US Natural Gas Corp is an independent oil and natural gas company engaged in exploration, development and production activities in the Appalachian Basin, particularly in South Central Kentucky and Wayne County, West Virginia.

The Company through its subsidiaries operates 115 natural gas wells, 33 oil wells, and maintains a leasehold base of approximately 17,000 acres in the Appalachian Basin. The Company’s business activities focus primarily on exploration and drilling, as well as the acquisition of proven developed and underdeveloped properties and on the enhancement and development of these properties.

The Appalachian Basin is the most mature oil and gas producing region in the United States, having established the first oil production in 1860. Because it is located near the high energy-consuming regions of the mid-Atlantic and northeastern United States, Appalachian producers have historically sold their natural gas at a premium to the benchmark price for natural gas on the NYMEX. In addition, most of our natural gas production has a high Btu content, resulting in an additional premium to NYMEX natural gas prices.

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.

Shallow reserves in the Appalachian Basin are typically in blanket formations and have a high degree of step-out development success. This means that 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 generally produce little or no water, contributing to a low cost of operation. In addition, most wells produce dry natural gas, which does not require processing.