BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 535

DOCKET NO. 150500254

ORDER NO. 535-668

REPORT OF THE COMMISSION

The Commission heard this matter on May 18, 2015, at the Aims Community College, 260 College Avenue, Fort Lupton, Colorado, upon application for an order to: 1) vacate an approximate 726.48-acre drilling and spacing unit established by Order No. 535-6 for Sections 16 and 21, Township 12 North, Range 65 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 1,366.48-acre drilling and spacing unit for Sections 16, 21 and 28, Township 12 North, Range 65 West, 6^th P.M; and 3) approve up to seven horizontal wells within an approximate 1366.48-acre drilling and spacing unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1. Anadarko E&P Onshore LLC (“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, on unspaced lands, 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.

5. On April 4, 2011, the Commission entered Order No. 535-6 which, among other things, established an approximate 726.48-acre drilling and spacing unit for Sections 16 and 21, Township 12 North, Range 65 West, 6^th P.M., and approved up to two horizontal wells within the unit, for the production of gas and associated hydrocarbons from the Niobrara Formation.

6. On February 20, 2015, Anadarko, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) vacate an approximate 726.48-acre drilling and spacing unit established by Order No. 535-6 for Sections 16 and 21, Township 12 North, Range 65 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 1,366.48-acre drilling and spacing unit for the below-described lands (“Application Lands”); and 3) approve up to seven horizontal wells within an approximate 1366.48-acre drilling and spacing unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation. with the productive interval of the wellbore to be no closer than 600 feet from the unit boundaries and no closer than 600 feet from the productive interval of a well producing from the Niobrara Formation, without exception being granted by the Director:

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

Section 16: Lots 1-4 (approximately 86.48 acres) (portion lying within the State of Colorado)

Section 21: All

Section 28: All

Applicant states that any horizontal well to be drilled under this Application will be drilled from the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director.

7. On April 27, 2015, Anadarko, 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. Testimony and exhibits submitted in support of the Application by Jason Rayburn, Landman for Anadarko, showed that Anadarko owns substantial leasehold interests in the Application Lands.

9. Testimony and exhibits submitted in support of the Application by Thomas A. Berkman, Senior Project Geologist for Anadarko, showed that the Niobrara Formation underlies the entirety of the Application Lands. The Niobrara Formation ranges from approximately 135 to 140 feet thick.

10. Testimony and exhibits submitted in support of the Application by Emily Boecking, Reservoir Engineer for Anadarko, showed that well drainage area for the Niobrara Formation is approximately 137 acres for approximate 1280-acre laterals, and would accommodate up to seven horizontal wells for the Niobrara Formation.

11. 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.

12. Anadarko agrees to be bound by oral order of the Commission.

13. 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: 1) vacate an approximate 726.48-acre drilling and spacing unit established by Order No. 535-6 for Sections 16 and 21, Township 12 North, Range 65 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 1,366.48-acre drilling and spacing unit for Sections 16, 21 and 28, Township 12 North, Range 65 West, 6^th P.M; and 3) approve up to seven horizontal wells within an approximate 1366.48-acre drilling and spacing unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

IT IS HEREBY ORDERED:

1. An approximate 726.48-acre drilling and spacing unit established by Order No. 535-6 for Sections 16 and 21, Township 12 North, Range 65 West, 6^th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation

2. An approximate 1,366.48-acre drilling and spacing unit for the below-described lands, is hereby established, and up to seven horizontal wells within the unit, are hereby approved, for production of oil, gas and associated hydrocarbons from the Niobrara Formation

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

Section 16: Lots 1-4 (approximately 86.48 acres) (portion lying within the State of Colorado)

Section 21: All

Section 28: All

3. The productive interval of the wellbores shall be located no closer than 600 feet from the unit boundaries and no closer than 600 feet from the productive interval of any well producing from the same formation, without exception being granted by the Director.

4. A maximum of four surface locations will be allowed for development of minerals from the Niobrara Formation within the spacing unit.

IT IS FURTHER ORDERED:

1. The provisions contained in the above order shall become effective immediately.

2. The Commission expressly reserves the right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

ENTERED this 1^st day of June, 2015, as of May 18, 2015.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

Julie Murphy, Secretary

1. Anadarko E&P Onshore LLC (“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.

Section 28: All

Applicant states that any horizontal well to be drilled under this Application will be drilled from the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director.

7. On April 27, 2015, Anadarko, 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. Testimony and exhibits submitted in support of the Application by Jason Rayburn, Landman for Anadarko, showed that Anadarko owns substantial leasehold interests in the Application Lands.

9. Testimony and exhibits submitted in support of the Application by Thomas A. Berkman, Senior Project Geologist for Anadarko, showed that the Niobrara Formation underlies the entirety of the Application Lands. The Niobrara Formation ranges from approximately 135 to 140 feet thick.

11. 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.

12. Anadarko agrees to be bound by oral order of the Commission.

1. An approximate 726.48-acre drilling and spacing unit established by Order No. 535-6 for Sections 16 and 21, Township 12 North, Range 65 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation

2. An approximate 1,366.48-acre drilling and spacing unit for the below-described lands, is hereby established, and up to seven horizontal wells within the unit, are hereby approved, for production of oil, gas and associated hydrocarbons from the Niobrara Formation

3. The productive interval of the wellbores shall be located no closer than 600 feet from the unit boundaries and no closer than 600 feet from the productive interval of any well producing from the same formation, without exception being granted by the Director.

4. A maximum of four surface locations will be allowed for development of minerals from the Niobrara Formation within the spacing unit.

1. The provisions contained in the above order shall become effective immediately.

2. The Commission expressly reserves the right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

1. An approximate 726.48-acre drilling and spacing unit established by Order No. 535-6 for Sections 16 and 21, Township 12 North, Range 65 West, 6^th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation