Web viewVIRGINIA DEPARTMENT OF MINES, MINERALS AND ENERGY. VIRGINIA GAS AND OIL BOARD HEARING....

VIRGINIA DEPARTMENT OF MINES, MINERALS AND ENERGY

VIRGINIA GAS AND OIL BOARD HEARING

Tuesday, December 19, 2017

Lebanon, Virginia

BOARD MEMBERS:

Bradley Lambert – Chairman

Bill Harris – Public Member

Bruce Prather – Oil and Gas Industry Representative

Donnie Ratliff – Coal Industry Representative

Donnie Rife – Public Representative

Mary Quillen – Public Member

Rita Surratt – Public Member

APPEARANCES:

Rick Cooper—Director of the Division of Gas & Oil and Principal Executive to the Staff of the Board

Sarah Gilmer—Staff Member of the Division of Gas & Oil

Sally Ketron—Staff Member of the Division of Gas & Oil

Paul Kugelman, Jr.—Senior Assistant Attorney General

Prepared by: Margaret Linford

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Agenda Items

Item Number Docket Number Page

1 Public Comments 1

2 VGOB-17-1219-4153 (Approved) 1

3 VGOB-00-0321-0775-03 (Approved) 8

4 VGOB-92-0317-0195-02 (Approved) 14

5 VGOB-92-0317-0196-02 (Approved) 19

6 VGOB-92-0317-0197-01 (Approved) 23

7 VGOB-92-0317-0198-01 (Approved) 27

8 VGOB-92-1117-0285-02 (Approved) 33

9 VGOB-98-1117-0697-05 (Approved) 37

10 VGOB-04-0120-1250-05 (Approved) 44

11 VGOB-17-1219-4154 (Approved) 49

12 VGOB-17-1219-4155 (Approved) 51

13 VGOB-17-1219-4156 (Approved) 57

14 Board & Division Activities from the Staff 60

- Escrow disbursement update.

15 Board Review of November 2017 Minutes (Approved) 65

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Bradley Lambert: Good morning, ladies and gentlemen. It's now after 9:00 and time to begin our proceedings, this morning. First of all, I'd ask if you have any communication devices to please put those on silent or turn them off. We're recording these proceedings and we don't need to hear background noise from cell phones ringing and people talking on cell phones. I'll begin, this morning, by asking the Board to please introduce themselves. I'll begin with Ms. Surratt.

Rita Surratt: I'm Rita Surratt, public member from Dickenson County.

Paul Kugelman: I'm Paul Kugelman, with the Attorney General's Office.

Bradley Lambert: I'm Butch Lambert, with the Department of Mines, Minerals and Energy.

Donnie Ratliff: Donnie Ratliff, representing coal from Wise County.

Donnie Rife: Donnie Rife, public member from Dickenson County.

Bill Harris: I'm Bill Harris, a public member. I'm from Wise County.

Bruce Prather: I'm Bruce Prather. I represent the oil and gas industry on the Board.

Mary Quillen: Mary Quillen, public member.

Bradley Lambert: Thank you.

Items Number 1 and 2

Bradley Lambert: Now, at this time, we usually have comments from the public, but on the sign-up sheet, I don't have anybody that's signed in, so I'll ask is there anybody with comments, from the public, who did not, or was not able, to sign in? [No response] If not, we'll move to Docket Item Number 2. We're calling a petition from CNX Gas Company, LLC, for pooling under the Nora Coalbed Methane Gas Field. This is Docket Number VGOB-17-1219-4153. All parties wishing to testify, please come forward.

Mark Swartz: Mark Swartz and Anita Duty.

Bradley Lambert: Good morning.

Mark Swartz: Good morning.

Sarah Gilmer: Ms. Duty, do you swear and affirm that your testimony is the truth, the whole truth and nothing but the truth?

Anita Duty: Yes.

Bradley Lambert: You may proceed, Mr. Swartz.

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Mark Swartz: Thank you. Anita, would you state your name for us, please?

Anita Duty: Anita Duty.

Mark Swartz: Who do you work for?

Anita Duty: CNX Land Resources.

Mark Swartz: And, are you here today, on behalf of the applicant, CNX Gas Company, LLC?

Anita Duty: Yes.

Mark Swartz: And, the second item on the docket is an application for pooling. Correct?

Anita Duty: It is.

Mark Swartz: In the Nora Field?

Anita Duty: Yes.

Mark Swartz: And, it pertains to Unit A (Apple) U (Utah) 91. Right?

Anita Duty: Yes.

Mark Swartz: The applicant is also seeking to be designated as the operator, if this is approved?

Anita Duty: Yes.

Mark Swartz: And, is CNX Gas Company a Limited-Liability Company, authorized, or organized in the Commonwealth of Virginia?

Anita Duty: Yes.

Mark Swartz: Is it authorized to do business in Virginia?

Anita Duty: It is.

Mark Swartz: Has it registered with the DMME and the DGO?

Anita Duty: Yes.

Mark Swartz: Does it have a blanket bond on file?

Anita Duty: Yes.

Mark Swartz: What did you do to tell people that we were going to have a pooling hearing, with regard to this unit, today?

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Anita Duty: We mailed by certified mail, return receipt requested, on September 15, 2017, and published in the Virginia Mountaineer on November 30, 2017.

Mark Swartz: Have you filed the certifications of mailing and proof of publication?

Anita Duty: Yes.

Mark Swartz: Okay. Do you want to add any people as respondents, today?

Anita Duty: No.

Mark Swartz: Do you want to dismiss anybody?

Anita Duty: No.

Mark Swartz: And, this is a coalbed methane unit?

Anita Duty: It is.

Mark Swartz: And, you've provided an estimate of allowable costs. Right?

Anita Duty: Yes.

Mark Swartz: How many wells is that for?

Anita Duty: Just one.

Mark Swartz: And, what is your estimate, with regard to that well?

Anita Duty: $337,784.

Mark Swartz: And, that would be for a frack well. Correct?

Anita Duty: Yes.

Mark Swartz: Then, you provided a plat, I believe?

Anita Duty: Yes.

Mark Swartz: This is a somewhat larger Nora unit, because it's on a boundary?

Anita Duty: Smaller.

Mark Swartz: Smaller? 70.67 acres?

Anita Duty: For Nora Field, yes. I'm sorry. Yes.

Mark Swartz: The typical Nora Unit is just under 60.

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Anita Duty: That's right.

Mark Swartz: If you look at the map that comes later, here, you'll see it's on a boundary.

Anita Duty: Yes.

Mark Swartz: So, we're talking about a 70.67-acre unit?

Anita Duty: Yes.

Mark Swartz: And, you've shown the drilling window, on the plat?

Anita Duty: Yes.

Mark Swartz: And, you've located the well within the drilling window?

Anita Duty: We have.

Mark Swartz: And, it's in the northeast corner of the drilling window?

Anita Duty: Yes.

Bradley Lambert: Can they hear okay?

Rick Cooper: We gave one person a hearing-aid. I asked everyone if they needed additional hearing. He's the only one that said that he needed it.

Bradley Lambert: Sir, can you hear okay? Okay. Thank you. I'm sorry, Mark.

Mark Swartz: That's okay. In Exhibit B3, you've indicated the folks that you are seeking to pool. Correct?

Anita Duty: Yes.

Mark Swartz: And, it pertains to Tract 2?

Anita Duty: It does.

Mark Swartz: And, the acres that we're seeking to pool are how many?

Anita Duty: 26.54.

Mark Swartz: And, what percentage of the unit would that be?

Anita Duty: 37.5548%.

Mark Swartz: And, with regard to the balance of the unit, do you either own it or have agreements, with regard to that, to develop those acres?

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Anita Duty: Yes, we do.

Mark Swartz: You've got a cost estimate, which was dated November 7, 2017. Right?

Anita Duty: Yes.

Mark Swartz: We can see from PDF Page 10, that the location is, indeed, on a boundary?

Anita Duty: Yes.

Mark Swartz: There's no need for escrow because we know where everyone is. Correct?

Anita Duty: Yes.

Mark Swartz: Is it your opinion that the location of this frack well in the drilling unit and the development of the well, as a frack well, is a reasonable way to produce the coalbed methane from this unit?

Anita Duty: Yes.

Mark Swartz: And, is it your opinion that, if you combine the contracts that the applicant has obtained, with regard to all of the unit, except for Tract 2, would a pooling order, pooling the folks in Tract 2, the correlative rights of all people in this unit will be protected?

Anita Duty: Yes.

Mark Swartz: What would your standard lease terms be, that you'd like the board to implement?

Anita Duty: $5 per acre per year, with a 5-year paid-up term and a 1/8 royalty

Mark Swartz: That's all I have, Mr. Chairman.

Bradley Lambert: Any questions from the Board? [No response] Anything further, Mr. Swartz?

Mark Swartz: No.

Bradley Lambert: Do I have a motion?

Donnie Rife: Motion made for approval, Mr. Chair.

Bill Harris: I'll second that.

Bradley Lambert: I have a motion and I have a second. Any further discussion? [No response] All in favor signify by saying yes.

Board: Yes.

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Bradley Lambert: Opposed no. [No response] Thank you, Mr. Swartz. That one is approved.

Mark Swartz: Thank you.

Item Number 3

Bradley Lambert: We're calling Docket Item Number 3. A petition from CNX Gas Company, LLC, for (1) re-pooling to revise interests consistent with those determined by re-mapping; (2) to include anticipated production under Oakwood II Field Rules after longwall panel isolation; and (3) to allow for and include production from additional wells drilled to de-gas coal in advance of mining. Docket Number VGOB-00-0321-0775-03. All parties wishing to testify please come forward.



Mark Swartz: State your name for us, Anita.


Mark Swartz: I'd like to incorporate the testimony, with regard to her employment and the petitioner and operator and the standard lease terms.

Bradley Lambert: Okay. You may continue.

Mark Swartz: Okay. Anita, this is a re-pooling. Correct?

Anita Duty: It is.

Mark Swartz: And, it pertains to which unit?

Anita Duty: N39.

Mark Swartz: In what field is that unit located?

Anita Duty: Oakwood.

Mark Swartz: And, we're seeking to re-pool under both Oakwood I, which is the frack well rules. Right?

Anita Duty: Correct.

Mark Swartz: And Oakwood II, which would be, in this case, panel production rules.

Anita Duty: Yes.

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Mark Swartz: Okay. And, there was a minimal mapping change, here, I think.

Anita Duty: There was.

Mark Swartz: So, this re-pooling is to accommodate that mapping change?

Anita Duty: Yes.

Mark Swartz: Then, we have some continuing development in the mine that underlays this unit and other units in the immediate area?

Anita Duty: Yes.

Mark Swartz: What mine is that?

Anita Duty: Buchanan.

Mark Swartz: Have you brought a map that you can show to the Board, in terms of the panels that we're talking about, today?

Anita Duty: Yes.

Mark Swartz: Okay. And, do you have extra copies?

Anita Duty: No, I didn't do that.

Mark Swartz: Do you have, at least, one extra copy?

Anita Duty: No. You can have this one and show them this one.

Mark Swartz: Why don't you give that to the Chairman and he can refer to that. You handed the Chairman a map of mine works, or projected mine works. Correct?

Anita Duty: Yes.

Mark Swartz: And, the panels that are shaded are which panels?

Anita Duty: 1 East and 2 East.

Mark Swartz: And, are those the panels that we're going to be allocating, today, to this unit? Portions? No, they're not? Okay.

Anita Duty: We're going to do 3 & 4.

Mark Swartz: Okay. So, we're going to the projections above.

Anita Duty: We are.

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Mark Swartz: Okay. If we go into the later portions of this application, as long as we're talking about the panels. You have provided well cost estimates for the several panels that we're talking about. Correct?

