112-196

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMOGATION AND

ESTABLISHMENT OF FIELD RULES TO GOVERN

OPERATIONS IN THE IGNACIO-BLANCO FIELD,

LA PLATA COUNTY, COLORADO

)

CAUSE NO. 112

ORDER NO. 112-196

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on November 27, 2006, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado for an order to pool all nonconsenting interests in a 320-acre drilling and spacing unit consisting of the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M. for the development and operation of the Mesaverde Formation.

FINDINGS

The Commission finds as follows.

1. Williams Production Company LLC (“WPC”), as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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 November 9, 1959, the Commission entered Order No. 112-6, which among other things, established 320-acre drilling and spacing units for the production of gas from the Mesaverde Formation for certain lands, including the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M.

5. On July 16, 1979, the Commission issued Order No. 112-46, which amended Order No. 112-6 and allowed a second well to be drilled on each 320-acre drilling and spacing unit for the production of gas from the Mesaverde Formation, including the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M.

6. On October 5, 2006, WPC, by its attorney, filed with the Commission a verified application for an order to pool all nonconsenting interests in the 320-acre drilling and spacing unit consisting of the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M., for the development and operation of the Mesaverde Formation. WPC plans to drill an additional well, the Bondad 33-9 #054 MV, in the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M.

7. On November 13, 2006, WPC filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the application.

8. Testimony and exhibits submitted in support of the application showed that WPC holds a 33.546530% working interest in the affected property.

9. Testimony and exhibits submitted in support of the application showed that offers to participate were made by WPC to the mineral owners or the leasehold owners for the applicable properties. Additional testimony indicated that the two leasehold interest owners who declined or failed to respond to the offers to participate are the William Waldeck Trust and James C. Mitchell.

10. Testimony and exhibits submitted in support of the application showed that offers to participate were sent to the two nonconsenting owners. Additional testimony submitted showed that the offers were fair and reasonable and similar to the offers prevailing in the area.

11. The testimony and exhibits submitted in support of the application indicate that WPC has complied with the requirements of Rule 530.a. and §34-60-116(7), C.R.S.

12. No protests to the application have been filed with the Commission or the Applicant.

13. An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive their just and equitable share of the oil and or gas from the common source of supply underlying said drilling unit.

14. Williams Production Company LLC agreed to be bound by oral order of the Commission.

15. Based on the facts stated in the verified application, having received no protests and based on the Hearing Officer’s review of the application under Rule 511.b., the Commission should enter an order pooling all nonconsenting interests in the 320-acre drilling and spacing unit consisting of the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M., for the development and operation of the production of gas from the Mesaverde Formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that 1. Pursuant to the provisions of §34-60-116, C.R.S., all of the nonconsenting interests in the 320-acre drilling and spacing unit consisting of the W½ of Section 31, Township 33 North, Range 9 West, N.M.P.M., are hereby pooled for the development and operation of the production of gas from the Mesaverde Formation.

2. The production obtained from each drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within each drilling unit; each owner of an interest in each drilling unit shall be entitled to receive his/her share of the production of the well located on each drilling unit applicable to his interest in each drilling unit.

3. The William Waldeck Trust and James C. Mitchell are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the wells to be drilled and be subject to the penalties as provided for by §34-60-116(7),C.R.S.

4. The operator of any well drilled on the above-described unit shall furnish all nonconsenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.

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 Procedures Act, the Commission considers this order to be final agency action for purposes of judicial review within thirty 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 December, 2006, as of November 27, 2006.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By___________________________________

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, CO 80203

December 11, 2006