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 May 7, 2009, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to:  (1) vacate the 640-acre drilling and spacing unit established by Order No. 191-4 for Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation; (2) re-establish a 320-acre drilling and spacing unit for the Williams Fork and Iles Formations in the W½ of said Section 24, with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations; and (3) designate the E½ of said Section 24 as unspaced, with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

FINDINGS

The Commission finds as follows:

1.     Bill Barrett Corporation (“BBC”), 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 February 22, 1994, the Commission issued Order No. 191-4, which among other things, established 640-acre drilling and spacing units for certain lands, including Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation, with the permitted well to be located no closer than 990 feet to the boundaries of the unit.

5.     On January 10, 2005, corrected June 8, 2005 and November 5, 2008, the Commission issued Order No. 191-8, which among other things, allowed the equivalent of one well per 10 acres, for certain lands, including the E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated production from the Williams Fork Formation, with the permitted to well to located no closer than 100 feet from the boundary or boundaries of the unit so abutting or cornering the lands and no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation, unless granted an exception from the Oil and Gas Conservation Commission.  Further, said Order No. 191-8, established a 320-acre drilling and spacing unit for the W½ of said Section 24, and allowed the equivalent of one well per 10 acres, 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 to the boundaries of the unit and no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation, unless granted an exception from the Oil and Gas Conservation Commission.

6.     On April 25, 2005, corrected on November 29, 2007 and November 5, 2008, the Commission issued Order No. 191-10, which among other things, allowed the equivalent of one well per 10 acres, for certain lands, including the E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated production from the Iles Formation, with the permitted to well to located no closer than 100 feet from the boundary or boundaries of the unit so abutting or cornering the lands and no closer than 400 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Iles Formation, unless granted an exception from the Director.  Further, said Order No. 191-10, established a 320-acre drilling and spacing unit for the W½ of said Section 24, and allowed the equivalent of one well per 10 acres, for the production of gas and associated hydrocarbons from the Iles Formation, with the permitted to well to located no closer than 100 feet from the boundary or boundaries of the unit so abutting or cornering the lands and no closer than 400 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Iles Formation, unless granted an exception from the Oil and Gas Conservation Commission.

7.     On March 17, 2009, BBC, by its attorney, filed with the Commission a verified application for an order designed to clarify the previous orders pertaining to Section 24, Township 6 South, Range 92 West, 6^th P.M. by:  (1) vacating the 640-acre drilling and spacing unit established by Order No. 191-4 for said Section 24, for the production of gas and associated hydrocarbons from the Mesaverde Formation; (2) re-establishing a 320-acre drilling and spacing unit for the Williams Fork and Iles Formations in the W½ of said Section 24, with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet to the boundaries of the unit and no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation and no closer than 100 feet from the boundary or boundaries of the unit so abutting or cornering the lands and no closer than 400 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Iles Formation, unless granted an exception from the Director; and (3) designating the E½ of said Section 24 as unspaced, with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet to the boundaries of the unit and no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation and no closer than 100 feet from the boundary or boundaries of the unit so abutting or cornering the lands and no closer than 400 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Iles Formation, unless granted an exception from the Director.

Except as previously authorized by order of the Commission, wells to be drilled under this application 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), unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception as set forth by Rule 318.c.  Further, Iles Formation wells should be drilled and completed only in association with the drilling and completion of wells in the Williams Fork Formation.

8.     On April 23, 2009, an administrative hearing was convened wherein sworn testimony and the request for administrative notice of supporting documents were made by BBC in support of its application.

9.     Administrative notice was taken of Order Nos. 191-4, 191-8, and 191-10, wherein it was established that a 640-acre drilling and spacing unit was established for Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.  However, subsequent orders (Order Nos. 191-8 and 191-10) established a 320-acre drilling and spacing unit for the W½ of said Section 24, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formation, and approved the equivalent of 10-acre well density for entirety of said Section 24, while neglecting to vacate the previous established 640-acre drilling and spacing unit for the entirety of said Section 24.

10.   Testimony presented at the administrative hearing showed that BBC is the sole leasehold owner of the W½ of Section 24, Township 6 South, Range 92 West, 6^th P.M. and holds leases in a portion of the E½ of said Section 24.  

11.   The above-referenced testimony and exhibits show that the proposed spacing order will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

12.   Bill Barrett Corporation agreed to be bound by oral order of the Commission. 

13.   Based on the facts stated in the verified application, having received no protests, and based on the Hearing Officer having conducted an administrative hearing,  the Commission should enter an order to:  (1) vacate the 640-acre drilling and spacing unit established by Order No. 191-4 for Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation; (2) re-establish a 320-acre drilling and spacing unit for the Williams Fork and Iles Formations in the W½ of said Section 24, with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations; and (3) designate the E½ of said Section 24 as unspaced, with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that the 640-acre drilling and spacing unit established, under Order No. 191-4, for Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation, is hereby vacated.

IT IS FURTHER ORDERED, that a 320-acre drilling and spacing unit is hereby re-established for the Williams Fork and Iles Formations in the W½ of Section 24, Township 6 South, Range 92 West, 6^th P.M., with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet to the boundaries of the unit and no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation, and no closer than 100 feet from the boundary or boundaries of the unit so abutting or cornering the lands and no closer than 400 feet from the boundary or boundaries of the unit so abutting or cornering lands not previously approved for 10-acre well density for the Iles Formation, unless granted an exception from the Director.

IT IS FURTHER ORDERED, that the E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M. is hereby unspaced (and accordingly, said lands are not part of a designated drilling and spacing unit), with the continued approval of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet to the boundaries of any lease line and no closer than 200 feet from the boundary or boundaries of any lease line so abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation, and no closer than 100 feet from the boundary or boundaries of any lease line so abutting or cornering the lands and no closer than 400 feet from the boundary or boundaries of any lease line so abutting or cornering lands not previously approved for 10-acre well density for the Iles Formation, unless granted an exception from the Director.

IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application will 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), unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception as set forth by Rule 318.c.

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 May, 2009, as of May 7, 2009.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

May 14, 2009