Contract Tasks: Accomplishments are presented for Tasks 1 and 3. Task 1 - Hydraulic/Natural Fracture Interaction. Task 1 milestones for this reporting period were: (1B) material characterization and selection, (1D) completion of initial test series, and (1E) determination of additional tests needed. Milestone 1B was met during this quarter. The material whose properties scaled best to those of Devonian shale was found to be hydrostone with a water to plaster ratio of 33.3/100. Milestone 1D was only partially met. The four endmembers of the test matrix were completed, but the five tests at intermediate conditions remain to be run. This delay is due primarily to the untimely loss of a set of flatjacks. This loss was anticipated at some time during the project. Unfortunately it happened right before a quarterly report was due. Milestone 1E can be completed immediately after milestone 1D. Task 3 - Natural Fracture Flow Characteristics. Milestone 3A was also met during this reporting period. Over 150 feet of core from various parts of the Appalachian Basin have been logged and shipped to the rock mechanics lab to begin testing. 1 reference, 3 tables.