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

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on April 4, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish three drilling and spacing units for certain lands located in Sections 16 through 21 of Township 12 North, Range 65 West, 6^th P.M., and approve of up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.     Anadarko E&P Company LP (“Anadarko” 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.  Sections 16 through 21 of Township 12 North, Range 65 West, 6^th P.M. are subject to this Rule for the Niobrara Formation.

5.     On December 22, 2010, Anadarko, by its attorney, filed with the Commission a verified application (the “Application”) for an order to establish three drilling and spacing units for the below-listed lands, and approve of up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the initial perforation, lateral and terminus of the permitted well to be located no closer than 600 feet from the boundary of the unit and the lateral to be located no closer than 600 feet from any wellbore which has perforated the Niobrara Formation without exception being granted by the Director of the Commission:

Drilling and Spacing Unit #1 (approximately 666.86 acres)

Township 12 North, Range 65 West, 6^th P.M.

Drilling and Spacing Unit #2 (approximately 702.86 acres)

Township 12 North, Range 65 West, 6^th P.M.

Drilling and Spacing Unit #3 (approximately 726.48 acres)

Township 12 North, Range 65 West, 6^th P.M.

6.     On March 22, 2011, Anadarko, 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 as is provided for by Rule 511.  Sworn written testimony and exhibits were submitted in support of the Application.

7.     Land testimony and exhibits submitted in support of the Application by Patrick McGraw, Landman for Anadarko, showed that Anadarko is a leasehold owner of land in each proposed drilling and spacing unit.

8.     Geology testimony and exhibits submitted in support of the Application by Mark Lehrer, Petroleum Geologist for Anadarko, showed that the total thickness of the Niobrara Formation ranges from approximately 260 to 265 feet under the proposed drilling and spacing units.  Type logs and cross sections show that the Niobrara Formation exists under the entirety of the application lands, and is a common source of supply. 

9.     Engineering testimony and exhibits submitted in support of the Application by Robert King, Consulting Petroleum Engineer for Anadarko, showed that lands in the general vicinity of the application lands, located in both Colorado and Wyoming, have been recently spaced for horizontal well development in the Niobrara Formation.  Additional testimony showed that a survey of 81 horizontal wells drilled in the Niobrara Formation in the general vicinity of the application lands indicates an average ultimate recovery estimated to be 112,538 barrels of oil with an estimated drainage area per well of 89 acres.  Horizontal Niobrara Formations wells drilled in the Hereford Field, Cause 421, are expected to recover between 130,000 and 285,000 barrels of oil and drain an estimated 92 to 201 acres.  Further testimony indicated that a successful Niobrara Formation horizontal well drilled in the application lands can yield an estimated 265,000 barrels of oil and drain about 210 acres.

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 gas, and will not violate correlative rights.

11.   Anadarko 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 establishing three drilling and spacing units for certain lands located in Sections 16 through 21 of Township 12 North, Range 65 West, 6^th P.M., and approve of up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that three drilling and spacing units are hereby established for the below-listed lands, and up to two horizontal wells are approved for each of the units, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

Drilling and Spacing Unit #1 (approximately 666.86 acres)

Township 12 North, Range 65 West, 6^th P.M.

Drilling and Spacing Unit #2 (approximately 702.86 acres)

Township 12 North, Range 65 West, 6^th P.M.

Drilling and Spacing Unit #3 (approximately 726.48 acres)

Township 12 North, Range 65 West, 6^th P.M.

IT IS FURTHER ORDERED, that the initial perforation, perforated lateral, and terminus of the permitted well shall be located no closer than 600 feet from the boundary of the unit and the lateral to be located no closer than 600 feet from any wellbore which has perforated the Niobrara Formation, without exception being granted by the Director of the Commission.

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  15^th  day of April, 2011, as of April 4, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________    

                                                                                    Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

April 15, 2011