BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                         CAUSE NOS. 191 & 523

ESTABLISHMENT OF FIELD RULES TO GOVERN                             )

OPERATIONS IN THE MAMM CREEK FIELD,                                       )                         ORDER NOS. 191-29 & 523-4

GARFIELD COUNTY, COLORADO                                                          )

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission at 9:00 a.m. on July 10, 2006, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to pool all non-consenting interests in the 320-acre drilling and spacing unit consisting of the N½ of Section 15, Township 6 South, Range 92 West, 6th P.M., for the development and operation of the Williams Fork and Iles Formations.

FINDINGS

                        The Commission finds as follows:

                        1. Antero Resources Corporation ("Antero"), 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, 2005, the Commission issued Order No. 523-2, which among other things established 320-acre drilling and spacing units for certain lands including the N½ of Section 15, Township 6 South, Range 92 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

                        5. On June 5, 2006, the Commission issued Order No. 191-25, establishing among other things, 320-acre drilling and spacing units including the S½ of Section 9, Township 6 South, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation of the Mesaverde Group.

                        6. On May 22, 2006, Antero, by its attorney, filed with the Commission a verified application for an order to pool all non-consenting interests in the 320-acre drilling and spacing unit consisting of the N½ of Section 15, Township 6 South, Range 92 West, 6th P.M., for the development and operation of the Williams Fork and Iles Formations. The applicant plans to drill the Valley Farms C-1 Well in the N½ of said Section 15. Offers to lease or to participate have been made to the mineral owners or the leasehold owners but as of the date the application was filed, these attempts have been unsuccessful.

                        7. On June 23, 2006, Antero, 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 three (3) exhibits were submitted in support of the application.

                        8. Testimony and exhibits submitted in support of the application showed that Antero proposes to drill the Valley Farms C-1 Well with a bottomhole location of 2128 feet from the north line and 173 feet from the west line of said Section 15.

                        9. Testimony and exhibits submitted in support of the application showed a list of all consenting and non-consenting parties, indicating that Antero has 100% of the unit leased but that there are thirty (30) unleased non-consenting tracts interests located within the unit that are the subject of the pooling request. These parties are listed as non-consenting interests because Antero’s lease with the parties requires consent to pool.

                        10. The testimony and exhibits submitted indicate that Antero has complied with the requirements of Rule 530.a. and §34-60-116(7)(d), C.R.S.

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

                        12. Antero Resources Corporation 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 pooling all non-consenting interests in the 320-acre drilling and spacing unit consisting of the N½ of Section 15, Township 6 South, Range 92 West, 6th P.M.

ORDER

                        NOW, THEREFORE IT IS ORDERED that, 1. Pursuant to the provisions of §34-60-116 C.R.S. as amended, of the Oil and Gas Conservation Act of the State of Colorado, all non-consenting interests in the 320-acre drilling and spacing unit consisting of the N½ of Section 15, Township 6 South, Range 92 West, 6th P.M., are hereby pooled for the development and operation of the Williams Fork and Iles Formations.

                        2. The production obtained from each drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within each drilling unit; each owner of an interest in each drilling unit shall be entitled to receive his/her share of the production of the well located on each drilling unit applicable to his interest in each drilling unit.

                        3. Said owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the well(s) and be subject to the penalties as provided for by §34-60-116 (7), C.R.S.

                        4. Any nonconsenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his/her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non-consenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116 (7)(b), C.R.S. as amended. After recovery of such costs, the non-consenting mineral owner shall then own his/her proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his/her proportionate share of further costs incurred in connection with the well as if he/she had originally agreed to the drilling.

                        5. The operator of any well drilled on the above-described unit shall furnish all non-consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.

                        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 July, 2006, as of July 10, 2006.

                                                                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

July 28, 2006