim(%Semi Vfa3%%mia 24212-2406PBmmes (2763 1%-4%%0Attn c Fmsmk )%ma%erson

14. commencement of onerations: Unit Operator shall commence or causeto conmence operations fo'r the drilling of the well within subject DrillingUnit within seven hundred thirty (730) days from the date of this Order, andshall prosecute the same with due diligence. If the Unit Operator has not socommenced and/or prosecuted, then this order shall terminate, except for anycash sums then payable hereunder; otherwise, unless sooner terminated hy Orderof the Board, this Order shall expire at 12:00 p.m. on the date on which thewell covered by this Order is permanently abandoned and plugged. Hioesver, inthe even at an appeal is taken from this order, then the time between thefiling of the Petition for Appeal and the Final Order of the Circuit Courtshall be excluded in calculating the two-year period referenced herein.

15. onsrator'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 off

shall be separable as to each separate person and shall remain liens until theUnit Operator drilling or operating the (sell(s) has been paid the full amountsdue under the terms of this Order.

16. Escrow Provisions:

The Applicant represented to the Board that there axe unknown orunlocatable claimants in Subject Drilling Unit whose payments are subject tothe provisions of paragraph 16.1 hereof in the subject Drilling Unit; and,the Unit Operator has represented to the Board that there axe conflictingclaimants in the Subject Drilling Unit whose payments are subject to theprovisions of Paragraph 16.2 hereof. Therefore, by this Order, the EscrowAgent named herein or any successor named by the Board, is required toestablish an interest-bearing escrow account for the Subject Drilling Unit(herein "Escrow Account" ), and to receive and account to the Board pursuAntto its agreement for the escrowed funds hereafter described in paragraphs16.1 and 16.2:

wachovia Bemk, N.A.VA7515

P.O. Bam 14061Beemahm, VA 24030

Attemtiems Ju4F Bmsger

16.1. Escrow Provisions For Unknown or Unlocatable Personsi If anypayment of bonus, royalty payment or other payment due and owingunder this Order cannot be made because the person entitledthereto cannot be located or is unknown, then such cash bon0s,royalty payment, or other payment shall not be commingled withany funds of the Unit Operator and, pursuant to Va. Code 5 45.1-361.21.D, said sums shall be deposited by the Unit Operator intothe Escrow Account, commencing within one hundred twenty (120)days of recording of this Order, and continuing thereafter on amonthly basis with each deposit to be made, by use of a reportformat approved by the Inspector, by a date which is no laterthan sixty (60) days after the last day of the month beingreported and/or for which funds are being deposited. Such fuadsshall be held for the exclusive use of, and sole benefit of theperson entitled thereto until such funds can be paid to suchperson(s) or until the Escrow Agent relinquishes such funds asrequired by law or pursuant to Order of the Board in accordancewith 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 clcud on Ehetitle, 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 AS)ya1achian hsrgy Znc. Applicant is dulyauthorized and qualified to transact business in the Commonwealth ofVirginia;

17.2. Applicant Appalachian Rnsrgy Znc. has made a delegation ofauthority to Appalachian Masrgy Znc. to explore, develop andmaintain the properties and assets of Applicant, now owned orhexeafter acquired, and Appalachian Mssrgy Znc. has accepted thisdelegation of authority and agreed to explore, develop and maintainthose properties and assets, and has consented to serve as CoalbedMethane Gas Unit Operator for Subject Drilling Unit and tofaithfully discharge the duties imposed upon it as Unit Operator bystatute and regulations;

17.3. Applicant Appalachian Energy Znc. is an operator in theCommonwealth of Virginia, and has satisfied the Board's requiremehtsfor operations in Virginia;

