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-301

XTO ENERGY INC., LAS ANIMAS COUNTY, COLORADO                 )

                        1. On March 9, 2006, the Colorado Oil and Gas Conservation Commission ("COGCC") approved an Application for Permit-to-Drill ("APD") for XTO Energy Inc. ("XTO") for the Golden Eagle #20-3 Well located in the NE¼ NW¼ of Section 20, Township 33 South, Range 67 West, 6th P.M. The COGCC approved the APD with a Condition of Permit Approval requiring that at least 870 feet of surface casing be set in the Well.

                        2. On or about April 2, 2006, XTO notified COGCC staff by telephone that only 230 feet of surface casing had actually been set in the Golden Eagle #20-3 Well. COGCC staff required XTO to submit a letter of explanation detailing the violation and action to prevent future violations of this nature.

                        3. COGCC staff received a letter from XTO on April 5, 2006 detailing the violation and proposing procedures to be implemented by XTO to prevent a reoccurrence of the violation.

                        4. On April 27, 2006, COGCC staff sent a Notice of Alleged Violation ("NOAV") to XTO for violations of Rule 317.d. and Conditions of Permit Approval for the Golden Eagle #20-3 Well. The NOAV required XTO to submit a letter detailing the violation and proposed action to prevent future violations of this type. This requirement was met by the XTO letter of April 5, 2006. The NOAV also required XTO to provide adequate cement coverage of production casing to cover potential aquifers and mitigate the effect of not setting sufficient surface casing to protect water wells in the area. By cementing the production casing from total depth up into the surface casing shoe during Well completion operations, XTO would mitigate the violation to the extent possible. This requirement has been complied with by XTO.

                        5. Rule 523.c. specifies a base fine of One Thousand dollars ($1,000) per day for each violation of Rule 317. Rule 523.(4) specifies that fines for violations for which no base fine is listed shall be determined by the Commission at its discretion, subject to Rule 523.a.(1) which states that no fine for any single violation shall exceed one thousand dollars ($1,000) per day.

                        6. A monetary penalty of Two Thousand dollars ($2,000.00) should be assessed against XTO Energy Inc., in accordance with Rule 523., for violation of Rule 317.d. and Conditions of Permit Approval. Aggravating factors in determining the fine recommendation under Rule 523.d. are: 523.d.(1), the violation was reckless; 523.d.(2), the violation had a threat of significant negative impact on the environment. Mitigating factors in determining the fine recommendation under Rule 523.d. are: 523.d.(1), the violation was self-reported by XTO; 523.d.(2), XTO demonstrated prompt, effective, and prudent response to the violation; 523.d.(3), and XTO cooperated with the Commission with respect to the violation.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that XTO Energy Inc. shall be found in violation of Rule 317.d. and Conditions of Permit Approval for failure to set the required amount of surface casing in the Golden Eagle #20-3 Well located in the NE¼ NW¼ of Section 20, Township 33 South, Range 67 West, 6th P.M.

                        IT IS FURTHER ORDERED, that XTO Energy Inc. shall be assessed a fine of Two Thousand dollars ($2,000.00) payable within thirty (30) days of the date the order is approved by the Commission for violations of the above-described rules occurring on the Golden Eagle #20-3 Well.

                        IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

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 April, 2006.

                                                OIL AND GAS CONSERVATION COMMISSION

                                                              OF THE STATE OF COLORADO

                                                By: ___________________________________

                                                                David Shelton, Hearing Officer

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

April 28, 2006

AGREED TO AND ACCEPTED THIS _________DAY OF May, 2006.

XTO ENERGY INC.

By ____________________________________________

Title ___________________________________________

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                        This cause came on for hearing before the Commission at 9:00 a.m. on July 10, 2006, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for the approval of this Administrative Order by Consent.

                        ENTERED this__________day of July, 2006, as of July 10, 2006.

                                                                OIL AND GAS CONSERVATION COMMISSION

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

July 28, 2006