Virginia Gas and Oil Board continues KeyRock Energy petition to modify M‑26‑1 shut‑in payments

The Virginia Gas and Oil Board continued a petition from KeyRock Energy LLC seeking a modification to the cooling/pooling order M‑26‑1 (docket 24‑0220‑4280‑01) that would change paragraph 9.2/9.6 shut‑in payment language from $1,000 per mineral interest to a pro rata distribution capped at $1,000 total per month for the unit.

KeyRock representatives described the unit (approximately 816 acres, of which KeyRock controls about 79.77%) and said the amendment is intended to align shut‑in payments with the company's annual revenue model for landfill/coal‑mine methane carbon‑credit sales. KeyRock's witness explained the company drills into sealed seams, meters and flares methane, and sells the resulting carbon credits; the company provided an AFE of $156,460 for the proposed work and estimated recoverable reserves for the target seam.

Under the existing order every mineral owner would receive $1,000 per month if a well was shut in. KeyRock said that structure could require payments that exceed unit economics and could force plugging if the company had to pay $1,000 for every mineral interest each month. KeyRock proposed distributing the $1,000 cap pro rata based on ownership percentages and continuing royalty distributions annually rather than monthly to match the carbon‑credit revenue stream.

Board members pressed KeyRock on notice and affidavit issues. The company acknowledged some certified mailings were listed as "in transit" and said it would file an updated affidavit showing returned receipts and revised exhibit language before the next meeting. Board members also asked KeyRock to clarify the mechanics and timing of when a well is deemed "shut in"; KeyRock said a shut in is defined as zero production for an entire calendar month (the practical effect being roughly a 45‑day window before a shut‑in payment is triggered) and that timing for payment should be clarified in the revised order.

Citing incomplete mail receipt evidence and requested edits to the application (clearer shut‑in definition, payment timing, and explicit language on annual royalty payment timing), a motion to continue the petition to the next monthly hearing passed (roll call: Cochran yes; Gibson yes; Harris yes; Owens yes; Prather yes; Jansen yes; Ratliff abstain). The board asked KeyRock to submit an updated affidavit of mailing and revised proposed order language ahead of the continued hearing.