RECOMMENDED ORDER

This cause came on for hearing before the Commission on July 12, 1999, 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 J. Magness, Incorporated is in violation of Rule 207.b. failure to perform bradenhead tests and Rule 326.b. failure to perform mechanical integrity tests on certain wells and why the Commission should not invoke the provisions of 34-60-12 1 C.R.S., as amended, providing for penalties for violations of the Rules and Regulations of the Commission. FINDINGS

1. J. Magness, Incorporated ("Magness") 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 of the subject matter, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. Rule 326.b requires a Mechanical Integrity Test ("MIT") on all wells within two (2) years of the initial shut-in date.

5. Commission Order No. 112-85 and Rule 207.b. requires bradenhead tests to be performed annually on all wells within specific areas.

6. The Echols Ute 1-12u Well is located in the NW1/4 NW1/4 of Section 12, Township 34 North, Range 7 West, N.M.P.M. The well has not produced since October, 1990. A Notice of Alleged Violation ("NOAV") was issued to Magness on January 31, 1996, requiring Magness to perform a bradenhead test on the well by March 1, 1996. As of May 25,1999, no bradenhead test has been performed. On December 16, 1998, a NOAV was issued to Magness requiring a MIT to be p erformed on the Echols Ute 1-12u Well by January 16, 1999. As of May 25,1999, no MIT has been performed.

7. The Echols Ute 1-12u Well is located within the boundaries of the Southern Ute Indian Tribe. The well is located on fee surface with approximately 25% tribal mineral ownership. The Southern Ute Indian Tribe supports this enforcement action.

8. The Echols Ute 1-12u Well is completed as a dual producer - injector. The injection portion of this well is under dual jurisdiction between the COGCC and the Environmental Protection Agency ("EPA"). The EPA has found Magness in violation of the Safe Drinking Water Act and Underground Injection Control Regulation. The EPA supports enforcement action by the COGCC and has offered a Memorandum of Understanding ("MOU") to allow the COGCC to use the Five T housand Dollar ($5,000) plugging bond claimed by the EPA to plug this well.

9. The Sitton 1-13 Well is located in the NE1/4 NE1/4 of Section 13, Township 34 North, Range 7 West, N.M.P.M. This well has not produced since November, 1988. A NOAV was issued to Magness on January 31, 1996, requiring Magness to perform a bradenhead test on the well by March 1, 1996. As of May 25,1999, no bradenhead test has been performed. On December 16, 1998, a NOAV was issued to Magness requiring a MIT to be performed on the Sitton 1-13 Well by January 16, 1999. As of May 25,1999, no MIT has been performed.

10. On June 30, 1999 COGCC staff received a letter from Amoco Production Company ("Amoco") stating that Amoco "is prepared to take over as Operator and assume all the responsibilities that go along with being the Operator of Record in Colorado." In addition, Amoco sent a Form 10, Change of Operator form, to Magness for signature.

11. The Powell 1-6 Well is located in the NE1/4 NW1/4 of Section 6, Township 33 North, Range 6 West, N.M.P.M. This well has not produced since August, 1988. A NOAV was issued to Magness on May 25, 1996, requiring Magness to perform a bradenhead test on the well by March 1, 1996. As of January 21,1999, no bradenhead test has been performed. On December 16, 1998, a NOAV was issued to Magness requiring a MIT to be performed on the Powell 1-6 Well by Janua ry 16, 1999. As of May 25,1999, no MIT has been performed.

12. At the hearing on July 12, 1999, COGCC staff submitted testimony and exhibits to support these findings. Although notice of hearing was sent, no representative of Magness attended the hearing.

13. In accordance with 34-60-121(6), C.R.S., the Commission considers Magness's failure to bring the wells and lease into compliance after numerous notifications as evidence of a pattern of violation of Commission rules and orders. Magness's failure to perform bradenhead tests threatens to cause significant adverse environmental impact.

ORDER

NOW, THEREFORE, IT IS ORDERED that J. Magness, Inc. shall be found in violation of Rule 207.b. for failure to perform bradenhead tests on the Echols-Ute #1-12u Well, the Sitton #1-13 Well and the Powell #1-6 Well.

IT IS FURTHER ORDERED that J. Magness, Inc. shall be found in violation of Rule 326.b. for failure to perform mechanical integrity tests on the Echols-Ute #1-12u Well, the Sitton #1-13 Well and the Powell #1-6 Well.

IT IS FURTHER ORDERED that J. Magness, Inc. shall be assessed a fine of Three Thousand Dollars ($3000) per well for a total fine of Nine Thousand Dollars ($9,000) payable within thirty (30) days from the date the order is approved by the Commission.

IT IS FURTHER ORDERED that J. Magness, Inc. shall perform bradenhead tests on the three (3) above-described wells no later than September 1, 1999.

IT IS FURTHER ORDERED that J. Magness, Inc., shall perform mechanical integrity tests on the three (3) above-described wells no later than September 1, 1999.

IT IS FURTHER ORDERED that if J. Magness, Inc. does not comply with this order, COGCC staff shall be authorized to commence claim on the Thirty Thousand Dollar ($30,000) plugging bond and proceed to plug and abandon the Echols-Ute #1-12u Well, the Sitton #1-13 Well and the Powell #1-6 Well. If plugging and reclamation costs exceed the bond amount, COGCC staff shall confiscate available equipment and tubulars for salvage per 34-60-124.(6).(c). C.R.S.

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.

RECOMMENDED this day of July, 1999, as of July 12, 1999.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln St. Denver, Colorado 80203 July 19, 1999 ??

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