BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 1
AND ESTABLISHMENT OF AN EXPLORATORY )
UNIT TO GOVERN OPERATIONS IN THE ) ORDER NO. 1-23 (Formerly 1-123)
CRAIG FIELD, MOFFAT COUNTY, COLORADO ) AMENDED
REPORT OF THE COMMISSION
TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:
This cause came on for hearing before the Commission on March 16, 1992 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of R. Craig Ponder for an order to establish an exploratory unit for production from the Niobrara Formation for the E1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., and further, to pool all interests in the drilling and spacing unit consisting of the E1/2 of said Section 9, for production of oil, gas and associated hydrocarbons from the Niobrara Formation underlying said unit, pursuant to the provisions of C.R. S. 34-60-116, 1984.
The Commission finds as follows:
1. R. Craig Ponder, 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.
4. On April 19, 1991, the General Assembly of the State of Colorado enacted Senate Bill 91-87, which among other things, authorized the Commission, when unable to determine the existence of a pool and the appropriate acreage to be embraced with a drilling unit, to establish the existence of a pool and the appropriate size and shape of the drilling unit to be applied.
5. The applicant proposes to reenter and directionally drill a well which surface location is 330 feet FSL and 330 feet FEL in the SE1/4 SE1/4 SE1/4 of said Section 9, for production from the Niobrara Formation, with the bottom hole location no closer than 600 feet from any lease line and no closer than 1200 feet from any well drilling to or producing from the Niobrara Formation.
6. Efforts have been made to obtain the voluntary pooling of all interests. All non-consenting interests will have thirty (30) days from the date that A.F.E.'s are furnished to respond under the provisions of C.R.S. 34-60-116, (6) and (7)(d).
7. The claim of the Shefstead Brothers to a mineral interest in a portion of the 320-acre drilling and spacing unit and to the issue of inadequate notice was unclear. The applicant and the protestant were required to file additional information within two (2) weeks of the date of the Commission hearing. Should it be determined by the Director as to validity of claim and should subsequent evidence support this, the Commission would conduct another hearing. If the Director determines the claim to be unsubstantiated, the order as issued would stand.
8. Based on the facts stated in the verified application, having been heard by the Director as Hearing Officer on March 13, 1992 and recommended for approval, the Commission should enter an order establishing an exploratory unit for the E1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado, and pooling all interests in the 320-acre drilling and spacing unit herein described in order to insure proper and efficient development of the oil and gas from the Niobrara Formation underlying said unit.
9. An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and /or gas from the common source of supply underlying said drilling unit.
10. Production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within said drilling unit.
O R D E R
NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of 34‑60‑116, C.R.S., 1991, as amended, of the Oil and Gas Conservation Act of the State of Colorado, an order to establish an exploratory unit for production from the Niobrara Formation for the E1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado is hereby granted.
2. Pursuant to the provisions of C.R.S. 34-60-116, 1984, as amended, all interests in the drilling and spacing unit consisting of the E1/2 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado, are hereby pooled for the development of oil, gas and associated hydrocarbons from the Niobrara Formation underlying said unit.
3. The production obtained from said drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.
4. The owner of the unleased tract should be afforded the opportunity to elect whether to participate in the drilling and operation of said well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of acres in each unleased tract to the total number of acres within said drilling unit.
5. Within thirty (30) days from the date of receipt of said A.F.E. by the owner of said tract, such owner shall indicate whether he consents to the cost of the drilling of the well and agrees to participate in such costs. Such election shall be made in writing either by executing the A.F.E. or similar document. In the event a written election to participate is not made by said owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non‑consenting as to the well and be subject to the penalties as provided for by 34‑60‑116 (7).
6. Any non‑consenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his or her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non‑consenting owner's proportionate 87.5% share of production, the costs specified in C.R.S. 34‑60‑116 (7)(b), as amended. After recovery of such costs, the non‑consenting mineral owner shall then own his proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with the well as if he had originally agreed to the drilling.
7. The operator of any well drilled on the above described unit shall furnish all non‑consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
IT IS FURTHER ORDERED, that R. Craig Ponder and the Shefstead Brothers shall furnish additional information to the Director no later than two weeks from the date of the March hearing.
IT IS FURTHER ORDERED, that R. Craig Ponder is hereby designated as operator of the well to be reentered and directionally drilled in the SE1/4 SE1/4 SE1/4 of Section 9, Township 6 North, Range 91 West, 6th P.M., Moffat County, Colorado.
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 day of , 1992, as of March 16, 1992.
AMENDED this ____________ day of ____________________, 1992, as of March 16, 1992.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
Patricia C. Beaver, Secretary
Dated at Suite 380
1580 Logan Street
Denver, Colorado 80203
April 10, 1992