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

REPORT OF THE COMMISSION

The Commission heard this matter on February 11, 2013, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre exploratory drilling and spacing unit for Section 9, Township 6 North, Range 60 West, 6^th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Condor Energy Technology, LLC (“Condor” 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.         Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  Section 9, Township 6 North, Range 60 West, 6^th P.M. is subject to this Rule for the Niobrara Formation.

5.         On December 13, 2012, Condor, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to establish an approximate 640-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

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

Section 9:      All

Applicant requested the Commission approve up to four well pads to be located anywhere within the drilling and spacing unit.

6.         On January 29, 2013, Condor, 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.

7.         Land testimony and exhibits submitted in support of the Application by Sean Fitzgerald, Engineering and Land Manager of South Texas Reservoir Alliance LLC for Condor, showed the surface of the Application Lands is owned in fee, the mineral ownership of the Application Lands is held in fee, and that Condor owns a partial leasehold ownership interest in the Application Lands.

8.         Geologic testimony and exhibits submitted in support of the Application by Cynthia L. Welch, Geoscience Manager of South Texas Reservoir Alliance LLC for Condor, showed the Niobrara Formation is present throughout the Application Lands, is approximately 240 to 265 feet thick, and is generally of uniform thickness throughout the Application Lands.

9.         Engineering testimony and exhibits submitted in support of the Application by Sean Fitzgerald, Engineering and Land Manager of South Texas Reservoir Alliance LLC for Condor, showed nearby horizontal Niobrara type wells on 640-acre units drained an average of 153-acres. Testimony showed the use of long horizontal wells in a 1280-acre unit will increase the recovery of hydrocarbons from the reservoir. Testimony further showed an estimated ultimate recovery (“EUR”) of 200 MBBL of oil and 300 MMCF of gas at a 5% recovery factor, showing the economics of the project are sound.

10.       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.

11.       Condor agreed to be bound by oral order of the Commission. 

12.       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 enter an order to establish an approximate 640-acre exploratory drilling and spacing unit for Section 9, Township 6 North, Range 60 West, 6^th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and up to four horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

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

Section 9:      All

IT IS FURTHER ORDERED, that up to four wellpads, are hereby approved, with no more than one per quarter quarter section, unless an exception is granted by the Director.

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 _____ day of February, 2013, as of February 11, 2013.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Robert J. Frick, Secretary