Anita Duty: Yes.

Mark Swartz: This is starting at Page 31 of the PDF, which I think would be the same page in the Board's PDF. We've got an Exhibit C, which is an estimated average cost per well, for the 2 East panel. Correct?

Anita Duty: Yes.

Mark Swartz: And, what's the average cost, there?

Anita Duty: $195,952.30.

Mark Swartz: And, that's followed by an estimated cost, per well, for the 3 East panel wells. Correct?

Anita Duty: Yes.

Mark Swartz: And, that average cost is what?

Anita Duty: $197,326.

Mark Swartz: Then, we've got the 4 East panel, as well.

Anita Duty: Yes, there is a little piece of it.

Mark Swartz: There's a little bit of that.

Anita Duty: There is.

Mark Swartz: Okay. And, the average cost, per well, in the 4 East panel, is what?

Anita Duty: $194,705.20.

Mark Swartz: And, these cost estimates, it looks like they were all prepared in November of this year.

Anita Duty: They were.

Mark Swartz: Then, what we have to do, is take the estimates, apply them across the units that all are affected by the panels and that is done on PDF Page 35. Right?

Anita Duty: Yes.

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Mark Swartz: Then, at the bottom of 35, you've taken the three panels (2 East, 3 East, 4 East) and the percentages of those panels affecting the N39 Unit and you've allocated the cost, accordingly. Correct?

Anita Duty: Yes.

Mark Swartz: And, what is the total cost for these three panels, that is being allocated to the N39 Unit?

Anita Duty: $700,896.47.

Mark Swartz: The plat, which is at Page 6, shows, it looks like, there are actually eight wells, within this unit?

Anita Duty: Yes.

Mark Swartz: And, they contribute to the de-gas of the mine below?

Anita Duty: They do.

Mark Swartz: As these panels above, the 4 East and 3 East, are isolated, at that point, we want to switch from the frack gas allocation to the panel allocation.

Anita Duty: We do.

Mark Swartz: That's why we're here, with both requests, today?

Anita Duty: Yes.

Mark Swartz: Have you provided the Board...? The Exhibit B3 is at PDF Page 31 and it's a pretty short list. Right?

Anita Duty: It is.

Mark Swartz: And, it pertains to Tract 1?

Anita Duty: Yes.

Mark Swartz: And, there are a few of the P.J. Brown heirs that we have not been able to reach an agreement with.


Mark Swartz: And, that pertains to how many acres, in this unit?

Anita Duty: 0.0785.

Mark Swartz: And, what percent of the unit is that?

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Mark Swartz: So, except for that little bit of the unit, you have either purchased or contracted with the owners to develop this N39 Unit?


Mark Swartz: And, that is the extent of the interest you're seeking to pool and the people you're seeking to pool?

Anita Duty: Yes.

Mary Quillen: Mr. Chairman, could I ask Mr. Swartz just one question, on this?

Bradley Lambert: Yes, Ms. Quillen.

Mary Quillen: This P.J. Brown heirs, are these all in one panel, or is it in all three panels?

Mark Swartz: They're in Tract 1, so we have to go back to the plat. Let me look there. So, if we look at the plat and, then, at Tract 1, it looks like they would be in, probably, two.

Anita Duty: They have a share in all of them.

Mark Swartz: I understand, but the physical location is not.... It looks like the physical location of the tract is, primarily, in 3 and some in 4. They will share in the production of all three panels.

Mary Quillen: All three panels. Okay. That was my question. Okay. Thank you.

Mark Swartz: The production of those three panels will be allocated on the percentages that we were looking at, for the costs, to this unit. So, everybody in this N39 Unit will share in all the production of gob gas from all three panels.

Mary Quillen: Right.

Bill Harris: Mr. Chairman.

Bradley Lambert: Mr. Harris.

Mark Swartz: In fact, Anita makes a good point, here. If you look at....

Bill Harris: Let me ask a question, very quickly. It, actually, relates to her question. When I look at the plat map, I'm not sure if I can distinguish where Tract 1, where the perimeter is, or where the confines are. I see a "1," that's in that inner square.

Anita Duty: It's a long tract, so it's going to go outside...

Bill Harris: Is that the horizontal line that's running through...?

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Anita Duty: It is. It's going to go outside the unit. You won't even see the boundary.

Bill Harris: Okay. So, north of that line? Is that what you're saying? That horizontal line that has N39D, N39C, just above that is.... Okay. So, everything north of that is Tract 1.

Anita Duty: This is actually what the tract looks like, this long rectangle.

Bill Harris: Yes. Okay.

Anita Duty: That's what the tract looks like, as a whole. If you want to see the whole, entire tract.

Mary Quillen: The tract is a rectangle, then.

Anita Duty: I'm sorry.

Mary Quillen: The tract is a rectangle. Is that what you're saying?

Anita Duty: The yellow line is that tract, is that P.J. Brown tract.

Mary Quillen: Okay.

Anita Duty: And, the line that changed is this other line. So, the line between the tract here and the tract there was adjusted by, like, 1.35 acres, is all.

Bradley Lambert: So, is that the re-mapping that's being done?

Mark Swartz: Yes.

Anita Duty: It was actually an agreement. I don't know if you remember J.C. Franks. He met with our mapping department, our land department, and they agreed that they had that line misplaced and had it surveyed and made the correction.

Mark Swartz: Coming back to the allocation, if you look at.... Anita makes a good point to illustrate this, here. If you look at PDF Page 31, Exhibit B3, for the people that are being pooled, there is actually a percentage under each panel, for each person. You can see that they're participating in the 2 East, 3 East and 4 East panels and the percentages of their interest in those panels, respectively, are all listed on Exhibit B3. You're all looking like that's clear as mud.

Bradley Lambert: Any other questions from the Board? [No response] Anything further, Mr. Swartz?

Mark Swartz: No.



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Bill Harris: I'll second that.


Board: Yes.


Mark Swartz: Thank you.

Item Number 4

Bradley Lambert: We're calling Docket Item Number 4. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to Tract 5, as depicted upon the annexed table; (2) dismissal of surface owners in Tract 5, B.F. McGlothlin Heirs. This is Docket Number VGOB-92-0317-0195-02. All parties wishing to testify please come forward.

Mark Swartz: Mark Swartz and Anita Duty

Mason Heidt: Mason Heidt from Harrison-Wyatt

Bradley Lambert: Good morning. You may proceed.

Mark Swartz: Thank you. Anita, you're here on behalf of CNX Gas Company, LLC. Correct?

Anita Duty: Yes.

Mark Swartz: And, this is a disbursement request?

Anita Duty: It is.

Mark Swartz: And, it pertains to which unit?

Anita Duty: S13.

Mark Swartz: We have a number of these, but it's a somewhat unusual situation because we're actually dismissing surface owners, as opposed to coal owners. Right?

Anita Duty: Yes.

Mark Swartz: And, we've been here, before. There was a fairly extensive surface tract that the B.F. McGlothlin Heirs made a claim as surface owners to the coalbed methane.

Anita Duty: Yes.

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Mark Swartz: And, there were a number of units pooled, subject to that claim and this pre-dated the House Bill, dealing with who owns coalbed methane. The solution of the Board, and I think this was even in the early '90's (This was pooled in '92...this particular unit.) was to simply pool them, as claimants. Nobody knew what the status, the legal status, of ownership was, at that point. Now that we have House Bill 2058, we know who to pay.

Anita Duty: Yes.

Mark Swartz: So, as we have done in a couple of recent trips to the Board, with regard to Harrison Wyatt and the McGlothlin Heirs, we have notified the heirs that they need to show up, today, if they have a claim.

Anita Duty: Yes.

Mark Swartz: If the Board would turn to the next page. I guess it's Page 2. It says, "Factual basis for relief requested," but it actually reproduces part of the notice that we gave to the surface owners. It says, among other things, "To the following persons identified as surface owners in the pooling order and supplemental orders, pertaining to the referenced docket, who were previously pooled by the Virginia Gas and Oil Board Order, as potential claimants." Then, it's capitalized. "You, as a respondent and your claims, if any, to coalbed methane royalties for gas produced from this unit, are subject to dismissal, by Board Order, at the hearing noticed above." Then, we listed them. And, we did it this way, which is not what we normally do, but we wanted to make sure that these folks understood, clearly, that they had made claims and those claims were going to be addressed at this hearing. Absent some evidence from them of an agreement or a problem or title issues, their claims were to be dismissed. So, we just wanted to point out to the Board that we have given specific notice of what's going to happen, today, in the clearest way we know how, in the mailings and the publications, to these people. So, that's what we're seeking, today. Of course, the factual basis is House Bill 2058, which says the Board is to pay the gas claimant. We've got a plat map, which I'm not sure we need, but if you go to the well plat legend, we're talking about Tract 5, the type-written number five, and you'll see there are surface, B.F. McGlothlin Heirs. So, that's the tract that we're talking about. We have a Table 1. It's 100% disbursement, so all of the funds, Anita, would go to H-W Financial. Correct?

Anita Duty: Yes.

Mark Swartz: And, you provided the official name and address for them?


Mark Swartz: And, the Escrow Agent should, simply, take 100% of the funds on hand, at the time of the disbursement, and pay them out.

Anita Duty: Yes.

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Mark Swartz: And, once that happens, you've provided a revised Exhibit E. There's no longer an escrow requirement.

Anita Duty: No.

Mark Swartz: This is the only thing that was holding us up.

Anita Duty: It is.

Mark Swartz: And, you provided a revised Exhibit EE, which is the payment plan, going forward?

Anita Duty: Yes.

Mark Swartz: Then, the other problem, the other reason we're here, today, is we've got some accounting issues.

Anita Duty: Yes.

Mark Swartz: Did you prepare an Exhibit J, for this unit?

Anita Duty: Yes.

Mark Swartz: And, it starts at PDF Page 9. You highlighted, either in yellow or in brackets, issues that you identified when you were doing the reconciliation.

Anita Duty: Yes.

Mark Swartz: And, the goal, here, was to locate all of your payments that you made, all the royalty payments you made and, then, try and find corresponding deposits.

Anita Duty: Yes.

Mark Swartz: And, the stuff that's highlighted, in yellow, were issues that there were differences between checks and deposits that you're just unable to resolve.

Anita Duty: Yes.

Mark Swartz: Then, the stuff that's bracketed.... For example, you've got five items highlighted in yellow at the very beginning. Then, you've got two items in a bracket, underneath that. Right?

Anita Duty: Yes.

Mark Swartz: The stuff that's in a bracket in the check column and, then, the deposit column, you were able to reconcile those.

Anita Duty: Yes.

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Mark Swartz: By looking at multiple entries.

Anita Duty: We were.

Mark Swartz: But, the stuff that's highlighted in yellow, for example, at PDF Page 9.... I think that's really the only page that you highlighted.

Anita Duty: It is.

Mark Swartz: But, that you could not resolve. That remains unknown, in terms of a solution.

Anita Duty: Yes.

Mark Swartz: Then, you go to PDF Page 14 and, as usual, you have done your calculations to, sort of, figure out what you think should be in the escrow account, based on the available data and, then, you've taken the bank's balance, as of September 2017, and you compared them. Correct?

Anita Duty: Yes.

Mark Swartz: There's a difference.

Anita Duty: First Bank and Trust has $673 more than our calculation.


Bradley Lambert: Any questions from the Board? [No response] Just to be sure that I understand, Mr. Swartz, what we're doing is the B.F. McGlothlin Heirs no longer have a claim and, now, we're disbursing to the...

Mark Swartz: Gas owner.

Bradley Lambert: Which is H-W Financial?

Mark Swartz: Correct. The successor of Harrison-Wyatt.

