BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                               OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE                       )                    CAUSE NO. 1V

RULES AND REGULATIONS OF THE COLORADO OIL                   )

AND GAS CONSERVATION COMMISSION BY                                   )                    ORDER NO. IV-260

PETROLEUM DEVELOPMENT CORPORATION,                           )

WELD COUNTY, COLORADO                                                            )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                       1.  On September 26, 2001, a Colorado Oil and Gas Conservation Commission (“COGCC”) Form 2, Application for Permit-to-Drill (“APD”) was approved for Petroleum Development Corporation (“PDC”) to drill the Jeffers #41-35 Well located in the NE¼ NE¼ of Section 35, Township 4 North, Range 68 West, 6th P.M.

                        2.  The APD for the Jeffers #41-35 Well specified the objective formation as the “J” Sand.  The APD was approved by the COGCC Director only for this formation.

                        3.  On March 11, 2002 the COGCC received from PDC a Completed Interval Report, Form 5A, for the Jeffers #41-35 Well.  The form stated that the Jeffers #41-35 Well had been completed in the Codell Formation and that the Codell Formation had been tested on January 11, 2002.

                        4.  On December 12, 2003, PDC contacted COGCC staff by letter and reported that the Codell Formation had been completed in the Jeffers #41-35 Well without proper APD approval.

                        5.  For the unauthorized completion of the Codell Formation in the Jeffers #41-35 Well, PDC should be found in violation of Rule 303.b., failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, Rule 301., not providing written notice of intention to do work, and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to protect correlative rights of all owners in every field or pool.

6.  Rule 523. specifies a base fine of One Thousand dollars ($1,000) per day for each violation of Rules 301. and 303., and a base fine for violations of the Oil and Gas Conservation Act shall be determined by the Commission at its discretion.

                        7.  A monetary penalty of Five Thousand dollars ($5,000.00) should be assessed against PDC, in accordance with Rule 523.a. and Rule 523.d., for violation of Rules 303.b., 301., and Section 34-60-117.(1) of the Oil and Gas Conservation Act.  An aggravating factor in determining the fine recommendation is that under Rule 523.d.(4) the violation had the potential to have a significant negative impact on correlative rights of other parties.  A mitigating factor in determining the fine recommendation is that under Rule 523.d.(1) the violator self-reported the violation.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that Petroleum Development Corporation shall be found in violation of Rule 303.b., failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, Rule 301., not providing written notice of intention to do work, and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to protect correlative rights of all owners in every field or pool for the Jeffers #41-35 Well located in the NE¼ NE¼ of Section 35, Township 4 North, Range 68 West, 6th P.M.

                        IT IS FURTHER ORDERED, that Petroleum Development Corporation shall be assessed a fine of Five Thousand dollars ($5,000.00) payable within thirty (30) days of the date the order is approved by the Commission for violations occurring on the Jeffers #41-35 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.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        Recommended this   day of January, 2004.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        By

Morris J. Bell, Hearing Officer

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

January 2, 2004

                        AGREED TO AND ACCEPTED THIS _________DAY OF January, 2004.

                                                                                      PETROLEUM DEVELOPMENT CORPORATION

                                                                        By ____________________________________________

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