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

REPORT OF THE COMMISSION

The Commission heard this matter on May 6, 2013, at the Weld County Southwest Services Complex, 4209 Weld County Road 24 ½, Longmont, Colorado, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 6, Township 6 North, Range 60 West, 6^th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 6 and 7, Township 6 North, Range 60 West, 6^th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Condor Energy Technology, LLC (“Condor” 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 July 8, 2010, the Commission entered Order No. 407-374 which, among other things, established 11 approximate 640-acre acre drilling and spacing units, and approved up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 6, Township 6 North, Range 60 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

5.         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 7, Township 6 North, Range 60 West, 6^th P.M. is subject to Rule 318.a. for the Niobrara Formation.

6.         On March 7, 2013, Condor, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 6, Township 6 North, Range 60 West, 6^th P.M., and establish an approximate 1280-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 6 North, Range 60 West, 6^th P.M.

Section 6:        All

Section 7:        All

7.         On April 23, 2013, Condor, 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.

8.         Land testimony and exhibits submitted in support of the Application by Sean Fitzgerald, Land Manager for South Texas Reservoir Alliance LLC as contract operator for Condor, showed that the surface of the Application Lands is owned in fee, the mineral ownership of the Application Lands is held in fee, and that Condor owns a partial leasehold ownership interest in the Application Lands.

9.         Geologic testimony and exhibits submitted in support of the Application by Amy K. Noack, Senior Geologist for South Texas Reservoir Alliance LLC as contract operator for Condor, showed an analysis of cross-sections from nearby Niobrara Formation type wells, demonstrating the Niobrara Formation underlies, and is generally of uniform thickness throughout the Application Lands. 

10.       Engineering testimony and exhibits submitted in support of the Application by Sean Fitzgerald, Engineering Manager for South Texas Reservoir Alliance LLC as contract operator for Condor, indicated that the use of horizontal wells in the Application Lands is necessary to increase the recovery of hydrocarbons from the reservoir and the economics utilized for the project are economic and efficient.

11.       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.

12.       Condor 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: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 6, Township 6 North, Range 60 West, 6^th P.M.; and 2) establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 6 and 7, Township 6 North, Range 60 West, 6^th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 6, Township 6 North, Range 60 West, 6^th P.M., is hereby vacated.

IT IS FURTHER ORDERED, that an approximate 1280-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and up to eight horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 6 North, Range 60 West, 6^th P.M.

Section 6:        All

Section 7:        All

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 Procedures 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 _____ day of May, 2013, as of May 6, 2013.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary