that's right
okay we'll call the meeting of Virginia
Gas and Oil board
to order today is June the 20th 2023
we're located in the Virginia energy
offices in Big Stone Gap
the first item on the agenda
is to approve those that's attending
remotely so let's establish a
coordinates
uh Miss Gilmore will you hold the board
to sick we have a quarter Mr Harris uh
yes uh president Mr Atlas yes Mr Jameson
yes Mr Cochran yes okay Mr Printer
don't think they're on you Mrs Whalen
well in case they come on since they're
going to attend remotely
we need a
we need a motion to commit
Mary Quillen who desires to participate
remotely and said meeting due to
Temporary permanent disability or other
medical conditions that prevent her from
physical attending
she should call in we need this approved
we need a motion absolute in a second
second
and
all in favor
yeah yeah yes
thank you and the next one's Mr Prather
Bruce Prather desires to participate
remotely and said mating Duty as
principal residence located more than 60
miles from the location
by excellent motion
a second yeah all inside yes yes
okay
now we'll have the board to introduce
themselves I'm Bill Harris a public
member
president the public member
uh Willie Cochran Virginia energy
remember I'm Donnie rattles representing
call when serves as your chairman I'd
like to remind everyone to uh silence or
turn off your phones as the proceedings
are being recorded
do we have any public comments anyone
signed up to speak
seeing none and hearing none will
proceed to item number three on the
docketed petition from intervest
operating LLC for polling unit VCI
530604 documents ctob
23-0516-4262 all parties interested
please come forward Tim Scott and Larry
Reeves for intervest operating
you may proceed Mr Scott
okay let's see on where you're going to
swear Mr Reeves in
Kareem you swearing it
through nothing but the truth
yes I do
Mr Reeves please state your name by whom
you're employed your job description
Larry Reeves employed by interest
operating as a land agent
are you familiar with this application
that's now Penny before the ward
yes I am and it's is it located in the
North Corby gas field is that correct
yes how many acres does this unit
contain
58.7 Acres
and uh presently intervest has a
substantial portion of this unit under
lease is that correct yes sir
and are we going to dismiss any parties
listed on exhibit B3 today
uh no
and how were these individuals or these
this party respondent notified of this
hearing
um
a certified mail with return receipt
and have we provided proof of mailing to
the board
yes we have do we have any unknown or
unlocatable parties in this unit
no we do not
and is there an escrow requirement for
this unit no
is enter best authorized to transact
business in the Commonwealth
they are
and is there a blanket Bond on file with
the Department yes there is
and if you were able to reach an
agreement with the party listed on B3
what lease terms would you offer for at
least in this area
um five dollars per acre per year for a
five-year paid up lease with one eighth
royalty okay thank you and um do you
think this is a reasonable uh
compensation for at least in this area
yes
and what percentage of the of the unit
does under arrest presently have under
lease
94.35 excuse me
94.345 percent
and that does include acreage in which
um
intervest is the owner of the minerals
is that correct it does
at what percent of the unit is is
seeking to pool today
5.655 percent
and are you also requesting that
intervests be named the operator of this
unit
yes we are
and if the board grants our application
today what would be the address used for
making any elections under the order
that's entered by the board
be intervest operating LLC
408 West Main Street Abingdon Virginia
24210
attention
Kevin Miller vice president land
thank you
it should be this should this address be
used for all Communications with an
order entered by the board
yes
thank you and are you also familiar with
the uh operational aspects of this unit
yes I am and you're what's the proposed
depth of this well
uh 1875 feet
and what are the estimated reserves for
this unit
uh 750
mmcf mmcf yeah I'm sorry thank you
that's all right thank you and are you
also going to be able to well costs
propose well cost
uh yes sir what's the estimated draw
hole cost for this unit
uh 199 056 and the completed well cost
of 580
9 dollars
and if the board grants our application
today in your opinion would it be uh
protect correlative rights promote
conservation prevent waste
yes
that's all I have for Mr Reeves for this
this
any questions from the board
anything else Mr Scott that's all I have
on this one Mr chairman
okay I believe we have Mr basically
online business
okay
good
the board excellent motion
listen to approved wait a second I'll
second then
thank you Miss Gilmore you holding
forward please
yes Mr rat
abstain Mr James yes Mr Cochran yes Mrs
quillin
yes
Mr Prather
Mr Prater
the orders approved Mr chairman let me
just answer the question I asked this
every year I noticed the afes are always
uh estimates do we ever come back and
compare the estimates to the actual is
there some way of doing that uh I know
every year we go through this and we
approve estimates
is there some way of ever going back and
seeing how close the estimates are to
action
