REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 19, 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 CIS Oil & Gas Inc. is not in violation of Rule Nos. 301., 303., 307., 308., and 319.a.(6) 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. CIS Oil & Gas Inc., 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. Upon review of the Completion Report and supporting documentation of the CIS Oil & Gas, Inc. Long Canyon PCW #11-10 Well (subsequently renamed Long Canyon PCW #10-11 Well) COGCC staff discovered a discrepancy with respect to the surface casing setting depth. A treatment report dated February 2, 1996 indicated surface casing was set at eighty feet (80') and another treatment report dated February 10, 1996 indicated surface casing was set at one hundr ed fifty-seven feet (157'). COGCC staff contacted Randy Donovan with CIS Oil & Gas by telephone seeking clarification. Mr. Donovan indicated that the Long Canyon PCW #10-11 Well had surface casing set to a depth of eighty feet (80') as permitted. In drilling out below the surface casing a mine shaft was encountered from one hundred sixteen feet (116') to one hundred twenty five feet (125'). Since it would be impossible to cement the production casing to surface as required by the permit conditions, the well was plugged. Mr. Donovan further stated that the rig was skidded three feet (3') to the northeast and a new well drilled to a total depth of nine hundred forty three feet (943') after setting one hundred fifty seven feet (157') of surface casing. This well was named the Long Canyon PCW #10-11R Well.

5. On September 19, 1996, CIS Oil & Gas was cited for violations of Rule Nos. 301., and 307. and issued an NOAV for plugging the Long Canyon PCW #10-11 Well without prior notification to or approval by the Commission. Rule No. 319.a.(6) was also referenced for not submitting the paperwork within thirty (30) days. CIS was also issued an NOAV for the Long Canyon PCW #10-11-R Well. The rule violations cited were Rule Nos. 301. and 303. for not seeking p rior approval and drilling a well without a permit. Rule 308 was also referenced for not submitting the completion report as required within thirty (30) days. The NOAV's required CIS Oil & Gas to submit all delinquent paperwork and respond with an explanation outlining the reasons the alleged violations occurred by October 19, 1996.

6. On October 14, 1996, CIS Oil & Gas submitted the paperwork as required by the NOAVs.

7. An order of the Commission should be entered finding CIS Oil & Gas Incorporated in violation of Rule No. 301., failure to file the proper forms within the prescribed time; Rule No. 303., failure to submit a Form 2, Application-for-Permit-to-Drill; Rule No. 307., failure to submit a Form 4, Sundry Notice; 308., failure to submit a Form 5, Well Completion Report and Log; and Rule No. 319.a.(6), failure to obtain approval for plugging a well, and assess ing a fine of Nine Thousand Five Hundred Dollars ($9,500), payable within thirty (30) days from the date the order is issued.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that CIS Oil & Gas Inc. shall be found in violation of Rule No. 301., failure to file the proper forms within the prescribed time; Rule No. 303., failure to submit a Form 2, Application-for-Permit-to-Drill; Rule No. 307., failure to submit a Form 4, Sundry Notice; Rule No. 308., failure to submit a Form 5, Well Completion Report and Log; and Rule No. 319.a.(6), failure to obtain approval for plugging a well.

IT IS FURTHER ORDERED, that CIS Oil & Gas Inc. shall be assessed a fine of Nine Thousand Five Hundred Dollars ($9,500), payable within thirty (30) days from the date the order is issued.

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 December, 1996, as of November 19, 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 March 25, 1997 ??

(1V#116)