BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER THE PROMULGATION                             )                     CAUSE NOS. 139, 440, 479,

AND ESTABLISHMENT OF FIELD RULES                        )                                               ; 495, and 510

TO GOVERN OPERATIONS IN THE RULISON,                 )

PARACHUTE, AND GRAND VALLEY FIELDS,                 )                     ORDER NOS. 139-38, 440-23,

GARFIELD COUNTY, COLORADO                                                                                      479-11, 495-3

                                                                                                                                                    and 510-8

                                                                                                                                                    AMENDED

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission at 10:00 a.m. on April 21, 2003 in the Arvada City Council Chambers, 8101 Ralston Road, Arvada, Colorado on the application of Williams Production Company RMT Company for an order to increase the number of wells which can be drilled into and produced from the Williams Fork Formation on the application lands which constitute existing drilling units (or portions thereof) to the equivalent of one Williams Fork well per 10 acres for certain lands in the Rulison, Parachute and Grand Valley Fields.

                        The Commission finds as follows:

                        1. Williams Production Company RMT Company ("WPC"), 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.

Sections 5 through 8: All

Sections 17 through 20: All

Sections 1 though 3: All

Sections 8 through 17: All

Sections 19 through 24: All

Sections 27 through 33: All

                        5. On March 8, 1990, the Commission issued Order No. 139-14 establishing 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the upper portion of the Mesaverde Formation and the lower portion of the Mesaverde Formation including the Cameo, Rollins, Cozzette and Corcoran Sands, and the Coalbed Methane horizons underlying the below-listed lands:

Sections 5 through 8: All

Sections 17 through 20: All

Sections 1 though 3: All

Sections 8 through 24: All

Sections 27 through 33: All

                        6. On March 9, 1990, the Commission issued Order No. 440-11 establishing 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation for the below-listed lands:

Sections 7 through 20: All

Sections 22 through 28: All

Sections 31 through 36: All

Section 5 and 6: All

                        7. On March 9, 1990, the Commission issued Order No. 479-1 establishing 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation for the below-listed lands:

Section 1: All

Section 12: All

Sections 23 through 27: All

Sections 34 through 36: All

Section 1: All

                        8. On December 18, 1996, the Commission issued Order No. 139-29 allowing up to four (4) wells to be drilled into and produced from the previously established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation including the below- listed lands:

Section 20: S½ NE¼

                        9. On December 18, 1996, the Commission issued Order No. 510-2 which allowed four (4) wells to be drilled into and produced from the Williams Fork Formation with each such well to have a bottom hole location no closer than 400 feet from the bottomhole location of any other Williams Fork Formation well and no closer than 200 feet from the boundary of any lease line, with the below-listed lands to remain unspaced:

Section 4: NE¼ NE¼

                        10. On February 6, 1998, the Commission issued Order No. 139-33 allowing up to sixteen (16) wells to be drilled into and produced from the Williams Fork Formation including the below-listed lands:

Section 20: E½ SE¼, W½ W½

Section 21: S½ NW¼, S½

Section 22: SW¼

Section 27: S½ NW¼, NE¼ NW¼, NW¼ SW¼

Section 28: NE¼, N½ NW¼, E½ SE¼,

Section 29: N½ NE¼, NE¼ NW¼

                        11. On February 17, 2000, the Commission issued Order Nos. 139-28, 440-16 and 479-5 allowing up to eight (8) wells to be drilled into and produced from the previously established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation including the below-listed lands:

Section 10: N½ SE¼

Section 11: S½ NW¼, N½ SW¼, SE¼ SW¼

Section 14: E½

Section 15: All

Section 27: NW¼ NE¼

Section 35: NE¼ NW¼, SW¼ NW¼, NW¼ NE¼

Section 6: SW¼ NW¼

                        12. On March 21, 2000, the Commission issued Order Nos. 139-32, 479-6, 495-2 and 510 allowing the equivalent of one (1) well per 20 acres to be drilled into and produced from the Williams Fork Formation including the below-listed lands:

