IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE BUCKBOARD FIELD, YUMA COUNTY, COLORADO Cause No. 331 Order No. 331-6

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 13, 2001 at 8:00 a.m., in the Trinidad and Raton Rooms, the Holiday Inn Trinidad, 3125 Toupal Drive, Trinidad, Colorado, after giving Notice of Hearing as required by law, on the verified application of Rosewood Resources, Inc. for an order to allow an optional second well to be drilled on certain 160-acre drilling and spacing units for the production of gas from the Niobrara Formation with the permitted well to be located no closer than 560 feet from the outer boundaries of the unit. In addition, the Applicant requests that for any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall also be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

FINDINGS

The Commission finds as follows:

1. Rosewood Resources, Inc. ("Rosewood"), as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On August 20, 1978, the Commission entered Order No. 331-2, establishing 160-acre drilling and spacing units covering Sections 7 through 11 and 14 through 23, Township 3 North, Range 46 West, 6th P.M., with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section upon which it is located. On August 2, 1994 the Commission entered Order No. 331-4, finding that one well would not efficiently and economically d rain certain 160-acre drilling and spacing units in this area and approved three additional wells. These additional wells, the HSR Stone 6-8 Well, the HSR Meyer 8-8 Well and the HSR Schafer 8-9 Well were never drilled.

5. On November 20, 2000, Rosewood filed with the Commission a verified application, amended on December 21, 2000, for an order allowing an optional second well to be drilled on the 160-acre drilling and spacing units described below for the production of gas from the Niobrara Formation with the permitted well to be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit. In addition, Rosewood requested that f or any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall also be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

Township 3 North, Range 46 West, 6th P.M. Section 7: E1/2 Section 8: N1/2 Section 9: All Section 10: N1/2, SE1/4 Section 14: All Section 15: All Section 22: All Section 23: All

6. Testimony and exhibits presented at the administrative hearing indicated that Rosewood has one hundred (100%) percent of the working interests in the application lands which are primarily irrigated farmland.

7. Testimony and exhibits presented at the administrative hearing indicated that, at the Yuma County Local Governmental Designee's request, Rosewood sent letters to the twenty (20) surface owners in the application lands, most of whom are also mineral owners in the application lands, advising them of Rosewood's application.

8. Testimony and exhibits presented at the administrative hearing showed that the Niobrara Formation in the application area has an average thickness of approximately thirty (30) feet and is a very porous, low permeability blanket chalk with some local faulting present.

9. Testimony and exhibits presented at the administrative hearing showed the initial gas in place has been calculated at 1.25 BCF, with only one-third of the gas in place recovered.

10. Further testimony and exhibits presented at the administrative hearing showed an optional second well will be economic and is necessary to prevent waste and recover additional reserves while protecting correlative rights of mineral owners.

11. At the time of the administrative hearing, Rosewood agreed to be bound by oral order of the Commission.

12. Based on the facts stated in the verified application, having received no protests to the application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow an optional second well to be drilled on certain 160-acre drilling and spacing units for the production of gas from the Niobrara Formation with the permitted well to be located no closer than 560 feet from the outer boundaries of the 1 60-acre drilling and spacing unit. In addition, the Commission should order that for any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall also be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

ORDER

NOW, THEREFORE IT IS ORDERED an optional second well is hereby allowed to be drilled on the 160-acre drilling and spacing units described below for the production of gas from the Niobrara Formation, with the permitted well to be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

Township 3 North, Range 46 West, 6th P.M. Section 7: E1/2 Section 8: N1/2 Section 9: All Section 10: N1/2, SE1/4 Section 14: All Section 15: All Section 22: All Section 23: All

IT IS FURTHER ORDERED that for any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall also be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

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.

ENTERED this day of February 2001, as of February 13, 2001.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 February 15, 2001 ??

(331#6)