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

REPORT OF 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 an approximate 1,280-acre drilling and spacing unit consisting of Sections 1 and 12, Township 7 North, Range 62 West, 6^th P.M., and approve of one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.    Continental Resources, Inc., (“Continental” 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 1 and 12, Township 7 North, Range 62 West, 6^th P.M. are subject to this Rule for the Niobrara Formation.

5.    On February 2, 2011, Continental, by its attorney, filed with the Commission a verified application (the “Application”) for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-listed lands (the “Application Lands”), and approve of one horizontal well within said unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the initial perforation, perforated lateral, and terminus of the permitted well to be located no closer than 600 feet from the boundary of the unit and the perforated lateral to be located no closer than 300 feet from any wellbore which has perforated the Niobrara Formation without exception being granted by the Director of the Commission:

Township 7 North, Range 62 West, 6^th P.M.

6.    On March 22, 2011, Continental, 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.    Testimony and exhibits submitted in support of the Application by Michael Schooley, Landman for Continental, showed that Continental is a leaseholder for the entirety of the application lands.

8.    Testimony and exhibits submitted in support of the Application by Ola Adisa, Geologist for Continental, showed that the Niobrara Formation underlies the entirety of the application lands with a total thickness of approximately 300 feet.

9.    Testimony and exhibits submitted in support of the Application by Archie Taylor, Reservoir Engineer for Continental, showed that the estimated ultimate recovery of an analogous horizontal well producing from the Niobrara Formation in the vicinity of the Application Lands is 538,000 barrels of oil with a drainage area of approximately 277 acres.  Continental anticipates an estimated ultimate recovery for the Application Lands of 550,000 barrels of oil due to the longer effective lateral length (expected to be 9,000 feet) than the analogous well, and that economic analysis shows positive results.

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.  Continental 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 an approximate 1,280-acre drilling and spacing unit consisting of Sections 1 and 12, Township 7 North, Range 62 West, 6^th P.M., and approve of one horizontal well 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 1,280-acre drilling and spacing unit is hereby established for the below-listed lands, and one horizontal well within the unit is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

Township 7 North, Range 62 West, 6^th P.M.

IT IS FURTHER ORDERED, that the initial perforation, perforated lateral and terminus of the permitted well to be located no closer than 600 feet from the boundary of the unit and the perforated lateral to be located no closer than 300 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  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