REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 6, 2000 at 8:30 a.m. at the La Plata County Fair Grounds, Exhibit Hall, 2500 Main Avenue, Durango, Colorado after giving Notice of Hearing as required by law, on the application of Coastal Oil and Gas Corporation for an order to vacate Order No. 311-2 which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Dakota Formation for Section s 11 and 12, Township 4 South, Range 102 West, 6th P.M.

FINDINGS The Commission finds as follows:

1. Coastal Oil and Gas Corporation, as applicant herein is an interested party in the subject matter of the above-referenced hearing.

2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. The Commission has jurisdiction over the subject matter embraced in said notice and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On February 17, 1978, the Commission issued Order No. 311-2 which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Dakota Formation underlying the below-listed lands in the Douglas Creek South Field, designating Well No. 12 South Douglas Creek Govt., located in the SE1/4 NE1/4 of Section 11 and Well No. 12-1 Red Rock Canyon-Superior Fee, located in the SW1/4 NE1/4 of Section 12, both in Tow nship 4 South, Range 102 West, 6th P.M. as the permitted wells for said units:

Township 4 South, Range 102 West, 6th P.M. Sections 11 and 12: All

5. On March 8, 2000, Coastal Oil & Gas Corporation ("Coastal"), by its attorney, filed with the Commission a verified application for an order to allow three (3) additional wells to be completed and produced for gas and associated hydrocarbons from the Dakota Formation for the two 640-acre drilling and spacing units subject to Order No. 311-2, with the additional wells to be located in accordance with Rule 318 of the Colorado Oil and Gas Conservation Com mission Rules and Regulations. In addition, each of the two existing wells in the two units were requested to be designated as one of the permitted wells for the spacing unit in which the well is located.

6. On April 13, 2000 an administrative hearing was held on the March 8, 2000 application at which time testimony was presented by the Applicant that indicated no current Dakota Formation production exists from the lands subject to Order No. 311-2. It was discussed at that time by the Hearing Officer and Coastal that withdrawing the March 8, 2000 application and submitting a new application requesting that Order No. 311-2 be vacated would be the most ap propriate action.

7. On April 27, 2000, Coastal, by its attorney, filed with the Commission a verified application for an order to vacate Order No. 311-2 since no production has occurred from the Dakota Formation in the past twenty (20) years. The Applicant requested the order allow wells to be drilled in accordance with Rule 318 of the Colorado Oil and Gas Conservation Commission Rules and Regulations as to lands outside the contracted South Douglas Creek Federal Unit.

8. That based on the facts stated in the application, having received no protests and having been heard and reviewed by the Hearing Officer who recommends approval, the Commission should enter an order to vacate Order No. 311-2 to allow wells on the lands described in Finding #4 above to be drilled in accordance with Rule 318 of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission.

ORDER

NOW, THEREFORE IT IS ORDERED that Order No. 311-2 is hereby vacated for the below-listed lands and wells shall be drilled in accordance with Rule 318 of the Colorado Oil and Gas Conservation Commission Rules and Regulations for the production of gas and associated hydrocarbons from the Dakota Formation:

Township 4 South, Range 102 West, 6th P.M. Sections 11 and 12: All

IT IS FURTHER ORDERED that the provisions contained in the above order shall become effective forthwith.

IT IS FURTHER ORDERED that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above order.

ENTERED this day of June, 2000, as of June 6, 2000.

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 June 20, 2000 ??

(311#9)