REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 10:00 a.m. on August 18, 2003, in the Petroleum Hall at the Green Center, Colorado School of Mines, 1500 Illinois Street, Golden, Colorado for an order to increase the number of wells drilled into and produced from the Williams Fork Formation, the equivalent of one well per 20 acres in certain 640-acre drilling and spacing units.

FINDINGS

The Commission finds as follows:

1. Tom Brown, Inc. ("TBI"), 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 March 14, 1994 (corrected on March 21, 2000), the Commission issued Order Nos. 440-14, 479-3 and 139-26, which allowed eight (8) wells to be optionally drilled into and produced from the Williams Fork Formation on certain lands in the established 640-acre drilling and spacing units, including Sections 1 and 2, Township 7 South, Range 94 West, 6th P.M., with the permitted well to be located no closer than 600 feet from the lease line nor 1, 200 feet from any other producible or drilling oil and gas well in the Williams Fork Formation.

5. On March 15, 1995 (corrected on February 17, 2000), the Commission issued Order Nos. 440-16, 479-5 and 139-28, which allowed sixteen (16) wells to be optionally drilled into and produced from the Williams Fork Formation on certain lands in the established 640-acre drilling and spacing units, including Sections 1 and 2, Township 7 South, Range 94 West, 6th P.M., with the permitted well to be located no closer than 400 feet from the bounda ries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells.

6. On June 26, 2003, TBI, by its attorney, filed with the Commission verified applications for an order to increase the number of wells which can be drilled into and produced from the Williams Fork Formation in Sections 1 and 2, Township 7 South, Range 94 West, 6th P.M., the equivalent of one well per 20 acres, with the permitted well to be located no closer than 200 feet from the boundaries of the drilling unit and no closer downhole than 400 feet from any existing Williams Fork Formation well or wells. In addition, TBI states that no more than one pad shall be used for the drilling of Williams Fork Formation wells per governmental quarter quarter section and that no more than two Williams Fork Formation wells shall be drilled per governmental quarter quarter section without exception being granted by the Director.

7. Testimony and exhibits presented at the administrative hearing showed that TBI will drill all 20 acre density wells directionally, that notice was given to all leasehold or mineral interests within the application lands and cornering and contiguous to the application lands, that the majority of the lands are federal minerals, that surface owner agreements have been entered into on existing well pads for additional wells to be drilled, th at TBI has 50% working interest in each unit, with Williams Production having the remainder, and that grazing is the current surface use on the application lands.

8. Testimony and exhibits presented at the administrative hearing showed that OGIP for Section 1 is calculated at 117.3 BCF and that OGIP for Section 2 is calculated at 111.3 BCF. Additional testimony showed that the average EUR for Section 1 is 1.7 BCF and the average EUR for Section 2 of 1.0 BCF. Further testimony showed that the pressure gradient for offset wells is similar to the pressure gradient for the parent wells, that gas is not being drained on 40-acre units, that waste will occur if well density is not increased and that correlative rights will be protected with increased density.

9. Testimony and exhibits presented at the administrative hearing showed that TBI has developed these sections on 40-acre density, that three (3) wells in Section 2 are yet to be drilled on 40-acre tracts, and that TBI is willing to adopt the provisions from previously issued 20 acre density orders.

10. At the time of the administrative hearing, Tom Brown, Inc. agreed to be bound by oral order of the Commission.

11. Based on the facts stated in the verified applications, having received no protests and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order to increase the number of wells drilled into and produced from the Williams Fork Formation to the equivalent of one well per 20 acres in the 640-acre drilling and spacing units described in Finding No. 6 above, with the permitted well to be located no clo ser than 200 feet from the boundaries of the drilling unit and no closer downhole than 400 feet from any existing Williams Fork Formation well or wells.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 440-16, 479-5 and 139-28 are hereby amended to increase the number of wells drilled into and produced from the Williams Fork Formation to the equivalent of one well per 20 acres in the 640-acre drilling and spacing units described below, with the permitted well to be located no closer than 200 feet from the boundaries of the drilling unit and no closer downhole than 400 feet from any existing Williams Fork Formation well or wells.

Township 7 South, Range 94 West, 6th P.M. Sections 1 and 2: All

IT IS FURTHER ORDERED, that this order shall not result in more than one (1) well site or multi-well sites per forty (40) acre nominal governmental quarter-quarter section (except as previously authorized by Commission Order), nor shall this order result in additional wells that would result in more than one (1) well site or multi-well sites per forty (40) acre nominal governmental quarter-quarter section within existing drilling units.