17.4 Applicant Appa1achian Energy znc. claims ownership of gas leases,Coalbed Methane Gas leases, and/or coal leases representing 31.SORYpercent of the oil and gas interest/claims in and to Coalbsd MethaneGas and s3.67'a percent of the coal interest/claims in and to coalbedMethane Gas in Subject Drilling Unit; and, Applicant claims theright to explore for, develop and produce Coalbed Methane Gas fromSubject Formations in Subject Drilling Unit in s ~ County,virginia, which subject Lands are more particularly described inBnhibit At

17.5. The estimated total production from Subject Drilling Unit is 3SOThe estimated amount of reserves from the Subject Drilling

Unit is 3SO 3M3CO;

17.6 Set forth in Rahibit B-3, is the name and last known address ofeach Owner or Claimant identified by the Applicant as having orclaiming an interest in the Coalbed Methane Gas in Subject Formationin Subject Drilling Unit underlying and comprised of Subject Lands,who has not, in writing, leased to the Applicant or the UnitOperator or agreed to voluntarily pool his interests in SubjectDrilling Unit for its development. The interests of the Respondentslisted in $¹hibit B-3 comprise 46.63% percent of the oil and gasinterests/claims in and to Coalbed Methane Gas and 46.33% percent ofthe coal interests/claims in and to Coalbed Methane Gas in SubjectDx'illing 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-3 hereto the opportunity to recoveror receive, without unnecessary expense, such person's just andfair share of the production from Subject Drilling Unit. Thegranting of the Application and relief requested therein willensure to the extent possible the greatest ultimate recovery ofCoalbed Methane Gas, prevent or assist in preventing the varicustypes of waste prohibited by statute and protect or assist inprotecting the correlative rights of all persons in the subjectcommon sources of supply in the Subject Lands. Therefore, theBoard is entering an Order granting the relief herein set forth.

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

19. Availability of Unit Records: The Director shall provide allpersons not subject to a lease with reasonable access to all records forSubject Drilling Unit which 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.

DONE AND EXECUTED this day of lt —:,2007, by a majorityof the Virginia Gas and Oil Board

Chairman, Be+ R. WaP&ler

DONE AND PERFORMED this ~ day o 2007, by Order ofthis Board.

. WilsonPrincipal Executive To The StaffVirginia Gas and Oil Board

STATE OF VIRGINIA '

COUNTY OF WASHINGTON )

Acknowledged on this ~ day of i ~~ ,2007, personallybefore me a notary public in and for thd Commonwealth of Virginia, appearedBenny Wampler, being duly sworn did depose and say that he is Chairman of theVirginia Gas and Oil Board, and B. R. Wilson, being duly sworn did depose andsay that he is Principal Executive to the Staff of the Virginia Gas and OilBoard, that they executed the same and was authorized to do so.

Diane DavisNotary Public 174394

My commission expires September 30, 2009

10

TOTAL UNIT AREA= 61.43 ACRES

Iianaa swaaa EasMaanaa MMIWCE a IBBRAL ESBS

UNIT II I!F I

I H

ie72.56'he

ootool location of the drsed wall

ahoS be wshhl ten (10) feet of theIooothal Shown hereon oa Pnndded for by4 VAC',25-150-250 ond 45.1-361.30.

ma A, ~~~ Pa ~ -OTCool, Spa, OS

QAS 78 AC. —72,88800180M SI RCONEY

0OTSON —aurhee

LATITUDE 5720'00'

ILICI

NAD 27 IXKNDStATESOF %XL AE-187

l BOUNDARY E ~~1~ I gLAT 37.388354

LON -IO.037711

0Z

g)BUCHANAN REALTY-COSL Qea, CN IQAS 2.65 AC. —4.31%

I-2

09

!+I EE

"-iay

~oa «'w453.73'

Cl CCC COOISSN ATESZ OF WELL AE-187N 7587L35D E 100836.02

02EAQLE COAL CORP.—Cae4Coa4N

~GAS 10.75 AC. —17.50%

JOSEPH B. LOONEY ESTATE—Cool,sac,OSQAS'2.25 AC, —SEINSS

UNIT y BOUNDARYKELLY LOINIY HBRS-Cool, Qoa, OSQAS 1.02 AC. —1.67%

COORDINATESOF BENCH MARK

N 46SSS.TIE Tsela.ss

ELEV.

