---------------------- Forwarded by Richard B Sanders/HOU/ECT on 01/06/2000 
04:19 PM ---------------------------


Janet H Moore
12/03/99 10:32 AM
To: Richard B Sanders/HOU/ECT@ECT
cc: csandvick@velaw.com, Jay Boudreaux/HOU/ECT@ECT, Patrick 
Johnson/HOU/ECT@ECT 
Subject: Another CGAS lawsuit

Richard:  I'll just assume that you will call John Keller on this one.  Let 
me know if you need my help
---------------------- Forwarded by Janet H Moore/HOU/ECT on 12/03/99 10:28 
AM ---------------------------


"Keller, John K." <JKKeller@vssp.com> on 12/03/99 09:52:04 AM
To: Janet H Moore/HOU/ECT@ECT
cc:  
Subject: 



I have just learned of another lawsuit involving CGAS.  This had been
handled by Jud Scheaf and had been dormant for a long time, which is why
neither I nor anyone at the company knew about it.

This is somewhat confusing, so let me try to explain.  The style is
Kilbarger Construction vs Eastland Energy Group, et al.  In the Court of
Common Pleas of Muskingum County, Ohio  Case No. CH96-0311.

CGAS had a lease in Muskingum County.  Eastland Energy had a lease on an
adjoining tract.  Eastland approached CGAS about going together to drill a
well on a unit formed by the two leases.  CGAS agreed.  Eastland was
designated operator.  Eastland hired Kilbarger as the drilling contractor.
Kilbarger drilled the well and it was dry.  Eastland thought Kilbarger
negligently drilled the well, so Eastland only paid Kilbarger half the
drilling cost.  Kilbarger filed a mechanics lien and filed suit against
Eastland for the other half of the drilling costs (approximately $30,000)
and also joined CGAS because of the mechanics lien.  Kilbarger was not
seeking any monetary recovery from CGAS, and the lien is meaningless since
CGAS has since released its lease.  Thus, we have no pending claims from
Kilbarger.

However, in the same case Eastland and CGAS have a claim pending.  During
the drilling of the well, some of the contractors would not work for
Eastland since they did not know Eastland - a new, small producer.  Those
contractors therefore did the work on the well for CGAS, billed CGAS, CGAS
paid those contractors, and CGAS then invoiced Eastland.  Eastland did not
pay and therefore CGAS has a claim in this suit against Eastland for
$7,139.69.  No monetary claim has been made by Eastland against CGAS.

I just learned of this case and have taken over this file from Jud Scheaf.
There is a settlement conference scheduled for December 9 and this case is
set for trial on December 16.  I am hopeful this will be resolved before
trial.  If there are questions, please call.