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Virginia Gas and Oil Board delays decision on E36 pooling dispute as parties negotiate
Summary
After hours of legal argument over Unit E36, the Virginia Gas and Oil Board agreed to continue items 5–10 to its February meeting while parties pursue a narrow settlement on how revenue from a 1.05‑acre tract will be handled.
The Virginia Gas and Oil Board on Jan. 20 declined to rule on a contested pooling application for Unit E36, instead voting to continue items 5–10 to the board’s February meeting while parties try to settle a narrow revenue‑sharing dispute.
The hearing centered on a legal fight between Diversified (which holds a lease covering the coalbed‑methane gas in the E36 drilling unit) and Pocahontas Gas (the applicant seeking forced pooling). Diversified’s attorney, Mr. Street, told the board that E36 is “voluntarily pooled” and that Buchanan Energy — the fee owner — and Diversified through its lease control the unit, arguing the board therefore lacks jurisdiction to force‑pool the unit and asking the board to dismiss Pocahontas’s petition.
Pocahontas Gas attorney Mr. Schwartz disputed that reading and urged the board to pool E36 so that owners of a tiny, 1.05‑acre interest in the unit receive revenue from nearby gob wells that will drain that small tract. Schwartz said pooling is needed to “share revenue from the gob gas wells that we're going to drill in the other 4 F units” and noted that adjacent development and existing voluntary and involuntary pooling in nearby units create a practical risk that the 1‑acre interest would otherwise be left unpaid.
Board members pressed both sides on timing and practical consequences. Mr. Street said the next phase of mining that could lead to drilling in the area is roughly three years away; Pocahontas responded that production from the 19 panel will affect the 1‑acre tract in the nearer term and that revenue distribution needs to be addressed now.
Counsel then proposed a limited settlement framework: if Diversified and Buchanan agree to withdraw or modify filings, Pocahontas would pay royalties for the one‑acre interest (directly or into escrow), with language preserving any existing appeals and an agreement not to prejudice litigated issues. The board recessed so principals could confer and returned with counsel reporting progress toward that framework.
On the record, the board voted to continue the contested items to its February meeting to allow parties to finalize the agreement and to permit staff time to circulate outstanding records the parties said they need to prepare. The continuance was approved after a roll call that included at least one abstention; board staff recorded the items on the February docket.
Other motions during the hearing: Diversified withdrew a formal subpoena request after opposing counsel said the witnesses were available to testify if the hearing proceeded; parties preserved objections to the scope of questioning. The board also agreed to enter an operatorship transfer order (Diversified replacing Summit Appalachia) subject to review and approval by the board’s counsel and final staff sign‑off.
What happens next: The board left the contested filings on the docket for February. Parties said that if they reach the narrow settlement — including either direct payment or escrow for the small Buchanan interest and mutual withdrawals of certain filings — Diversified will withdraw its dismissal request and Pocahontas will withdraw the pooling petition as unnecessary. If talks fail, the board will resume the formal hearing and resolve the contested petitions at a later date.
Reporting notes: Quotations and attributions in this story come from the board hearing transcript. The board’s deliberations referenced Oakwood field orders and provisions the participants identified in filings; counsel cited code provisions (discussed in the hearing transcript as sections in the 45.2/16.22 range). The board did not issue a final pooling order on Jan. 20.
