BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

The Commission heard this matter on January 23, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application to vacate Order 535-22.

FINDINGS

The Commission finds as follows:

1. Carrizo Oil & Gas, Inc. (“Carrizo” or “Applicant”), 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 May 16, 2011, the Commission entered Order No. 535-13, which among other things, established eleven approximate 640-acre drilling and spacing units for certain lands, and authorized up to two horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Section 8, Township 5 North, Range 60 West, 6^th P.M. is subject to this order.

5. On May 23, 2011, the Commission entered Order No. 535-22, which among other things, pooled all nonconsenting interests in the approximate 640-acre drilling and spacing units for certain lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 8, Township 5 North, Range 60 West, 6^th P.M. is subject to this order.

6. On November 18, 2011, Carrizo Oil & Gas, Inc. (“Carrizo” or “Applicant”), by its attorneys, filed with the Commission a verified application (“Application”) to vacate Order 535-22, affecting the below-listed lands (“Application Lands”):

            Township 5 North, Range 60 West, 6^th P.M.

            Section 8: All

7. On January 9, 2012, Carrizo, by its attorneys, 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 exhibits were submitted in support of the Application.

8. Land Testimony and exhibits submitted in support of the Application by Craig E. Wiest, Land Manager-Western US for Carrizo, stated Carrizo’s application to pool the Application Lands was unprotested at the time that Order 535-22 was submitted, heard and approved by the Commission. Subsequently, Upstream Innovations, Inc. (“Upstream”) filed an application seeking to pool its interest into the unit without being subject to the cost recovery penalty applicable to such interest under Order 535-22.  Additionally, due to recent geologic interpretation, the drilling of the Wickstrom 8-41 horizontal well has been indefinitely postponed.  In light of these changed circumstances, Carrizo seeks to vacate Order 535-22 and resubmit its pooling application as a new matter at a future date.

9. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

10.  Carrizo agreed to be bound by oral order of the Commission. 

11.  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., the Commission should vacate Order 535-22.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that Order 535-22 is hereby vacated.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

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 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   26^th  day of January, 2012, as of January 23, 2012.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Peter J. Gowen, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

January 26, 2012