IT IS FURTHER ORDERED, that the following shall be applied to all new surface wellsites and existing surface wellsites on which new wells are drilled that will be constructed in the application lands, in addition to any requirements of applicable existing Commission Rules and Regulations:

Site Specific Reclamation Plan Requirements The operator shall submit a site-specific reclamation plan along with each Application for Permit-to-Drill, Form 2 ("APD") for all wells in the application lands for prior approval by the Director. The Applicant's "2003 Reclamation Plan" is recognized and endorsed as a suitable guidance document for wellsite and access road design, construction, and reclamation in the application lands. The operator shall provi de an informational copy of the APD, the Drill Site/Access Road Reclamation, Form 2A, and the site-specific reclamation plan to the surface owner and a complete informational copy of the APD and all other attachments, including the site-specific reclamation plan, to the Garfield County Local Governmental Designee ("LGD") at or before the time of filing with the Director. The Director shall provide the Garfield County LGD with formal notice of the filing of the APD by providing a copy of the APD to the Garfield County LGD. The operator shall confirm that the requirement to provide the surface owner with a copy of the APD has been completed or waived before the Director approves an APD. A copy of the approved APD, including any conditions of approval, shall be provided by the Director to the Garfield County LGD and to the operator. The operator shall provide a copy of the approved APD, including any con ditions of approval, to the surface owner prior to commencement of operations with heavy equipment. The provisions of the site-specific reclamation plan may be attached as conditions of approval for the Permit-to-Drill. The discretionary provisions of the plan should be structured according to the outline shown in Appendix 1. The plan shall contain the following mandatory provisions: Interim and Final Reclamation Goals Considering Surface Owner Input Schedule and Milestones for Reclamation Revegetation Reference Areas The operator shall identify the revegetation reference areas and provide a description, photographs and a location map. Soil Horizons The operator shall conduct a high intensity soil survey by mapping, sampling, and analysis and describe methods that were used for this determination. For wellsites where the operator has conducted high intensity soil surveys under previous Commission orders, such surveys shall fulfill this requirement. Wellsite Diagrams Cut and fill diagrams for construction of wellsite, including cross sections and plan views with topographic contours. Site map showing the location of the wellbore, drilling and completion pits, access road, soil stockpiles, and layout of drilling and completion equipment. Interim reclamation diagrams showing wellsite layout for life of well, including fencing, reclaimed and unreclaimed areas, and layout of production facilities. Final reclamation diagrams showing the former wellsite after plugging and abandonment of the well including cross sections and plan views. Favorable Growth Medium Requirements A minimum of twelve (12) inches of favorable growth medium shall be reapplied during interim and final reclamation of non-crop land. If this quantity of material is not available, existing soils shall be treated with amendments and fertilizer to create a favorable growth medium. Rocks greater than eight (8) inches in diameter shall not make up more than ten percent (10%) of the favorable growth medium. Mulching Requirements All wellsites, access roads, and flowline and gathering line rights-of-way shall be mulched immediately after seeding with a weed-free straw or other type of weed-free mulch. Fencing Requirements Wellsites shall be fenced to ensure success of interim and final revegetation. Once revegetation has been shown to be successful, fencing may be removed. Site Slope and Recontouring Requirements Steep Slope Restriction To maintain site stability and productivity, surface disturbance for oil and gas wellsites shall not be allowed on slopes greater than fifty percent (50%). Interim Reclamation All disturbed areas not reasonably needed for production operations, including wellsites, flowline and gathering line rights-of-way and access roads, shall be recontoured by placing fill material back into cut areas to approximate original contours. Slopes shall be recontoured to minimize areas that exceed a 3:1 slope. Any areas exceeding the 3:1 slope criteria or highwalls shall be reclaimed using enhanced stabilization and erosion prevention methods. Areas recontoured during interim reclamation shall be reseeded with the intent of establishing vegetation suitable for final reclamation. Final Reclamation Additional disturbance of native or previously reclaimed areas shall be minimized. Recontouring shall not be required in areas that have been successfully reclaimed. Slope requirements shall be the same as those for interim reclamation. Reclamation Success Monitoring And Revegetation Inspections The operator shall hire a third party contractor to monitor and inspect until interim and final reclamation and revegetation efforts meet or exceed ninety percent (90%) of the desirable plant cover found on the previously identified and approved reference areas and meet the 1000 Series Rule requirements. The operator shall submit a written report on the success of the reclamation and revegetation to the Director on an annual basis by December 31st of each year. This report shall include photographs of each site and the reference areas, and discussion of any additional work required to achieve the 90 percent (90%) plant cover and other reclamation requirements. Sanitary Facilities Requirements All operator and contract personnel are required to use self-contained sanitary facilities while conducting oil and gas operations in the application