I believe the only way that ever would
happen Mr Harris in my experience with
this is if
a person who is being pooled today came
forward and wanted to participate in the
well they would have the right to see
what the actual costs were and I think
at that time the division would require
that information to be submitted but as
long as nobody's actually participating
in the well I don't think it becomes an
issue okay or if it's disputed it's
disputed yes it's just for you yes in a
way yes sir I was just curious because
see I know we go and usually
prove these I'd say it this way without
question but I just wonder sometimes if
and I'm not questioning the accuracy but
I you know we just go through and say oh
yeah this is okay I just wonder if
anyone ever comes back at this yeah I
think the purpose of the AFE is for that
person who wants to participate in the
well to have an idea of what their cost
would need to be to participate in the
well and that would be chewed up at the
end when the actual cost actually came
in where the will was drilled up and
then that would all be reconciled at the
end right if they were choosing to
participate but if and we have so few
people that actually participate then
it's really never been a big issue okay
thank you very much okay we voted on
that I don't know yes we did next item
on the dockets item four it's a petition
from intervest operating LLC pooling
unit VCI
60004 docket number vgov
23-0620-1465 all parties interested
please come forward again Tim Scott and
Larry reviews for intervest operating
LLC
you make procedures thank you Mr
chairman uh Mr Reeves again your name by
whom you're employing your job
description
Larry Reeves employed by intervest
operating as a land agent
again this unit is also located in the
North Copa gas field is that right
yes sir and how many acres does this
unit contain
58.8 Acres
and again does intervests have a
substantial portion of this unit under
lease
yes we do and do we have any parties
responding that we're going to dismiss
from this application today
no we do not
we have unknowns is that right yes we're
doing this one and how were those
parties notified of this hearing by
publication in the Bluefield Daily
Telegraph
and what day was that publication
um May 26th
May 26 2023.
addition to the board
yes
and is there an escrow requirement for
this unit
no no escrow
and again I investors authorized to
transact business in the Commonwealth is
that correct that is correct
and there is a blanket Bond on file with
the Department yes again if you were
able to locate and negotiate a lease
with the party's respondent listed on
exhibit B3 what would be the terms that
would be offered
excuse me
um the terms offered would be five
dollars per acre per year for a
five-year paid up lease at 1 8 royalty
again do you consider that to be
reasonable compensation for release of
this area
yes sir
and what percentage of the uh unit does
intervests presently have under lease
94.29571429 percent
and this does include uh acreage in
which
intervest is the mineral owner is that
correct
yes that's correct and what percentage
of the unit are you seeking to pool
today
I'm seeking to pull
5.70428571 percent
and you're asking the board to pull the
Unleashed parties listed on exhibit V3
yes sir and that interests me named the
operator for this unit is that also
correct yes and if the board grants our
application today and an order is
entered what would be the address she
used for making any elections under the
an order entered by the board
address would be intervest operating LLC
408 West Main Street Abingdon Virginia
24210
attention Kevin Miller vice president
land
and would this be the address for any
correspondence regarding this order
yes it would
and are you also familiar with
operational aspects of this unit yes sir
what's the proposed depth of this well
proposed death is 2600 feet
and what are the estimated reserves for
this unit
estimated reserves or 950 mmcf
and are you also familiar with the will
cost for this for this proposed well
yes what's the estimated draw hole cost
um Draco cost is 269 thousand and twenty
six dollars and the completed well cost
um completed well cost is 723 850
dollars thank you and your opinion if
the board grants our application today
would it promote conservation prevent
waste and correct protect correlative
rights
yes sir
that's all I have for Mr Reeves any
questions from the board
with a couple quick questions uh again
just for clarification there's no escrow
requirement on this uh you to do the
unknowns it's those will be paid
directly to the treasury Department is
that correct Mr Reeves yes yep that go
to the uh unclaimed property at Treasury
and the second question there's a an
exhibit Ale in the application for the
uh
so in the mine locations in the vicinity
of the proposed wheel the the scene that
the those mines are in are not
identified you know what seems those
Minds represent
those things
I apologize I don't have the exhibit l
in front of me
um I don't I can find out uh
Mr Jansen
um I just I just wanted to if you could
maybe
revise that exhibit and place the
identify the coal seems that associated
with those Minds sure and I'm assuming
that those Minds were those coal scenes
would not be stimulated as part of this
well application
I would assume not I would assume that
