BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES #9; ) CAUSE NO. 1V

AND REGULATIONS OF THE COLORADO OIL AND GAS #9; )

CONSERVATION COMMISSION BY ENCANA OIL & GAS (USA) INC., ) DOCKET NO. 0410-OV-33

GARFIELD COUNTY, COLORADO #9; )

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

On March 3, 2002, a Colorado Oil and Gas Conservation Commission ("COGCC") Application for Permit-to-Drill ("APD"), Form 2, was approved for AEC Oil & Gas (USA) to drill the Shideler # 32-4C1 (H31) ("Well") located in the SE¼ NE¼ of Section 31, Township 7 South, Range 92 West, 6th P.M. This APD expired on March 10, 2003.

On November 24, 2003, a Sundry Notice, Form 4, was submitted by EnCana Oil & Gas (USA) Inc ("EnCana"), successor operator to AEC Oil & Gas (USA), to change the well name to the Shideler # 31-1 (H31) and to move the well location. The Form 4 was returned without approval and stated the name change had been made to the Well.

On December 11, 2003 a new APD was submitted for the Well. This APD was approved on December 23, 2003. On January 9, 2004, a Sundry Notice, Form 4, was submitted by EnCana stating the Well had been spudded on December 18, 2003 which was five (5) days prior to the approval of the APD. On July 1, 2003, a Drilling Completion Report, Form 5, a Completed Interval Report, Form 5A, a Certification of Clearance, Form 10 and the Well logs were submitted to the COGCC. The Form 5 stated the Well had been spudded on December 18, 2003.

On July 20, 2004, a Notice of Alleged Violation ("NOAV") was issued to EnCana for violation of Rule 303.a.1., for not obtaining the Director’s approval before commencement of operations with heavy equipment, Rule 308A., for not submitting the Drilling Completion Report, Form 5 within thirty (30) days of setting the production casing, Rule 308B., for not submitting the Completed Interval Report, Form 5A within thirty (30) days of completing a formation, and Rule 312., for not submitting a Certification of Clearance, Form 10 within thirty (30) days of initial sales of oil or gas. The NOAV required EnCana to submit a letter detailing the reasons for spudding the well prior to permit approval and why the three (3) forms were delinquent. The abatement date for the NOAV was August 3, 2004.

On August 3, 2004, COGCC staff received from EnCana a letter in response to the NOAV. The letter explained the reasons for spudding the Well prior to APD approval and why the three (3) forms were delinquent.

For spudding the Well prior to permit approval, and failure to submit Forms 5, 5A and 10 in a timely manner for the Shideler # 31-1 (H31) Well, EnCana should be found in violation of Rule 303.a.1., for not obtaining the Director’s approval before commencement of operations with heavy equipment, Rule 308A., for not submitting the Drilling Completion Report, Form 5 within thirty (30) days of setting the production casing, Rule 308B., for not submitting the Completed Interval Report, Form 5A, within thirty (30) days of completing a formation, and Rule 312., for not submitting a Certification of Clearance, Form 10 within thirty (30) days of after initial sales of oil or gas. EnCana should also be found in violation of 317.c. for not posting the APD at the rig.

A monetary penalty of Five Thousand dollars ($5,000) should be assessed against EnCana, in accordance with Rule 523.d., for violation of Rule 303.a. A monetary penalty of Five Thousand dollars ($5,000) should be assessed against EnCana, in accordance with Rule 523.d., for violation of Rule 308A. A monetary penalty of Five Thousand dollars ($5,000) should be assessed against EnCana, in accordance with Rule 523.d., for violation of Rule 303B. A monetary penalty of Five Thousand dollars ($5,000) should be assessed against EnCana, in accordance with Rule 523.d., for violation of Rule 312. A monetary penalty of Five Thousand dollars ($5,000) should be assessed against EnCana, in accordance with Rule 523.d., for violation of Rule 317.c. Aggravating factors in determining the fine recommendation under Rule 523.d.(1) are the violation was reckless and Rule 523.d.(6) the violation involved recidivism. EnCana should be fined a total of Twenty Five Thousand dollars ($25,000) for the five (5) violations.

NOTICE IS HEREBY GIVEN, that the Oil and Gas Conservation Commission of the State of Colorado, pursuant to the above, has scheduled the above-entitled matter for hearing on:

Date: Monday, October 25, 2004

1120 Lincoln Street

Denver, CO 80203

In accordance with the Americans with Disabilities Act, if any party requires special accommodations as a result of a disability for this hearing, please contact Mary Werth at (303) 894-2100 ext. 113, prior to the hearing and arrangements will be made.

Pursuant to said hearing in the above-entitled matter at the time and place aforesaid, or at any adjourned meeting, the Commission will enter such orders as it deems appropriate to protect the health, safety and welfare of the public and to prevent the waste of oil and gas, either or both, in the operations of said field, and to carry out the purposes of the statute.

In accordance with Rule 509., any interested party desiring to protest the granting of the application or to intervene on the application should file with the Commission a written protest or intervention no later than October 8, 2004, briefly stating the basis of the protest or intervention. Such interested party shall, at the same time, serve a copy of the protest or intervention to the person filing the application. An original and nine (9) copies shall be filed with the Commission (Rule 503.f.). Anyone who files a protest or intervention must be available to participate in a prehearing conference during the week of October 11, 2004. Pursuant to Rule 503.e., if a party who has received notice under Rule 503.b. wishes to receive further pleadings in the above-referenced matter, that party must file a protest or intervention in accordance with these rules.

IN THE NAME OF THE STATE OF COLORADO

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By______________________________________

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

September 30, 2004