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 PARACHUTE FIELD, ) ORDER NO. 440-43

GARFIELD COUNTY, COLORADO )

report of the commission

This cause came on for hearing before the Commission at 9:00 a.m. on March 26, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate a 320-acre drilling and spacing unit established for the production of gas and associated hydrocarbons from the Mesaverde Formation for certain lands in Township 6 South, Range 95 West, 6^th P.M., and to establish an approximate 40-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Williams Fork Formation.

FINDINGS

The Commission finds as follows:

1. Williams Production RMT Company (“Williams”) 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. 440-11, which, among other things, established 320-acre drilling and spacing units for certain lands, including the E½ of Section 26, Township 6 South, Range 95 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.

5. On July 28, 2006, the Commission issued Order Nos. 139-64 and 440-35, which, among other things, allowed the equivalent of one (1) well per ten (10) acres to be drilled on certain lands, including the SE¼ SE¼ of Section 26, Township 6 South, Range 95 West, 6^th P.M.

6. On February 2, 2007, Williams, by its attorney, filed with the Commission a verified application to vacate the 320-acre drilling and spacing unit consisting of E½ of Section 26, Township 6 South, Range 95 West, 6^th P.M. and establish the SE¼ SE¼ of said Section 26 as an approximate 40-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group and to allow the equivalent of one (1) well per ten acres.

All future Williams Fork Formation wells drilled on the SE¼ SE¼ of said Section 26 should be located downhole anywhere upon such lands be no closer than one hundred (100) feet from the outside boundary of the drilling and spacing unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density downhole drilling for the Williams Fork Formation, in which event the Williams Fork Formation wells to be drilled upon the application lands should be drilled downhole no closer than two hundred (200) feet from the portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for the Williams Fork Formation wells has not been ordered by the Commission.

All Williams Fork Formation wells drilled upon the SE¼ SE¼ of said Section 26 will be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.

7. On March 15, 2007, Williams, by its attorney, 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. Testimony and exhibits submitted in support of the application indicated that Williams owns leasehold interests in the SE¼ SE¼ of Section 26, Township 6 South, Range 95 West, 6^th P.M., but owns very little of the leasehold interest in the remainder of the E½ of said Section 26. In addition, the remainder of the E½ of said Section 26 includes some federal oil and gas minerals which are not leased and not expected to be leased in the near future. Williams maintains that vacation of the described 320-acre drilling and spacing unit and the establishment of an approximate 40-acre drilling and spacing unit consisting of the SE¼ SE¼ of said Section 26 for the Williams Fork Formation will allow the SE¼ SE¼ of said Section 26 to be timely drilled for the production of gas and associated hydrocarbon substances from the Williams Fork Formation.

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

10. 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.b., the Commission should enter an order to vacate the 320-acre drilling and spacing unit consisting of E½ of Section 26, Township 6 South, Range 95 West, 6^th P.M. and establish the SE¼ SE¼ of said Section 26 as an approximate 40-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, and to allow the equivalent of one (1) well per ten (10) acres to be drilled on said unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the 320-acre drilling and spacing unit consisting of the E½ of Section 26, Township 6 South, Range 95 West, 6th P.M. established for the Mesaverde Formation under Order No. 440-11 is hereby vacated and an approximate 40-acre drilling unit consisting of the SE¼ SE¼ of said Section 26 is hereby established for the production of gas and associated hydrocarbons from the Williams Fork Formation, allowing the equivalent of one (1) well per ten acres on said unit.

IT IS FURTHER ORDERED, that all future Williams Fork Formation wells drilled on the SE¼ SE¼ of said Section 26 shall be located downhole anywhere upon such lands but no closer than one hundred (100) feet from the outside boundary of the drilling and spacing unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density downhole drilling for the Williams Fork Formation, in which event the Williams Fork Formation wells to be drilled upon the application lands shall be drilled downhole no closer than two hundred (200) feet from the portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for the Williams Fork Formation wells has not been ordered by the Commission.

IT IS FURTHER ORDERED, that all Williams Fork Formation wells drilled upon the SE¼ SE¼ of said Section 26 shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.

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 filing for judicial review.

ENTERED this _______ day of April, 2007, as of March 26, 2007.

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

April 11, 2007