Section 27: SW¼ SW¼

Section 34: SE¼, E½ SW¼, SW¼ SW¼, NW¼ NW¼, SE¼ NW¼

Section 35: SW¼ SW¼, SE¼ SE¼

Section 36: SW¼, W½ SE¼

Section 1: S½ N½, N½ NW¼, N½ S½

                        13. On March 21, 2000, the Commission issued Order Nos. 139-32, 479-6, 495-2 and 510-3 establishing 40-acre drilling and spacing units for certain lands including the below-listed lands which were previously unspaced and within these 40-acre drilling and spacing units, allowing up to two (2) wells to be drilled into and produced from the Williams Fork Formation:

Section 28: S½ S½

Section 29: SE¼ SE¼

Section 32: W½ NE¼, NE¼ NE¼, SE¼ NW¼

Section 33: N½ NW¼, SE¼ NW¼, N½ NE¼, SW¼ NE¼

Section 2: N½, SW¼, W½ SE¼, NE¼ SE¼¼

Section 3: NE¼

                        14. On November 29, 2000, the Commission issued Order Nos. 479-7, 440-19, 139-34 and 510-4 establishing 40-acre drilling and spacing units for certain lands including the below-listed lands which were previously unspaced, allowing up to two (2) wells to be drilled into and produced from the Williams Fork Formation:

Section 17: E½

Section 20: N½, SE¼, E½ SW¼

Section 28: S½ NW¼, N½ SW¼

Section 29: NE¼, NE¼ NW¼, NE¼ SE¼

Section 31: S½ NE¼, N½ SE¼

Section 32: NW¼ SE¼, SW¼ NW¼, N½ SW¼

                        15. On November 29, 2000, the Commission issued Order Nos. 479-7, 440-19, 139-34, and 510-4 allowing the equivalent of one (1) well per 20 acres to be drilled into and produced from the Williams Fork Formation including the below-listed lands:

Section 16: S½, W½ NE¼, E½ NW¼

Section 17: SW¼ SW¼

Section 18: SE¼ SE¼, W½ SE¼

Section 21: N½ NE¼, SW¼ NE¼

Section 22: N½, W½ SE¼

Section 27: SW¼ SW¼

Section 26: S½ SW¼

Section 27: S½ SW¼, SW¼ SE¼

Section 28: S½ SE¼, E½ W½

Section 31: SE¼ SE¼

Section 32: SW¼, N½ SE¼, SW¼ SE¼, SE¼ NE¼

Section 33: S½, NE¼, NE¼ NW¼, SW¼ NW¼

Section 34: All

Section 35: NW¼ NW¼

Township 6 South, Range 96 West, 6th P.M.

Section 23: SW¼ SW¼

Section 27: NE¼ NE¼, S½ NE¼, N½ SE¼, SW¼ SE¼, SE¼ SW¼

Section 34: NE¼ NW¼, NW¼ NE¼

Section 5: NW¼ NW¼

Section 6: E½ NW¼, W½ NE¼, NE¼ NE¼

Section 1: NW¼ NE¼, SE¼ SW¼

                        16. On July 18, 2001, the Commission issued Order Nos. 139-37, 440-22, 479-9 and 510-6 allowing the equivalent of one (1) well per 10 acres to be drilled into and produced from the Williams Fork Formation for the below-listed lands:

Section 20: E½ SW¼, W½ SE¼

Section 33: SE¼

                        17. On August 26, 2002, the Commission issued Order Nos. 479-10 and 510-7 allowing the equivalent of one (1) well per 20 acres to be drilled into and produced from the Williams Fork Formation including the below-listed lands:

Section 1: S½ SE¼

                        18. On February 14, 2003, WPC, by its attorney, filed with the Commission a verified application requesting an order from the Commission to allow additional wells to be drilled for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, the equivalent of one (1) well per 10 acres for the lands described below ("Application Lands"). WPC requested that the NE¼ NE¼ of Section 4, Township 7 South, Range 96 West, 6^th P.M. be constituted as a 40-acre drilling and spacing unit for the Williams Fork Formation. WPC also requested that the permitted downhole location for each new Williams Fork Formation well drilled upon the Application Lands be located anywhere within a given drilling and spacing unit but no closer than 100 feet from any boundary of a drilling unit without exception being granted by the Director of the Oil and Gas Conservation Commission. It is provided however that no new Williams Fork Formation well shall be drilled with a downhole location closer than 200 feet from the exterior boundaries of the Application lands (with the exception of the Ten Acre Pilot Lands contiguous to the Application Lands) without exception being granted by the Director of the Oil and Gas Conservation Commission. The application was not intended to 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 did the application request approval for 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 (except as previously authorized by Commission Order). Although it was not required, the application included plans to protect public health, safety, and welfare, and the environment.

Section 10: N½ SE¼

Section 11: S½ NW¼, N½ SW¼, SE¼ SW¼

Section 14: E½

Section 15: All

Section 16: S½, W½ NE¼, E½ NW¼

Section 17: SW¼ SW¼

Section 18: SE¼ SE¼, W½ SE¼

Section 20: S½ NE¼, E½ SE¼, W½ W½

Section 21: N½ NE¼, SW¼ NE¼, S½ NW¼, S½

Section 22: N½, SW¼, W½ SE¼

Section 27: S½ NW¼, NE¼ NW¼, W½ SW¼, NW¼ NE¼

Section 28: NE¼, N½ NW¼, E½ SE¼

Section 29: N½ NE¼, NE¼ NW¼

Section 26: S½ SW¼

Section 27: S½ SW¼, SW¼ SE¼

Section 28: S½ SE¼, E½ W½

Section 31: SE¼ SE¼

Section 32: SW¼, N½ SE¼, SW¼ SE¼, SE¼ NE¼

Section 33: S½, NE¼, NE¼ NW¼, SW¼ NW¼

Section 34: All

Section 35: N½ NW¼, SW¼ NW¼, NW¼ NE¼

Section 17: E½

Section 20: N½, SE¼, E½ SW¼

Section 23: SW¼ SW¼

Section 27: NE¼ NE¼, S½ NE¼, N½ SE¼, SW¼ SE¼, S½ SW¼

Section 28: SW¼, S½ SE¼, S½ NW¼

Section 29: NE¼, NE¼ NW¼, E½ SE¼

Section 31: S½ NE¼, N½ SE¼

Section 32: W½ NE¼, NE¼ NE¼, SE¼ NW¼, NW¼ SE¼, SW¼ NW¼, N½ SW¼

Section 33: N½ NW¼, SE¼ NW¼, N½ NE¼, SW¼ NE¼

Section 34: SE¼, E½ SW¼, SW¼ SW¼, N½ NW¼, SE¼ NW¼, NW¼ NE¼

Section 35: SW¼ SW¼, SE¼ SE¼

Section 36: SW¼, W½ SE¼

Section 5: NW¼ NW¼

Section 2: N½, SW¼, W½ SE¼, NE¼ SE¼¼

Section 3: NE¼

Section 4: NE¼ NE¼

                        19. The application filed on February 14, 2003 that resulted in the above-described order contained the SW¼ NW¼ of Section 6, Township 7 South, Range 95 West, 6^th P.M. as part of the application lands, however, these lands were inadvertently omitted from the Notice of Hearing and were therefore unable to be included in the Order. On August 3, 2006, Williams Production RMT Company filed with the Commission a written request for the SW¼ NW¼ of Section 6, Township 7 South, Range 95 West, 6^th P.M. to be included in Order Nos. 139-38, 440-23, 479-11, 495-3 and 510-8, and a notice of hearing was published.

