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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 AN EXPLORATORY UNIT TO GOVERN OPERATIONS IN THE CRAIG FIELD, MOFFAT COUNTY, COLORADO |
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CAUSE NO. 199
ORDER NO. 199-4 AMENDED |
REPORT OF THE COMMISSION
TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:
This cause came on for hearing before the Commission on April 18, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Think Oil, Inc. for an order to establish a 320-acre exploratory unit in the Craig Field for production of oil, gas, and associated hydrocarbons from the Frontier Formation. Further, the order should pool all interests in the 320-acre drilling and spacing unit for the development and operation of the Frontier and Dakota Formations for the production of oil, gas, and associated hydrocarbons underlying said unit, pursuant to Colorado Revised Statutes, 34‑60‑116, 1984.
FINDINGS
The Commission finds as follows:
1. Think Oil, Inc., 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.
4. On April 19, 1991, the General Assembly of the State of Colorado enacted Senate Bill 91-87, which among other things, authorized the Commission, when unable to determine the existence of a pool and the appropriate acreage to be embraced with a drilling unit, to establish the existence of a pool and the appropriate size and shape of the drilling unit to be applied.
5. A 320-acre exploratory unit should be established for the below-listed lands, for production from the Frontier and Dakota Formations:
Township 6 North, Range 91 West, 6th P.M.
Section 9: N1/2
6. Efforts have been made to obtain the voluntary pooling of all interests. A.F.E.'s were furnished to all unleased mineral owners on or around February 26, 1994 and consent was not given. A.F.E.'s were furnished to additional leased mineral owners, Berton F. Chamberlin and Jeffery D. Chamberlin, as Trustees of the Chamberlin Revocable Living Trust, and John C. Conder, Trustee of the Merton Henry Chamberlin and Anna Florence Hayes Chamberlin 1969 Trust, on April 12, 1994, and consent has not been given.
7. An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying said drilling unit.
8. Production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within said drilling unit.
9. Think Oil, Inc. should be approved as the operator for the 320-acre exploratory unit consisting of the N1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado, for the development and operation of the Frontier and Dakota Formations.
10. Based on the facts stated in the verified application, having received no protests, and having been heard by the Hearing Officers on April 14, 1994, the Hearing Officers recommend that the Commission enter an order establishing a 320-acre exploratory unit for production from the Frontier and Dakota Formations, for the lands described in Finding 5, and pool all interests in the 320‑acre exploratory unit herein described, in order to insure proper and efficient development of the oil and gas from the Frontier and Dakota Formations underlying said unit.
O R D E R
NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of 34‑60‑116, C.R.S., 1991, as amended, of the Oil and Gas Conservation Act of the State of Colorado, an order to establish a 320-acre exploratory unit for production from the Frontier and Dakota Formations for the below-listed lands is hereby granted.
Township 6 North, Range 91 West, 6th P.M.
Section 9: N1/2
IT IS FURTHER ORDERED, that, 2. 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 interests in the 320-acre exploratory unit consisting of the N1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado, are hereby pooled for the development of gas and associated hydrocarbons from the Frontier and Dakota Formations underlying said unit.
3. The production obtained from said 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 said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.
4. The owner of the leased and unleased tract should be afforded the opportunity to elect whether to participate in the drilling and operation of said well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of acres in each unleased tract to the total number of acres within said drilling unit.
5. Within thirty (30) days from the date of receipt of said A.F.E. by the owner of said tract, such owner shall indicate whether he consents to the cost of the drilling of the well and agrees to participate in such costs. Such election shall be made in writing either by executing the A.F.E. or similar document. In the event a written election to participate is not made by said owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non‑consenting as to the well and be subject to the penalties as provided for by 34‑60‑116 (7).
6. Any non‑consenting 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 or her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non‑consenting owner's proportionate 87.5% share of production, the costs specified in C.R.S. 34‑60‑116 (7)(b), as amended. After recovery of such costs, the non‑consenting mineral owner shall then own his proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with the well as if he had originally agreed to the drilling.
7. The operator of any well drilled on the above described unit shall furnish all non‑consenting 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.
8. Think Oil, Inc. is hereby approved as the operator for the 320-acre exploratory unit consisting of the N1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado, for the development and operation of the Frontier and Dakota Formations.
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.
ENTERED this 27th day of April , 1994, as of April 18, 1994.
CORRECTED this day of , 1994, as of April 18, 1994.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Patricia C. Beaver, Secretary
Dated at Suite 380
1580 Logan Street
Denver, Colorado 80203
June 2, 1994