NOTE I I I

WEEL COORDSIA1Bi ARE BASED ON CUNCHFIEEDcoAL coMPANYs cooRDSIATE slslEMCUNCHFELD COAL COMPANY COORDSIATES ARECALCEIEATED FROM STATE PEANE WEEL COORDINATES

PROPERTY INFORMATION PROVIDED BY APPALACHIANBISROY. INC.

ELEVAlIONS ARE BASED ON NOS CONTROL CSIDY AZ MK

IERIC W. PIISCE

Uc No M4499

ua~»

THIS PLAT IS A NEW PLAT x; AN UPDATED PLAT; OR A FINAL LOCATION PLATPROPOISED TOTAL DEPTH OF WELL ~+, .

DENOTES THE LOCATION OF A WELL ON UNITED STATES TOPOGRAPHIC MAPS, SCALE 1 TO24,DOO, LATITUDE AND LONGI E UNES BEING REPRESENTED BY BORDER UNES AS SHO

'f-I+O I (AFFIXII z@ UCENSED PROFESSIONAL ENGINEER OR UCENSED LAND SURVEYOR . n n a

WELL LOCATION PLAT

COMPANY Assalachlafl EnerQY. Inc. WELL NAME AND NUMBER ~-~ex P'-ee)TRACT No. OOLEMAN. LEaaE PossT ELEVATION 2032.05 (OPs) QUADRANGLE ESNBIDY

COUNTY DISTRICT NDRTH MUMDY SCALE: 1" 400'ATE sewtember 14, 2007

Exhibit 8-3Unit F-100

(AE-187)Revised 10/12/07

TRACT LESSORLEASESTATUS

Gas Estate Oalv

INTERESTWITHINUNIT

GROSSACREAGEIN UNPI

1 Dorothy Compton and or Heirsunknown / unlocateable

unleased 3.643 2.238

William E. Davis3930Deborah LaneAnchorage, Alaska 99504

Watie Davis4547 County Rd ¹25Heflin, AL 36264

Barbara Davis Yagle3642 Gunnels LaneOxford, AL 36203

Douglas Wayne Davis1004 Edgewood DriveClarksville, TN 37040

Glenn Allen DavisRt.2,Box560.4Hartford, AL 36344

Shelby Davis StacyPO Box 966Grundy, VA 24614

W.W. Coleman Heirs

Lydia Jane Coleman10216-BWhite Pelican WayNew Market, MD 21774

H. Claude Pabst Heirs

Meredith Eilis Jennings542 Butler Mill Rd~le, TN 37803

unlcased 2.569'o

7.6PYa

1.574889

4.72466/

Richard K. Pobst3760 Lindell RdLas Vegss, NV 89103

unleased 3.85% 2.362333

QQ1Z

Exhibit B-3Unit F-1GG

(AE-187)

TRACT LESSOR

Nancy Catherine Pobst-Hooper111Postelle StCarterville, GA 30120

John W. Pobst Heirs

LEASESTATUS

unleased 3.85%

GROSSACREAGEIN UNIT

2.362333

John W. Pobst, Jr. R Lynda Pobst unleased

PO Box 86Revere, PA 18953

3 85% 2.362333

Virginia dt Phillip Linnick4324 South Ball DrVeradale, WA 99037

unleased 3.85% 2.362333

2 EAGLE COAL CORPORATION unleased

cJo Stewart dt Campbell HessPO Box 1060Huntington, West Virginia 25727

17.50% 10.75

3 Carol KeeneRt. 3, Box 191Grundy, VA 24614

unleased 1.8300000% 1.125

GAS%STATE TOTAL Total Unluased 48,62% 29.86

Coal Estate Qnlv

W.W. Coleman Heirs

1 Lydia Jane Coleman10216-BWhite Pelican WayNew Market, MD 21774

uttleased 2.70% . 1.657778

Meredith Ellis Jennings542 Butler Mill RdMaryville, TN 37803

unleased 8.10% 4.973333

Richard K. Pobst3760 Lindel! RdLas Vegas, NV 89103

unleased 4.05% 2.486667

Nancy Catherine Pobst-Hooper111Postelle StCarterville, GA 30120

unleased 4.05% 2.486667

TRACT LESSOR

Exhibit B-3Unit F-100

(AE-1&7)