uh that those seams would be denied
through the the coal owner
or lessee
right so if you provide that revised it
yeah but that'll be good thank you yeah
sure that's all questions I had
anyone else
anything else Mr Scott that's all I have
Mr chairman board axon emotion
motion to approve
thank you Miss quill Carl second man
any questions there are none Miss
Gilmore will you all the boys Mr Harris
yes Mr rattlin abstain Mr Jansen yes Mr
Cochrane yes Mrs Whalen
yes
Mr Prater
that order is approved as presented
thank you uh Mr Jansen we'll have the
exhibit L uploaded and make sure it's
there before we submit the order okay
thank you
uh the next item on the document is the
item number five the petition from
Pocahontas gas LLC for the creation of a
sealed grilling unit and pooling
unit is Buc one s g u six docket numbers
bgob
23-0516-4263 all parties interested
please come forward introduce yourself
Mark Schwartz and Kelly Berry
Miss Berry needs to be sworn in
bearing is where in affirm that your
testimony is the truth the whole truth
and nothing but the truth
I do
you may foresee Mr Scott Mr
Lord
thank you
um
I'd like to just comment a little bit
before I I get into Kelly's testimony
here this is a sealed proposed sealed
Gob unit it's in the uh the Canon number
one mine uh there are other seal God
units in associated in that mine uh this
uh this unit is approximately three
thousand acres and to give the board an
idea of what we're dealing with here in
terms of sealing this unit and creating
the unit
if you could go to your PDF page 12
uh it has a depiction
of the boundaries of the unit
uh where this which obviously need to be
sealed uh but it has a slightly odd
shape to it which is kind of looks like
a handle that goes from the it goes to
the West at the south portion of the of
the unit uh that's shown on PDF page 12.
um this PDF page shows the line works uh
the mind out panels of the solid coal
that remains within the sealed Gob area
and it also shows the um the wells that
were drilled uh into the into the area
under consideration uh to put this in
context if you could find your way to
PDF page 272 I'm sorry that's so far
away
um
okay if you go actually it's uh well yes
PDF page 272. on that page you can see
the reason why we included the handle
I'll call it it actually uh abuts the
two prior
sealed gov units looks like Buchanan uh
number three and number four uh in the
mine so we've tried to not leave
space unaccountered for that that people
would not be receiving royalties for so
that's the the reason for the peculiar
shape
uh and then the the the last comment
that I would I would like to make uh
there are some extra exhibits here that
you don't normally see uh when we are
um are pooling uh a typical Oakwood unit
for example uh and what explanation for
that is
most if not all of our leases
require us to pool standard
size units that have been created by
them previously by the board and
whenever we're talking about a large
unit like this
uh we actually have to have to notice
our lessors
to give them an opportunity to object to
creating this non-standard larger unit
so we have we have listed and noticed
everyone here we've noticed the people
that we have leases from and the people
that were seeking to force pool the
people that we notice that have we have
leases from where simply noticing them
that we're proposing to create this
large unit we're not seeking the pool as
much as we have them leased and
obviously with regarded respondents
that we named in here uh which would be
image of the B3 that we're seeing the
pool workers joining them as parties for
two reasons one to create the unit and
then all sorts of force pull their
interests in producing the unit and with
that introduction uh Kelly could you
give us your name please
Kelly Berry
and who do you work for
Pocahontas gas LLC okay and and
Pocahontas gas LLC is the applicant in
this in this hearing docket
that's correct and his Pocahontas gas
seeking to be a designated the board's
operator in the event that is approved
yes
and uh is Pocahontas gas authorized to
do business in the Commonwealth of
Virginia
yes has it registered with the
department and does it have a blanket
Bond on file
yes
what did you do to notify
um the newer lessors and the respondents
that were seeking to pool that were we
were going to have a meeting today
we mailed to all uh known respondents by
certified mail with return receipt
requested and we also published notice
uh in the Virginia Mountaineer
have you provided the the department
with uh proof of mailing
yes
and have you provided the certificate of
publication
yes and what paper was it published in
the Virginia Mountaineer and on what
date
June 8th 2023
uh do you want to add any respondents
today
no
do we want to dismiss any today
no
what is the percentage of the coveted
methane interests in this in this unit
that you're seeking to pool today
1.3827 percent
okay and I think that is
41.7287 Acres out of the 3 000 odd Acres
correct
yes okay
uh and
is there an escrow requirement
uh yes for uh two tracks with a title
conflict yes okay and and what
percentage of the 100 of the covet
methane interest is is going to be
escrow
uh let me see
approximately
0.0.1 percent
okay and that it will actually uh if you
go to uh let's see digital page 219.
