BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                         CAUSE NO. 510

ESTABLISHMENT OF FIELD RULES TO GOVERN                             )

OPERATIONS IN THE MAMM CREEK FIELD,                                       )                         ORDER NO. 510-16

GARFIELD COUNTY, COLORADO                                                          )

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission at 10:00 a.m. on October 31, 2005, in the Ramada Inn & Suites, 124 West 6^th Street, Glenwood Springs, Colorado, for an order to change the existing well location and setback rules for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, to allow the equivalent of one well per 10 acres with the permitted well to be located no closer than 100 feet from the outside boundary of the application lands.

FINDINGS

                        The Commission finds as follows:

                       1. Antero Resources Corporation ("Antero Resources") 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. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless authorized by order of the Commission upon hearing. The below-listed lands are subject to this Rule:

                        Beginning at a point on the West line of Section 14, from which the Southwest corner of said section bears South 1°05’45" East a distance of 2370.07 feet; thence North 1°05’ East a distance of 3172.30 feet; thence North 64°18’ East a distance of 4950.30 feet; thence North 64°38’ East a distance of 1021.80 feet; thence North 66°30’ East a distance of 300.70 feet; thence North 69°53’ East a distance of 453.30 feet; thence North 75°31’ East a distance of 551.10 feet; thence North 78°41’ East a distance of 764.30 feet; thence North 78°10’ East a distance of 379.80 feet; thence North 82°34’ East a distance of 278.10 feet; thence North 78°01’ East a distance of 1011.30 feet; thence North 77°24’ East a distance of 1677.20 feet to a point on the East line of Section 12; thence North 78°47’ East a distance of 2001.30 feet; thence North 6°20’ East a distance of 55.90 feet; thence North 89°39’ East a distance of 1024.80 feet; thence North a distance of 154.30 feet; thence South 88°52’ East a distance of 1253.40 feet; thence South 0°49’ West a distance of 432.20 feet; thence North 67°05’ East a distance of 673 feet; thence North 76°22’ East a distance of 141.30 feet; thence South 78°14’ East a distance of 102 feet; thence North 71°34’ East a distance of 52.60 feet; thence South 86°40’ East a distance of 429.20 feet; thence South 55°59’ East a distance of 200.80 feet; thence South 85°26’ East a distance of 104.30 feet; thence North 87°43’ East a distance of 104.10 feet; thence South 43°29’ East a distance of 894.60 feet; thence North 77°28’ West a distance of 76.70 feet; thence South 65°55’ East a distance of 425.90 feet; thence South 01°04’ West a distance of 1354 feet; thence South 89°16’ East a distance 1314.80 feet; thence South 0°43’ West a distance of 1319 feet; thence North 88°59’ West a distance of 3978 feet to a point along the Westerly line of Section 8; thence South 0°48’ West a distance of 1771.90 feet; thence North 83°25’ West a distance of 160 feet; thence North 1°04’ East a distance of 1722.50 feet to a point South of the Colorado River Meander Land; thence continuing along said Meander Land following twenty-three (23) courses:

                        Thence leaving said Meander Land South 01°04’ West along Westerly line of Section 7 a distance of 1274.30 feet; thence South 69°52’ West a distance of 383.20 feet; thence South 81°00’ West a distance of 613.10 feet; thence South 76°10’ West a distance of 2006.70 feet; thence South 83°44’ West a distance of 989.20 feet; thence West a distance of 515.60 feet; thence North 86°57’ West a distance of 450.30 feet; thence North 85°28’ West a distance of 378.90 feet; thence South 7°08’ West a distance of 48.30 feet; thence North 88°49’ West a distance of 869.60; thence South 77°55’ West a distance of 1318.20 feet; thence South 65°24’ West a distance of 2809 feet; thence South 72°02’ West a distance of 699.60 feet to the point of beginning.

                        5. On September 6, 2005, Antero Resources, by its attorney, filed with the Commission a verified Application for an order to change the existing well location and setback rules for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, to allow the equivalent of one well per 10 acres with the permitted well to be located no closer than 100 feet from the outside boundary of the application lands unless such boundary 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 wells 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 that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission. That, except as previously authorized by order of the Commission, wells to be drilled under this application 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 Colorado Oil and Gas Conservation Commission pursuant to application made for such exception for portions of Sections 11, 12, 13 and 14 of Township 6 South, Range 93 West, 6^th P.M. and portions of Sections 7, 8 and 18 of Township 6, Range 92 West, 6^th P.M., as described in Finding No. 4 above.

                        6. On October 17, 2005 Dolphin Energy Corporation, Exxel Energy Corp. and Apollo Energy, LLC (collectively "Protestants") filed with the Commission a protest to the application.

                        7. On October 18, 2005, a prehearing conference was held, at which time three (3) of the four (4) of the Protestants’ concerns were resolved, and the last concern was dismissed by the Hearing Officer after consultation with the Assistant Attorney General, after which an administrative hearing was held.