                        20. Testimony and exhibits presented at the administrative hearing showed the proposed ten (10) acre density application lands in the Grand Valley, Parachute, and Rulison Fields in Garfield County. The application lands consist of approximately eleven thousand (11,000) acres of fee surface and mineral ownership lands. Surface use agreements have been executed with all surface owners in the Grand Valley Field except for two (2) surface owners, where there will be no surface well locations. Surface use agreements have been executed with all surface owners in the Parachute Field. Surface use agreements have been executed with all surface owners in the Rulison Field except for five (5) surface owners, where there will be no surface well locations. No surface use agreements have been executed with the State of Colorado or the D&RG Railroad for highway and railroad lands in the application area because there will be no surface well locations on those lands. The predominant surface use in the Application Lands is range land.            

                        21. Testimony and exhibits presented at the administrative hearing showed the geologic development in the area, and that the Williams Fork Formation consists of many vertically stacked, fluvial, and meander belt point bar sand bodies that are discontinuous and compartmentalized across the Application Lands. Additional testimony indicated that wells drilled under setbacks equivalent to ten (10) acre density intersect very few, if any, of the same sand bodies, and that only gas from the sand bodies that are intersected by a well is produced into the well. Further testimony indicated that even under ten (10) acre density there are many partially drained and undrained gas reservoirs left in place.

                        22. Testimony and exhibits presented at the administrative hearing utilized findings from the Multiwell Experiment project which described the abundant natural fracture systems in the Williams Fork Formation and showed that these systems do not communicate vertically. Williams Fork Formation point bar sand bodies are naturally isolated from each other, and drainage from a well is limited to the aerial extent of the point bar sand bodies. Additional testimony indicated that waste will occur if ten (10) acre density is not approved for the Application Lands.

                        23. Testimony and exhibits presented at the administrative hearing showed that in general, the ten (10) acre density wells performed as well as in the Grand Valley Field, or better in the Rulison Field than the forty (40) acre density wells and the twenty (20) acre density wells after taking out the wells that were affected by direct fracture orientation.

                        24. Testimony and exhibits presented at the administrative hearing indicated that the gas in place is one hundred five (105) BCF per 640-acres for the Grand Valley Field, one hundred twenty (120) BCF per 640-acres for the Parachute Field, and one hundred thirty-five (135) BCF per 640-acres for the Rulison Field. Additional testimony indicated an average recovery on ten (10) acre well density of seventy-nine percent (79%) in the Grand Valley Field, eighty percent (80%) in the Parachute Field, and seventy-eight percent (78%) in the Rulison Field.

                        25. That the proposed density will allow more efficient drainage, will prevent waste, will not violate correlative rights and will assure a greater ultimate recovery of gas and associated hydrocarbons.

                        26. No protests to the application have been filed with the Commission or the Applicant.

                        27. WPC agreed to be bound by oral order of the Commission.

                        28. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order to allow additional wells to be drilled for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, the equivalent of one (1) well per 10 acres for the lands described in Finding No. 18 above. The NE¼ NE¼ of Section 4, Township 7 South, Range 96 West, 6^th P.M. should be constituted as a 40-acre drilling and spacing unit for the Williams Fork Formation and the permitted downhole location for each new Williams Fork Formation well drilled upon the Application Lands should be located anywhere within a given drilling and spacing unit but no closer than 100 feet from any boundary of a drilling unit without exception being granted by the Director of the Oil and Gas Conservation Commission. No new Williams Fork Formation well should be drilled with a downhole location closer than 200 feet from the exterior boundaries of the Application lands (with the exception of the Ten Acre Pilot Lands contiguous to the Application Lands) without exception being granted by the Director of the Oil and Gas Conservation Commission. The order should 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 should the 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 (except as previously authorized by Commission Order).