LEASESTATUS

INTEREST GROSSWITHIN ACREAGEUNIT IN UNIT

John W. Pobst Heirs

John W. Pobst, Jr. Jc Lynda Pobst uuleasedPO Box 86Revere, PA 18953

Virginia dt Phillip Linnick unleased4324 South Ball DrVeradale, WA 99037

2 EAGLE COAL CORPORATION unleasedcIo Stewart 4 Campbell HessPO Box 1060Huntington, West Virginia 25727

4.05%

4 05%

17.50%

2.486667

2.486667

10.75

3 Carol KeeneRL 3, Box 191Grundy, VA 24614

unleased 1.8300000% 1.125

COAL ESTATE TOTAL Total AEI Unleased 46.33% 28.45

Exhibit EF-100(AS-187)

(Revised 10/12/07)

LEASESTATUS

INTEREST GROSSWfTNN . ACREAGEUNIT IN IS8IT

tsaa Eatata1 Dorothy Compton and or Heirs unleased

unhewn / ~teWilliam E.Davis3930Deborah LaneAnchorage, Ahtska 99504

Watie Davis4547 County Rd ¹25Heflm, AL 36264

3.643 2.238

Barbara Davis angle3642 Gunnels LaneOxfcad, AL 36203

Douglas Wayne Davis1004 Bdttewood DriveClatksvtlle, TN 37040

Glenn Alien T)tivts

Rt. 2, Box 560-A-Hartfer@-AL 36344

Shelby Davis StacyPO Box 966Grundy, VA 24614

Lydia Jane Coleman unleased10216-BWhite Pelican WayNew Market, MD 21774T~VA 24651

Alice Maelean Schepp273 Hickory Heights DrBridgeville, PA 15017

0.14'Yo

0.145e

0.083

0.083

Amy Elizabeth Reilly819 Hlllcrest CircleWexford, PA 15090

leased 0 14% 0.083

QQJS

Exhibit EF-100(AE-187)

(Revised 10/12/07)

LEASESTATUS

INTERESTWITHINUNIT

QROSSACIIIIhaE

Daniel L. dt Annie G. Coleman leased

200 Bellefonte CircleAshbmd, KY 41101

0.41% 0.249

Fnmces Poley34958 Roberts LaneSt. Helens, OR 97051

leased 0.41% 0249

S. Charbxt dt Lillian C. Ratliff leased

110Fairview StreetGnmdy, VA 24614

Meredith EIIIs Jennings542 Butler Mill RdMaryville, TN 37803

122%

0 41%

0.746

0.249

Richard K. Pobst3760 Lindcll RdLas Vegan, NV 89103

unlcased 020% 0.124

Nancy Catherine Pobst-Hooper unleased

111Postelle StCmtarville;GA 30120

0.20'Yo 0.124

John W. Pobst, Jr. 8.Lynda PobstPO Box 86Revere, PA 18953

unless cd 020% 0.124

Virginia dt.Phillip Linnick unleased

4324 South Ball DrVeradale, WA 99037

0.20% 0.124

VIRGINIA: In thc Clerk's Olgce of the Circuit Court ofBuchanan County. The foregoing instryn~ was this thc olSce

foresaid and 'yggyjth ths~ofykowicdgsment annexed, admitted to record this~day of

20~. '."0/I'865%4~~ TE: Beverly S.Tiller, Clerk

Returned to:

)ATE

TESTE: 6.~ dhsamSCIea

0016