ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

1. On June 13, 2002, Evergreen Operating Corporation ("Evergreen") was issued a drilling permit for the Kildare 42-20 Well located in the SE1/4 NE1/4 Section 20, Township 34 South, Range 65 West, 6th PM. The permit indicated the well was located 321 feet from the nearest property line. Additional information submitted with the permit indicated the surface owner was Brian T. and Jennifer J. O'Neill and that they had been notified of the well on May 13, 2002.

2. On September 5, 2002, Colorado Oil and Gas Conservation Commission ("COGCC") staff received a complaint from Mr. William Silverman of Trinidad, Colorado. Mr. Silverman claimed Evergreen drilled a gas well 53 feet from his property and built a 484 foot road on his property without his knowledge or consent.

3. COGCC staff notified Evergreen by phone of the complaint on September 10, 2002. Further discussion with Evergreen confirmed that Evergreen had drilled the Kildare 42-20 Well 53 feet from Mr. Silverman's property line and that Evergreen had constructed the access road across Mr. Silverman's property.

4. A Notice of Alleged Violation ("NOAV") was issued to Evergreen on September 23, 2002. The NOAV cited violations of Rule 603.a.(2) which requires a 150 foot setback from any property line, Rule 305. which requires notification of the surface owner before commencement of operations with heavy equipment, and Rule 306. which requires consultation with the surface owner prior to the commencement of operations with heavy equipment. The NOAV required Evergr een to notify and consult with Mr. Silverman and obtain a waiver from Mr. Silverman to allow the Kildare well to be located closer than 150 feet from his property line. The NOAV had an abatement date of October 11, 2002.

5. The NOAV was accepted by Evergreen.

6. Evergreen has removed wellpad equipment from Mr. Silverman's property

7. Evergreen has relocated the access road and flowline that serves the Kildare 42-20 Well off of Mr. Silverman's property. A professional surveyor has prepared an as-built survey to verify that the new access road and pipeline is not located on Mr. Silverman's property.

8. Evergreen has offered to reclaim the surface disturbance on Mr. Silverman's property. Evergreen has offered Mr. Silverman Ten Thousand dollars ($10,000) in compensation for approximately 0.7 acres of such surface disturbance on his property.

9. As of December 13, 2002, Evergreen had not obtained a waiver from Mr. Silverman in accordance with Rule 603.a(2).

10. Evergreen should be found in violation of Rule 602.b., failure to obtain a waiver to locate a well closer than 150 feet from a property line and Rules 305. and 306., failure to notify and consult with Mr. Silverman prior to building an access road and part of the location across his property.

11. Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each violation of Rules 603., 305., and 306.

12. Mitigating factors in determining the fine recommendation are: (1) the violator demonstrated prompt, effective and prudent response to the violation, (2) the violator cooperated with the COGCC with respect to the violation, and (3) the cost of correcting the violation reduced or eliminated any economic benefit to the operator.

13. A total monetary penalty of Three Thousand dollars ($3,000) for violations of Rules 603.a.(2), 305., and 306. should be assessed against Evergreen for these violations in accordance with Rule 523.a.

14. Evergreen should consult and reach agreement with Mr. Silverman concerning reclamation of the surface disturbance on Mr. Silverman's property.

15. By December 31, 2002, Evergreen should either: (1) obtain a waiver from Mr. Silverman to allow the Kildare 42-20 Well to be located closer than 150 feet from his property, (2) schedule a hearing before the Colorado Oil and Gas Conservation Commission to request a variance to allow the Kildare 42-20 Well to be located closer than 150 feet to Mr. Silverman's property, or (3) plug, abandon and reclaim the Kildare 42-20 Well.

ORDER

NOW, THEREFORE IT IS ORDERED, that Evergreen Operating Corporation shall be found in violation of Rule 603.a.(2) for failure to drill the Kildare 42-30 Well 150 feet from a property line, Rule 305., failure to notify the surface owner before commencement of operations with heavy equipment, and Rule 306., failure to consult with the surface owner prior to the commencement of operations with heavy equipment.

IT IS FURTHER ORDERED, that Evergreen Operating Corporation shall be assessed a total fine of Three Thousand dollars ($3,000) for the above-described rule violations, payable within thirty (30) days of the date the order is entered by the Commission.

IT IS FURTHER ORDERED, that by March 31, 2003, Evergreen Operating Corp. shall remove the abandoned Kildare 42-20 flowline and reclaim the abandoned access road and portion of the wellpad on Mr. Silverman's property, subject to Mr. Silverman granting access for this purpose.

IT IS FURTHER ORDERED, that by December 31, 2002, Evergreen shall either: (1) obtain a waiver from Mr. Silverman to allow the Kildare 42-20 Well to be located closer than 150 feet from his property, (2) schedule a hearing before the Colorado Oil and Gas Conservation Commission to request a variance to allow the Kildare 42-20 Well to be located closer than 150 feet to Mr. Silverman's property, or (3) plug, abandon and reclaim the Kildare 42-20 Well.

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 December, 2002.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Morris Bell, Hearing Officer Dated at Suite 801 1120 Lincoln St. Denver, Colorado 80203 December 16, 2002

AGREED TO AND ACCEPTED THIS DAY OF December, 2002.

Evergreen Operating Corporation

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