let's take a look at that
um
we have page 219.
you find that killing
yes okay uh and at the full of 219
you've got the acreage in the in units
conflicting and what is with the acreage
uh 1.59 Acres of
0.0527 percent
I think those and that's going to be
escrow until uh that conflict is
resolved correct
yes that's correct
let's go back then to the uh beginning
um more or less the beginning of this uh
PDF the
um the exact amount of acreage uh is is
is provided
stated in the application at PDF page
eight and what's what's the uh exact
acreage
3017.94 Acres
okay and then you provided in addition
to the class that show the boundaries of
the proposed unit you have as required
by the regulations uh you you've
provided a
description uh point-by-point
description uh in the Virginia state
plane coordinates of the boundaries of
the uh proposed unit correct
that's correct
and then
in order to
[Music]
um
allow people to participate there's a
there's a requirement that we provide uh
costs or allocable costs for folks who
might want to participate so they can
figure out what their what their
participation cost would be and I think
it's PDF page 271.
it's good or bad
yes and at page 271 we have two kinds of
costs we've got well costs and we've got
uh panel costs or ceiling costs correct
that's correct okay and and what did you
do to calculate a uh allocable well cost
um the alcohol well costs were
calculated uh by utilizing actual well
costs because all of the wells that are
uh currently producing or plugged within
the boundary uh you know have been
drilled and we have actual costs
available
um so those costs were calculated by
totaling
um
by each panel located within the
boundary uh the the total cost
per panel and then divide that total
cost by the number of Wells drilled in
each panel and then that brings you to
the total average well cost and then you
divide that by the number of panels
located within the boundary
and that's how you came up with the uh
seven million 800 and some thousand uh
subtotal for the well cost
yes okay and the average will cost you
just testified as to how you did that
now with regard to sealing the panels
we've done this before on other units
correct
that's correct okay and previously you
went back and and reviewed some data
from from our previous uh estimates with
regard to ceiling costs and uh it's my
recollection that Mr Cooper actually did
uh made an inquiry into costs of the
seal panels uh quite a while ago but
back in in 2014 and at that time the the
cost of per seal was fifty thousand
dollars is that correct
yes and you went back and looked at that
docket and the testimony correct
well
at that determined that it would not be
fair to pass on the total ceiling costs
uh to owners who wish to participate and
they voted that
half of the total ceiling costs could be
passed on to the
owner who wish to participate okay and
the concept behind that if you were back
at the order or certainly or the
discussion doing that the hearing was
that the ceiling costs in this context
actually benefited uh the mining company
in terms of isolating the panel from the
rest of the mine and also benefited the
oil and gas owners or the cobit methane
owners and that it allowed them to uh
get a product that they could actually
put into a pipeline and that was the
concept between the 50 50 correct
that's correct okay
uh and on this exhibit M you have in
fact allocated
the participation costs uh per panel and
you've got you've got a list of those
costs correct
yes
um with regard to
some of the other exhibits have you
separately listed the respondents that
are our leased parties and and if so in
what exhibit have done that
uh leased parties are identified on
exhibit d
and uh and then the parties that you're
seeking to pool who would have a
participation option uh because you
don't have leases from them what exhibit
are they listed on
exhibit B is the collective list of
everybody you've noticed
yes
um
I think the last exhibit that we need to
at least mention uh exhibit I is a
listing of if I appears it's two pages
and it starts at uh
PDF page 269 that's a list of Prior
board orders that affect units that are
either entirely or partially within this
proposed sealed government is that
correct
that's correct and that that gives the
the
department and the board at least the
heads up as to what we think are the
prior orders that need to be considered
when this when this occurs in terms of
pain I'm not going forward basis correct
yes okay
um is in the event that the board
approves this
um petition uh
is it your opinion that it would protect
uh Corolla the correlative rights of all
of the owners of the Kobe methane within
the area of this within the 3000 acres
and also uh prevent uh prevent waste
yes
and in the event that the board
proves this what would you recommend to
the board as reasonable compensation for
people who might be deemed to have been
leased
um that would be
paid uh five dollar per acre per year
for a five-year paid up lease uh with a