Bradley Lambert: Any other questions from the Board?

Paul Kugelman: May I, Mr. Chairman?

Bradley Lambert: Yes.

Paul Kugelman: A couple things I want to make sure the record's clear on, and if you explained it already, I apologize. So, the surface owners, prior to Swords Creek and those cases, those line of cases, and prior to the passage of what is now 45.1-361.22:2, the surface owner said, "Hey, I might be a gas owner. I'm a claimant."

Mark Swartz: Right.

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Paul Kugelman: All this has passed. Has there been any litigation on this point, for these tracts? I know there's, what, four or five of these petitions pending on the same?

Mark Swartz: No.

Paul Kugelman: No litigation?

Mark Swartz: There was some litigation, surface owner litigation, in the very early '90's, but I don't think it was McGlothlin. It was somebody else.

Paul Kugelman: Okay. I mean, I'm just trying to make...

Mark Swartz: There's a whole collection of cases. There's the Nellie Dye case, as well, but the collection of cases.... The Supreme Court of Virginia and, then, the House Bill, although frankly, I think the House Bill, itself.... I mean, the House Bill contains a directive. It really doesn't address surface claims, but it has a very clear direction to this Board that, absent some issue, you're to pay the gas claimant.

Paul Kugelman: No, that is true. I was looking at that, carefully, because I never, for whatever reason, the petitions that are dismissing a surface owner escaped me, until today. I was looking at that and I agree with your assessment, that sub-paragraph A of that statute does direct the Board to dismiss and, then, it goes on to talk about a coal claimant filing evidence of something. There's no coal claimant, here, that we're trying to dismiss because it's a surface owner.

Mark Swartz: I'm sure I wouldn't be here, unless the statute was so clear on the directive to the Board.

Paul Kugelman: I'm not taking issue with it. I just want to make sure.

Mark Swartz: I'm saying we have case law. It's, certainly, consistent with what the legislature did, but case law is.... A statute is better.

Paul Kugelman: Indeed.

Mark Swartz: In terms of you relying on it and us relying on it.

Paul Kugelman: Well, it gives the Board direction. The one thing I do want to make clear for the record, though, that this, if the petition is granted, it's not an adjudication of anybody's rights, as far as ownership, although the disbursement could go forward. I just want to make sure, if anybody looks back, that that's in there. Okay.

Bradley Lambert: Any other questions from the Board? [No response] Sir, do you have anything?

Mason Heidt: No.

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Bradley Lambert: Anything further, Mr. Swartz?

Mark Swartz: No.


Donnie Rife: Now that that's cleared up, I'll make a motion to approve, Mr. Chair.

Bill Harris: Second.


Board: Yes.


Item Number 5

Bradley Lambert: We're calling Docket Item Number 5. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to Tract 4, as depicted upon the annexed table; (2) dismissal of surface owners in Tract 4, which is the B.F. McGlothlin Heirs. This is Docket Number VGOB-92-0317-0196-02. All parties wishing to testify please come forward.


Mason Heidt: Mason Heidt, for Harrison-Wyatt.

Bradley Lambert: Before we begin, and I meant to ask this, earlier, but I apologize. Anita, has CNX Gas, LLC, now changed their name to Resources and should that be reflected in the petitions?

Anita Duty: No. Actually, the only thing that's changed, as of right now, is the main Consol Energy doesn't exist. It's not Consol Energy, anymore, because of the separation of coal and gas. That's the only thing that's changed. Consol Energy is CNX Resources Corporation, but as far as anything that's under that umbrella, it's still the same, for now.

Bradley Lambert: Okay.

Anita Duty: Consol Energy is the only name, which was the main company. That's the only thing that's changed, as of right now.

Bradley Lambert: Okay. I just wanted to clear that up because I know that there had been some name changes that we'd been made aware of, over the past couple weeks.

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Anita Duty: Yes.

Bradley Lambert: Okay. You may proceed, Mr. Swartz.

Mark Swartz: Thank you. Anita, would you state your name for us, again?


Mark Swartz: And, you're here, again, on behalf of CNX Gas Company, LLC, with regard to a petition asking for a disbursement?

Anita Duty: Yes.

Mark Swartz: And, this is, basically, the same situation that we've just addressed?

Anita Duty: It is.

Mark Swartz: But, this pertains to Drilling Unit S14?

Anita Duty: Yes.

Mark Swartz: Again, did you mail and publish the notice tailor-made for surface owner claims?

Anita Duty: Yes.

Mark Swartz: And, have you filed the certificates with regard to mailing and, also, your proof of publications, showing that we published this notice to surface owners, with the e-forms?

Anita Duty: Yes.

Mark Swartz: Okay. Once again, we have a request to pay the oil and gas owner and to dismiss the claims that were pooled back in 1992, by the original order of the surface owner claims, in Tract 4?

Anita Duty: Yes.

Mark Swartz: And, you provided the Board with a Table 1, which is a percentage disbursement. You've identified the recipient as who?

Anita Duty: H-W Financial, LLC.

Mark Swartz: And, provided their address. Correct?

Anita Duty: Yes.

Mark Swartz: And, the Escrow Agent is to pay 100% of the account to them when the disbursement is made?

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Anita Duty: Yes.

Mark Swartz: Then, you're going to pay them, going forward, directly.

Anita Duty: We are.

Mark Swartz: Once that payment occurs, there is no longer an escrow requirement and you've provided a revised Exhibit E?

Anita Duty: Yes.

Mark Swartz: And, you've also provided a revised Exhibit EE, showing the going-forward payments?

Anita Duty: Yes.

Mark Swartz: Then, we have a problem, once again, with the earlier checks and deposits into this escrow account. Correct?

Anita Duty: Yes.

Mark Swartz: So, if we go to PDF Page 9, you've got some bracketed difficulties, inconsistencies, which you were actually able to resolve. Correct?

Anita Duty: Yes.

Mark Swartz: But, then, we've got some highlighted entries in yellow, where you found deposits that you couldn't account for and you have checks that you couldn't account for. Correct?


Mark Swartz: And, are the discrepancies that you identified limited to the first page, Page 9?

Anita Duty: Yes.

Mark Swartz: Again, just to re-cap, your goal, here, was to identify all of your royalty payments and, then, look for a corresponding deposit.

Anita Duty: Yes.

Mark Swartz: And, you were not able to reconcile those?

Anita Duty: We weren't.

Mark Swartz: Then, at the end, Page 14 of the PDF, did you then do your calculation, based on the data available to you, to come up with a balance and compare that to the September 2017 First Bank and Trust balance?

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Anita Duty: Yes.

Mark Swartz: And, what was the difference?

Anita Duty: The bank is showing $556.95 more than our calculation.

Mark Swartz: Okay. And, then, you've also re-capped some reconciliations, on that last page, that enabled you to get pretty close to equal. Correct?

Anita Duty: Yes.

Mark Swartz: Those are summarized on Page 14 of the PDF.

Anita Duty: Yes.


Bradley Lambert: Any questions from the Board? [No response] Sir, do you have anything?

Mason Heidt: No.

Bradley Lambert: Do you have anything further, Mr. Swartz?

Mark Swartz: No.





Board: Yes.


Item Number 6

Bradley Lambert: We're calling Docket Item Number 6. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to Tracts 1, 2 and 3, as depicted upon the annexed table; (2) dismissal of surface owners in Tract 2, the B.F. McGlothlin Heirs. Docket Number VGOB-92-0317-0197-01. All parties wishing to testify please come forward.


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Mason Heidt: Mason Heidt, Harrison-Wyatt.


Mark Swartz: State your name, again.


Mark Swartz: Are you here on behalf of CNX Gas Company, LLC, with regard to this petition?

Anita Duty: Yes.

Mark Swartz: And, we're asking for a disbursement from the escrow account, pertaining to T (as in Tom) 13. Right?

Anita Duty: Yes.

Mark Swartz: And, this is the same situation that we've had in the last two disbursement petitions. We have the B.F. McGlothlin Heirs, who made surface claims. This unit was also pooled in 1992 and you mailed to the surface owners who made these claims and you published in the newspaper, the special notice to them, about the fact that their claims could be dismissed at this hearing and that, if they wanted to resist that, they needed to come and have evidence. Correct?

Anita Duty: Yes. We also have royalty agreements.

Mark Swartz: Okay, but in terms of the dismissals, we've done the same thing?

Anita Duty: Yes.

Mark Swartz: Here, we'll see those royalty agreements, I think, when we get to Table 1. Right?

Anita Duty: Okay.

Mark Swartz: We get to Table 1, here, which is PDF Page 5. Right?

Anita Duty: Yes.

Mark Swartz: We have the first disbursement out of Tract 1, is the tract where we had the surface owner claims.

Anita Duty: It is.

Mark Swartz: Who we're seeking dismissal. Correct?

Anita Duty: Yes.

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Mark Swartz: So, for that tract, who gets the disbursement, with regard to Tract 1?

Anita Duty: H-W Financial, LLC.

Mark Swartz: Okay. Since that disbursement does not zero out the escrow account, it's 100% of the claim, but it's not 100% of the escrow account. Correct?


Mark Swartz: So, what percentage should the Escrow Agent use to make the disbursement, pertaining to Tract 1?

Anita Duty: 53.2875%, to H-W Financial.

Mark Swartz: At the address provided.

Anita Duty: Yes.

Mark Swartz: Then, with regard to Tracts 2 and 3, it looks like you have 50-50 split agreements. Correct?

Anita Duty: We do.

Mark Swartz: Then, who receives the disbursements, with regard to Tract 2?

Anita Duty: H-W Financial and CNX Gas Company.

Mark Swartz: And, the Escrow Agent should use what percentages to calculate the dollar amounts, at the time the disbursement is made?

Anita Duty: Each party should receive 1.0125%.

Mark Swartz: Of what's on hand at the time?

Anita Duty: Yes.

Mark Swartz: Then, with regard to Tract 3, who receives those disbursements?

Anita Duty: H-W Financial and Garden Royalty Corporation.

Mark Swartz: And, you provided an "In Care of" address for Garden Royalty, as well. Right?

Anita Duty: Yes.

Mark Swartz: And, what percentage should the Escrow Agent use when calculating a dollar amount to be disbursed to H-W Financial and Garden Royalty?

Anita Duty: Each party should receive 22.3438%.

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Mark Swartz: And, you've shown, on Table 1, the wells that have contributed to the escrow account. Correct?

Anita Duty: Yes.

Mark Swartz: Then, on the next page, on Exhibit E, you've indicated that, once those disbursements are made, the escrow account can be closed because there will be no further need for escrow.

Anita Duty: Yes.

Mark Swartz: We have a revised Exhibit EE, showing the going-forward payment plan.

Anita Duty: Yes.

Mark Swartz: Then, we get to our Exhibit J and we've got problems, again. Today is problem day with Exhibit J. Right?

Anita Duty: Yes.

Mark Swartz: And, to re-cap, the yellow highlights on PDF Pages 8 and 9, the yellow indicates discrepancies between checks and deposits, or between deposits and checks. Correct?

Anita Duty: Yes.

Mark Swartz: Then, the bracketed information, with the heavier outlines, indicates apparent discrepancies, but you were able to resolve those?

Anita Duty: Yes.

Mark Swartz: Once we get past the first couple of pages, the problems go away.

Anita Duty: They do.

Mark Swartz: Then, at the very end, at PDF Page 13, you've done your calculations, again?

Anita Duty: Yes.

Mark Swartz: And, when you compare your estimated balance to the bank's September 2017 balance, there's a difference in what amount?

Anita Duty: The bank is showing $692.51 more than our calculations.

Mark Swartz: I would request, then, that you dismiss the surface owners, as indicated, and the Board direct the Escrow Agent to make the disbursements, as specified in Table 1.

