BEFORE THE OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE MAMM CREEK FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 191
ORDER NO. 191-88
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REPORT OF COMMISSION
This cause came on for hearing before the Commission on May 16, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to pool all nonconsenting interests in the approximate 625-acre drilling and spacing unit established for certain lands located in Sections 33, Township 5 South, Range 91 West, 6th P.M., Section 6, Township 6 South, Range 91 West, 6th P.M., and Section 1, 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” or “Applicant”), 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 4, 2011, the Commission, the Commission entered Order No. 191-85, which among other things, established an approximate 625-acre drilling and spacing unit, and authorizing the drilling of up to 16 wells within the unit, for certain lands located in Section 33, Township 5 South, Range 91 West, 6th P.M., Section 6, Township 6 South, Range 91 West, 6th P.M., and Section 1, Township 6 South, Range 92 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
5. On March 16, 2011, Antero, by its attorney, filed with the Commission a verified application (the “Application”) for an order to pool all nonconsenting interests in the approximate 625-acre drilling and spacing unit which may be established for the below-described lands (the “Application Lands”), for the development and operation of the Williams Fork and Iles Formations, effective as of the commencement date of operations for the Maves #A1 Well (API #05-045-19732):
Section 33: SE¼, E½ SW¼, and E½ W½ SW¼
Section 6: NW¼
Section 1: NE¼
6. On May 4, 2011, 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 exhibits were submitted in support of the Application.
7. Testimony and exhibits submitted in support of the Application by Max Green, Landman for Antero, showed: 1) Antero has drilled the Maves #A1 Well on the Application Lands, and requests that the Commission’s pooling order be made retroactive to the date that operations to drill said well were commenced, as provided in C.R.S. §34-60-116(7)(b)(II; and 2) at least 30 days prior to the hearing on this matter, each interest owner shown on Exhibit A to its Application was offered the opportunity to lease on terms similar to those contained in leases Antero has obtained in the area, or to participate in the drilling of the Maves #A1 Well, as the case may be, and was provided with the information required by Rule 530.
8. 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.
9. Antero agreed to be bound by oral order of the Commission.
10. 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 pooling all nonconsenting interests in the approximate 625-acre drilling and spacing unit established for certain lands located in Sections 33, Township 5 South, Range 91 West, 6th P.M., Section 6, Township 6 South, Range 91 West, 6th P.M., and Section 1, 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, the nonconsenting owners in the approximate 625-acre drilling and spacing unit established for the below-described lands, are hereby pooled for the development and operation of the Williams Fork and Iles Formations, effective as of the commencement date of operations for the Maves #A1 Well (API #05-045-19732):
Section 33: SE¼, E½ SW¼, and E½ W½ SW¼
Section 6: NW¼
Section 1: NE¼
2. The production obtained from the drilling and spacing 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 the drilling and spacing unit; each owner of an interest in the drilling and spacing unit shall be entitled to receive its share of the production of the Well located on the drilling and spacing unit applicable to its interest in the drilling and spacing unit.
3. The nonconsenting leased (working interest) owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Well (including penalties as provided by §34-60-116(7)(b), C.R.S.) out of production from the drilling and spacing unit representing the cost-bearing interests of the nonconsenting working interest owners as provided by §34-60-116(7)(a), C.R.S.
4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by §34-60-116(7), C.R.S.
5. Each nonconsenting unleased owner within the drilling and spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, only out of each 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, each unleased nonconsenting mineral owner shall then own its proportionate 8/8ths share of the Well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the Well as if it had originally agreed to the drilling.
6. The operator of the well drilled on the above-described drilling and spacing unit shall furnish the 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.
7. Nothing in this order is intended to conflict with §34-60-116, C.R.S., as amended. Any conflict that may arise shall be resolved in favor of the statute.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.
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 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 ___23rd__ day of May, 2011, as of May 16, 2011.
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 23, 2011