BEFORE THE OIL & GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND  ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE MAMM CREEK FIELD, GARFIELD COUNTY, COLORADO

)            CAUSE NO. 191

)          

)            ORDER NO. 191-51

)           

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on July 23, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to pool all nonconsenting interests in the 223.578-acre drilling and spacing unit located in Section 18, Township 6 South, Range 92 West, 6th P.M., for the development and operation of the Williams Fork and Iles Formations.

 

FINDINGS

The Commission finds as follows:

1.         Antero Resources Piceance Corporation ("Antero"), 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 November 27, 2006, the Commission issued Order No. 191-40, which among other things, established a 223.578-acre drilling and spacing unit in the N½ of Section 18, Township 6 South, Range 92 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and the Iles Formations of the Mesaverde Group.

 

5.         On May 18, 2007, Antero, by its attorney, filed with the Commission a verified application for an order to pool all nonconsenting interests in the 223.578-acre drilling and spacing unit located in Section 18, Township 6 South, Range 92 West, 6th P.M., for the development and operation of the Williams Fork and Iles Formations, described as follows:

 

A parcel of land in the N½ of Section 18, Township 6 South, Range 92 West, 6th P.M. beginning 445.03 feet south of the NE¼ NE¼ of said section; thence south 00º 34’ 00” East a distance of 362.60 feet; thence south 519.00 feet; thence south 1320.00 feet; thence west 4260.91 feet; thence North 00º 04’ 16” west a distance of 2327.20 feet; thence North 70º 50’ 00” East a distance of 471.60 feet; thence South 89º30’00” East a distance of 300.00; thence South 76º 42’ 00” east a distance of 1128.10 feet; thence South 89º 30’ 00” east a distance of 2085.20 feet; thence South 89º 59’ 30” east a distance of 181.30 feet; thence south 89º 58’ 00” east a distance of 150.5 feet to the point of beginning

 

The applicant plans to directionally drill the Dixon A-4 Well in said Section 18. Offers to lease or to participate have been made to the mineral owners or the leasehold owners but as of the date the application was filed, not all of these attempts have been successful. 

 

6.         On July 3, 2007, Antero, 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.  Sworn written testimony and five (5) exhibits were submitted in support of the application.

 

7.         Testimony and exhibits submitted in support of the application showed that Antero proposes to drill the Dixon A-4 Well to the Williams Fork and the Iles Formations within the drilling and spacing unit described above with a surface location 1,250 feet FNL and 2,400 feet FWL and a bottomhole location 1,400 feet FNL and 525 feet FWL in Section 18. 

8.         Testimony and exhibits submitted in support of the application showed a list of all consenting and nonconsenting parties, indicating that Antero has approximately 80.74% of the unit leased and that the non-consenting owners located within this unit comprise approximately 16.68% of the well which are subject to the force pooling application.  Approximately 2.58% of the spacing unit are unleased owners and have not been given proper notice; therefore such interests are not subject to this order for pooling. 

9.         Testimony and exhibits submitted in support of the application showed that offers to lease or to participate were sent to nonconsenting owners.  Additional testimony submitted showed that the offers and the Authorizations for Expenditures were fair and reasonable, and similar to those prevailing in the area.  Further testimony submitted showed the offers were sent via certified mail and all were received at least thirty (30) days prior to the July 23, 2007 hearing date, as evidenced by return receipt cards.

10.       The testimony and exhibits submitted indicate that Antero has complied with the requirements of Rule 530.a. and §34-60-116(7)(d), C.R.S.

11.       Antero Resources Piceance Corporation agreed to be bound by oral order of the Commission.

                        12.       On July 17, 2007, Grant Brothers Ranch, LLC filed with the Commission a written statement under Rule 510. requesting that the Commission deny Antero’s application to involuntarily pool Grant Brothers’ unleased mineral interests.  

 

13.       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.b., the Commission should enter an order pooling all nonconsenting interests in the approximate 223.578-acre drilling and spacing unit lying in the N½ of Section 18, Township 6 South, Range 92 West, 6th P.M., for the development and operation of the Williams Fork and Iles Formations.                       

ORDER

NOW, THEREFORE IT IS ORDERED that, 1.      Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all of the nonconsenting interests in the 223.578-acre drilling and spacing unit located in Section 18, Township 6 South, Range 92 West, 6th P.M., are hereby pooled for the development and operation of the Williams Fork and Iles Formations, described as follows:

A parcel of land in the N½ of Section 18, Township 6 South, Range 92 West, 6th P.M. beginning 445.03 feet south of the NE¼ NE¼ of said section; thence south 00º 34’ 00” East a distance of 362.60 feet; thence south 519.00 feet; thence south 1320.00 feet; thence west 4260.91 feet; thence North 00º 04’ 16” west a distance of 2327.20 feet; thence North 70º 50’ 00” East a distance of 471.60 feet; thence South 89º30’00” East a distance of 300.00; thence South 76º 42’ 00” east a distance of 1128.10 feet; thence South 89º 30’ 00” east a distance of 2085.20 feet; thence South 89º 59’ 30” east a distance of 181.30 feet; thence south 89º 58’ 00” east a distance of 150.5 feet to the point of beginning

2.         The production obtained from the 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.         Said owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the well(s) and be subject to the penalties as provided for by §34-60-116 (7), C.R.S.

4.         Any nonconsenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his/her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116 (7)(b), C.R.S. as amended. After recovery of such costs, the nonconsenting mineral owner shall then own his/her proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his/her proportionate share of further costs incurred in connection with the well as if he/she had originally agreed to the drilling.

5.         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 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, 2007, as of July 23, 2007.

OIL AND GAS CONSERVATION COMMISSION

  OF THE STATE OF COLORADO

By                                                                               

                Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

August 15, 2007