Bradley Lambert: Any questions from the Board?

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Donnie Ratliff: Mr. Chairman.

Bradley Lambert: Mr. Ratliff.

Donnie Ratliff: On the reconciliation, Anita, did you change numbers or did you just find these? Was there monies added on deposits that you found, that was misplaced, or somewhere else?

Anita Duty: Like, on the ones that are bracketed, or…?

Donnie Ratliff: Ones that's in yellow.

Anita Duty: The ones that's in yellow, especially because once you get to the end result, you actually have more in the bank, I'm thinking that it just was missing data from the bank, but the funds are actually there, if you look at the balance. We just couldn't look at a deposit and find that deposit, but at the end of the day, it appears that the money was there because the bank actually has more than what we could actually reconcile, as far as looking at it on paper.

Donnie Ratliff: But, when you reconciled, did you add or take away anything on the sheet?

Anita Duty: No.

Donnie Ratliff: So, disbursements in the past have not been affected by any adjustments?

Anita Duty: No, I don't think.... We would have listed any disbursements at the bottom, too, so I don't think.... This one didn't have a disbursement, a prior disbursement. It looks like the only thing that was escrowed were those three tracts.

Donnie Rife: No interest, no penalties.

Anita Duty: There is interest, with these. I mean, they all have that. Interest and fees is a positive $8,673.38. Some of those were the ones from '92, '93. Those are hard to get those bank records.

Mark Swartz: The best guess when something like this happens is that the bank got our deposits and just didn't book them in a way that we could deal with. I mean, we're looking back 25 years. That's our best guess, as to what happened.

Bradley Lambert: So, Ms. Duty, you did testify that, once these disbursements are made, this will be closed out?

Anita Duty: It will.

Bradley Lambert: Any other questions from the Board? [No response] Sir, do you have anything?

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Mason Heidt: No.


Mark Swartz: No.





Board: Yes.


Item Number 7

Bradley Lambert: Docket Item Number 7. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to Tract 2, as depicted upon the annexed table; (2) dismissal of surface owners in Tract 2, the B.F. McGlothlin Heirs. Docket Number VGOB-92-0317-0198-01. All parties wishing to testify please come forward.


Mason Heidt: Mason Heidt.


Mark Swartz: Your name, again.


Mark Swartz: This is another H-W Financial, McGlothlin surface owners issue. Correct?

Anita Duty: It is.

Mark Swartz: This pertains to Drilling Unit T, as in Tom, 14?

Anita Duty: Yes.

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Mark Swartz: And, you're requesting a disbursement from escrow and dismissal of surface owners, I think. Once again, did you mail the special notice that's reported at Page 2 of this PDF application? Did you mail that to the surface owners and did you also publish that, in the paper?

Anita Duty: We did.

Mark Swartz: And, you filed certificates, with regard to mailing and proof of publication, with e-forms?

Anita Duty: Yes.

Mark Swartz: And, this is the only basis, here, for the disbursement is House Bill 2058, which requires the Board and the operators to pay gas claimants. Correct?

Anita Duty: Yes.

Mark Swartz: And, there are no split agreements or any other reasons for this?

Anita Duty: No.

Mark Swartz: If we go to Table 1, we're just talking about one tract. Correct?

Anita Duty: Yes.

Mark Swartz: And, this is a percentage table, but it's pretty simple. It's just the Escrow Agent needs to be directed, by the Board, to pay 100% of the funds on hand, to H-W Financial. Correct?

Anita Duty: Yes.

Mark Swartz: And, you've provided the address, again?

Anita Duty: Yes.

Mark Swartz: And, on your Table 1, you've listed the wells that were contributing to this escrow account?

Anita Duty: Yes.

Mark Swartz: Then, you've got an Exhibit E, which reflects the fact that 100% of the escrow account will be paid out and it will no longer be required.


Mark Swartz: We've got an Exhibit EE, which shows, going forward, 100% of the royalties will go to H-W Financial?

Anita Duty: Yes.

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Mark Swartz: Once again, we have an Exhibit J with some problems.

Anita Duty: Yes.

Mark Swartz: And, we've got both kinds, here. We've got the highlighted in yellow problems that you just were not able to resolve?

Anita Duty: Yes.

Mark Swartz: Then, we've got the bracketed problems, which, looking at multiple entries, you were able to resolve?

Anita Duty: Yes.

Mark Swartz: We've got some yellow, unresolvable issues, at PDF Page 8, some more at Page 9, some more at Page 10, which gets us up to 2005, or so, and then, going forward, we have further unresolved issues. Right?

Anita Duty: Right.

Mark Swartz: You've done your calculation at the very end, again, and you've estimated a total, you've calculated a total, based on the data available to you and you compared that to the September 2017 First Bank and Trust balance. There's a difference of what?

Anita Duty: The bank has $306.26 more than our calculation.


Bradley Lambert: Any questions from the Board? [No response] Ms. Duty, do you have updated plats, other than what you're submitted in these petitions? This plat that's in this particular petition has a note on the bottom, that there's no well in this unit. The plat's prepared to show property info, only. And the plat was prepared in February '92.

Anita Duty: That unit only has allocated production. So, at the time that these were.... I always include the last recorded plat that was in the last order, so we don't update them every time we go. We always include the last one that was recorded.

Bradley Lambert: I understand that. I understand, also, that there's an updated plat in the permit application.

Anita Duty: We only pull what was recorded with the Board's information, not the permitting.

Bradley Lambert: The reason I bring that up is because there's been a couple, previous to this one and I thought I would wait until we get to this one, that's had some incorrect information on them. It's been small, like different tract numbers that's been handwritten in versus what's been

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printed on the plat and a couple things. So, just going forward, you may want to check those plats a little closer for correct information and update them, if necessary.

Anita Duty: Instead of using what the Board has approved in the order, you want me to look at a permit plat?

Bradley Lambert: No. I think what I'm saying is be sure that what you submit to us is correct information on the plat, even if the Board's approved it back in 1992, things may have changed. I won't go back on the other two, where I found some errors, but they're minor kinds of things, but if we're going to submit correct information.... From '92 until 2017, there may have been some changes that the Board needs to be aware of. That's all I'm saying.

Paul Kugelman: Ms. Duty, did you hear? I had asked the Chairman if, maybe just an errata sheet…

Mark Swartz: Let's stay with this unit, for a moment. Anita, are there any wells, at the moment, in this unit, drilled?

Anita Duty: No.

Mark Swartz: Okay. So, there are no wells in this unit, so there would have never been.... She's checking to make, absolutely, sure. The other thing is, once this pooling order goes away, this is a voluntary unit. I don't remember what the other ones were, Mr. Chairman, but.... T13 and T14 do not have wells and never had wells, so we do not have updated plats for a permit, that we could give you. I'm not looking at T13, at the moment, but I'm looking at T14 and when I look at the well plat legend, Harrison-Wyatt owns 100% of this unit, if the surface claim goes away, so it becomes a voluntary unit. I understand the point that you're making, that a more current map would be a great idea.

Paul Kugelman: I don't think he's saying that. I think he's just saying that, if you feel the need to hand-write something, to correct the plat.... Rather than hand-writing it in, just submit an errata sheet, saying we're making these changes.

Anita Duty: I didn't hand-write.... I don't know where that hand-written comes from. I don't write on any...

Paul Kugelman: Okay. I was operating with the understanding that you wrote the handwriting.

Anita Duty: Right. I think if we would go back and look at the order.... It should be what was recorded in the order.

Mark Swartz: It might have been a supplemental order. The original pooling order did not, which we have.... The plat on the original pooling order did not have the handwriting on it.

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Anita Duty: That's what should be in there. That's right. This should have been in there, instead of the other.

Paul Kugelman: Okay.

Anita Duty: So, that was a mistake. I mean, I know what you're saying and I'll pay more attention.

Bradley Lambert: I'm not trying to make a big deal out of it.

Anita Duty: I guess if you want me to go and look up permits, to me, that's a little bit different because that's not the same....

Bradley Lambert: No. I was just making the point that we have an updated one in the permit, that that's not what we've got in our petitions. That's all. Don't take this any more than what I'm asking for, here. It's just a simple, please check the plat and see.

Anita Duty: Okay. You're right. It should have been this one and not that one. I don't know.... You're right. We can have this one put over top of the one we have.

Bradley Lambert: So, you'll submit that with the corrected one.

Anita Duty: Yes, we will.

Mary Quillen: It will be the updated map. Correct?

Anita Duty: I guess I didn't realize that that hand-written.... I don't even know where that's from, but it should have been this one that was recorded in the Board order because I've got the Board order in here.

Paul Kugelman: They're going to submit the one that was attached to the original order.

Anita Duty: I'll look at all of them, to make sure that we haven't done that same thing and that we have, actually, the one that was in the order.

Bradley Lambert: Okay. That's all we're...

Rick Cooper: Mr. Chairman, could I ask what's the date on the plat that you're going to submit to us?

Anita Duty: This one says 2/4/92.

Bradley Lambert: That's the same date on the one that we have in the petition, that has the...

Mark Swartz: It's not going to have the hand-written stuff on it.

Anita Duty: It won't.

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Mark Swartz: The original plat had handwriting. It's not going to have exhibit quote "B" in it, written-out Tract Roman Numeral I on it, Roman Numeral II. That's going to disappear.

Bradley Lambert: Okay.

Mark Swartz: Everything else will be the same.

Bradley Lambert: Okay. That's fine.

Anita Duty: Any time I see those handwritten ones, I will make sure that I check that, to make sure that that shouldn't be in there.

Mary Quillen: This one says, "Revised in September '91."

Donnie Ratliff: I think the form was revised.

Mary Quillen: Oh, the form was revised, not the plat. Okay. The seal is over the date of that. Okay. It is '92. I see.

Bradley Lambert: Any other questions? [No response] Sir, do you have anything.

Mason Heidt: No.


Mark Swartz: No.





Board: Yes.

Bradley Lambert: Opposed no. [No response] Thank you, Mr. Swartz. That is approved. We're going to take about a ten-minute break.

Item Number 8

Bradley Lambert: Ladies and gentlemen, it's time to get started back, this morning. At this time, we're calling Petition Number 8. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to Tract 1, as depicted upon the annexed table; (2) dismissal of surface owners in

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Tract 1, which is the B.F. McGlothlin Heirs. Docket Number VGOB-92-1117-0285-02. All parties wishing to testify please come forward.


Mason Heidt: Mason Heidt.


Mark Swartz: Your name again, Anita.


Mark Swartz: This is another petition for disbursement. Correct?

Anita Duty: Yes.

Mark Swartz: And, you're here on behalf of CNX Gas Company, LLC?

Anita Duty: Yes.

Mark Swartz: It pertains to Unit U, as in Utah, 13?

Anita Duty: Yes.

Mark Swartz: And, this is another one of those situations where we had some surface owner claims that were pooled when this unit was originally pooled, back in 1992. Correct?

Anita Duty: Yes.

Mark Swartz: And, we want permission to pay out the escrow account to the gas owner?

Anita Duty: Yes.

Mark Swartz: Did you, again, as we've seen in the other cases, did you both mail the special notice for surface owners that we have at Page 2 of the PDF, to the surface owners and, also, publish the notice in the newspaper?

Anita Duty: Yes.

Mark Swartz: And, they were advised that we were going to have a hearing, today, and if they wanted to protect their status, as a claimant, or seek disbursement, they needed to show up, today?

Anita Duty: Yes.

Mark Swartz: Is that the only reason for the disbursement request?

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Anita Duty: Yes.

Mark Swartz: And, if we go to Table 1, this pertains to one tract, Tract 1.

Anita Duty: It does.

