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 to vacate certain 40-acre drilling and spacing units established in Order No. 139-73, and establish an approximate 59.42-acre drilling and spacing unit consisting of Lots 1 and 2 (a.k.a., the N½ NE¼) of Section 17, Township 7 South, Range 94 West, 6th P.M., and continue to allow the equivalent of one well per 10 acres well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

FINDINGS

The Commission finds as follows:

1.    Williams Production RMT Company (“Williams”), 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 20, 1990, the Commission issued Order No. 139-31, which among other things, established 640-acre drilling and spacing unit for certain lands, including Section 17, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.

5.    On July 1, 1997, the Commission issued Order No. 139-31, which among other things, established a 640-acre drilling and spacing unit for Section 17, Township 7 South, Range 94 West, 6^th P.M., and approved the optional drilling of up to 16 wells for said unit, for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well located no closer than 400 feet from the boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells.

6.    On April 24, 2006 (corrected November 15, 2006), the Commission issued Order No. 139-59, which among other things, allowed one (1) well per 10 acres to be drilled on certain lands, including Section 17, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Iles Formation, with the permitted well to be located no closer than 100 feet from the boundaries of the unit and no closer than 200 feet from any existing Iles Formation well or wells.

7.    On June 5, 2006 (corrected July 26, 2006), the Commission issued Order No. 139-61, which among other things, allowed one (1) well per 10 acres to be drilled on certain lands, including Section 17, Township 7 South, Range 94 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the boundaries of the unit and no closer than 200 feet from any existing Williams Fork Formation well or wells.

8.    On May 10, 2007 the Commission issued Order No. 139-73, which among other things, established 40-acre drilling and spacing units for certain lands, including Section 17, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one (1) well per 10 acres.

9.    On May 19, 2010, Williams, by its attorney, filed with the Commission a verified application to vacate the 40-acre drilling and spacing units previously established under the Order No. 139-73 as it pertains to the below-listed lands, and establish an approximate 59.42-acre drilling and spacing unit for said lands, with the continued approval of the equivalent of one well per 10 acres well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

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

 All future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands should be located downhole anywhere within the application lands but no closer than 100 feet from the unit boundary without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

That, except as previously authorized by order of the Commission, wells to be drilled under this order should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto).  In addition, all wells drilled to the Iles Formation will be drilled only in connection with the drilling of Williams Fork Formation wells.

10.  On June 24, 2010, Williams, by its attorney, 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.

11.  Testimony and exhibits submitted in support of the application showed that Williams owns the entirety of the leasehold interest for the application lands, and that establishing the approximate 59.42-acre drilling and spacing unit will provide for the efficient and economic development of the Williams Fork and Iles Formations while preventing waste.

12.  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.

13.  Williams agreed to be bound by oral order of this Commission.

14.  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 to vacate certain 40-acre drilling and spacing units established in Order No. 139-73, and establish an approximate 59.42-acre drilling and spacing unit consisting of Lots 1 and 2 (a.k.a., the N½ NE¼) of Section 17, Township 7 South, Range 94 West, 6th P.M., and continue to allow the equivalent of one well per 10 acres well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that certain 40-acre drilling and spacing units previously established in Order No. 139-73 as it pertains to the below-listed lands are hereby vacated, and an approximate 59.42-acre drilling and spacing unit is hereby established for the below-listed lands, with the continued approval of the equivalent of one well per 10 acres well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

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

 All future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application lands but no closer than 100 feet from the unit boundary without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

That, except as previously authorized by order of the Commission, wells to be drilled under this order shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto).  In addition, all wells drilled to the Iles Formation shall be drilled only in connection with the drilling of Williams Fork Formation wells.

IT IS FURTHER ORDERED, that by virtue of the previous order wherein the drilling and spacing units previously established for the NW¼ NE¼ and the NE¼ NE¼ of Section 17, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, are vacated subject to establishment of the 59.42-acre drilling and spacing unit for the N½ NE¼ of said Section 17, the S½ NE¼ of said Section 17 hereby reverts to being unspaced lands under Rule 318.a., with the continuing approval of the equivalent of one well per 10 acres well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

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