Carbon Appalachian Co. LLC

Carbon Natural Gas Co. finalized the limited liability company agreement of Carbon Appalachia, which received initial equity. It was formed by Carbon and two institutional investors to acquire producing assets in Southern Appalachia. Carbon Appalachia completed the acquisition of natural gas producing properties in Tennessee for about $20 million. It will also fund as part of the acquisition an inventory of field development and enhancement projects and general working capital. Pursuant to the LLC agreement, Carbon holds a 2% equity interest in Carbon Appalachia and has the ability to earn up to an additional 20% of Carbon Appalachia after certain return thresholds are met. Carbon is the sole manager of Carbon Appalachia.