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. 1V-293

UNITED STATES EXPLORATION INC,                                                 )

WELD COUNTY, COLORADO                                                                  )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                        1. On December 17, 2004, the Colorado Oil and Gas Conservation Commission ("COGCC") Director approved the Application For Permit-to-Drill the United States Exploration Inc. ("USX") B & M #12-5 Well located in the SW¼ NW¼ of Section 5, Township 2 North, Range 65 West, 6^th P.M. Rule 317.i. (and the Form 2 conditions of approval) required that "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 Sussex Formation (shallowest known producing horizon)". Review of the B & M #12-5 cement bond log by COGCC staff found 0’ of 800 psi cement above the Sussex Formation.

                        2. On July 25, 2005, USX 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 Sussex Formation for the B & M #12-5 Well. The NOAV required USX to submit a procedure to verify or isolate the Sussex Formation by August 8, 2005 and complete all work by September 23, 2005.

                        3. On August 17, 2005, (due August 8, 2005) USX submitted a Sundry Notice describing the procedure to isolate the Sussex Formation with the acknowledgement the remedial cement work would be completed no later than the September 23, 2005 deadline.

                        4. USX was requested by the surface owner to delay remedial work to allow crops to be harvested. USX believes that it verbally advised the Commission that the landowner requested a remedial work delay, however, COGCC staff has no record of extending the abatement date of the NOAV.

                        5. USX did not complete the remedial cement work to provide zonal isolation of the Sussex Formation by the September 23, 2005 deadline.

                        6. USX completed remedial cementing operations for the B & M #12-5 Well on November 3, 2005. The remedial cementing operations did not establish a clear cement top as shown by the Cement Bond Log.

                        7. USX has received a total of 7 (seven) NOAV(s) for not providing 200’ of cement isolation above the Sussex and/or Shannon Formation(s). All such NOAV’s applied to wells that were cemented within a six (6) month period of time.

                        8. USX should be found in violation of Rule 317.i. and Form 2 Permit Conditions of Approval for the B & M #12-5 Well, and be assessed a penalty of Two Thousand dollars ($2,000) per violation of Rule 317.i. and Form 2 permit Conditions of Approval for a total of Four Thousand dollars ($4,000).

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that United States Exploration Inc. 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 Sussex Formation for the B & M #12-5 Well located in the SW¼ NW¼ of Section 5, Township 2 North, Range 65 West, 6^th P.M.

                        IT IS FURTHER ORDERED, that United States Exploration Inc. 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 United States Exploration Inc. shall be required to perform a bradenhead test on the B & M #12-5 Well approximately one year after the date of this order. Additional remedial cementing operations will be required if a high bradenhead pressure is observed.

                         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 November, 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

November 15, 2005

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

United States Exploration Inc.