The Appalachian Basin includes portions of the states of Kentucky, Maryland, New York, Ohio, Pennsylvania, Virginia, West Virginia and Tennessee, and covers an area of over 70,000 square miles. It is the most mature oil and natural gas producing region in the United States, first establishing oil production in 1859.

Despite its long production history, the Appalachian Basin remains one of the most undeveloped areas for natural gas, as established in the 2003 undiscovered natural gas resource assessment of over 70 trillion cubic feet by the United States Geological Survey. In addition, the Appalachian Basin is strategically located near high energy demand areas with limited supply. As a result, the natural gas from the area typically commands a higher well head price relative to other North American areas.

Although the Appalachian Basin has sedimentary formations indicating the potential for deposits of oil and natural gas reserves up to depths of 30,000 feet or more, most production in this area has been derived from relatively shallow, low porosity and permeability sand and shale formations at depths of 1,000 to 6,000 feet. Operations in the area are generally characterized by long Reserve Lives, high drilling success rates and a large number of low productivity wells in these shallow formations. In the Appalachian Basin, there are more than 200,000 producing wells and 3,100 operators, with most being relatively small, private enterprises.

The Ravenswood Area is located in the western portion of West Virginia. At September 30, 2005, the Company had Proved Reserves of 47.6 Bcfe and 588 gross producing wells. The Company operates 99% of its Proved Reserves in this area. Production in the Ravenswood area is primarily from the Mississippian and Devonian formations at depths of 2,500 to 4,400 feet.

The Maben Area is located in southwest West Virginia. At September 30, 2005, the Company had Proved Reserves of 34.8 Bcfe and 316 gross producing wells. The Company operates 100% of its Proved Reserves in this area. In Maben, the Company produces from the Mississippian and Devonian formations at depths ranging from 1,500 to 5,500 feet. The Company’s drilling activity targets seven separate shallow formations, with a typical well completed in two or more horizons.

The Adamsville Area is located in South Central Ohio. At September 30, 2005, the Company had Proved Reserves of 12.7 Bcfe and 357 gross producing wells. The Company operates 99% of its Proved Reserves in this area. Adamsville produces from the Clinton reservoir and the Knox series at depths from 3,000 to 6,300 feet.

The Jamestown Area is located in western Pennsylvania. At September 30, 2005, the Company had Proved Reserves of 17.7 Bcfe. The Company operates 120 wells which represent 100% of its Proved Reserves in the area. Production is primarily from the Medina Sandstone formation at depths of 4,500 to 5,100 feet.

The Permian Basin is located in West Texas and the adjoining area of southeastern New Mexico. Though the Permian Basin is better known as a mature oil focused basin exploited with waterflood and other enhanced oil recovery techniques, the Company’s activities are focused on conventional gas properties. Vinegarone Field is located in Val Verde County, Texas. At September 30, 2005, the Company had Proved Reserves of 31.1 Bcfe and 26 gross producing wells. The Company operates 99% of the Proved Reserves in the field. Gomez Field is located in Pecos County, Texas. At September 30, 2005, the Company had Proved Reserves of 10.7 Bcfe and 11 gross producing wells, all operated by others.

The Rockies is a well known oil and gas province which encompasses several oil and natural gas basins. The Company’s activities are currently focused on the Wattenberg Field of the Denver-Julesberg Basin of northeastern Colorado. The Wattenberg Field encompasses more than 1,000 square miles, between 20 and 55 miles northeast of Denver, Colorado. At September 30, 2005, the Company had Proved Reserves of 37.2 Bcfe and 126 gross producing wells.

Total production was $17.5 million for the nine months ended September 30, 2005, an increase of $322 thousand compared to total production of $17.2 million for the nine months ended September 30, 2004.

Total oil & gas production costs were $22 million for the nine months ended September 30, 2005, an increase of $856 thousand compared to total oil & gas production costs of $21.1 million for the nine months ended September 30, 2004.

General and administrative costs, net were $15.7 million for the nine months ended September 30, 2005, an increase of $4.2 million compared with $11.4 million for the nine months ended September 30, 2004.

Interest expense was $24.5 million for the nine-month period ended September 30, 2005, an increase of $2 million compared with $24.5 million for the nine-month period ended September 30, 2004.