                       8. Testimony and exhibits presented at the administrative hearing showed that Antero Resources has a 100% leasehold in the majority of the application lands.

                        9. Testimony and exhibits presented at the administrative hearing showed the geological nature of the Williams Fork Formation in the application area and the extent of typical Williams Fork Formation sands.

                        10. Testimony and exhibits presented at the administrative hearing showed that increased well density has resulted in increased gas production which would increase the ultimate gas recovery from the Williams Fork Formation.

                        11. Testimony and exhibits presented at the administrative hearing showed that increasing well density from twenty (20) to ten (10) acres would increase estimated ultimate recovery and that drilling wells in the application lands would be economic.

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

                         13. Antero Resources Corporation agreed to be bound by oral order of the Commission.

                        14. Based on the facts stated in the verified application, having received four (4) protests, three (3) of which were resolved and one (1) that was dismissed, and have been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow the equivalent of one well per 10 acres with the permitted well to be located no closer than 100 feet from the outside boundary.

                        NOW, THEREFORE, IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, with the permitted well to be located no closer than 100 feet from the outside boundary of the below-described lands in portions of Sections 11, 12, 13 and 14 of Township 6 South, Range 93 West, 6^th P.M. and portions of Sections 7, 8 and 18 of Township 6, Range 92 West, 6^th P.M. as follows:

                        #9; Beginning at a point on the West line of Section 14, from which the Southwest corner of said section bears South 1°05’45" East a distance of 2370.07 feet; thence North 1°05’ East a distance of 3172.30 feet; thence North 64°18’ East a distance of 4950.30 feet; thence North 64°38’ East a distance of 1021.80 feet; thence North 66°30’ East a distance of 300.70 feet; thence North 69°53’ East a distance of 453.30 feet; thence North 75°31’ East a distance of 551.10 feet; thence North 78°41’ East a distance of 764.30 feet; thence North 78°10’ East a distance of 379.80 feet; thence North 82°34’ East a distance of 278.10 feet; thence North 78°01’ East a distance of 1011.30 feet; thence North 77°24’ East a distance of 1677.20 feet to a point on the East line of Section 12; thence North 78°47’ East a distance of 2001.30 feet; thence North 6°20’ East a distance of 55.90 feet; thence North 89°39’ East a distance of 1024.80 feet; thence North a distance of 154.30 feet; thence South 88°52’ East a distance of 1253.40 feet; thence South 0°49’ West a distance of 432.20 feet; thence North 67°05’ East a distance of 673 feet; thence North 76°22’ East a distance of 141.30 feet; thence South 78°14’ East a distance of 102 feet; thence North 71°34’ East a distance of 52.60 feet; thence South 86°40’ East a distance of 429.20 feet; thence South 55°59’ East a distance of 200.80 feet; thence South 85°26’ East a distance of 104.30 feet; thence North 87°43’ East a distance of 104.10 feet; thence South 43°29’ East a distance of 894.60 feet; thence North 77°28’ West a distance of 76.70 feet; thence South 65°55’ East a distance of 425.90 feet; thence South 01°04’ West a distance of 1354 feet; thence South 89°16’ East a distance 1314.80 feet; thence South 0°43’ West a distance of 1319 feet; thence North 88°59’ West a distance of 3978 feet to a point along the Westerly line of Section 8; thence South 0°48’ West a distance of 1771.90 feet; thence North 83°25’ West a distance of 160 feet; thence North 1°04’ East a distance of 1722.50 feet to a point South of the Colorado River Meander Land; thence continuing along said Meander Land following twenty-three (23) courses:

                        Thence leaving said Meander Land South 01°04’ West along Westerly line of Section 7 a distance of 1274.30 feet; thence South 69°52’ West a distance of 383.20 feet; thence South 81°00’ West a distance of 613.10 feet; thence South 76°10’ West a distance of 2006.70 feet; thence South 83°44’ West a distance of 989.20 feet; thence West a distance of 515.60 feet; thence North 86°57’ West a distance of 450.30 feet; thence North 85°28’ West a distance of 378.90 feet; thence South 7°08’ West a distance of 48.30 feet; thence North 88°49’ West a distance of 869.60; thence South 77°55’ West a distance of 1318.20 feet; thence South 65°24’ West a distance of 2809 feet; thence South 72°02’ West a distance of 699.60 feet to the point of beginning.

                        IT IS FURTHER ORDERED, that in cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well shall be located downhole no closer than 200 feet from that portion of the boundary abutting or cornering such lands without exception being granted by the Colorado Oil and Gas Conservation Commission.

                        IT IS FURTHER ORDERED, that, except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

                        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 the filing for judicial review.

                        ENTERED this ________ day of November, 2005, as of October 31, 2005.

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

November 30, 2005