BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                         CAUSE NO. 1

ESTABLISHMENT OF FIELD RULES TO GOVERN                             )

OPERATIONS IN A WILDCAT AREA,                                                      )                         ORDER NO. 1-221

MOFFAT COUNTY, COLORADO                                                             )

                        This cause came on for hearing before the Commission at 10:00 a.m. on June 5, 2006, in the Council Chamber Room of the Ambulance Building, 304 West 3^rd Street, Wray, Colorado, for an order to vacate Order No. 1-220, covering certain lands in Townships 7 and 8 South, Range 94 West, 6^th P.M. as these lands are now included under the Bureau of Land Management ("BLM") rules, regulations and stipulations as part of the federal Sugarloaf Unit.

                        The Commission finds as follows:

                        1. CDX Gas, LLC ("CDX"), 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 pursuant to the Oil and Gas Conservation Act.

                        4. On April 25, 2005, the Commission issued Order No. 1-220, which established an exploratory unit consisting of approximately 1122 acres for the below-listed lands, allowing a horizontal production well system and service well to be produced on the 1122 acre unit with the horizontal production legs to be located no closer than 660 feet from the outer section lines, for production of gas and associated hydrocarbons from the Williams Fork Coal Seam Formation, without regard to the shared section lines between the affected sections:

                                Township 7 North, Range 94 West, 6^th P.M.

                                Section 3: All

                                Section 4: E½ E½

 

                                Township 8 North, Range 94 West, 6^th P.M.

                                Section 33: SE¼

                                Section 34: S½ S½

                        5. On April 17, 2006, CDX, by its attorney, filed with the Commission a verified application to vacate Order No. 1-220, covering the lands described above in Finding No. 1, as these lands are now included under the BLM rules, regulations and stipulations as part of the federal Sugarloaf Unit.

                        6. Testimony and exhibits presented at the administrative hearing showed the certification–determination signed by the BLM, which showed that the unit was approved on June 21, 2005, and the Sugarloaf Unit Operating Agreement–Cover and Signature Page, which showed that CDX is the unit operator and working interest owner.

                        7. Testimony and exhibits presented at the administrative hearing showed the original well plan proposed for the horizontal drilling of the Argo 33-10X Well using the z-pennate drilling pattern when Order No. 1-220 was approved, and the new plan proposed for the horizontal drilling of the Aries 34-12X Well using the pitchfork system. This well is now proposed to be drilled from the southeast to the southwest, re-oriented from the original well.

                        8. Testimony and exhibits presented at the administrative hearing showed original gas in place in the Williams Fork Formation, with reserves of approximately 75 to 80 BCF per section in the application area.

                        9. The above-referenced testimony and exhibits show that the exploratory unit established in Order No. 1-220 is no longer necessary and that vacating the spacing order will allow the lands to be operated under the federal Sugarloaf Unit plan of development.

                        10. CDX Gas, LLC agreed to be bound by an oral order of the Commission.

                        11. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to vacate Order No. 1-220, covering the lands described above in Finding No. 4.

                        NOW, THEREFORE IT IS ORDERED, that Order No. 1-220, is hereby vacated for the below-listed lands, as these lands are now included under the Bureau of Land Management rules, regulations and stipulations as part of the federal Sugarloaf Units:

Section 3: All

Section 4: E½ E½

                                                            Township 8 North, Range 94 West, 6^th P.M.

Section 33: SE¼

Section 34: S½ S½

                        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 orders.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        ENTERED this__________day of June, 2006, as of June 5, 2006.

                                                                        OIL AND GAS CONSERVATION COMMISSION

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 23, 2006