Virginia CBM Operations is our coalbed methane project in the southwestern corner of that state. The gas operations of CONSOL Energy, from which CNX Gas evolved, had its genesis in Virginia. Removing gas from the Pocahontas #3 seam was an imperative to improving the safety and productivity of CONSOL Energy's Virginia mines. Virginia has the vast majority of the company's proved reserves. Cash generated from Virginia is plowed back into the developed CBM projects, Mountaineer and Nittany, as well as the shale and other exploratory plays.

Virginia CBM Operations consists primarily of two adjacent fields known as the Oakwood Field and the Middle Ridge Field. These fields, along with the nearby Nora Field, contain some of the gassiest coal in the Western Hemisphere, with gas content of between 400-600 cubic feet per ton. If these three fields were listed as one field by the U.S. Department of Energy, it would rank near or in the top 10 of all gas fields in the U.S.

CNX Gas drills vertical frac wells in the Oakwood Field on 40-acre spacing and in the Middle Ridge Field on 60-acre spacing. Oakwood comprises approximately 144,000 net acres, and Middle Ridge an additional 30,000 of our Virginia acreage.  Approximately 101,000 acres in Virginia has yet to be drilled. CNX Gas drilled 53 wells on 30-acre spacing at Middle Ridge in 2007. Results from this tighter spacing are being evaluated. If successful, 30-acre drilling could result in several hundred additional locations.

CNX Gas has expanded frac well drilling in Virginia in recent years. In 2005, 176 wells were drilled; in 2006, 253 wells were drilled; and in 2007, a record 294 wells were drilled, as the goal of 278 wells was handily eclipsed.

In August 2007, Virginia CBM Operations completed and tied into line its most productive CBM well ever, at a flow rate of over one million cubic feet per day. CNX Gas has a 100% working interest in this well. The well was producing in excess of 500 Mcf per day as of December 31, 2007. While this single well is not material, in and of itself, it does show that sweet spots continue to be discovered in the Oakwood Field, where the company has over 2,000 producing wells.

In 2007, Virginia CBM Operations benefited from having the Jewell Ridge Pipeline available all year, with the line having been completed in October 2006. Prior to the line's completion, CNX Gas was dependent on a single interstate pipeline for the movement and sale of its Virginia gas. The second line has dramatically reduced the curtailment risk while allowing CNX Gas to rapidly expand its drilling program to fully exploit the increasing mineral asset position in Virginia. CNX Gas had no Virginia gas curtailed during 2007.

In 2008, Virginia CBM Operations conducted an extensive workover program. This had the effect of increasing production from "legacy" wells, or those drilled before January 1, 2007.

CNX Gas is poised for another record breaking year of drilling. For 2008, 300 wells are expected to be drilled in Virginia with 242 wells having been drilled through the September 2008 quarter. Gas production is estimated to be about 62 Bcf.