BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF RECLAMATION AND ) CAUSE NO. 1

RESTORATION OF THE RULES AND REGULATIONS ) ORDER NO. 1-35 (Formerly 1-145)

FOR OIL AND GAS OPERATIONS IN )

WELD COUNTY, COLORADO )

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 17, 1993 at 8:30 a.m., in the 2nd Floor Auditorium, Department of Transportation, 4201 East Arkansas Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Delores Martindale for an order to raise the Surface Bond requirement and to establish a Reclamation Bond for three wells to be drilled by Elk Exploration, Inc. in the NE1/4 of Section 36, Township 4 North, Range 67 West, 6th P.M.

FINDINGS

The Commission finds as follows:

1. Delores Martindale 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 15, 1993, the Commission adopted the D-J Basin Policy for Cause Nos. 499, 232, 407, 250, 496 and 493, which among other things, established guidelines for requiring the posting of Damage Bonds and Reclamation Bonds for wells drilled or to be drilled in lands covered by the above-listed Cause Numbers.

5. On March 8, 1993, Delores Martindale, owner of surface lands in the NE1/4 of Section 36, Township 4 North, Range 67 West, 6th P.M., by her attorney, filed with the Commission, an application for an order to be issued requiring that Elk Exploration, Inc. raise the bond amounts for the Surface Damage Bonds, as the damage that will be incurred as a result of oil and gas operations will exceed the amount of the blanket Surface Bond posted by Elk Exploration, Inc. in accordance with Rule 304.b.; and that Elk Exploration, Inc. be required to file a Reclamation Bond as established by the D-J Basin Policy for Cause Nos. 499, 232, 407, 250, 496 and 493, conditioned that the lands affected by operations associated with the drilling and operating of such well(s) shall be stabilized and reclaimed in accordance with the Commission's rules.

6. Testimony was presented by the applicant at the April 19, 1993 hearing and the matter was continued to the May 17, 1993 hearing. Testimony presented by the applicant and by Elk Exploration, Inc. at the time of hearing on May 17 and 18, 1993, described the proposed surface agreement, crop cost and crop loss analyses, estimates of repair for irrigation systems and road maintenance, and soil conditioning.

7. Based on the facts stated in the application, and on the testimony presented, the Commission should enter an order requiring Elk Exploration, Inc. to post an additional surface bond in the amount of $15,250.00, for three wells to be drilled in NE1/4 of Section 36, Township 4 North, Range 67 West, 6th P.M.

8. Claims must be made on the bond no later than twelve months from the date of completion of each well, as established in Rule 123 of the Rules and Regulations of the Commission.

9. Upon expiration of the twelve month period, the Commission will release the additional Surface Bond and the wells will revert to coverage under the blanket Surface Bond posted by Elk Exploration, Inc., unless a surface agreement for each well is provided.

IT IS FURTHER ORDERED, that claims must be made on the bond no later than twelve months from the date of completion of the last well, as established in Rule 123 of the Rules and Regulations of the Commission.

IT IS FURTHER ORDERED, that upon expiration of the twelve month period, the Commission will release the additional Surface Bond and the wells will revert to coverage under the blanket Surface Bond posted by Elk Exploration, Inc., unless a surface agreement for each well is provided.

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.

ENTERED this _____________ day of ___________________, 1993, as of May 18, 1993.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

BY ____________________________________

Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado 80203

June 21, 1993