lands. Spill Reporting To Surface Owners In the event of a spill of E&P waste or any hazardous substance, the operator shall immediately notify the surface owner(s) of the land(s) where the spill occurred and any adjacent lands that may be impacted of the quantity, location, and type of substance released. Surface owners shall be notified in writing if telephone or other verbal communication is unsuccessful. Surface Casing Setting Depth and Shoe Integrity Requirements The requirements in the COGCC staff documents "Notice to All Operators Drilling Williams Fork Formation Wells in Garfield County, Surface Casing Depth and Modification of Leakoff Test Requirements" dated July 24, 1998, and "Notice to All Operators Drilling Williams Fork Formation Wells in the Grand Valley Field, Garfield County, Surface Casing Depth Requirements" dated August 9, 1998 are hereby adopted as they apply to the application lands. The operator shall perform a surface casing shoe integrity test on all wells drilled within the application lands. Each surface casing shoe integrity test shall be designed to test the drilled out surface casing shoe to a pressure equivalent to the hydrostatic pressure exerted by a full column of mud with the maximum mud weight anticipated during the drilling of the well plus an additional one-half (1/2) pound per gallon. The maximum mud weight anticipa ted during the drilling of the well for the purpose of the surface casing shoe integrity test shall be determined for each well by the operator. If at any depth during the drilling of the well the actual mud weight exceeds the anticipated mud weight used for the surface casing shoe integrity test, the operator shall be required to set and cement a string of either intermediate casing or production casing at that depth. The operator shall report the results of the surface casing shoe integrity test, including the mud weight used, the pressure applied, and the total calculated mud weight equivalent, to the Director via facsimile or e-mail within twenty-four (24) hours of conducting the test. The report shall not be required if the surface casing shoe integrity test is witnessed by a COGCC representative. Loss of Well Control Notice to Residents In the event of a surface or subsurface loss of well control, the operator shall notify all residents within one (1) mile of the well as soon as possible. The residents shall be notified in writing if telephone or other verbal communication is unsuccessful. Wildlife Requirements The operator shall notify the Colorado Division of Wildlife ("CDOW") of the location of any proposed additional wellsites and advise the Director of the date such notice was provided. If the Director receives comments from the CDOW within ten (10) days of the date notice was provided, such comments may be considered in applying conditions to any APD. The Applicant's 2003 Wildlife and Wildlife Habitat Protection Plan is recognized and endorsed as a suitable guidance document for wildlife. Water Well Sampling Requirements The operator shall select for sampling six (6) water wells or springs located within or in close proximity to the area of drilling activity planned for each year. A list of the selected wells or springs shall be submitted to the COGCC by January 31st of that year. Each well or spring to be sampled shall be no further than one (1) mile from the perimeter of that year's drilling activity. If fewer than six (6) wells or s prings exist within one (1) mile of the year's drilling activity the operator shall sample all such wells and springs. For water wells or springs where the operator has conducted sampling under previous Commission orders, such sampling shall fulfill this requirement. The water samples shall be tested for benzene, toluene, ethyl benzene, and xylenes, methane, major cations and anions, TDS, iron and manganese, nitrates, nitrites, pH, presence of bacteria, specific conductance, and hydrogen sulfide. The initial baseline testing shall occur prior to the drilling of the proposed additional wells. Within one (1) year after completion of the proposed additional wells, a "post completion" test shall be performed for the same parameters above and repeated three (3) and six (6) years thereafter. If no significant changes from the baseline have been identified after the six (6) year test, then no further testing shall be required. Additional "post complet ion" test(s) may be required if changes in water quality are identified during follow-up testing. The Director may require the operator to conduct further water well sampling at any time in response to complaints from water well owners. If free gas or a methane concentration greater than 2 mg/L is detected, then a sample of the gas shall be collected and analyzed for composition and the ratio of stable carbon isotopes in the methane to determine gas type (thermogenic, biogenic or mixture). If the testing results indicate biogenic gas, then no further isotopic testing shall be required. If the results indicate thermogenic gas or a mixture of biogenic and thermogenic gas, the operator an d the Director shall determine an investigation strategy to determine the source of the gas. Copies of all test results described above shall be provided to the COGCC, Garfield County, and the landowner where the water quality testing well is located within three (3) months of collecting the samples used for the test. Air Emission Requirements The operator shall install emission control equipment on production facilities located within one thousand (1,000) feet of an occupied building or in response to an odor complaint investigation that identifies an offending facility greater than one thousand (1,000) feet from an occupied building. ADDITIONAL REQUIREMENTS Annual Drilling Plan The operator shall provide the Director and the Garfield County LGD a projected calendar year drilling plan prior to December 1st of each preceding year. The operator shall not be bound by this plan which would be expected to be adjusted