BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE APPLICATION )

OF CFG ENERGY, INC. FOR AN )

ORDER POOLING CERTAIN INTERESTS ) CAUSE NO. _______

FOR THE PRODUCTION OF OIL AND GAS )

FROM THE CODELL AND NIOBRARA ) ORDER NO. _______

FORMATIONS UNDERLYING CERTAIN )

LANDS IN WELD COUNTY, COLORADO )

APPLICATION

The Applicant, CFG Energy, Inc. ("CFG"), by and through its undersigned counsel, respectfully petitions the Oil and Gas Conservation Commission of the State of Colorado as follows:

BACKGROUND

1. CFG owns or controls oil and gas leasehold interests in the NW4 of Section 3, Township 4 North, Range 63 West, 6th P.M., Weld County, Colorado.

2. The Oil and Gas Conservation Commission has not established spacing for production from the Dakota or J-Sand formations underlying the NW4 of said Section 3.

3. CFG has caused the NHF-Laura #5-3 oil and gas well to be drilled to the Dakota formation and casing has been run and set through said Dakota formation. The NHF-Laura #5-3 well is the only existing well in the NW4. According to the records of the COGCC, Sovereign Energy LLC operates the Croissant #1 well in the SW4 of said Section 3, and the Ronald #1-B well in the SE4 has been plugged and abandoned. No other wells have been drilled in said Section 3.

4. United States Exploration, Inc. (“USX”) and Sovereign Energy LLP (“Sovereign”) are the owners of all leasehold rights in said NW4 not owned by CFG. CFG has heretofore attempted to obtain either such leasehold rights, or consent to the drilling of the well from USX and Sovereign, but has been not yet been able to obtain such agreements on a voluntary basis. USX and Sovereign have not yet agreed to farm out their interests to CFG nor participate in the drilling of the well.

5. CFG invited both such parties to participate in the drilling of the NHF-Laura #5-3 well, and sent, at least 30 days prior to the spudding of the NHF-Laura #5-3 well, an A.F.E.

setting forth the estimated costs of such well. Neither party replied to the A.F.E. despite requests to do so because a rig was then available.

6. An Order of the Commission pooling all interests in the NW4 is necessary to afford each owner of interests in the NW4 the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying the NW4.

7. The granting of such an Order would not be prejudicial to the owners in the N2NE4 and would protect correlative rights.

8. The granting of such an Order would prevent or assist in preventing waste and will ensure that the pool as a whole may be efficiently and economically developed.

SPACING AND INVOLUNTARY POOLING REQUEST

9. Pursuant to Colo. Rev. Stat. Section 34-60-116, CFG requests that the Commission, after notice and hearing, enter an order:

(a) establishing the NW4 of said Section 3 as a unit for the production of oil and gas from the Dakota, J-Sand, Codell and Niobrara formations underlying said NW4; and

(b) pooling all interests in the NW4 of Section 3, Township 4 North, Range 63 West for the development and operation of the Dakota, J-Sand, Codell and Niobrara formations underlying such unit and the production of oil and gas from the same.

10. CFG further requests that such pooling order

(a) be upon terms and conditions that are just and reasonable and that afford to the owner of each tract or interest in the NW4 the opportunity to recover or receive, without unnecessary expense, his just and equitable share of oil and gas;

(b) provide that production obtained from said drilling and spacing unit, including additional wells if drilled on same, be allocated to each owner therein on the basis of the proportion that the number of mineral acres held by each owner in such drilling unit bears to the total number of mineral acres within the drilling unit;

(c) provide for the drilling of additional well at locations which conform to Rule 318A, the Greater Wattenberg Special Well Location Rule; and

(d) provide that CFG be allowed to recover from any non-consenting owner's share of production the penalty costs as provided in Colo. Rev. Stat. Section 34-60-116 (7).

11. The names and addresses of all leasehold owners in the said NW4 are set forth on Exhibit "A" attached hereto and made a part hereof.

WHEREFORE, CFG prays that this matter be set for hearing on September 23, 2002, that Notice of said hearing be given as required by law, and that following such hearing the

Commission enter an Order establishing the NW4 as a unit for production from the Dakota, J- Sand, Codell and Niobrara formations underlying said NW4 and pooling all interests in the NW4 of said Section 3 for the development and operation of all said formations underlying such unit and the production of oil and gas from same. CFG further requests that it be allowed to recover from any non-consenting owner's share of production the penalty costs as provided in Colo. Rev. Stat. Section 34-60-116 (7).

Dated this ____ day of August, 2002.

Respectfully submitted,

LOHF SHAIMAN JACOBS & HYMAN P.C.

By_____________________________

J. Michael Morgan #7279

David G. Ebner, #7743

950 So. Cherry St., Suite 900

Denver, Colorado 80246

Telephone: (303) 753-9000

Facsimile: (303) 753-9997

Applicant’s Address;

CFG Energy, Inc.

1846 Frontier Road

Greeley, CO 80634

VERIFICATION

STATE OF COLORADO )

) ss

CITY & COUNTY OF DENVER )

The undersigned, of lawful age, having been first sworn upon his oath, deposes and states that:

1. He is an attorney who maintains his office at 950 South Cherry Street, Suite 900, Denver, Colorado 80246.

2. He is an attorney for the Applicant, CFG Energy, Inc., whose address is 1846 Frontier Road, Greeley, CO 80634.

3. He has read the within application, is familiar with the facts set forth therein, and states that said facts are true and correct to the best of his knowledge and belief.

Further Affiant sayeth not.

______________________________

J. Michael Morgan

Subscribed and sworn to before me this 7^th day of August, 2002.

Witness my and hand official seal.

My commission expires: ______________________________

________________________ Notary Public

The undersigned, of lawful age, having been first sworn upon his oath, deposes and states that:

1. He is a consulting petroleum landman who maintains his office at 1223 28th Avenue, Suite 2, Greeley, Colorado 80631.

2. He is an agent for the Applicant, CFG Oil Company, whose address is 300 E. 16th Street, Suite 207, Greeley, CO 80631.

3. He has read the within application, is familiar with the facts set forth therein, and states that said facts are true and correct to the best of his knowledge and belief.

I hereby certify that on this 7^th day of August, 2002 I mailed a true and correct copy of the Application, by placing the same in the U.S. Mail, postage prepaid, to the following: