BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                         )                                 CAUSE NO. 371
ESTABLISHMENT OF FIELD RULES TO GOVERN                     )
OPERATIONS IN THE BUZZARD FIELD,                                        )                                 ORDER NO. 371-3

MESA COUNTY, COLORADO                                                           )                                 CORRECTED

                        This cause came on for hearing before the Commission at 10:00 a.m. on June 5, 2006, in the Council Chamber Room of the Ambulance Building, 304 West 3^rd Street, Wray, Colorado, for an order to vacate Section 30, Township 9 South, Range 94 West, 6^th P.M. from the provisions of Order No. 371-1, and allow wells to be drilled optionally on the lands, the equivalent of one well per 10 acres, for the production of gas from the Mesaverde Group.

                        The Commission finds as follows:

                        1. Laramie Energy, LLC ("Laramie"), 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 pursuant to the Oil and Gas Conservation Act.

                        4. On May 18, 1981, the Commission issued Order No. 371-1, which among other things, established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation, with the permitted well to be located no closer than 660 feet from the boundaries of the unit for the below-listed lands:

                        5. On May 21, 1984, the Commission issued Order No. 371-2, which among other things, deleted Section 30, Township 9 South, Range 94 West, 6^th P.M. from the spaced area of the Buzzard Field and exempted these lands from Rule 318. only insofar as it pertains to the Cameo Coal Section of the Mesaverde Formation, however these lands remained subject to Order No. 371-1 for the production of gas from all other zones of the Mesaverde Formation.

                        6. On April 18, 2006, Laramie Energy, LLC, by its attorney, filed with the Commission a verified application to vacate Section 30, Township 9 South, Range 94 West 6^th P.M. from the provisions of Order No. 371-1 for the production of gas from the Mesaverde Group. The order should allow the equivalent of one well per 10 acres to be optionally drilled for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 100 feet from lease lines without exception granted by the Director. In cases where the application lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Mesaverde Formation wells, the well should be located downhole no closer than 200 feet from lease lines abutting or cornering such lands, without exception granted by the Director

                        7. On May 22, 2006, EnCana Oil & Gas (USA) Inc. ("EnCana"), by its attorney, submitted a protest to the application alleging that EnCana owned working interest in portions of the Application Lands and that granting the Application would constitute waste in this portion of the field.

                        8. On May 25, 2006, Laramie agreed to withdraw the below-listed lands containing a working interest owned by EnCana from its application. Based on this revision, EnCana agreed to withdraw its protest to the application.

Township 9 South, Range 94 West 6^th P.M.

Section 30: W½, NE¼ NE¼

                        9. On May 26, 2006, subsequent to the administrative hearing, the Board of County Commissioners of Mesa County submitted a letter to the COGCC staff indicating they had no specific comments or concerns regarding Laramie’s applications.

                        10. Testimony and exhibits presented at the administrative hearing showed that the Mesaverde Formation is composed of the Williams Fork Formation and the Iles Formation, which is further composed of the Rollins, the Cozzette, and the Corcoran Formations.

                        11. Testimony and exhibits presented at the administrative hearing showed that the gas saturated interval of the Williams Fork Formation in the application area increases to the northeast, the variability in the thickness of the net sand in the Cozzette and Corcoran Formations and the depositional discontinuities in the sands of the Williams Fork Formation and the Cozzette and Corcoran Formations.

                        12. Testimony and exhibits presented at the administrative hearing showed that wells in the Buzzard Field contain an average of 130 feet of net Williams Fork pay interval, and that the ultimate recovery from wells drilled on 10-acre density in this area will be approximately 0.6 bcf per well.

                        13. Testimony and exhibits presented at the administrative hearing showed that drilling wells on 10-acre density is required to recover all oil and gas in the application area and that wells drilled on 10-acre density in the application area would be economic.

                        14. The above-referenced testimony and exhibits show that the proposed density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

                        15. Laramie Energy, LLC, agreed to be bound by oral order of the Commission.

                        16. Based on the facts stated in the verified amended application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to vacate the NW¼ NE¼, S½ NE¼, and the SE¼, all in Section 30, Township 9 South, Range 94 West, 6^th P.M. from the provisions of Order No. 371-1.

                        NOW, THEREFORE IT IS ORDERED, that the NW¼ NE¼, S½ NE¼, and the SE¼, all in Section 30, Township 9 South, Range 94 West, 6th P.M. are hereby vacated from the provisions of Order No. 371-1.

                        IT IS FURTHER ORDERED, that the equivalent of one well per 10 acres is hereby approved to be optionally drilled for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 100 feet from lease lines without exception granted by the Director. In cases where the application lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Mesaverde Formation wells, the well shall be located downhole no closer than 200 feet from lease lines abutting or cornering such lands, without exception granted by the Director.

                        IT IS FURTHER ORDERED, that no more than four (4) Mesaverde Formation wells shall be drilled on the application lands per governmental quarter quarter section. Mesaverde Formation wells to be drilled on the application lands shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on any quarter quarter section unless exception is granted by the Director.

                        ENTERED this 23^RD day of June, 2006, as of June 5, 2006.

                                                OIL AND GAS CONSERVATION COMMISSION

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

November 15, 2006