Mark Swartz: And, you've identified the person, or the company, that you propose to receive the disbursement is H-W Financial, again?

Anita Duty: Yes.

Mark Swartz: And, you provided their mailing address. Correct?

Anita Duty: Yes.

Mark Swartz: And, the Board should instruct the Escrow Agent to pay 100% of the escrow account that's been maintained for Unit U13, out to H-W Financial?

Anita Duty: Yes.

Mark Swartz: And, when that happens, the next page, Page 6, shows that there's a revised Exhibit E and there will be no further escrow requirement?


Mark Swartz: And, you have a provided a revised Exhibit EE, which shows the going-forward payment, 100%, to H-W Financial.

Anita Duty: Yes.

Mark Swartz: Then, we've got, once again, an Exhibit J, with a bunch of problems. At Page 8 of the PDF, the first page of Exhibit J, there are a number of things highlighted in yellow, which are issues that you identified, but were unable to resolve. Correct?


Mark Swartz: There's a few that are bracketed, which were problems you identified and were able to square away.

Anita Duty: Yes.

Mark Swartz: If you go to the next page, PDF Page 9, we've got a few more highlights, in yellow. Then, we have a number of pages with no problems.


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Mark Swartz: Then, at the very end, you've done your usual attempt to compare your calculation to the bank balance and, here, you came up with your total, compared that to the August 2017 First Bank and Trust balance. There was a difference of what?

Anita Duty: The bank is showing $119.95 more than our calculation.

Mark Swartz: Once again, with regard to Exhibit J, the goal here was to identify all of your royalty checks and I assume you were able to do that.

Anita Duty: Except for where we indicated it.

Mark Swartz: But, you were able to find the checks you issued.

Anita Duty: Yes.

Mark Swartz: Okay. So, you had that list?

Anita Duty: We did.

Mark Swartz: Then, you went looking for them in the bank deposit records and that's where the yellow issues arose. You couldn't find them. You couldn't account for all of them.


Mark Swartz: Okay. That was the goal and that was the result.

Anita Duty: Yes.


Bradley Lambert: Any questions from the Board? [No response] Ms. Duty, so this will close out this account?

Anita Duty: It will.

Bradley Lambert: Okay. This may be a question for Rick. I know, in the pay-out, it's got $22,285.26, but on Exhibit J, at the end, it's showing $22,283.44. Is that plus the $119.95?

Anita Duty: Our reconciliation goes to August and I think when we put our information into the table, it pulls the current escrow sheet. Isn't that the way it works? So, depending on the date that we did it, we may not have had reconciled data, but this may be, like, the following month, depending on what's loaded on the website. It pulls that in, to get the balance.

Bradley Lambert: So, help me, here, Rick. In other words, when this is closed out, when the check is paid out, there's still going to be a little bit of money left?

Mark Swartz: No.

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Rick Cooper: No, we will pay it out at current balance. Probably the way it is now, it will probably be even December or January's balance. So, we will take that full amount and pay it out, 100%.

Bradley Lambert: 100% of what's left. Okay.

Rick Cooper: Whatever is in the account. I'm sure it will be more than what's on here.

Bradley Lambert: So, it could be a little more than what's on here.

Rick Cooper: It will be more.

Bradley Lambert: Okay. Thank you. Wanted to clear that up. Any other questions from the Board? [No response] Anything further, Mr. Swartz?

Mark Swartz: No.

Bradley Lambert: Do you have anything, sir?

Mason Heidt: No.


Donnie Ratliff: Motion to approve, Mr. Chairman.

Donnie Rife: Second, Mr. Chair.


Board: Yes.

Bradley Lambert: Opposed no. [No response] Thank you, Mr. Swartz. That one is approved. Thank you, sir. Merry Christmas!

Mason Heidt: Thank you. You all, too.

Item Number 9

Bradley Lambert: We're calling Docket Item Number 9. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to Tracts 11, 12, 13, 30, 34, 35, 52, and a portion of Tract 36A, as depicted upon the annexed table; and (2) authorization to begin paying royalties directly to the parties listed in the petition. Docket Number VGOB-98-1117-0697-05. All parties wishing to testify please come forward.

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Bradley Lambert: You may proceed, Mr. Swartz. I'm sorry. If you have any trouble, just holler and we'll get that back, for you. Could you, please, state your all's name, for the record, please?

Burns Mullins: My name is Burns. Her name is Nancy. We're Burns and Nancy Mullins.

Bradley Lambert: Okay. Thank you.

Paul Kugelman: Mr. Mullins, could I get you to put that microphone between you all?

Bradley Lambert: We'll have to swear you in, if you're going to provide testimony.

Sarah Gilmer: Mr. and Mrs. Mullins, do you swear and affirm that your testimony is the truth, the whole truth and nothing but the truth?

Nancy Mullins: Yes.

Burns Mullins: Yes, ma'am.

Bradley Lambert: Mr. Swartz, you may proceed.

Mark Swartz: Anita, state your name for us, again.


Burns Mullins: Burns and Nancy Mullins.

Mark Swartz: And, this is a petition for disbursement. Correct?

Anita Duty: It is.

Mark Swartz: And, what unit does it pertain to?

Anita Duty: Buchanan Number 1, SGU1.

Mark Swartz: Sealed Gob Unit 1. Correct?

Anita Duty: Yes.

Mark Swartz: And, this was originally pooled back in '98, I think.

Anita Duty: It was.

Mark Swartz: And, what you're looking for, here, is first of all, a disbursement and direct pay.

Anita Duty: Yes.

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Mark Swartz: If we go to PDF Page 2, you've given the Board, in your petition, the basis for this request. Basically, we've got a collection of people, here, who are gas claimants and that we can, now, pay under House Bill 2058.

Anita Duty: Yes.

Mark Swartz: And, you also indicated that you, previously, gave notice to conflicting coal claimants, which we address later in the petition, in the exhibits, and that they were previously dismissed on a prior visit. Right?

Anita Duty: Yes.

Mark Swartz: And, you've given that reference at sub-paragraph C. So, the goal here is to go to the tables and identify the people that are to receive the disbursements and an order authorizing those. Go to Table 1, which is at PDF Page 15, we have two sets of tables, in this instance, because it's been so long. We've got some transfers.

Anita Duty: Yes.

Mark Swartz: So, Table 1 is a "pay exact dollar amount" table, to square up some conveyance issues.

Anita Duty: Yes.

Mark Swartz: The tract that's involved in Table 1 is Tract 30?

Anita Duty: It is.

Mark Swartz: And, have you identified the six people that are to receive payments?

Anita Duty: Yes.

Mark Swartz: And, you provided an address for each one of them?


Mark Swartz: And, they are all to receive an identical dollar amount. Right?

Anita Duty: They are.

Mark Swartz: And, what is that amount?

Anita Duty: $830.91.

Mark Swartz: And, the Escrow Agent should be directed to make those six $830.91 payments, first.

Anita Duty: Yes.

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Mark Swartz: And, then, proceed to Table 2.

Anita Duty: Yes.

Mark Swartz: Which is a percentage table?

Anita Duty: It is.

Mark Swartz: Okay. And, on Table 2, you've got quite a lengthy list of tracts and people, which are at Pages 16 and 17, folks that should be receiving disbursements. Correct?

Anita Duty: Yes.

Mark Swartz: And, with regard to the disbursements, have you given a name of every person and/or company that is proposed to receive a disbursement?


Mark Swartz: And, for each person or company, have you also given a mailing address?

Anita Duty: Yes.

Mark Swartz: Should the Escrow Agent, then, be instructed to take the percentages in the third column from the right?

Anita Duty: Yes.

Mark Swartz: And apply that percentage to the balance on hand, after the Table 1 disbursements have been made?

Anita Duty: Yes.

Mark Swartz: And, that will generate the dollar amount that the Escrow Agent should pay to each one of the people listed on Pages 16 and 17?

Anita Duty: Yes.

Mark Swartz: Also, with regard to Table 2, have you provided at PDF Page 18, a list of all the wells that have contributed to the Sealed Gob Unit 1?

Anita Duty: Yes.

Mark Swartz: Then, we have an Exhibit E. Correct?

Anita Duty: We do.

Mark Swartz: And, we still need to have an escrow.

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Anita Duty: We do.

Mark Swartz: After these disbursements. We've got some affidavits, pending. Correct?

Anita Duty: We do.

Mark Swartz: I think in this one, we also may have some unlocatables or unknowns. Yes, we do. So, there's a couple reasons for escrow.

Anita Duty: There is.

Mark Swartz: Then, have you also provided the Board with a revised Exhibit EE, which is the payment situation, going forward, if this is approved?


Mark Swartz: We've got an Exhibit J, your reconciliation, which starts at Page 55, of the PDF.

Anita Duty: Yes.

Mark Swartz: Once again, we have some unresolved issues.

Anita Duty: We do.

Mark Swartz: And, they're actually on all four pages of the exhibit. Correct?

Anita Duty: Yes.

Mark Swartz: If we go to the last page, there was one correction that was made and you highlighted that, in yellow.

Anita Duty: Yes.

Mark Swartz: And, you've done, as usual, your calculation and you've compared that to the September 2017 First Bank and Trust balance.

Anita Duty: Yes.

Mark Swartz: And, there's a difference and what was that difference?

Anita Duty: $99.82. The bank is showing $99.82 more than our calculation.

Mark Swartz: Okay. Then, you've provided, just as a courtesy, the prior notices to the coal companies that were, previously, dismissed?

Anita Duty: Yes.

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Mark Swartz: So, the relief you're seeking, here, is for the Escrow Agent to be directed to pay, as specified in Table 1 and as specified in Table 2, and to allow the operator to pay those folks that are receiving these payments, directly, in the future?

Anita Duty: Yes.

Mark Swartz: And, to maintain the escrow, as indicated in the revised Exhibit E?


Mark Swartz: That's all I have.


Bill Harris: Mr. Chairman, just a quick question.


Bill Harris: Back at Table 1, (let me see if I can find it) which was a direct pay. I notice there are some percentages. I can't find it. I notice there are some percentages listed, but still it's a dollar amount?

Mark Swartz: Yes.

Bill Harris: So, the $830.91, that's still not a percent of.... That's not .1573% of the total, at the time of the pay-out?

Anita Duty: What we do is.... This is actually, I remember now, this is actually a will, where he wanted his grandchildren paid out, up to the time of his death. We actually base it on whatever period in time they want us to do it. So, say this was an August 2005 balance. So, we still have to do a percentage, to calculate what would have been due him, at that date.

Bill Harris: Okay.

Anita Duty: Then, we put it there.

Bill Harris: It's not a percentage of what's in the account, now?

Anita Duty: No, because that number would be different. So, we make it an exact dollar amount, but we still have to use that percentage to calculate, as if we were back in August 2005. We still do a percentage, to get that initial calculation.

Mary Quillen: Just one other question on that. Let me get to it. Table 1, that was that the exact dollar amount that was being paid. The tract number, I don't know if I misunderstood. What is that tract number?

Anita Duty: 30.

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Mary Quillen: 30. Oh, okay. Thank you.

Bradley Lambert: Any other questions from the Board? [No response] Mr. and Mrs. Mullins, do you have anything to add to that?

Burns Mullins: Well, the only thing I've understood, we're here on our last check that we should have received that we didn't receive, out of escrow.

Anita Duty: From the Sealed Gob?

Burns Mullins: Yes.

Anita Duty: We had, originally, filed this one earlier in the year and, then, we found out that there was a heirship change that caused a deposit to need to be made into the account. So, we did that, this past pay period. Now, that we did that, we had to send everybody.... You probably got a revised notice that said we were going to have this. You didn't get a revised table and a revision to this, just lately, notifying you to come to the hearing, today?