one-night royalty
what's your answer
else
Mr chairman I think that's it
foreign
what will be the timing of the ceiling
of this of this of this area within the
mine will that take place over several
months period or is it already taken
place or where are we at in the creation
of the unit
has informed us that they intend to seal
this area uh Late July early August of
this year
okay so at that point in time
you'll continue to produce from the 80
acre units that are established within
the steel Gob area and pay under those
units
and then you'll trans transition until
filling is complete
so when Sicilian is completed then you
will pay under the seal God Beauty and
all those other units will basically
terminate
except for the partials correct
that's correct
okay
so there's a this question is probably
to the staff does the staff do any
confirmation of the seals to ensure that
the unit conforms to the unit that they
have proposed here at some point in time
do they confirm that where their seals
are constructed and how the unit is laid
out today as proposed
is that something new you should be
doing in theory we came to that Hills
okay with the division of Mines right I
think that has to be approved it in
place right ceiling and all the others
proposed today you would have to change
the configuration this unit maybe at
some point in time if that happened is
that correct
okay
um
the um
exhibit e that identifies the small
acreage associated with the conflict the
conflicting claims there looks like
that's a conflict between VDOT and some
airships
is that correct Miss Mary
yes
do those conflicts
have a history all the way back to the
original unit that was built in 1998
that confidence that complicated all the
way back
so what's what's the procedure to what's
the procedure to have some of these
conflicts be resolved how does that get
initiated by anyone
I know it's a very small percentage is
that fair to say that nobody's just
interested in doing it because it's such
a small interest
oh I do I individually I
I a track by track basis review units
um which previously
um at the point in time when the unit
was pulled and attract identification uh
was completed you know go back and
review title work and review to see if
any additional documentation has been
recorded or any additional review you
know can can determine uh which owner
owns the oil and gas
I do that on a regular basis
okay so this makes a bit no change in 25
years I assume that it's still it's
still in conflict and
but how would a conflict like that ever
get resolved or will it ever get
resolved
uh it could be resolved it could be that
that
litigation required and and a judgment
is needed from a court to determine uh
depending on what causes the conflict um
it could be
um just interpretation of Deeds
um and how laws that are passed change
the interpretation of Deeds over time
okay but somebody would have to initiate
that correct either one of the two
parties have to initiate that action and
you've got unknown airship in Virginia
Department of Transportation so
we really only got one party they can
probably come forward and do anything
ever so what was one this may be a
question for the general board here to
have an understanding of this once
you know 20 years from now 50 years from
now when this still got up unit is
finished and we're sitting here with a
small amount of money sitting in an
escrow account will that just be as
cheated if the conflict is never
resolved or just sitting this escrow
forever
do we have any clue how that works thank
you
well actually this to the extent that
there's there's been money in escrow
um in the underlying units the 80 acre
units I would I would believe depending
on when these units were pulled
um I would I would assume that that
money has already been paid over the
treasury and and that the board no
longer has an escrow account because the
the future royalties if any are being
paid
uh are being paid to the treasury
not in a case of a conflicting claim but
I don't think the board is
transferring you those millions of
treasure they're still sitting there
they'll sit there until that's resolved
by the two parties that they never
resolved the issue then
I assume it just sits in escrow for
eternity
is that correct
unless the board makes other something
actually at some point
I'm just saying it's been 25 years or do
we really expect anything that's gonna
happen in the next 25 years
who's all this probably not my
assumption has been that money in
conflict is sheets as well but I may be
wrong I I thought that you know if money
is the only concern to that I believe
and I know as far as I know that the
completing owners skip the interests
stay in the escrow account until and
it's resolved and then application and
interrupts for the board to disbursed
okay
so I guess that's just something the
board probably needs to think about on
the going forward basis that
should the operator or the board itself
take some action to try to have some of
