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-265

PETROLEUM DEVELOPMENT CORPORATION,                           )

WELD COUNTY, COLORADO                                                            )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                       1.  On November 29, 2003, 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 Wells Ranch #32-3 Well located in the SW¼ NE¼ of Section 3, Township 5 North, Range 63 West, 6th P.M.

                        2.  The APD for the Wells Ranch #32-3 Well specified the objective formation as the “Niobrara, Codell”.  The APD was approved by the COGCC Director only for these formations.

                        3.  On November 18, 2003 the COGCC received from PDC a Completed Interval Report, Form 5A, for the Wells Ranch #32-3 Well.  The form stated that the Wells Ranch #32-3 Well had been completed in the “J” Sand Formation and that the “J”  Sand Formation had been tested on July 10, 2003.

                        4.  On September 29, 2003, PDC submitted a Sundry Notice, Form 4, to the COGCC reporting that the Wells Ranch #32-3 Well was “initially permitted for the NB-CD formations and was drilled to and producing from the JSND.”  

                        5.  On November 17, 2003, the COGCC received an APD for Recompletion to the “J” Sand Formation from PDC for the Wells Ranch #32-3 Well.

                        6.  For the unauthorized completion of the “J” Sand Formation in the Wells Ranch #32-3 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 “J” Sand 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.

7.  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.

                        8.  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 “J” Sand 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 Wells Ranch #32-3 Well located in the SW¼ NE¼ of Section 3, Township 5 North, Range 63 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 Wells Ranch #32-3 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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