BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE APPLICATION OF )

ROBERT L. BAYLESS, PRODUCER LLC )

TO SPACE CERTAIN LANDS LOCATED IN ) CAUSE NO. 517

LAS ANIMAS COUNTY, COLORADO FOR THE )

PRODUCTION OF GAS AND ASSOCIATED )

HYDROCARBONS FROM THE VERMEJO COAL ) DOCKET NO. ___

FORMATION AND FOR AN ORDER POOLING )

ALL INTERESTS IN THE SPACING UNITS )

VERIFIED APPLICATION

COMES NOW, the Applicant, Robert L. Bayless, Producer LLC, by and through its attorneys, Poulson, Odell & Peterson, LLC, and makes application to the Oil and Gas Conservation Commission of the State of Colorado for an order establishing drilling and spacing units for the production of gas and associated hydrocarbons from the Vermejo Coal Formation underlying certain lands located in Las Animas County, Colorado and for an order pooling all interests in said drilling and spacing units.

The lands which are the subject of this Application are described as follows:

UNIT I

Township 34 South, Range 65 West, 6th P.M.

Section 7: NW/4 (approximate)

containing 160.00 acres, more or less

UNIT II

Township 34 South, Range 66 West, 6th P.M.

Section 1: SE/4 (approximate)

containing 160.00 acres, more or less

UNIT III

Township 34 South, Range 66 West, 6th P.M.

Section 12: NE/4 (approximate)

containing 160.00 acres, more or less

Applicant is the owner of oil and gas leasehold interests within the area described above. Said interest was acquired by the Applicant by virtue of an Oil and Gas Lease from the United States of America (COC-65103) dated effective September 1, 2001. Said lease encompasses portions of the above-described Units.

The following described wells have been drilled upon the subject lands and completed as productive of gas and associated hydrocarbons from the Vermejo Coal Formation:

UNIT I

Roadrunner #12-7 SW/4 NW/4 Section 7-34S-65W

Gladiator (a/k/a

Ernest) #21-7 NE/4 NW/4 Section 7-34S-65W

UNIT II

Bobcat #33-1 NW/4 SE/4 Section 1-34S-66W

Bullsnake #34-1 SW/4 SE/4 Section 1-34S-66W

UNIT III

Doe #42-12 SE/4 NE/4 Section 12-34S-66W

Evergreen Operating Corporation is the operator of the wells described above.

III

Geological and engineering evidence indicates that the wells heretofore drilled and producing upon the lands described above will adequately and efficiently drain all recoverable gas and associated hydrocarbons from the Vermejo Coal Formation underlying Units I, II and III above and that any additional drilling upon lands encompassed within the lease acquired by Applicant from the United States would constitute the drilling of unnecessary wells and result in waste.

Applicant requests that the Commission establish three drilling and spacing units of approximately 160 acres in size for the production of gas and associated hydrocarbons from the Vermejo Coal Formation, identified as follows:

UNIT I

Township 34 South, Range 65 West, 6th P.M.

Section 7: NW/4 (approximate)

containing 160.00 acres, more or less

UNIT II

Township 34 South, Range 66 West, 6th P.M.

Section 1: SE/4 (approximate)

containing 160.00 acres, more or less

UNIT III

Township 34 South, Range 66 West, 6th P.M.

Section 12: NE/4 (approximate)

containing 160.00 acres, more or less

Applicant further requests that the wells previously drilled and producing upon the three drilling and spacing units as more particularly identified above be designated as the permitted wells for production of gas and associated hydrocarbons from the Vermejo Coal Formation from each of said drilling and spacing units.

At the time of this Application, the Applicant has been unable to reach agreement with the Operator of the wells located upon the proposed drilling and spacing units with respect to participation in said wells. Applicant requests that the Commission enter an order pursuant to C.R.S. §34-60-116(6) pooling all interests in the Vermejo Coal Formation underlying each of said proposed drilling and spacing units. Applicant requests that the order be made after notice and hearing and upon such terms and conditions that are just and reasonable, and that afford to the owner of each unit in the drilling and spacing units the opportunity to recover or receive, without unnecessary expense, its just and equitable share of oil, gas and associated hydrocarbons produced therefrom.

The names and addresses of all owners and interested parties within the proposed drilling and spacing units specified above as the same are defined by the rules of this Commission are designated on Exhibit "A" attached hereto.

WHEREFORE, in order to prevent waste and protect the correlative rights of the Applicant, the Applicant respectfully requests that this matter be set for hearing by the Commission; that notice thereof be given as required by law; and that upon such hearing this Commission issue its order establishing three drilling and spacing units of approximately 160 acres in size for the production of gas and associated hydrocarbons from the Vermejo Coal Formation, said drilling and spacing units being described as follows:

UNIT I

Township 34 South, Range 65 West, 6th P.M.

Section 7: NW/4 (approximate)

containing 160.00 acres, more or less

UNIT II

Township 34 South, Range 66 West, 6th P.M.

Section 1: SE/4 (approximate)

containing 160.00 acres, more or less

UNIT III

Township 34 South, Range 66 West, 6th P.M.

Section 12: NE/4 (approximate)

containing 160.00 acres, more or less

Applicant further requests the Commission enter an order pooling all interests in the gas and associated hydrocarbons producing from the Vermejo Coal Formation underlying each of the aforesaid proposed drilling and spacing units and that such pooling be made pursuant to C.R.S. §34-60-116(6) and contain such terms and conditions that are just and reasonable and that afford the owner of each unit in said drilling and spacing units the opportunity to recover or receive, without unnecessary expense, its just and equitable share of gas and associated hydrocarbons produced.

Applicant further requests that the Commission in its order grant such other relief as the Commission may find to be necessary or desirable in the cause.

DATED this 18th day of November, 2002.

Respectfully submitted,

ROBERT L. BAYLESS, PRODUCER LLC

By:________________________________

William G. Odell, Esq.

Poulson, Odell & Peterson, LLC

1775 Sherman Street, Suite 1400

Denver, Colorado 80203

(303) 861-4400

Applicant's Address:

Robert L. Bayless, Producer LLC

621 Seventeenth Street, Suite 1640

Denver, Colorado 80294

(303) 296-9900

J:\Odell\Bayless\Oil&Gas\VerifiedApplication_Cause.wpd

VERIFICATION

STATE OF COLORADO )

) ss.

COUNTY OF DENVER )

Robert L. Bayless, Jr. as Executive Manager of Robert L. Bayless, Producer LLC, upon oath, deposes and says that he has read the foregoing Verified Application before the Oil and Gas Conservation Commission of the State of Colorado, and states that the matters contained therein are true to the best of his knowledge and belief.

___________________________________

Name: Robert L. Bayless, Jr.

Title: Executive Manager

Subscribed to and sworn to before me this 18th day of November, 2002 by Robert L. Bayless, Jr. as Executive Manager of Robert L. Bayless, Producer LLC.

My Commission expires: ___________________________________

August 1, 2004 Notary Public

Patrese J. Taulli