these conflicting claims be resolved and
I'm not sure how that should happen
um rather than just money City they just
go forever
I understand it's probably in this case
such a small amount of money that
neither party is probably going to want
to go into alleviations
but something would have to happen there
I don't know if these people are aware
that
that is in there I don't know vdot's
aware that they have this conflicting
claim I guess unless they really
understood this process
anyway that's just the commentary there
right right known owners are are mailed
or mailed copies of the petition so the
information is available to them and you
know
okay
um
I noticed in this application you had
you had a lot of
applicants who were a few applicants not
allowed she had a handful of applicants
who did not have addresses associated
with their names
um
how are those people going to be
compensated how are they getting there
conversation paid to them now either
under the existing units or the proposed
unit here today are they is that being
internally escrowed by Pocahontas gas or
how does that take place
uh for for all owners with either a
pending address or an you know that we
have attempted to mail to and have had
mail returns from and that's like a bad
address their funds are held in internal
suspense
or internal escrow until you know an
accurate address can be identified for
them
okay
there was a
an amount of uh deceased owners whose uh
heirs are pending and documentation is
currently being attained to document The
Heirs of those deceased individuals
okay
and and that that internal escrow
operates
as you know the big Gob escrow would and
once five years have passed without
being able to identify a location for an
owner those funds are executed to the
state
so you had again you touched on just
briefly there you had several that had
documentation pending I guess that's uh
so those are also internal suspenses
just like the unknowns or the
we are in the process of identifying the
errors
so generally uh once this sealed Gob
unit is established
I think you you stated in the uh
facts you had 314 permitted Well
locations several of those have been
plugged at this point several them over
the bottom of the plug you'll continue
to produce from a series of those whales
and that all be combined into one unit
and again like we said before the the
existing units and the tracking on the
individual whales will go away at that
point is that correct
that's correct
okay
the last thing I had I think with the
the cost
that you had developed for the um
the seal guy unit
you you indicated you had several whales
you went back and looked at
but you only used a well count of 27 to
calculate that cost do you think that's
just representative you ended up using
three Wells per panel but some panels
have more than obviously have more than
three Wells is that the standard way you
do it was just three Wells
in an in an area of
of this size with as many Wells that are
drilled in it I mean we couldn't
reasonably
pass on the entire amount of will cost
to an owner who wished to participate so
yes this this is
this is what we have done in the past in
in areas of this size
okay
is this the last question for uh just
just have a little bit of understanding
what we may expect out of this large
unit out of the 80 acre units that
underly this unit did you have any
participation from any of the Unleashed
um climates before in any of those units
in the past or all those just okay
that's what I thought it's okay thank
you that's all the questions I had
thank you yeah chance anyone else have
questions
anything further Mr Schwartz no
not at this point
it's on a motion
motion to approve motion to approve
a second
I'll second thank you Mr Harris
uh any other questions
Mr Pierce yes Mr Redland yes Mr Jansen
yes Mr Cochran yes and Mrs Whelan
yes
thank you
Schwartz that's approved as presented
sir
thank you sir
the board will now receive an update
from the division staff
we have an update on anything nothing
particular
and the only thing since Jody's not here
I can give you an update like on the
disbursements I was just going to give
you an overview of just for the fiscal
year 2023
um a regular disbursements like
the uh from House Field 2058 total 37
658.97
and the treasury for fiscal year 2023
totaled 141
978.81 cents for a total of 179
637.78 and that um those amounts go
through April of this year
okay okay so any questions
anything further Miss Gilbert
we uh need to approve the May minutes
that was provided in length that was
sent to you
we have a motion to approve the minutes
as presented
thank you
all those in favor say aye
yes
anything further for the good of the
order
uh just a question next month's meeting
we are scheduled for that is that the
was it the 19th of the 20th 16th 18th
a couple of things
foreign
the date
I'm okay
and I should be
Mr Cochran you've been off quiet you
have anything to offer
yeah
hearing nothing further on the agenda if
I would stand adjourned
foreign