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                                   )

ELM RIDGE RESOURCES,                                                                )                    ORDER IV-266

LA PLATA COUNTY, COLORADO                                                       )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                        1. On October 17, 2003, a leak of Di-Ethylene Amine and deionized water occurred at the Ignacio Amine Plant operated by Elm Ridge Resources. The spill flowed onto the soil and off the plant site and into a draw.

                        2. On October 20, 2003, a complaint was filed by Doug Davis, the land owner affected by the spill. Colorado Oil and Gas Conservation Commission (“COGCC”) staff inspected the spill site on October 20, 2003.

                        3.  A Notice of Alleged Violation (“NOAV”) was issued to Elm Ridge Resources on October 29, 2003. The NOAV alleged Elm Ridge Resources failed to report the spill to the COGCC as required by Rule 906.b.(3) and also failed to consult with the landowner as required by Rule 906.c. The NOAV required Elm Ridge Resources to obtain a lab analysis of water and soil samples from the effected area, submit a Form 27 remediation plan to the COGCC for approval, and submit a complete spill report. This corrective action was to be completed by December 1, 2003.

                        4.  Elm Ridge Resources submitted a Form 19 spill report on November 17, 2003, and the lab analysis of water and soil samples on November 12, 2003. The spill report described the spill as 20 barrels of water and 1 barrel of amine.

5.  COGCC staff sent Elm Ridge Resources a spill remediation recommendation on December 22, 2003.

                        6.  Elm Ridge Resources should be found in violation of Rule 906.b.(3), failure to report the spill to the COGCC and Rule 906.c., failure to consult with the landowner prior to commencing operations to remediate a spill.

                        7.  Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each violation of Rule 906.

                        8. A total monetary penalty of Two Thousand dollars ($2,000) for violation of Rules 906.b.(3) and 906.c. should be assessed against Elm Ridge Resources in accordance with Rule 523.a.

 ORDER

                        NOW, THEREFORE IT IS ORDERED, that Elm Ridge Resources should be found in violation of Rule 906.b.(3), failure to report the spill to the COGCC and Rule 906.c., failure to consult with the landowner prior to commencing operations to remediate a spill.

                        IT IS FURTHER ORDERED, that Elm Ridge Resources shall be assessed a total fine of Two Thousand dollars ($2,000) for the violations of the above rules, payable within thirty (30) days of the date the order is  approved by the Commission.

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

                                                                               OF THE STATE OF COLORADO

                                                                        By______________________________________                                                                                                                                     David K. Dillon, Hearing Officer

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 23, 2003

                        AGREED TO AND ACCEPTED THIS ________DAY OF ____________, 2004

                                                                        Elm Ridge Resources

                                                                        BY____________________________________

                                                                        TITLE_________________________________