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 Stroud Oil Properties, Inc. is not in violation of Rule Nos. 303.f., 307., and 317.f. 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. Stroud Oil Properties, 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 Reports submitted by Stroud Oil Properties Inc. for the Apache Canyon #5-12 Well, Apache Canyon #18-9 Well, Apache Canyon #20-6 Well, Hill Ranch #29-14 Well and the Hill Ranch #33-4 Well, COGCC staff determined that the wells listed above did not have surface casing set at the approved permitted depth, as specifically described below:

a) The Apache Canyon #5-12 Well was approved for Two Hundred feet (200') of surface casing. The Completion Report indicated that Ninety-one feet (91') of surface casing had been set. On September 13, 1996, an NOAV was sent to Stroud Oil Properties citing them with violation of COGCC Rules 303.f. and 307. for changing the surface casing depth without prior notification to or approval by the Commission. The NOAV required Stroud to respond by October 13 , 1996 with an explanation as to why surface casing was not set at the approved permitted depth. On October 11, 1996 Stroud Oil Properties responded stating "a lack of drilling supervision" as the reason for the oversight.

b) The Apache Canyon #18-9 Well was approved for Five Hundred feet (500') of surface casing. The Completion Report indicated that Three Hundred Nineteen feet (319') of surface casing had been set. On September 13, 1996, an NOAV was sent to Stroud Oil Properties citing them with violation of COGCC Rules 303.f. and 307. for changing the surface casing depth without prior notification to or approval by the Commission. The NOAV required Stroud to respond by October 13, 1996 with an explanation as to why the surface casing was not set at the approved permitted depth. On October 11, 1996 Stroud Oil Properties responded stating "this well was permitted for Five Hundred feet (500') of surface casing through a stupid mistake during the drilling permit execution. It should have read Two Hundred feet (200') as the others".

c) The Apache Canyon #20-6 Well was approved for Two Hundred Fifty feet (250') of surface casing. The Completion Report indicated that One Hundred Fifty-Seven feet (157') of surface casing had been set. On September 13, 1996, an NOAV was sent to Stroud Oil Properties citing them with violation of COGCC Rules 303.f. and 307. for changing the surface casing depth without prior notification to or approval by the Commission. The NOAV required Stroud to r espond by October 13, 1996, with an explanation as to why the surface casing was not set at the permitted depth. On October 11, 1996, Stroud Oil Properties responded stating "this well was permitted for Two Hundred Fifty feet (250') of surface casing, yet as the AC 5-12 failed to read Two Hundred Twenty feet (220'). Nevertheless, One Hundred Fifty-Seven feet (157') of surface casing was set. This was especially difficult to explain as the 8 3/4" hole r equired for setting the seven inch (7") casing was drilled to a depth of Two Hundred Thirteen feet (213') and Two Hundred Forty feet (240') of surface casing was on location prior to spud. CBL shows depth of casing at Two Hundred Three feet (203') yet upon questioning of Thornton Drilling it appears the One Hundred Fifty Seven feet (157') must be correct and was completed accordingly".

d) The Hill Ranch #29-14 Well was approved for Two Hundred feet (200') of surface casing. The Completion Report indicated that Ninety-one feet (91') of surface casing had been set. On September 13, 1996, an NOAV was sent to Stroud Oil Properties citing them with violation of COGCC Rules 303.f. and 307. for changing the surface casing depth without prior notification to or approval by the Commission. COGCC Rule 317.f. was also cited since an insuffici ent amount of surface casing was set to protect a fresh water well within one (1) mile. The NOAV required Stroud to respond by October 13, 1996, with an explanation as to why surface casing was not set at the permitted depth. On October 11, 1996, Stroud Oil Properties responded stating "a lack of drilling supervision" as the reason for the oversight.

e) The Hill Ranch #33-4 Well was approved for Two Hundred feet (200') of surface casing. The Completion Report indicated that Ninety-one feet (91') of surface casing had been set. On September 13, 1996, an NOAV was sent to Stroud Oil Properties citing them with violation of COGCC Rules 303.f. and 307 for changing the surface casing depth without prior notification to or approval by the Commission. COGCC Rule 317.f. was also cited for setting an insuf ficient amount of surface casing to protect a fresh water well within one (1) mile. The NOAV required Stroud to respond by October 13, 1996, with an explanation as to why surface casing was not set at the permitted depth. On October 11, 1996, Stroud Oil Properties responded stating "a lack of drilling supervision" as the reason for the oversight.

5. An order of the Commission should be entered finding Stroud Oil Properties Inc. in violation of COGCC Rules 303.f. and 307. for the Apache Canyon #5-12 Well; Rules 303.f. and 307. for the Apache Canyon #18-9 Well. No fine recommendation was made for the following violations: Rules 303.f. and 307. for the Apache Canyon #20-6 Well; Rules 303.f., 307. and 317.f. for the Hill Ranch #29-14 Well; Rules 303.f., 307. and 317.f. for the Hill Ranch #33-4 Well . Stroud Oil Properties Inc. should be assessed a total fine of Twelve Thousand Dollars ($12,000) for violations of the above rules payable within ten (10) days of order issuance.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Stroud Oil Properties Inc. shall be found in violation of COGCC Rules 303.f. and 307. for the Apache Canyon #5-12 Well; Rules 303.f. and 307. for the Apache Canyon #18-9 Well. No fine recommendation was made for these well violations; Rules 303.f. and 307. for the Apache Canyon #20-6 Well; Rules 303.f., 307. and 317.f. for the Hill Ranch #29-14 Well; Rules 303.f., 307. and 317.f. for the Hill Ranch #33-4 Well.

IT IS FURTHER ORDERED, that Stroud Oil Properties Inc. shall be assessed a total fine of twelve thousand dollars ($12,000) for violations of the above rules payable within ten (10) days of order issuance.

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 ??

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