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REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on July 23, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one (1) well per 10 acres for certain lands in Township 7 South, Range 95 West, 6^th P.M., 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”), 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 April 20, 1990, the Commission issued Order No. 440-12, which among other things, established 640-acre drilling and spacing units for certain lands including Section 3, Township 7 South, Range 95 West, 6^th P.M. and 320-acre drilling and spacing units for certain lands including the W½ of Section 2, S½ of Section 3 and the S½ of Section 6, Township 7 South, Range 95 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.

5. On February 21, 1995, amended April 26, 1995, the Commission issued Order No. 440-16, which among other things, allowed eight (8) wells to be optionally drilled on the 320-acre drilling and spacing units, for certain lands including Section 2, Township 7 South, Range 95 West, 6^th P.M. and allowed sixteen (16) wells to be optionally drilled on the 640-acre drilling and spacing unit, including Section 3, Township 7 South, Range 95 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.

6. On April 19, 2007, Williams, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres to be drilled in the below-described lands for the production of gas and associated hydrocarbons from the Williams Fork Formation:

Township 7 South, Range 95 West, 6^th P.M.
Section 2:       SW¼
Section 3:       S½
Section 6:       S½

That all future Williams Fork Formation wells drilled on the application lands should be located downhole anywhere upon such lands be no closer than 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 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.

That all Williams Fork Formation wells drilled upon the application lands will be drilled from the surface either vertically or directionally from no more than one 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 May 29, 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.

8. Testimony and exhibits submitted in support of the application indicated that the application lands contain approximately 800 acres of fee lands and no federal lands.

9. Testimony and exhibits submitted in support of the application indicated that based on the geologic model 10-acre density drilling is necessary to develop the Williams Fork Formation underlying the application lands.

10. Testimony and exhibits submitted in support of the application indicated that gas in place calculations show that ten acre density drilling is necessary to maximize production of the resource. Additional testimony indicated that more depletion was observed when wells are on exact fracture orientation with older parent wells. Further testimony indicated that even with some pressure reduction, 10-acre density wells will produce substantial incremental gas reserves.

11. The above-referenced testimony and exhibits show that the proposed increased well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

12. Williams Production RMT Company 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.b., the Commission should enter an order to allow the equivalent of one (1) well per 10 acres for certain lands in Township 7 South, Range 95 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that the equivalent of one (1) well per 10 acres is hereby approved to be drilled in the below-described lands for the production of gas and associated hydrocarbons from the Williams Fork Formation:

Township 7 South, Range 95 West, 6^th P.M.
Section 2:       SW¼
Section 3:       S½
Section 6:       S½

IT IS FURTHER ORDERED, that all future Williams Fork Formation wells drilled on the application lands shall be located downhole anywhere upon such lands no closer than 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 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 application lands shall be drilled from the surface either vertically or directionally from no more than one 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 August, 2007, as of July 23, 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

August 15, 2007