BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 440

ESTABLISHMENT OF FIELD RULES TO GOVERN )

OPERATIONS IN THE GRAND VALLEY FIELD, ) ORDER NO. 440-34

GARFIELD COUNTY, COLORADO )

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 10:00 a.m. on June 5, 2006, in the Council Chamber Room of the Ambulance Building, 304 West 3rd Street, Wray, Colorado, for an order to allow an exception to the permitted location specified in Order No. 440-23 for the producing intervals and the bottomhole location of the GM-243-1 Well to be located in the N½ S½ of Section 1, Township 7 South, Range 96 West, 6^th P.M., in the 320-acre drilling and spacing unit consisting of the S½ of said Section 1, for the production of gas from the Williams Fork Formation.

The Commission finds as follows:

1. Williams Production RMT Company ("Williams"), 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 March 9, 1990, the Commission issued Order No. 479-1 which, among other things, established 320-acre drilling and spacing units for the production of gas from the Mesaverde Formation including the N½ and S½ of Section 1, Township 7 South, Range 96 West, 6^th P. M.

5. On April 30, 2003, the Commission issued Order No. 440-23, which among other things, approved the S½ N½ and the N½ S½ of Section 1, Township 7 South, Range 96 West, 6^th P.M. for the drilling of Williams Fork Formation wells on a ten (10) acre density basis with each permitted well to be located no closer downhole than 100 feet to the drilling and spacing unit boundary unless the exterior lands of the unit boundary have not also been granted ten (10) acre density drilling for the Williams Fork Formation, in which event the well may be located no closer downhole than 200 feet to the drilling and spacing unit boundary.

6. On February 26, 2000, Barrett Resources Corporation (now Williams Production RMT Company, "Williams") commenced the drilling of the GM-243-1 Well from a surface location in the SW¼ NW¼ of Section 1, Township 7 South, Range 96 West, 6^th P. M. and completed the well as a producer from the Williams Fork Formation. The well was not drilled directionally. Subsequently, due to the greater density of Williams Fork Formation wells being drilled in the area, Williams undertook to survey gyroscopically the entire length of each of its existing wells drilled in the general area of the drilling unit and discovered that the GM-243-1 Well had producing interval and bottom hole locations in the adjacent S½ 320-acre drilling and spacing unit. Following such discovery of this improper downhole location, Williams proposed a fair and reasonable formula to allocate production from the well to net revenue interest owners both within the N½ of said Section 1 and within the drilling and spacing unit which had been encroached upon, being the S½ of Section 1, Township 7 South, Range 96 West, 6^th P.M.

7. On March 22, 2006, Williams, by its attorney, filed with the Commission a verified application for an order to allow an exception to the permitted location specified in Order No. 440-23 for the producing intervals and the bottomhole location of the GM-243-1 Well to be located in the N½ S½ of Section 1, Township 7 South, Range 96 West, 6^th P.M., in the 320-acre drilling and spacing unit consisting of the S½ of Section 1.

8. The verified application states that the granting of the described exception location will allow proper development of the Williams Fork Formation to occur, will not promote waste, will not violate correlative rights, and will assure the greatest ultimate recovery of gas and associated hydrocarbon substances from the reservoir.

9. Testimony and exhibits presented at the administrative hearing showed that the well has been shut-in since August of 2004, when the exact bottomhole location was discovered and that proper payments of proceeds have been distributed to the mineral owners according to the actual bottomhole producing location of the well.

10. Williams Production RMT Company agreed to be bound by oral order of the Commission.

11. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow an exception to the permitted location specified in Order No. 440-23 for the producing intervals and the bottomhole location of the GM-243-1 Well to be located in the N½ S½ of Section 1, Township 7 South, Range 96 West, 6^th P.M., in the 320-acre drilling and spacing unit consisting of the S½ of said Section 1.

NOW, THEREFORE, IT IS ORDERED, that an exception to the permitted location specified in Order No. 440-23, is hereby granted for the producing intervals and the bottomhole location of the GM-243-1 Well to be located in the N½ S½ of Section 1, Township 7 South, Range 96 West, 6^th P.M., in the 320-acre drilling and spacing unit consisting of the S½ of said Section 1, for the production of gas from the Williams Fork Formation.

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

ENTERED this day of June, 2006, as of June 5, 2006.

OIL AND GAS CONSERVATION COMMISSION

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 23, 2006