                        NOW, THEREFORE, IT IS ORDERED, that additional wells are hereby allowed to be drilled for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, the equivalent of one (1) well per 10 acres for the lands described below ("Application Lands"):

Section 10: N½ SE¼

Section 11: S½ NW¼, N½ SW¼, SE¼ SW¼

Section 14: E½

Section 15: All

Section 16: S½, W½ NE¼, E½ NW¼

Section 17: SW¼ SW¼

Section 18: SE¼ SE¼, W½ SE¼

Section 20: S½ NE¼, E½ SE¼, W½ W½

Section 21: N½ NE¼, SW¼ NE¼, S½ NW¼, S½

Section 22: N½, SW¼, W½ SE¼

Section 27: S½ NW¼, NE¼ NW¼, W½ SW¼, NW¼ NE¼

Section 28: NE¼, N½ NW¼, E½ SE¼

Section 29: N½ NE¼, NE¼ NW¼

Section 26: S½ SW¼

Section 27: S½ SW¼, SW¼ SE¼

Section 28: S½ SE¼, E½ W½

Section 31: SE¼ SE¼

Section 32: SW¼, N½ SE¼, SW¼ SE¼, SE¼ NE¼

Section 33: S½, NE¼, NE¼ NW¼, SW¼ NW¼

Section 34: All

Section 35: N½ NW¼, SW¼ NW¼, NW¼ NE¼

Section 17: E½

Section 20: N½, SE¼, E½ SW¼

Section 23: SW¼ SW¼

Section 27: NE¼ NE¼, S½ NE¼, N½ SE¼, SW¼ SE¼, S½ SW¼

Section 28: SW¼, S½ SE¼, S½ NW¼

Section 29: NE¼, NE¼ NW¼, E½ SE¼

Section 31: S½ NE¼, N½ SE¼

Section 32: W½ NE¼, NE¼ NE¼, SE¼ NW¼, NW¼ SE¼, SW¼ NW¼, N½ SW¼

Section 33: N½ NW¼, SE¼ NW¼, N½ NE¼, SW¼ NE¼

Section 34: SE¼, E½ SW¼, SW¼ SW¼, N½ NW¼, SE¼ NW¼, NW¼ NE¼

Section 35: SW¼ SW¼, SE¼ SE¼

Section 36: SW¼, W½ SE¼

Section 5: NW¼ NW¼

Section 2: N½, SW¼, W½ SE¼, NE¼ SE¼¼

Section 3: NE¼

Section 4: NE¼ NE¼

                        IT IS FURTHER ORDERED, that the NE¼ NE¼ of Section 4, Township 7 South, Range 96 West, 6^th P.M. shall be constituted as a 40-acre drilling and spacing unit for the Williams Fork Formation

                        IT IS FURTHER ORDERED, that the permitted downhole location for each new Williams Fork Formation well drilled upon the Application Lands shall be located anywhere within a given drilling and spacing unit but no closer than 100 feet from any boundary of a drilling unit without exception being granted by the Director of the Oil and Gas Conservation Commission.

                        IT IS FURTHER ORDERED, that no new Williams Fork Formation well shall be drilled with a downhole location closer than 200 feet from the exterior boundaries of the Application lands (with the exception of the Ten Acre Pilot Lands contiguous to the Application Lands) without exception being granted by the Director of the Oil and Gas Conservation Commission.

                        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 (except as previously authorized by Commission Order).

                        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 provide 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 complete copy of the APD and all other attachments, including the site-specific reclamation plan, 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 conditions 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:

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.

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 31^st 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 anticipated 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 31^st 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 springs 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 completion" 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 and 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.

Annual Drilling Plan The operator shall provide the Director and the Garfield County LGD a projected calendar year drilling plan prior to December 1^st 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 Commission 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, protection 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 for 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 30th day of April 2003, as of April 21, 2003.

                        AMENDED this__________day of October, as of April 21, 2003.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

                                                            By ____________________________________

                                                                            9; Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203