Nancy Mullins: Yes, we got one, in April.

Anita Duty: The April one and, then, we had to revise it, so we sent everybody out a revision, last month.

Nancy Mullins: Yes, we got that one.

Anita Duty: Okay. That's the reason we had to wait for the accounting department to make a correction for us and, then, we had to send out a revision, so you would know that we had changed it. And, now, it should be, probably, what, within 30 days, now?

Rick Cooper: 45-60 days.

Anita Duty: We just need to make a correction. That's what delays.

Burns Mullins: Okay.

Nancy Mullins: We didn't understand what was going on.

Burns Mullins: We didn't understand that. See, the first time we came, our names wasn't up here, so we didn't even have a hearing. So, that's whenever I come up there and talked to you and you sent me another one and we figured and I got that green card back, from the original.

Anita Duty: On the original one.

Burns Mullins: Right.

Anita Duty: Right. So, everything, now, is good. So, we've got everything we need, so you all should...

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Mark Swartz: And, you're on the list.

Anita Duty: You're on here and everything should be...

Burns Mullins: Okay. That's fine.

Rick Cooper: Mr. Chairman, they're Tract 13, on Page 16.

Bradley Lambert: Correct.

Anita Duty: Everything should be good, now.

Nancy Mullins: Okay. That's what we didn't understand.

Burns Mullins: We didn't understand that.

Mark Swartz: That's okay.

Nancy Mullins: We got a payment after we got notice of this.

Anita Duty: For a different unit?

Nancy Mullins: Yes, for a different well.

Anita Duty: Do you think is your final one, according to what we've talked about?

Nancy Mullins: According to what we received, this will be our final one. Like I said, we did get one check after we received this one, but we never did get one since then.

Anita Duty: Okay. Right now, we've got everything corrected, so this one, like he said, 45-60 days. That will be a nice little New Year's gift.

Burns Mullins: Fair, then.

Nancy Mullins: Okay. We appreciate your all's time.

Bradley Lambert: So, is that all you all have, Mr. and Mrs. Mullins?

Burns Mullins: That's all, sir. Thank you all.

Bradley Lambert: Thank you. Anything further, Mr. Swartz?

Mark Swartz: We're good.




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Board: Yes.

Bradley Lambert: Opposed no. [No response] Thank you, Mr. Swartz. That one is approved. You all have a Merry Christmas.

Burns Mullins: You all, too.

Item Number 10

Bradley Lambert: We're calling Docket Item Number 10. A petition from CNX Gas Company, LLC, for (1) the disbursement of escrowed funds heretofore deposited with the Board's Escrow Agent, attributable to a portion of Tract 1B, as depicted upon the annexed table; and (2) authorization to begin paying royalties directly to the parties listed in the petition. Docket Number VGOB-04-0120-1250-05. All parties wishing to testify please come forward.



Mark Swartz: Anita, state your name for us, again.


Mark Swartz: This is another petition for disbursement. Correct?

Anita Duty: It is.

Mark Swartz: And, you're here on behalf of CNX Gas Company, LLC?

Anita Duty: Yes.

Mark Swartz: And, this pertains to drilling unit A, Apple, Z, Zebra, 99?

Anita Duty: Yes.

Mark Swartz: And, the reasons for the request are set forth at PDF Page 2. We have a gas claimant, Lena Sutorka. Right?

Anita Duty: Yes.

Mark Swartz: And, we previously gave notice to conflicting coal claimants and a past trip to the Board, with regard to the coal claimant dismissals. The Board actually dismissed them.

Anita Duty: Yes.

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Mark Swartz: So, all we're looking for, today, is the disbursement. Right?

Anita Duty: That's right.

Mark Swartz: Okay. If we go to Table 1, it is a percentage disbursement, I believe.

Anita Duty: It is.

Mark Swartz: You've identified Lena Sutorka as the recipient.

Anita Duty: Yes.

Mark Swartz: And, you've given an address for her?


Mark Swartz: And, the Escrow Agent is to use what percentage, in calculating the amount due her?


Mark Swartz: And, that's the percentage that should be applied to the balance on hand, when the check is cut?

Anita Duty: Yes.

Mark Swartz: You've given us a revised Exhibit E. Correct?

Anita Duty: Yes.

Mark Swartz: And, we still have some outstanding W-9/affidavit issues that require escrow, but hopefully, those will get resolved and we can be done.

Anita Duty: Yes.

Mark Swartz: But, not today.

Anita Duty: Right.

Mark Swartz: Then, you've given us a revised Exhibit EE. Correct?

Anita Duty: Yes.

Mark Swartz: And, that's the going forward pay status, if this petition is approved, today?

Anita Duty: Yes.

Mark Swartz: Then, the last but not least, is the biggest problem with Exhibit J, of the day. Correct?

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Anita Duty: Yes.

Mark Swartz: Okay. To recap, though, in terms of your goals on Exhibit J, you first identified all of the royalty payments that your company or agents for your company paid to the escrow.

Anita Duty: Yes.

Mark Swartz: And, you, obviously, were you able to get a complete list?

Anita Duty: We were.

Mark Swartz: Then, you went looking for deposits, to try and verify that all of that money found its way into the account.

Anita Duty: Yes.

Mark Swartz: And, you've highlighted, in yellow, on the first page, which is PDF Page 10, problems that you identified that you cannot resolve.


Mark Swartz: Then, you have done a calculation at the very end, where you calculated what you estimate should be in the account.

Anita Duty: Yes.

Mark Swartz: Then, you've taken the reported September 2017 First Bank and Trust balance, and there's quite a difference. Right?

Anita Duty: Yes.

Mark Swartz: And, what's the difference?

Anita Duty: The bank is showing $2,409.29 less than our calculation.

Mark Swartz: Go back to the first page, PDF Page 10. You've got a bunch of checks that you sent that you can't find deposits for.


Mark Swartz: So, that's the explanation.

Anita Duty: Yes.

Mark Swartz: And, just to summarize for the Board, what you and staff have done to try and resolve that, in terms of records and searching and so forth?

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Anita Duty: We have access to.... Everything is on the DGO site and, sometimes, we even will email Jody, but it's not something that's during her time. She, usually, can't help us.

Mark Swartz: Jody's the current administrator.

Anita Duty: Yes. So, because of the date. A lot of the accounts during that August/September 2006.... I don't know if that was a transition period, or something, but we seem to see that a lot, in that time period.

Mark Swartz: But, you've looked at the data that's available to the DGO and to the Board.

Anita Duty: Yes.

Mark Swartz: And your company and just have not been able to work with the deposit information.


Mark Swartz: Once again, we have provided, just as a courtesy, the prior coal owner notices.

Anita Duty: Yes.



Bill Harris: Mr. Chairman?


Bill Harris: Let me ask, and I know we've answered this, before. What is the actual dollar amount that will be used, here? Is it the $12,000, or the $9923, when you actually pay out?

Anita Duty: It will be the 9 because that's what's in the account. They'll take the balance in the account, at the time of the disbursement, and use the percentage to pay, but we'll use the $9,000. That's what the account is showing.

Mark Swartz: It will actually be more than that, though, because royalty is still going in there.

Bill Harris: Right.

Mark Swartz: There isn't $12,000.

Anita Duty: It's not in there.

Bill Harris: I don't need to go through this, but we've talked before about all of these other accounts that are $500 over. Again, I think I used the term, "slush fund," but that's not the word to use, so strike that. If you were to take that and add that in a separate account, to accommodate

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this kind of difference, it looks like it would all come out in the wash. I'm sure it won't, but to me, it looks like that would be a little more fair to everybody. But, I know you can't. You have to go, based on the balance in the account and I know that you'll do what you can to make sure that it's accurate.

Anita Duty: This is our fifth disbursement from this. We've had this here several times before.

Bill Harris: I understand. When you look at the overage, it's nice, there, but if you're on this...

Anita Duty: If you're on the other end, that's not.

Bill Harris: If you're on the other end, then.... But, that was all. It's more of a comment than a question.

Bradley Lambert: Thank you, Mr. Harris. Any other questions? [No response] Anything further, Mr. Swartz?

Mark Swartz: No.





Board: Yes.


Mark Swartz: Thank you. Happy holidays, everybody.

Bradley Lambert: You have a happy holiday.

Donnie Rife: Merry Christmas.

Mark Swartz: Merry Christmas.

Item Number 11

Bradley Lambert: We're calling Docket Item Number 11. A petition from EnerVest Operating, LLC, for a Well Location Exception for Well No. 900145. Docket Number VGOB-17-1219-4154. All parties wishing to testify please come forward.

Tim Scott: Tim Scott, Gus Janson and Chuck Akers for EnerVest Operating, LLC

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Bradley Lambert: Good morning.

Tim Scott: Good morning.

Bradley Lambert: You may proceed.

Sarah Gilmer: Mr. Janson and Mr. Akers, do you swear and affirm that your testimony is the truth, the whole truth and nothing but the truth?

Gus Janson: Yes, I do.

Chuck Akers: Yes, I do.

Tim Scott: Mr. Akers, would you please state your name, by whom you are employed and your job description, please?

Chuck Akers: My name is Charles Akers, Jr. I'm employed by EnerVest Operating as a Land Manager.

Tim Scott: And, you participated in the preparation of this application. Is that correct?

Chuck Akers: Yes, that's correct.

Tim Scott: And, are you familiar with the owners of the minerals underlying this unit?

Chuck Akers: Yes.

Tim Scott: And, are those owners set out on Exhibit B, to the application?

Chuck Akers: Yes, they are.

Tim Scott: And, we've got several wells, from which we're seeking a location exception, today. Is that correct?

Chuck Akers: That's correct.

Tim Scott: And, who operates those wells?

Chuck Akers: EnerVest Operating, LLC.

Tim Scott: I believe, based on the ownership that we've set out in Exhibit B, EnerVest is both an owner and an operator. Is that correct?

Chuck Akers: Yes, that is correct.

Tim Scott: With regard to notice to the parties listed on Exhibit B, how was that accomplished?

Chuck Akers: By certified mail.

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Tim Scott: And, have we provided proof of mailing, to the Board?

Chuck Akers: Yes, we have.

Tim Scott: That's all I have for Mr. Akers.

Bradley Lambert: Any questions from the Board? [No response] You may continue, Mr. Scott.

Tim Scott: Thank you. Mr. Janson, please state your name, by whom you are employed and your job description.

Gus Janson: My name is Gus Janson, employed by EnerVest Operating, LLC, as a Geology Advisor.

Tim Scott: And, you're familiar with this application. Is that correct?

Gus Janson: I am.

Tim Scott: And, would you please tell the Board why we're seeking a well location exception for this particular unit, today?

Gus Janson: Yes. I'll preface to the Board that these two location exceptions have been previously heard by this Board, in the past. We're, basically, doing our permitting and our Board applications back in line with the predecessor, who was operating on the property, so that we'll have the opportunity to move forward on these projects, as we see fit, moving forward. The Board has been provided an Exhibit K. You'll see the location of proposed Well 900145. This well has been positioned, due to steep terrain and topographic constraints, resulting in maximum recovery of the natural gas resources, with relationship to the existing off-setting wells. The nearest feasible location is to be in the state-wide spacing requirements identified as located approximately 1,500-2,000 feet either to the north or to the south of the location. In the event the well is not drilled, approximately 104.22 acres of reserves will be stranded.

Tim Scott: What's the proposed depth of this well, Mr. Janson?

Gus Janson: The proposed depth is 5,227 feet.

Tim Scott: And, what is the potential for loss of reserves, if the application is not granted?

Gus Janson: The estimated reserves for this location are 800 million cubic feet of gas.

Tim Scott: In your opinion, if our application is approved, today, would it prevent waste, protect correlative rights and promote conservation?

