IN THE MATTER OF ALLEGED VIOLATIONS OF THE          CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO OIL
AND GAS CONSERVATION COMMISSION BY
ENERGY SEARCH COMPANY, INC.,                                       ORDER NO. 1V-184
ADAMS COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Colorado Oil and Gas Conservation Commission on January 10, 2000 at 8:30 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Energy Search Company, Inc. is not in violation of Order No. 1V-180 and in continuing violation of Rule 319. b. (3), failure to obtain Director approval for continuing shut-in status and Rule 326. b., failure to perform a mechanical integrity test within thirty (30) days of removing the surface production equipment for the Campbell #1 Well located in the SW¼ SW¼ of Section 22, Township 1 South, Range 67 West, 6th P.M.

FINDINGS

The Commission finds as follows:

1. Energy Search Company, Inc. (“Energy Search”) 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.

4. On January 7, 1999, Colorado Oil and Gas Conservation Commission (“COGCC”) staff conducted a routine inspection of the Campbell #1 Well located in the SW¼ SW¼ of Section 22, Township 1 South, Range 67 West, 6th P.M. The well was determined to be incapable of production as a result of the surface production equipment being removed.

5. On January 13, 1999, COGCC staff issued a Notice of Alleged Violation (“NOAV”) to Energy Search for the Campbell #1 Well. Per return receipt, the NOAV was accepted on January 19, 1999. The NOAV cited violation of Rule 319.b. (3), failure to obtain Director approval for continuing shut-in status and Rule 326.b., failure to perform a mechanical integrity test within thirty (30) days of removing the surface production equipment from the Campbell #1 Well. COGCC records indicate that the well has not produced since June 1998. The NOAV specified an abatement date of July 12, 1999.

6. On June 16, 1999, COGCC staff attempted to contact Mr. Don Robuck, president of Energy Search regarding the Campbell #1 Well. Correspondence was mailed informing the company that an Administrative Order By Consent (“AOC”) would be issued if the Campbell #1 Well was not brought into compliance by the July 12, 1999 deadline. Mr. Robuck never responded to the mailed correspondence.

7. On July 16, 1999, COGCC staff inspected the Campbell #1 Well and found it was still in noncompliance.

8. On July 30, 1999, COGCC staff issued an AOC to Energy Search citing the violations issued on the NOAV for failure to bring the Campbell #1 Well into compliance. Per return receipt, the AOC was accepted on August 4, 1999.

9. On August 2, 1999, Mr. Robuck contacted COGCC staff requesting plugging orders for the Campbell #1 Well.

10. On August 31, 1999, Mr. Robuck signed the proposed AOC on behalf of Energy Search.

11. The AOC was approved by the Commission and entered as a final order at its October 22, 1999 hearing. The AOC levied a fine amount of Two Thousand Dollars ($2,000.00) and required the Campbell #1 Well brought into compliance within thirty (30) days after acceptance of the order.

12. As of November 24, 1999, the Campbell #1 Well had not been brought into compliance nor had the Commission received payment of the fine.

13. At the time of the hearing on this matter, COGCC staff testified that Energy Search is the operator of other wells in Colorado in addition to the Campbell #1 Well. Therefore, should it be necessary for COGCC staff to commence a claim on the Thirty Thousand dollar ($30,000) plugging bond to plug, abandon and reclaim the Campbell #1 Well, Energy Search will no longer have financial assurance to operate its remaining wells. In accordance with Rule 709.c., if an operator’s financial assurance is foreclosed by the Commission, such operator’s Certificates of Clearance, Form 10, are suspended and no sales of oil or gas is allowed.

ORDER

NOW, THEREFORE IT IS ORDERED, that Energy Search Company, Inc. shall be found in violation of Order No. 1V-180, failure to comply with an Administrative Order By Consent.

IT IS FURTHER ORDERED, that Energy Search Company, Inc. shall be found in continuing violation of Rule 319. b. (3), failure to obtain Director approval for continuing shut-in status and Rule 326. b., failure to perform a mechanical integrity test within thirty (30) days of removing the surface production equipment from the Campbell #1 Well located in the SW¼ SW¼ of Section 22, Township 1 South, Range 67 West, 6th P.M.

IT IS FURTHER ORDERED, that Energy Search Company, Inc. shall be assessed a total fine of Eight Thousand dollars ($8,000.00) for violation of Order No. 1V-180 and Rules 319.b.(3) and 326.b. for the Campbell #1 Well, payable within thirty (30) days of the date the order is issued.

IT IS FURTHER ORDERED, that Energy Search Company, Inc. shall be required for the Campbell #1 Well to either: 1) perform a successful mechanical integrity pressure test; 2) properly plug, abandon and reclaim; or 3) return to production within thirty (30) days of the date this order is entered.

IT IS FURTHER ORDERED, that if Energy Search Company, Inc. does not comply with the order, COGCC staff shall be authorized to commence a claim on the Thirty Thousand Dollar ($30,000) plugging bond and proceed to plug, abandon and reclaim the well.

IT IS FURTHER ORDERED, that Certificates of Clearance, Form 10, shall be suspended and no sales of oil or gas shall be allowed from any well operated by Energy Search Company, Inc. until such time as Energy Search Inc.’s financial assurance has been replaced or restored.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

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.

ENTERED this 28th day of January, 2000, as of January 10, 2000.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 Patricia C. Beaver, Secretary 1120 Lincoln Street Denver, Colorado 80203 January 28, 2000.

(1V#184)