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

REPORT OF THE COMMISSION

The Commission heard this matter on March 25, 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 24, Township 7 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 24, Township 7 North, Range 60 West, 6^th P.M. is subject to this Rule for the Niobrara Formation.

5.         On December 13, 2012 (amended March 8, 2013), 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 7 North, Range 60 West, 6^th P.M.

Section 24:      All

7.         On January 31, 2013, Condor, by its attorneys, requested, and the Secretary of the Commission granted, a continuance to the March hearing,

8.         On January 28, 2013, Prima Exploration, Inc (“Prima” or “Protestant”), by its attorneys, filed a protest to the Application.

9.         On January 28, 2013, Speaker Holdings 24 LLC, Inc (“Speaker” or “Protestant”), by its attorneys, filed a protest to the Application.

10.       On March 7, 2013, Prima, by its attorneys, withdrew the protest to the Application.

11.       On March 8, 2013, Speaker, by its attorneys, withdrew the protest to the Application.

12.       On March 8, 2013, Condor, by its attorneys, filed an Amended Application as a result of the resolution of two protests to the Application reached with Prima and Speaker. 

13.       On March 12, 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.

14.       Land testimony and exhibits submitted in support of the Application by Sean Fitzgerald, Contract Operator for Condor, showed that 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.

15.       Geologic testimony and exhibits submitted in support of the Application by Cynthia L. Welch, Geoscience Manager for Condor, showed that the gross thickness of the Niobrara Formation underlying the Application Lands is between approximately 240 and 265 feet thick. Additional testimony showed the Niobrara Formation exists under the Application Lands.

16.       Engineering testimony and exhibits submitted in support of the Application by Sean Fitzgerald, Contract Operator for Condor, showed the calculations of original oil in place, estimated ultimate recovery and drainage area for 18 of the most prolific horizontal producers from the Niobrara Formation in the Weld County area.  The two wells that were the closest offsets drained 1 and 25 acres respectively. The average drainage area of the best 18 horizontal wells was 153 acres. Testimony concluded the economics of the project were sound.

17.       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.

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

19.       Based on the facts stated in the verified Application, having resolved all 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 24, Township 7 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 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 7 North, Range 60 West, 6^th P.M.

Section 24:      All

IT IS FURTHER ORDERED that surface facilities may be located on up to four well pads within the drilling and spacing unit.

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 Procedures 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   5^th   day of April, 2013, as of March 25, 2013.      

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                                                                                                                                                                                        By____________________________________       

                                                                        Robert J. Frick, Secretary