Gus Janson: Yes, it would.

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Tim Scott: That's all I have for Mr. Janson.

Bradley Lambert: Mr. Janson, is EnerVest the operator of the adjoining wells?

Gus Janson: Yes, we are.

Bradley Lambert: Any other questions from the Board? [No response] Anything further, Mr. Scott?

Tim Scott: That's all I have for this one, Mr. Chairman.





Board: Yes.

Bradley Lambert: Opposed no.

Donnie Ratliff: I'll abstain.

Bradley Lambert: One abstention. Mr. Ratliff. Thank you, Mr. Scott. That one is approved.

Tim Scott: Thank you.

Item Number 12

Bradley Lambert: We're calling Docket Item Number 12. A petition from EnerVest Operating, LLC, for a Well Location Exception for Well No. V-530319. Docket Number VGOB-17-1219-4155. All parties wishing to testify please come forward.

Tim Scott: Again, Tim Scott, Gus Janson, and Chuck Akers for EnerVest Operating, LLC

Bradley Lambert: You may proceed, Mr. Scott.

Tim Scott: Thank you, Mr. Chairman. Mr. Akers, again, your name, by whom you're employed and your job description.

Chuck Akers: My name is Charles Akers, Jr. I'm employed by EnerVest Operating as a Land Manager.

Tim Scott: And, you helped in the preparation of this application. Is that right?

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Tim Scott: And, you are familiar with the minerals underlying this unit. Is that correct?

Chuck Akers: Yes, I am.

Tim Scott: And, are those owners set out in Exhibit B to the application?

Chuck Akers: Yes, they are.

Tim Scott: And, who operates the wells from which this well location exception is sought, today?

Chuck Akers: EnerVest Operating, LLC is the operator.

Tim Scott: Again, we have both ownership and leased interest, here. Is that correct?


Tim Scott: With regard to notice of this hearing, today, how was notice provided to the parties listed on Exhibit B?

Chuck Akers: Notification was by certified mail.

Tim Scott: And, have we provided proof of mailing, to the Board?

Chuck Akers: Yes, we have.



Mary Quillen: Just one question. These adjacent units, are all of these EnerVest?

Chuck Akers: Yes.

Bruce Prather: And, they are drilled?

Chuck Akers: Yes.

Bradley Lambert: Any other questions? [No response] You may continue, Mr. Scott.

Tim Scott: Thank you, Mr. Chairman. Mr. Janson, again, your name, by whom you are employed, and your job description.

Gus Janson: My name is Gus Janson, employed by EnerVest Operating, LLC, as a Geology Advisor.

Tim Scott: And, you participated in the preparation of this application. Is that right?

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Gus Janson: I did.

Tim Scott: So, would you please explain to the Board why we're seeking this well location exception?

Gus Janson: This is another location exception, previously approved by the prior operator in this field. Just as a bit of background on this well location, this is a tighter spacing than we, typically, see on a location exception in this area. The offsetting wells are relatively older and they were, typically, only Berea completions. As part of our ongoing attempts to maximize the resource recovery in the field, we're looking at other formations in the offsetting areas in here, such as up in the calcareous sands in the Maxton and Ravencliffe along with the Big Lime, so that's why this is a little tighter space than the other. Again, with that being said, the well has been positioned to maximize recovery of the remaining natural gas resources. There is no location available that meets the statewide spacing requirements. In the event the well is not drilled, approximately 4.42 acres of reserves would be stranded at this location.

Tim Scott: What's the proposed depth of this well?

Gus Janson: The proposed depth is 5,540 feet.

Tim Scott: What is the potential loss of reserves, if the application isn't approved, today?

Gus Janson: Again, the estimated reserves in this location are 800 million cubic feet of gas.

Tim Scott: In your opinion, if this application is granted, would it promote conservation, prevent waste, and protect correlative rights?



Bradley Lambert: Mr. Janson, I assume that those mines are abandoned.

Gus Janson: Yes. That's correct.

Bradley Lambert: There's a note at the bottom that this well was permitted by Range Resources. Is that 2011 date, the date it was permitted?

Gus Janson: I believe that is correct.

Bradley Lambert: So, in other words, this permit would have expired, Rick?

Gus Janson: Been renewed a couple times.

Rick Cooper: It has been renewed. It had expired, then been renewed, yes.

Bradley Lambert: This is not a renewal.

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Rick Cooper: This is not a renewal, here.

Bradley Lambert: Just transferring it from Range over to...

Gus Janson: We're just putting.... Our Board application for the location exception has expired, so we're putting that...

Bradley Lambert: Okay. Thank you, Gus. Any other questions from the Board?

Bruce Prather: I've got one, Mr. Chairman. Gus, on these wells.... Let's say these are all Berea wells. Do you envision going back in, eventually, and re-fracking some of these Berea wells? I just wonder if these wells really have drained the acreage that you're looking at, there, in that circle.

Gus Janson: That has, certainly, been an ongoing technical evaluation by EnerVest, as well as the previous operators in the field. There are opportunities to do that. You sort of get into some more complex abilities to be able to re-complete wells, as opposed to drilling a new well, with new technology, regarding your casing and your cementing plans that have been done, in the past. Sometimes, environmentally, as well as technically, it's better just to drill a new well and see if we can achieve those, recover those resources that are still out there.

Bruce Prather: Gus, aren't you finding out that on a lot of that shallow stuff, you don't have cement up far enough?

Gus Janson: Correct.

Bruce Prather: You can't squeeze it, you can't complete it.

Gus Janson: That's just another added cost to that, which again, makes it a little more efficient to just drill a new well bore, at some point in time and try to space it and try to recover those resources that have been left behind. We'll continue to test that. Like I said, it's been initiated over the past ten years that I've been involved with this. It will continue to be because economics drive that, too.

Mary Quillen: Just one...just curious. Drilling the new well, do you expect that you will drain the area more efficiently and get more production?

Gus Janson: I think, with the newer technology, yes, you would expect to drain it more efficiently. I don't know that.... I still think the spacing that's set forth in the statewide spacing is not enough that we're probably not going to impinge too much on the offsetting wells, in the Berea formation, specifically.

Mary Quillen: Okay. Those that are surrounding, it's the Berea. Right?

Gus Janson: Those are primarily Berea on those offsetting wells.

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Mary Quillen: Thanks.

Bill Harris: One quick question. Do you anticipate more of these wells that are in between? I'm sure there's a technical name for those.

Gus Janson: Again, we've been.... The work by the previous operators, both EQT and Range. We've really just scratched the surface of being able to technically evaluate this, at that point in time and EnerVest, again, is seeing that past work's been done and is of special interest to be able to move forward and do some more of this testing, moving forward. It's going to be...

Bill Harris: So, this well is actually one of those testing...

Gus Janson: It just never got done back in the time, the second time...

Bruce Prather: Gus, are these horizontal wells, these new ones?

Gus Janson: These are vertical wells.

Bruce Prather: Verticals?

Gus Janson: These are all verticals. Correct.

Bruce Prather: I just think that's a little high, on the reserves, unless you're including all that stuff up the hole.

Gus Janson: That's what we're including. That's our anticipated drill and recovery from some other formations within that well bore contributing production.

Mary Quillen: Just one more comment. Since you have a great deal of background knowledge on all of these wells, you have the advantage of going in and doing these wells where you do have that stranded acreage right now because you know the history of what has gone on around them. Is that an advantage for you all, your background and knowledge?

Gus Janson: I would hope so. Some of that knowledge of what's been going on, in the past would help us make decisions, going forward, to where we would want to find our best opportunities to recover the reserves.

Mary Quillen: And, probably someone that didn't have that expertise and that background might not see the advantage of coming in and doing that?

Gus Janson: I think that most people (engineers and geologists) who would evaluate this would probably come to the same conclusion that we're at, today.

Mary Quillen: I just thought they had an advantage of having you and your expertise.

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Bruce Prather: Gus, let me ask you a question. Are you anticipating, in the future, that you're going to re-complete every formation in that thing? In other words, the Ravencliffe in there would probably have 600-800 pounds and on down the hole and you've got 1,200 pounds. Are you going to co-mingle all that or are you just going to...? How are you going to do it?

Gus Janson: That has been the completion technology that we've been employing, back from Range, and what we see, going forward, with EnerVest, also, is to co-mingle all that production into vertical wells.

Bruce Prather: The only thing about it, you don't want to keep shut-in too long.

Gus Janson: Correct.

Bruce Prather: If you recirculate your gas from the high zone into the low zone, it won't come back as fast.

Bradley Lambert: Any other questions? [No response] Anything further, Mr. Scott?

Tim Scott: That's all I have, Mr. Chairman.


Donnie Rife: Motion made for approval, Mr. Chair?


Bradley Lambert: I have a motion and a second. Any further discussion? [No response] All in favor signify by saying yes.

Board: Yes.


Donnie Ratliff: I'll abstain, Mr. Chairman.

Bradley Lambert: One abstention. Mr. Ratliff.

Item Number 13

Bradley Lambert: We're calling Docket Item Number 13. A petition from EnerVest Operating, LLC, for pooling of Well VCI-530481. Docket Number VGOB-17-1219-4156. All parties wishing to testify please come forward.

Tim Scott: Again, Tim Scott, Gus Janson, and Chuck Akers for EnerVest Operating, LLC.

Bradley Lambert: You may proceed, Mr. Scott.

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Tim Scott: Thank you, Mr. Chairman. Mr. Akers, one more time, your name, by whom you're employed and your job description.

Chuck Akers: My name is Charles Akers, Jr. I'm employed by EnerVest Operating.

Tim Scott: And, you're familiar with this application. Is that right?

Chuck Akers: Yes, I am.

Tim Scott: And, is this unit located in the Nora Coalbed gas field?

Chuck Akers: Yes, it is.

Tim Scott: And, how many acres does it contain?

Chuck Akers: It contains 58.77 acres.

Tim Scott: I believe if you look at the exhibits that we've attached, there's a significant portion of this unit that EnerVest is both an owner and an operator. Is that right?

Chuck Akers: That is correct.

Tim Scott: Are we going to dismiss any parties respondent, today?

Chuck Akers: No.

Tim Scott: How was notice provided of this hearing, today?

Chuck Akers: By certified mail.

Tim Scott: And, we provided proof of mailing to the Board. Is that right?


Tim Scott: And, EnerVest is authorized to conduct business in the Commonwealth. Is that correct?


Tim Scott: And, there is a bond on file with the department?


Tim Scott: In the event you are able to reach an agreement with the parties listed on Exhibit B3, what terms would you offer?

Chuck Akers: $25 per acre for a 5-year paid up lease, with a 1/8 royalty.

Tim Scott: Do you consider that to be a reasonable amount for a lease in this area?

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Chuck Akers: Yes.

Tim Scott: What percentage of the gas estate are you seeking to pool, today?

Chuck Akers: .4%.

Tim Scott: So, that would leave us with 99.6 that you have under lease or own. Is that right?


Tim Scott: Do we have an escrow requirement for this unit?

Chuck Akers: No.

Tim Scott: Okay. Are you requesting the Board to pool those parties listed on Exhibit B3?


Tim Scott: And, are you also requesting that EnerVest be named the operator of this unit?

Chuck Akers: Yes, we are.

Tim Scott: If the Board grants our application, today, and we send out an order, providing for elections to be made, what would be the address used for any responses to that election.

Chuck Akers: The address would be 408 West Main Street; Abingdon, VA 24210. Attn: Chuck Akers, Land Manager.

Tim Scott: And, that would be the address for all communications. Is that correct?

Chuck Akers: That is correct. Yes.


Bradley Lambert: Any questions from the Board? [No response] You may continue, Mr. Scott.

