Appalachian Basin

The Appalachian Basin is a mature producing region with well known geologic characteristics. Reserves in the Appalachian Basin have typically had a high degree of step-out development success; that is, as development progresses, reserves from newly completed wells are reclassified from the proved undeveloped to the proved developed category and additional adjacent locations are added to proved undeveloped reserves. As a result, the cumulative amount of total proved reserves tends to increase as development progresses. Wells that we have drilled in the Appalachian Basin generally produce little or no water, contributing to a low cost of operation. Natural gas produced in the Appalachian Basin typically sells for a premium to New York Mercantile Exchange, or NYMEX, natural gas prices due to the proximity to major consuming markets in the northeastern United States. In addition, most of our natural gas production has historically had a high Btu content, resulting in an additional premium to NYMEX natural gas prices.