in response to changes in product prices, rig availability, corporate priorities and other factors. Onsite Inspections The Director shall conduct an onsite inspection: for any new wellsite whenever the operator and surface owner have not entered into a surface use agreement specifically addressing the proposed wellsite and access road; whenever the surface wellsite is proposed to be located within any subdivision that has been approved by Garfield County; or when ever the LGD believes that a significant adverse environmental impact or adverse impact to public health, safety and welfare may occur and requests an onsite inspection within ten (10) days from the day the Director sends the APD to the LGD per Rule 303.d. The Director may also conduct an onsite inspection to investigate conditions that threaten to cause a significant adverse environmental impact or that threaten to adversely impact public health, safety and welfare. The Director shall report any onsite inspections conducted at the monthly C ommission hearing following the date on which any onsite inspection was conducted. When the Director conducts an onsite inspection, the Director shall invite representatives of the surface owner, the operator, and LGD to attend. The Director shall attempt to select a mutually acceptable time for the representatives to attend. The inspection shall be conducted within thirteen (13) days, or as soon as practicable thereafter, of the date on which the APD is received by the COGCC. Site-Specific Drilling Permit Conditions of Approval Following the onsite inspection, the Director shall apply appropriate site-specific drilling permit conditions of approval, if necessary, to prevent or mitigate public health, safety and welfare or significant adverse environmental impacts taking into consideration cost-effectiveness and technical feasibility and relevant geologic and petroleum engineering conditions as well as prevention of waste, pro tection of correlative rights, and promotion of development. The Director shall carefully consider any relevant input from the surface owner and Garfield County and any conditions that have been agreed to between the surface owner, Garfield County, and the operator with regard to potential conditions of approval. Surface owner damage compensation shall not be relevant to such consideration. Examples of the types of impacts and conditions of approval that might be applied if determined necessary by the Director include (this list is not prescriptive or all inclusive): a.) visual or aesthetic impacts - moving the proposed surface wellsite or access road to take advantage of natural features for screening; constructing artificial features for screening b.) surface impacts - moving or reducing the size, shape, or orientation of the surface wellsite or access road to avoid disturbance of natural features or to enhance the success of future reclamation activities; using an existing surface wellsite or access road to avoid the impacts of new construction; using a closed drilling fluid system instead of reserve pits to avoid impacts to sensitive areas; directional drilling from an existing surface wellsite c.) noise impacts - locating or orienting motors and compressors used in drilling, hydraulic fracturing, well completion, and production operations to reduce noise; installing sound barriers to achieve compliance with COGCC rules d.) dust impacts - watering roads as necessary to control dust during drilling and completion operations e.) ground water impacts - collecting and analyzing water and gas samples from existing water wells or springs; installing monitoring wells, collecting samples, and reporting water, gas and pressure data f.) safety impacts - installing security fencing around wellheads and production equipment g.) wildlife impacts - limiting drilling and completion operations during certain seasonal time periods when site-specific conditions warrant h.) financial assurance - requiring additional financial assurance for sites with difficult reclamation conditions or if repeated reclamation attempts have been unsuccessful If the operator objects to any of the conditions of approval for the Permit-to-Drill, the Director shall suspend the APD and properly notice and set the matter for the next regularly scheduled Commission hearing at which time the Commission may determine conditions of approval for the Permit-to-Drill. The surface owner and Garfield County shall be granted intervention by right in such a hearing. Hearing to Address Impacts If the Director has reasonable cause to believe that any existing or proposed oil and gas operations are causing, or are likely to cause, public health, safety and welfare or significant adverse environmental impacts within COGCC jurisdiction that may not be adequately addressed by COGCC rules or orders, the Director may properly notice and set the matter for the next regularly scheduled Commission hearing to request an order f or appropriate investigative or remedial action. APPENDIX 1 RECLAMATION PLAN - OUTLINE OF DISCRETIONARY PROVISIONS AFFECTED COMMUNITIES/HABITATS PREDISTURBANCE INVENTORY AND SITE PLANNING Wellpad and Facility Site Construction, Roads, Pipelines TOPSOIL AND SUBSOIL DETERMINATION AND SALVAGE SOIL STOCKPILING TEMPORARY REVEGETATION EFFORTS SOIL AMENDMENTS AND FERTILIZERS STABILIZATION AND INTERIM RECLAMATION TOPSOIL AND WETLAND SOIL REPLACEMENT FACILITY AND STRUCTURE REMOVAL BACKFILLING, GRADING, AND RECONTOURING SEEDBED PREPARATION/SOIL TILLAGE SEEDING METHODS AND TIMES SEED MIXTURES EROSION CONTROL BLANKETS OTHER SPECIAL PROVISIONS FOR EROSION CONTROL WEED CONTROL PLAN DESCRIPTION OF PROVISIONS TO MEET MANDATORY REQUIREMENTS FOR FAVORABLE GROWTH MEDIUM, MULCHING, FENCING, SLOPES AND RECONTOURING

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.

ENTERED this day of September 2003, as of August 18, 2003.

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 2, 2003

2 (139#39)

(139#39)

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