Tim Scott: Thank you, Mr. Chairman. Mr. Janson, one last time, your name, by whom you're employed and your job description, please.

Gus Janson: My name is Gus Janson, employed by EnerVest Operating, LLC, as Geology Advisor.

Tim Scott: And, you're familiar with this application. Is that correct?

Gus Janson: I am.

Tim Scott: And, you also participated in the preparation of the AFE. Is that right?

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Gus Janson: I did.

Tim Scott: What's the proposed depth of this well?

Gus Janson: 2,438 feet.

Tim Scott: And, what are the estimated reserves?

Gus Janson: The estimated reserves are 1 bcf, or 1,000 million cubic feet of gas.

Tim Scott: And, you're familiar with the cost of this unit, right?

Gus Janson: I am.

Tim Scott: And, what's the potential dry hole cost?

Gus Janson: The estimated dry hole cost is $186,900.

Tim Scott: And, the estimated completed well cost?

Gus Janson: $405,150.

Tim Scott: In your opinion, if the Board grants our application, today, would it prevent waste, promote conservation, and protect correlative rights?



Bradley Lambert: Questions from the Board? [No response] Anything further, Mr. Scott?

Tim Scott: That's all I have, Mr. Chairman.





Board: Yes.


Donnie Ratliff: I'll abstain, Mr. Chairman.

Bradley Lambert: One abstention. Mr. Ratliff.

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Tim Scott: Thank you, very much. Merry Christmas!

Bradley Lambert: Thank you all. Merry Christmas!

Item Number 14

Bradley Lambert: The Board will now receive an update of Board and Division activities from the staff.

Rick Cooper: What I just handed out to you all are disbursements, since the House Bill passed, but I will report on the current quarter. We've disbursed out $806,791, this quarter, but so far, this fiscal year we have disbursed out $5,886,000. I keep this running total all the time, but if you look over on the right, in the little box. So, since the House Bill has passed, we've disbursed $18,745,950. For the Board's reference, the most that was ever in the account, I think, was in May 2014. It was just shy of $30,000,000. It was about $29,800,000, in May 2014. So, we have a little over $10,000,000 left in the account, which is really good. The Board had asked us to look on unknown/unlocatables and we're taking that project on. We're working with, I call them, "the Big Three," EnerVest, CNX, and EQT, to try to determine the unknowns/unlocatables. So, everybody is in the same position. Nobody really, categorically, checked that information in the format that you would like to see it. Everyone is working on that, trying to come up with that estimated total, unknown/unlocatables. That's money that would be much more difficult to get out than the coal dismissals or other items. So, we're working on that and will report that, in the near future, but we think it's somewhere between 3-4 million dollars, in the account, that's attributed to unknown/unlocatables. I can't get the exact dollar until we work through all those accounts. So, we have the same problem at the Division, also, so we're all working on that, too. It will take, at least, another month, or so, working with the companies. What we want to do is come up with our data, compare it to their data. Then, we can report out on that. Again, nobody kept it in that format, historically. So, we have about 10.7 million dollars left to disburse, whether it's unknown/unlocatable, coals, or cloud on title, litigation, and those types of things. That's what we will report out, in the near future. We have an estimated total, but I'm not ready to report on those. One other thing that, if the Board's okay, we've been working on a project. I announced last Board hearing that we did the electronic objections. We do appeals and everything electronic, now, which is working really well. We've had a variety of hearings, so it's worked out real well. Something we have worked on for at least five years, ever since Sarah has been here and ever since Sally has been here, we've worked to try to catch up a lot of items, so we could do some more electronic linking. Currently, our permitting process is not linked to our Board order process. It may seem to you all that we would have had that done, so we had a lot of outstanding issues that we have cleaned up in the last 3-5 years. We're almost to the point that we can implement that, so what that would be for you all that are familiar with our permitting process, on Page 2 of our permitting, to have all the Board items, whether it's an increased density, pooling, or whatever the situation may be. We

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already have those spots there. The permitting people are not always the Board people, depending on which company you deal with, so we are working to tie those together. So, when you put a VGOB number in, on Page 2, like some of the issues we've talked about today, about permits expiring and re-poolings or poolings. Two years down the road, it would send Sarah an email that says, you know that if the permit expired, it would send her an email and it would also send the company the exact same email when that permit expires or pooling order has expired, also. To you all, that may not seem like it's a big deal, but that is very complicated. It's very complex to track, so if we can do that, electronic, it would be much more efficient. Also, it would tie into increased density, spacing, whatever it is. We already have that data available and we're making it available on the permitting process. It will be a drop-down menu, so you can actually just click a little button and all the VGOB orders will show up. So, whoever selects that VGOB order, it will be the exact one, the correct one. That way, in the future, it ties the VGOB order to the permit and if one of them expires, they talk to each other, which will make it much more efficient. One reason we've done that is we're actually going through this clean-up process and auditing each and every of the 700+ items. Again, it's been very difficult, but I think we've managed it really well. We have found and we will be bringing them in front of the Board, in the near future. We've probably found twenty accounts that, probably, have expired and they still have monies in them. It may be $20. It may be $80. It may be $60. As we've audited each and every file, we've found multiple orders that have expired. We will bring those in front of the Board, for your approval to disburse the money back. This will, probably, all go back to the companies and it's a variety of companies. As we clean that up and once we get this in place, we can refresh this, daily, so the numbers that we will have at the end of our project will be the exact numbers with everyone else. It's interactive and it's real time, so we can activate it, refresh it, daily. That's a project that we're working on. We hope to have that, we think, maybe by February, no later than March, we'll have that up and running. You all won't see any difference in what you all do, but hopefully, as an organization and for the VGOB, it just makes us more efficient, orderly, and we can track more accurate numbers, in the future.

Donnie Rife: So, you're saying that money that's not claimed is sitting in an account, instead of.... If they can't locate the person that it's supposed to be paid to, that they're going to give it back to the company that paid it in?

Rick Cooper: No, what I was saying on those dollars, we have several Board orders that probably was a bonus payment put in there, but the well was never drilled. So, we don't have those talking to each other, now. So, when the well was never drilled, the order expired and that money has never been refunded back to the company.

Paul Kugelman: So, there's no production involved.

Rick Cooper: Correct. No production at all, on several. There's going to be several of those we'll bring in front of the Board.

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Bruce Prather: That's not your permit fee, is it?

Rick Cooper: No. It's not the permit fee. It's bonus payments by the company, as a general rule. Again, some of it's $.13, $10, $12, that type of thing, but it is not allocated to production.

Donnie Rife: Are we going to petition our legislators again, this January, instead of unclaimed funds, unpaid funds, instead of going to the State, to come back to the localities, from which the gas wells was drilled?

Rick Cooper: So, Mr. Kugelman may be better to address that, than I am, or Mr. Lambert. I'm not sure.

Paul Kugelman: I haven't heard of anything along those lines, either.

Donnie Rife: Well, you know, the thing about it is it's good to ask them each and every year because you don't want them coming up to the point to where they think they're going to receive the money. It would be nice if we would, kind of, nip that in the bud before we got started on it.

Rick Cooper: That is the thrust behind what we're doing. So, if that ever does happen, we can give, like within just a few dollars, an exact amount that's available to disburse. We'll be able to know which county it's in and everything, really easily. That's our goal.

Donnie Rife: I know the Commonwealth likes to say we use this for education, but believe it or not, if it comes back to the localities in which the well is drilled, it's going to be used for education, anyway. Those counties have to subsidize the educational systems so much.

Mary Quillen: That's great. Make sure it is earmarked for education and gets....

Bruce Prather: Do we still have enough money of 10.7 million, to pay First Bank on their contract, without paying any of the principal?

Rick Cooper: Yes, we do. The way they are paid, they are paid 1/10 of one percent of the interest. So, right here, they're getting $1,000 a month, is what they're getting. It would be what they would be getting per month to run this. Years ago, they were getting $3,000 a month to operate the account.

Bruce Prather: Do you remember when we had that other bank, I think, we were kind of running the deficit, there for a while.

Mary Quillen: Yes.

Rick Cooper: So, what they have done, here, and you can ask Ms. Maney, but she actually takes care of, these are called "wealth accounts." So, she actually manages four wealth accounts, to accumulate enough dollars to justify her position. So, she has three other wealth accounts. This used to be the largest wealth account. Over the last few years, I don't think it is, now. She's

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paid on a percentage basis, based on the interest. So, as we look at that, and we have met with them. We would think and I think everyone sitting here would like to think the interest rates increase. You know, the Board is very conservative on those investments because you have to disburse that out. You're not exactly sure when and how much you're going to have to disburse out. I believe C.J. there, at First Bank and Trust, I think he'll give a report here, soon. Interest rates have slightly increased, but they’re a long ways from doubling their amount. They have asked when their contract's due, that they may propose to the Board some other fashion to pay them, besides 1/10 of one percent of interest. I guess we can address that in 2020. That's when their contract expires.

Bruce Prather: I just don't want to get into the principal.

Mary Quillen: Yes, like we did, before, because it was into the principal when we lost money for several years.

Rick Cooper: We have a couple of years to work on that and, so we're fortunate Ms. Maney's worked with us. As you see, most of the discrepancies we have are prior to First Bank and Trust, so she's done really well. The last thing I wanted to say to the Board--Sally, Sarah and myself want to thank the Board for the support throughout the year. It's been a big accomplishment. There's been a lot of money going out, but we could not have done it without you all and we want to thank each and every one of you all for your participation in helping and supporting us. We really appreciate that. We talk about that quite often. Thanks to each and every one of you all.

Donnie Rife: I tell you what, we couldn't have done it without you all, either, because you guys stay on top of the game so well. I don't think there's ever been a time that I've ever asked anybody a question that they didn't already have the answer for and I think that's pretty good. That's pretty good heads up, especially coming into a Board meeting.

Mary Quillen: You've done an outstanding job.

Rick Cooper: I give Sarah Gilmer and Sally Ketron the credit for keeping things up to date. They're about as good as you can get.

Donnie Rife: We can't give them a raise, but we'll give them praise.

Rick Cooper: So, that's all I have, unless you have any questions on anything. The petitions have not come in at the rate they were, which we're glad of that, but they're still coming in. As they come forward, as you all have seen on the docket items, they're just getting tougher and harder and there's reasons why some of these have come in now, instead of earlier. They're just more difficult to process and put together, but I think working with the companies, all the companies have been great to work with. Mostly, we work with CNX and EnerVest, so everything we ask of them, they've been very supportive and I have to thank them, too, because

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without them helping and working together, it would be a much more difficult process. Other than that, it's worked really good. It's been amazing to me how well we have done this, as complicated as this is. There's a lot of wheels that turn in the background, you all may or may not see. That is good. We don't really think you all need to know that stuff. We want to make your all's job as easy as we possibly can.

Mary Quillen: I think that you all have done an outstanding job working with the companies because in past years, I've been around for a long time and, in past years, we have not seen that. Working with the escrow agent, we didn't see that and these things come as a total shock and surprise when we end up like he was saying. We did not have the money from the interest to pay the fees. This has been so much less stressful for everybody.

Rick Cooper: It's been painfully good for us.

Mary Quillen: Well, we hope not too much pain.

Bradley Lambert: Is that all, Rick?

Rick Cooper: Yes, sir.

Item Number 15

Bradley Lambert: The next item on the agenda is the approval of the November minutes. Any additions, changes, corrections that we need to make? If not, may I have a motion to approve?

Donnie Rife: Motion to approve as presented Mr. Chair.


Bradley Lambert: I have a motion and a second. All in favor signify by saying yes.

Board: Yes.

Bradley Lambert: Do I have a motion to adjourn?

Donnie Rife: Motion to adjourn.

Bill Harris: Second that.

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