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 approve up to a total of six horizontal wells within each of three approximate 640-acre drilling and spacing units established for Sections 25, 26 and 35, Township 8 North, Range 60 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

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 September 19, 2011, the Commission entered Order No. 535-70 which, among other things, established two approximate 640-acre drilling and spacing units, and approved up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Section 25, Township 8 North, Range 60 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

5.         On October 31, 2011, the Commission entered Order No. 535-91 which, among other things, established two approximate 640-acre drilling and spacing units, and approved up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Sections 26 and 35, Township 8 North, Range 60 West, 6^th P.M. are subject to this Order for the Niobrara Formation.

6.         On July 9, 2012, the Commission entered Order No. 535-187 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 35, Township 8 North, Range 60 West, 6^th P.M., for the development and operation of the Niobrara Formation.

7.         On July 9, 2012, the Commission entered Order No. 535-188 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 25, Township 8 North, Range 60 West, 6^th P.M., for the development and operation of the Niobrara Formation.

8.         On July 9, 2012, the Commission entered Order No. 535-189 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 26, Township 8 North, Range 60 West, 6^th P.M., for the development and operation of the Niobrara Formation. 

9.         On November 15, 2012, the Commission entered Order No. 535-219 which, among other things, approved up to four horizontal wells within each of three approximate 640-acre drilling and spacing units, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the horizontal wellbore to be no closer than 600 feet from the unit boundaries, and no closer than 600 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.  Sections 25, 26 and 35, Township 8 North, Range 60 West, 6^th P.M. are subject to this Order for the Niobrara Formation.

10.       On January 24, 2013, Carrizo, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to approve up to a total of six horizontal wells within each of three approximate 640-acre drilling and spacing units established for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the horizontal wellbore to be no closer than 600 feet from the unit boundaries, and no closer than 600 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 8 North, Range 60 West, 6^th P.M.

                        Section 25:      All                                                        (“DSU #1”)

                        Township 8 North, Range 60 West, 6^th P.M.

                        Section 26:      All                                                        (“DSU #2”)

Township 8 North, Range 60 West, 6^th P.M.

Section 35:      All                                                        (“DSU #3”)

11.       On March 12, 2013, 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.

12.       Land testimony and exhibits submitted in support of the Application by Craig E. Wiest, Land Manager for Carrizo, showed the Applicant is an owner with the right to drill in the Application Lands.

13.       Geologic testimony and exhibits submitted in support of the Application by Paul Fears, Geologist for Carrizo, included stratigraphic cross-sections and gross thickness isopach tests showing the Niobrara Formation is approximately 305 feet thick and to be consistent, continuous, and underlying all of the Application Lands.

14.       Engineering testimony and exhibits submitted in support of the Application by Stephen C. Peters, Manager of Reservoir Engineering for Carrizo, showed an estimated ultimate recovery (“EUR”) of 200 MBO and a drainage area estimated at 70-acres, for analogous type wells drilled by Carrizo within its Weld County operational area.  Testimony further showed drainage estimates for the best 35 horizontal wells in the nearby Silo Field varied from 41 to 356-acres, with an average of 78-acres.  Testimony concluded the economics of the project were sound.

15.       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.

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

17.       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 approve up to a total of six horizontal wells within each of three approximate 640-acre drilling and spacing units established for Sections 25, 26 and 35, Township 8 North, Range 60 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

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

Township 8 North, Range 60 West, 6^th P.M.

                        Section 25:      All                                                        (“DSU #1”)

                        Township 8 North, Range 60 West, 6^th P.M.

                        Section 26:      All                                                        (“DSU #2”)

Township 8 North, Range 60 West, 6^th P.M.

Section 35:      All                                                        (“DSU #3”)

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   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