BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on July 8, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order for an exception location for the Jaques 33-8-23 #3 Well with the bottomhole location of 1,836.2 feet from the south line (“FSL”) and 647.2 feet from the east line (“FEL”) in the SE¼ NE¼ of Section 23, Township 33 North, Range 8 West, 6^th N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams.

FINDINGS

The Commission finds as follows:

1.    Samson Resources Company (“Samson”), 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 July 11, 2000, the Commission entered Order No. 112-157, which among other things, approved an optional second well for 320-acre drilling and spacing units for certain lands, including Section 23, Township 33 North, Range 8 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams, with the permitted well to be located in any undrilled quarter section but no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line.

5.    On October 31, 2005, the Commission entered Order No. 112-181, which among other things, amended Order No. 112-157 to allow a total of up to four wells to be optionally drilled in the 320-acre drilling and spacing units previously established for certain lands, including Section 23, Township 33 North, Range 8 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams, with the permitted well to be located no closer than 660 feet to any outer boundary of the unit with no interior section line setback, utilizing a common or expanded pad with an existing well.

6.    On May 19, 2010, Samson, by its attorneys, filed with the Commission a verified application for an order to allow an exception location for the Jaques 33-8-23 #3 Well (the “Well”) directionally drilled at a surface location of 780 feet FSL and 1,915 feet FEL in the SW¼ SE¼ of Section 23, Township 33 North, Range 8 West, N.M.P.M., with a surveyed bottomhole location of 1,836.2 feet FSL and 647.2 feet FEL of said Section 23, for the production of gas and associated hydrocarbons from the Fruitland coal seams.  Samson seeks an exception to previous Commission orders regarding setbacks established for the affected lands, in that, the Well has a bottomhole location which is 647.2 feet from the unit boundary, rather than the required 660 feet from the unit boundary.  Samson alleges that engineering conditions and other good cause exist which warrant the granting of an exception location for the Well, and that contiguous owners of lands, toward whom the Well is to be located, have not executed waivers for said exception location.

7.    On June 24, 2010, Samson, by its attorneys, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits as is provided for by Rule 511.  Sworn written testimony and exhibits were submitted in support of the application.

8.    Testimony and exhibits submitted in support of the application showed that Samson owns the entire leasehold interest for the S½ of Section 24, Township 33 North, Range 8 West, N.M.P.M., which are the lands immediately adjacent and subject to the encroachment of the Well.  Further testimony demonstrated that Samson directionally drilled the Well at a surface location of 780 feet FSL and 1,915 feet FEL in the SW¼ SE¼ of Section 23, Township 33 North, Range 8 West, N.M.P.M., with a surveyed bottomhole location of 1,836.2 feet FSL and 647.2 feet FEL of said Section 23, for completion in the Fruitland coal seams.  Additional testimony showed that Samson provided waiver requests to the interested parties and did not receive any objections or protests to the encroachment of the Well’s bottomhole location, and that to prevent waste, while protecting the correlative rights of all affected owners in the area of the bottomhole location, the exception location of the Well should be permitted.

9.    The above-referenced testimony and exhibits showed that the granting of the application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of oil/gas, and will not violate correlative rights.

10.  Samson agreed to be bound by oral order of this Commission.

11.  Based on the facts stated in the verified application, having received no protests, and based on the Hearing Officer review of the application under Rule 511., the Commission should enter an order for an exception location for the Jaques 33-8-23 #3 Well with the bottomhole location of 1,836.2 feet FSL and 647.2 feet FEL in the NE¼ SE¼ of Section 23, Township 33 North, Range 8 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams.

ORDER

NOW, THEREFORE IT IS ORDERED, that the bottomhole location of 1,836.2 feet FSL and 647.2 feet FEL in the NE¼ SE¼ of Section 23, Township 33 North, Range 8 West, N.M.P.M. for the Jaques 33-8-23 #3 Well is hereby approved as an exception location to Order No. 112-181, for the production of gas and associated hydrocarbons from the Fruitland coal seams.

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 August, 2010, as of July 8, 2010.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

August 2, 2010