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 January 11, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to reaffirm the approximate 320-acre drilling and spacing unit established in Order No. 191-55, consisting of the N½ of Section 13, Township 6 South, Range 92 West, 6^th P.M., and approve said unit for 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.    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 August 19, 2008, the Commission issued Order No. 191-55, which among other things, established an 320-acre drilling and spacing unit consisting of the N½ of Section 13, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

Under Order No. 191-55, all future Williams Fork Formation wells to be drilled upon the lands within the drilling and spacing unit shall be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided however that 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 wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

Further, all future Iles Formation wells to be drilled upon the drilling and spacing unit shall be located downhole anywhere in the drilling and spacing unit but not closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided however that 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 Iles Formation wells, the wells shall be located downhole no closer than 400 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. 

Furthermore, except as previously authorized by order of the Commission, wells to be drilled under Order No. 191-55 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) unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

5.    On November 23, 2009, Antero, by its attorney, filed with the Commission a verified application for an order to reaffirm the approximate 320-acre drilling and spacing unit established in Order No. 191-55, consisting of the N½ of Section 13, Township 6 South, Range 92 West, 6^th P.M., and approve said unit for 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.  In said application, Antero alleges that certain interested parties were not given proper notice of the proceedings which gave rise to Order No. 191-55, and has brought this application to cure those defects in notification.

6.    On December 28, 2009, 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 as is provided for by Rule 511.  Sworn written testimony and exhibits were submitted in support of the application.

7.    Testimony and exhibits submitted in support of the application showed that Antero is the majority leaseholder owner of the application lands.  Additional testimony indicated that, subsequent to the approval of Order No. 191-55, it was determined that certain interested parties were not given due process through legal notification, and that Antero desires to reaffirm those provisions in said order establishing a 320-acre drilling and spacing unit for the N½ of Section 13, Township 6 South, Range 92 West, 6^th P.M., while providing proper notice to all interested parties.

8.    Administrative notice was taken of the testimony and exhibits supporting the application for Order No. 191-55, wherein it was found that there are depositional discontinuities in the sands of the Williams Fork and Iles Formations underlying the application lands, and that the Williams Fork and Iles Formations are common sources of supply in the Piceance Basin.  Testimony showed that drilling and spacing units on adjacent lands were established through Order Nos. 523-2 and 191-24 for the Williams Fork Formation and Order No. 191-25 for the Iles Formation, with approval of one well per 10 acre equivalent well density, and that approval of the requested spacing and well density will promote economic and efficient development of the reservoirs, prevent waste, and protect correlative rights.

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

10.       Antero agreed to be bound by oral order of the 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 to reaffirm the approximate 320-acre drilling and spacing unit established in Order No. 191-55, for the N½ of Section 13, Township 6 South, Range 92 West, 6^th P.M., and approve said unit for 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 the approximate 320-acre drilling and spacing unit established in Order No. 191-55 for the N½ of Section 13, Township 6 South, Range 92 West, 6^th P.M., is hereby reaffirmed and approved for 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 all future Williams Fork Formation wells to be drilled upon said drilling and spacing unit should be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided however that in cases where the 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 wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

IT IS FURTHER ORDERED, that all future Iles Formation wells to be drilled upon said drilling and spacing unit should be located downhole anywhere in the drilling and spacing unit but not closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided, however, that in cases where the 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 Iles Formation wells, the wells should be located downhole no closer than 400 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. 

IT IS FURTHER ORDERED, 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) unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

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 February, 2010, as of January 11, 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

February 8, 2010