BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                     CAUSE NO. 517

ESTABLISHMENT OF FIELD RULES TO GOVERN                             )

OPERATIONS IN THE LORENCITO FIELD,                                            )                     ORDER NO. 517-10

LAS ANIMAS COUNTY, COLORADO                                                      )

                        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 3^rd Street, Wray, Colorado, for an order to vacate Order No. 517-3 in its entirety, including the previously adopted Public Health, Safety, Welfare and Environmental Plan.

                        The Commission finds as follows:

                        1. Cedar Ridge, LLC ("Cedar Ridge"), 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 October 31, 2000, the Commission issued Order No. 517-3 which among other things established 160-acre drilling and spacing units and adopted a Public Health, Safety, Welfare and Environmental Plan for certain lands in Townships 30 and 31 South, Range 65 West, 6^th P.M., Townships 29, 30 and 31 South, Range 66 West, 6^th P.M. and Township 31 South, Range 67 West, 6^th P.M. for the production of coalbed methane gas from the Raton and Vermejo Coal Formations.

                        5. On April 17, 2006, Cedar Ridge, by its attorney, filed with the Commission a verified application to vacate Order No. 517-3 in its entirety, including the previously adopted Public Health, Safety, Welfare and Environmental Plan, for the below-listed lands:

                        As of November 2003, the entire project was abandoned, with all necessary requirements complied with in this unproductive area. The applicant requests to be relieved from further obligations under the Public Health, Safety, Welfare and Environmental Plan, as provided for in the Plan itself regarding the economic life of the project, which states that "Should the proposed well program contemplated by Cedar Ridge be abandoned due to economics, lack of production or otherwise, Cedar Ridge shall be permitted to request that the Commission grant it relief from ongoing monitoring obligations described herein.

                        6. Testimony and exhibits presented at the administrative hearing showed that Cedar Ridge drilled thirty-six (36) wells under Order No. 517-3 in a three (3) year period, with eleven (11) wells plugged and abandoned, and twenty-five (25) wells converted to water wells and turned over to surface owners. The project was abandoned in November 2003 as non-productive.

                        7. Testimony and exhibits presented at the administrative hearing showed that in accordance with the Public Health, Safety, Welfare and Environmental Plan in Order No. 517-3, Cedar Ridge collected initial pressure data, water samples from nearby domestic wells and water well fluid level data, compiled a groundwater hydrogeology report in June, 2001, and on a quarterly basis sampled the water well for the town of Aguilar. Additional testimony showed that initially all wells were underpressured, that no known seeps were found in the immediate area, and that no seeps developed during the project.

                        8. Testimony and exhibits presented at the administrative hearing showed that it is not necessary to meet the three (3) year and six (6) year obligations for testing and monitoring described in the Public Health, Safety, Welfare and Environmental Plan now that the project is abandoned. Additional testimony showed that the Raton and Vermejo Formations are not in communication and are isolated from the surface, that there are no surface impacts, and that there have been no chemistry changes in the sampled water wells.

                        9. Cedar Ridge, LLC 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 having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to vacate Order No. 517-3 in its entirety, including the previously adopted Public Health, Safety, Welfare and Environmental Plan.

                        NOW, THEREFORE, IT IS ORDERED, that Order No. 517-3 is hereby vacated in its entirety, including the previously adopted Public Health, Safety, Welfare and Environmental Plan, for the below-listed lands and the lands shall be placed under the provisions of the Rules and Regulations of the Commission:

                        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