BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 429

ESTABLISHMENT OF FIELD RULES TO GOVERN )

OPERATIONS IN THE BRUSH CREEK FIELD, ) ORDER NO. 429-2

MESA COUNTY, COLORADO )

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 10:00 a.m. on August 16, 2004, in the Birch Banquet Room, Ramada Inn & Suites, 124 W. 6^th Street, Glenwood Springs, Colorado after giving Notice of Hearing as required by law, on the verified application of Laramie Energy, LLC for an order to allow three additional wells to be drilled, at the option of the operator, within the existing 160-acre drilling and spacing units for certain lands for the production of gas and associated hydrocarbons from the Mesaverde Formation.

FINDINGS

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.

4. On May 30, 1985, the Commission issued Order No. 429-1, which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation for the below-listed lands, with the permitted well located no closer than 600 feet from the quarter section lines and wells presently producing or producible, or permitted within the proposed area designated as the permitted well for the unit upon which they are located:

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

Sections 1 and 2: All

Sections 11 through 14: All

5. On June 29, 2004, Laramie, by its attorney filed with the Commission a verified application for an order to allow three additional wells to be drilled, at the option of the operator, within the existing 160-acre drilling and spacing units for the below-listed lands, for the production of gas and associated hydrocarbons from the Mesaverde Formation.

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

Section 2: All

Sections 11 through 14: All

6. Testimony and exhibits presented at the administrative hearing showed Laramie’s leasehold in the application area and indicated that for the initial program Laramie plans to drill an additional eight (8) wells from three (3) well pads.

7. Testimony and exhibits presented at the administrative hearing described how the Brush Creek Field is located eleven (11) miles south of Rulison Field, that the field is located between the Buzzard and Buzzard Creek Fields in Mesa County, and that all of these fields produce from tight gas sands.

8. Testimony and exhibits presented at the administrative hearing indicated that the field currently has seven (7) wells producing from the Mesaverde Formation and one (1) well producing from the Wasatch Formation. Additional testimony indicated that the Williams Fork Formation has the most pay interval with a thickness of 1600 to 2000 feet of pay.

9. Testimony and exhibits presented at the administrative hearing indicated that recovery factors for the existing wells vary from .8% to 1.8% of original gas in place, that the wells in the Brush Creek Field could produce 1.2 BCF per well by perforating additional pay and using newer completion techniques, and that drainage areas for the Brush Creek Field are estimated to be less that fifteen (15) acres per well using an estimated ultimate recovery of 1.2 BCF per well.

10. Additional testimony indicated that four (4) wells per 160-acre drilling and spacing unit are necessary to effectively drain each spacing unit, that 160-acre drilling and spacing units are not smaller than the area that can be efficiently and economically drained by four (4) wells, that gas will be left in place unless additional wells are approved for the Brush Creek Field, and that correlative rights will be protected with additional drilling.

11. At the time of the administrative hearing, Laramie Energy, LLC, 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 three (3) additional wells to be drilled, at the option of the operator, within the existing 160-acre drilling and spacing units for described above in Finding No. 5 for the production of gas and associated hydrocarbons from the Mesaverde Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that Order No. 429-1 is hereby amended to allow three (3) additional wells to be drilled, at the option of the operator, within the existing 160-acre drilling and spacing units for the below-listed lands, for the production of gas and associated hydrocarbons from the Mesaverde Formation.

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

Section 2: All

Sections 11 through 14: All

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.

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 thirty (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 September, 2004, as of August 16, 2004

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

September 9, 2004