BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

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

AND REGULATIONS OF THE COLORADO OIL AND GAS                        )

CONSERVATION COMMISSION BY BONANZA CREEK                           )                     ORDER NO. 1V-286

OIL COMPANY, WELD COUNTY, COLORADO                                            )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                        1. On December 19, 2003 and February 26, 2004, the Colorado Oil and Gas Conservation Commission ("COGCC") Director approved the Application For Permit-to-Drill the Bonanza Creek Oil Company Siebring #32-32 and #42-32 Wells located in the SW¼ SW¼ and SE¼ NE¼ of Section 32, Township 5 North, Range 63 West, 6^th P.M., respectively. COGCC Rule 317.i. (and the Form 2 conditions of approval) required "all cement shall be of adequate quality to achieve a minimum compressive strength of at least eight hundred (800) psi and shall be pumped two hundred (200) feet above the top of the shallowest known producing horizon". Review of the Siebring #32-32 and #42-32 cement bond logs by COGCC staff found only 80’ and 71’ of 800 psi cement, respectively, above the Niobrara Formation.

                        2. On March 8, 2005, Bonanza Creek Oil Company was issued a Notice of Alleged Violation ("NOAV") citing violation of Rule 317.i. and Form 2 Permit Conditions of Approval for failure to provide 200’ of 800 psi compressive strength cement above the Niobrara Formation for the Siebring #32-32 and #42-32 Wells. The NOAV(s) required Bonanza Creek Oil Company provide documentation to verify the wellbores have 800 psi compressive strength cement 200’ above the Niobrara Formation. The NOAV(s) required Bonanza Creek Oil Company respond by March 26, 2005.

                        3. On March 28, 2005, Bonanza Creek Oil Company responded to the NOAV(s) by stating "Bonanza Creek believes that it acted prudently in calculating and pumping a sufficient volume of cement to meet the requirements of both rule 317i and the Form 2 permit conditions. We also pumped an additional volume of lightweight lead cement to cover the exposed casing for corrosion protection. With the amount of cement in place on these wells, Bonanza Creek believes that there is no remediation available for the alleged violation as it will not be possible to squeeze the area in question".

                        4. Bonanza Creek Oil Company did not self-report these violations.

                        5. Bonanza Creek Oil Company should be found in violation of Rule 317.i. and Form 2 Permit Conditions of Approval.

                        6. Bonanza Creek Oil Company should be assessed a penalty of One Thousand dollars ($1,000) per violation for the Siebring #32-32 and #42-32 Wells.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that Bonanza Creek Oil Company shall be found in violation of Rule 317.i. and Form 2 Permit Conditions of Approval for failure to provide two hundred (200) feet of eight hundred (800) psi compressive strength cement above the Niobrara Formation for the Siebring #32-32 and #42-32 Wells.

                        IT IS FURTHER ORDERED, that Bonanza Creek Oil Company shall be assessed a total fine of Four Thousand dollars ($4,000) for violation of Rule 317.i. and Form 2 Permit Conditions of Approval, 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 March, 2005.

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

March 30, 2005

AGREED TO AND ACCEPTED THIS _______ DAY OF ______________, 2005.

Bonanza Creek Oil Company