REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 18, 1996, at 8:30 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Snyder Oil Corporation was not in violation of Order No. 304-5, Rule 1; Order No. 304-5, Rule 2, Rule 303.b. and Rule 320. of the Oil and Gas Conservation Commission, and why it should not invoke the provisions of 34-60-121 C.R.S., as amended, providing for penalties for violations of the Rules and Regulations of the Commission.

FINDINGS

The Commission finds as follows:

1. Snyder Oil Corporation 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 September 29, 1995, staff reviewed the recompletion permit for the Mercure No. 8-6I5 Well located in the SE1/4 NW1/4 of Section 8, Township 4 North, Range 65 West, 6th P.M., Weld County. Review of the well file revealed the well was completed in the Sussex Formation in January, 1994, at the same time the Codell and Niobrara Formations were completed. The original permit was approved and issued only for the Codell and Niobrara Formations. Produc tion from the Sussex Formation has been commingled with the Codell and Niobrara Formations. In addition, the Sussex Formation is spaced at this location by Order No. 304-5, Rule 2 which requires that a well be located no closer than 990 feet from the boundaries of the quarter section upon which it is located. This well is located at an exception location for the Sussex Formation since it is 674 feet from the southern boundary and 661 feet from the easte rn boundary of the quarter section. Order No. 304-5, Rule 1 requires that the drilling and spacing units consist of 160-acres, with one well allowed for production from the Sussex Formation. On the Form 10 filed by Snyder Oil Corporation on May 19, 1994, the Sussex Formation is spaced on an 80-acre drilling and spacing unit.

5. On January 15, 1996, an Administrative Order by Consent was issued by Commission staff with the agreement of Snyder Oil Corporation.

6. The Hearing Officer recommends that Snyder Oil Corporation be found in violation of Rule No. 206, inaccurately indicating ownership in the Application for Permit to Drill (APD); Rule No. 301, changing plans previously approved; Rule 303, recompleting a formation prior to permit approval; Rule 306, submitting the Well Completion Report or Recompletion Report, Form 5, after the 30-day requirement; Rule 320, commingling production without prior approval ; and 34-60-106 C.R.S., failure to accurately measure production. Further, the Hearing Officer recommends that a fine of ten thousand dollars ($10,000) be assessed for these violations.

7. The Hearing Officer further recommends that Snyder Oil Corporation be found in violation of Order No. 304-5, Rules 1 and 2 for spacing the Sussex Formation on an 80-acre drilling and spacing unit and for completing and producing the Sussex Formation at a location exception without prior approval. Because these violations affected correlative rights, the Hearing Officer recommends that a fine of Twenty Thousand Dollars ($20,000) be assessed for these violations.

8. The Hearing Officer further recommends that Snyder Oil Corporation be found in violation of correlative rights by completing and producing the Sussex Formation without ownership. Snyder Oil Corporation disclosed this ownership to the COGCC staff and has advised the COGCC staff of the resolution of the correlative rights issues; however, because these violations could have resulted in significant damage to correlative rights, the Hearing Officer reco mmends a fine of Twenty Thousand Dollars ($20,000) be assessed for these violations. A total fine of Fifty Thousand Dollars ($50,000) should be assessed, payable within thirty (30) days of the date the order is entered.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Snyder Oil Corporation shall be found in violation of Rule No. 206, inaccurately indicating ownership in the APD; Rule No. 301, changing plans previously approved; Rule 303, recompleting a formation prior to permit approval; Rule 306, submitting the Well Completion Report or Recompletion Report, Form 5, after the 30-day requirement; Rule 320, commingling production without prior approval; 34-60-106 C.R.S., failure to accurately measure production; and Order No. 304-5, Rules 1 and 2 for spacing the Sussex Formation on an 80-acre drilling and spacing unit and for completing and producing the Sussex Formation at a location exception without prior approval and without ownership, which resulted in significant damage to correlative rights.

IT IS FURTHER ORDERED, that Snyder Oil Corporation shall be assessed a total fine of Fifty Thousand Dollars ($50,000), payable within thirty (30) days of the date the order is entered.

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 day of , 1996, as of January 18, 1996.

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 February 6, 1996 ??

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