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

REPORT OF THE COMMISSION

The Commission heard this matter on January 23, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish one approximate 160-acre drilling and spacing unit for the SE¼, Section 18, Township 4 North, Range 63 West, 6^th P.M., to accommodate the drilled Sater CC 18-23 Well (API No. 05-123-30883) for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

FINDINGS

The Commission finds as follows:

1.    Noble Energy, Inc. (“Noble” 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.    On April 27, 1998, the Commission adopted Rule 318A., the Greater Wattenberg Well Location Rule 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.  Pursuant to Rule 318A.j., Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells. Section 18, Township 4 North, Range 63 West, 6^th P.M. is subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

5.    On December 13, 2011, Noble, by its attorneys, filed with the Commission a verified amended application (“Amended Application”) for an order to establish an approximate 160-acre drilling and spacing unit for the below-listed lands (“Application Lands”), to accommodate the drilled Sater CC 18-23 Well (API No. 05-123-30883), for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director:

Township 4 North, Range 63 West, 6^th P.M

Section 18:    SE¼

6.    On January 9, 2012, Noble, by its attorneys, 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.

7.    Land testimony and exhibits submitted in support of the Application by Joseph H. Lorenzo, Senior Land Manager for Noble, showed that Noble holds a 75 percent leasehold ownership in the Application Lands.

8.    Geologic testimony and exhibits submitted in support of the Application by Ron Pritchett, Senior Geologist for Noble, indicates that the Niobrara Formation is generally of uniform thickness throughout the Application Lands, ranging from 259 to 268 feet; and that the thickness of the Codell Formation ranges from 13 to 14 feet. 

9.    Engineering testimony and exhibits submitted in support of the Application by Ryan Sullivan, Engineering Team Lead for Noble, indicated that ultimate recovery of hydrocarbons using existing vertical wells would be approximately 5.2 percent, and that an 160-acre drilling and spacing unit will avoid waste of natural resources, protect correlative rights, and is in the best interest of the mineral owners.

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.  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 January 6, 2012, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.

12. Noble agreed to be bound by oral order of the Commission. 

13.  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 one approximate 160-acre drilling and spacing unit for the SE¼, Section 18, Township 4 North, Range 63 West, 6^th P.M., to accommodate the drilled Sater CC 18-23 Well (API No. 05-123-30883), for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that an approximate 160-acre drilling and spacing unit is hereby established, for the below-listed lands, to accommodate the drilled Sater CC 18-23 Well (API No. 05-123-30883), for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the unit, without exception being granted by the Director:

Township 4 North, Range 63 West, 6^th P.M

Section 18:    SE¼

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   26^th  day of January, 2012, as of January 23, 2012.

                                                                        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

January 26, 2012