BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF COMMISSION

           The Commission heard this matter on September 19, 2011, at the Broomfield City & County Building, One Descombes Drive, Broomfield, Colorado 80020, upon application for an order to establish two approximate 640-acre drilling and spacing units for Section 20, Township 4 North, Range 62 West, 6th P.M. and Section 26, Township 11 North, Range 64 West, 6th P.M., and approving one horizontal well within each unit for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.     EOG Resources, Inc. (“EOG” or “Applicant”), 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  Section 11, Township 11 North, Range 64 West, 6^th P.M. is subject to this Rule for the Niobrara Formation.

5.  On April 27, 1998, the Commission adopted Rule 318A., which among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  On December 5, 2005, Rule 318A. was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  Section 20, Township 4 North, Range 62 West, 6^th P.M. was included in this Rule. 

6.  On July 21, 2011, EOG, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish two approximate 640-acre drilling and spacing units for the below-listed lands (the “Application Lands”), and approving one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted well to be located no closer than 600 feet from the boundaries of the unit:

Township 4 North, Range 62 West, 6^th P.M.

Township 11 North, Range 64 West, 6^th P.M.

7.  On September 7, 2011, EOG, by its attorney, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.

                        8.  Testimony and exhibits submitted in support of the Application shows that EOG owns a significant mineral interest in the Application Lands. The Niobrara Formation underlies the entire Application Lands, with a thickness range of 268 to 276 feet. The range of estimated drainage areas is between 17 acres to 248 acres, assuming matrix contribution. The drainage areas could be significantly larger if fractures are encountered. The testimony concluded that development of the Application Lands is expected to be economic.

                        9.  The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d.  In a letter dated September 7, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary in approving the Application.

10.  The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

11.   EOG agreed to be bound by oral order of the Commission. 

                        12.  Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to establish two approximate 640-acre drilling and spacing units for Section 20, Township 4 North, Range 62 West, 6th P.M. and Section 26, Township 11 North, Range 64 West, 6th P.M., and approving one horizontal well within each unit for the production of oil, gas, and related hydrocarbons  of the Niobrara Formation.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre drilling and spacing units are hereby established for the below-listed lands, and one horizontal well is hereby approved within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted well to be located no closer than 600 feet from the boundaries of the unit:

Township 11 North, Range 64 West, 6^th P.M.

IT IS FURTHER ORDERED, that two approximate 640-acre drilling and spacing units are hereby established for the below-listed lands, and one horizontal well is hereby approved within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted well to be located no closer than 460 feet from the boundaries of the unit:

Township 4 North, Range 62 West, 6^th P.M.

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

                        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 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.

                        ENTERED this    23^rd   day of September, 2011, as of September 19, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Peter J. Gowen, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

September 23, 2011