The Appalachian Basin is one of the country’s oldest natural gas producing regions characterized by long-lived reserves and predictable decline rates. During the first several years of production, Appalachian Basin wells generally experience higher initial production rates and decline rates which are followed by an extended period of significantly lower production rates and decline rates. The average well production in the Appalachian Basin is 10 Mcf per day or less and decline rates typically range from 2% to 6% per year.

The Appalachian Basin spans more than seven states in the largest natural gas consuming region of the United States. The close proximity to major natural gas consuming markets in the northeastern United States results in lower transportation costs to these markets relative to natural gas produced in other regions, contributing to the premium pricing for Appalachian production relative to NYMEX natural gas prices.

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 in the Appalachian Basin are typically drilled at relatively low cost due to the shallow drilling depths and the ability to use air drilling. Most of the drilling rigs are small pull-down type rigs that can be set up on very small locations that are typically 60 feet wide and 160 feet long. These small rigs can be transported to the drilling locations at relatively low cost. Further, the use of air drilling greatly reduces the size of any pits for drilling fluids needed on location. Appalachian wells typically are drilled on relatively close spacing of between 20 to 40 acres per well due to the low permeability of the producing formations.

The Company’s average well takes 10 days to drill and is expected to have an average cost of $250,000 in the twelve month period ending September 30, 2008. Most of the Company’s wells are producing and connected to a pipeline within 30 days after completion.

Since formation of the Company’s predecessor in 1999, Vinland has drilled over 511 wells on its properties, all of which were completed and placed on production. In 2006, the Company drilled 100 gross wells, 87 of which it retained in the Nami Restructuring Plan. The other 13 wells were located outside the AMI and not producing at the time of the separation and were thus conveyed to Vinland.

As reflected in the reserve report, as of March 31, 2007, the Company had identified 338 proved undeveloped drilling locations and over 171 other drilling locations in this area.

For the six months ended June 30, 2007, the Company drilled 41 gross (16 net) wells. For the six months ended December 31, 2007 the Company intends to drill 60 gross (24 net) wells and have budgeted $6.0 million for participation in these wells all of which will be operated by Vinland.

On April 18, 2007 but effective as of January 5, 2007, the Company entered into various agreements with Vinland, under which it will rely on Vinland to operate its existing producing wells and coordinate its development drilling program.

Lease operating expenses increased $0.1 million to $2.5 million for the six months ended June 30, 2007, as compared to $2.4 million for the six months ended June 30, 2006.

Depreciation, depletion and amortization increased $0.3 million to $4.3 million for the six months ended June 30, 2007.

Interest and financing expenses were approximately $4.4 million for the six months ended June 30, 2007 compared to approximately $3.8 million for the six months ended June 30, 2006.