IN THE MATTER OF THE PROMULGATION AND CAUSE NO

IN THE MATTER OF THE PROMULGATION AND CAUSE NO. 113
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE CRAIG-NORTH FIELD, ORDER NO. 113-7
MOFFAT COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 10:00 a.m. on October 29, 2001 in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, on the amended application of Beartooth Oil & Gas Company, by its attorney for an order to remove a 320-acre tract from an existing order and to establish 160-acre drilling and spacing units for certain lands in the Craig-North Field for the production of gas from the Lewis Formation. Permitted wells shall be located no closer than 600 feet from the boundaries of the unit and no closer than 1,200 feet from any well producing from the Lewis Formation.

FINDINGS

The Commission finds as follows:

1. Beartooth Oil & Gas Company (“Beartooth”), as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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 May 21, 1979, the Commission issued Order No. 113-5 which among other things, established 320-acre drilling and spacing units for certain lands in the Craig-North Field including Section 23, Township 8 North, Range 90 West, 6th P.M. for the production of gas from the Upper Lewis Formation

5. On September 11, 2001, Beartooth by its attorney filed with the Commission a verified Application for an order to remove Section 23, Township 8 North, Range 90 West, 6th P.M. from the provisions of Order No. 113-5 and to establish 160-acre drilling and spacing units for the below-listed lands for the production of gas from the Lewis Formation, with the permitted well to be located no closer than 600 feet from the boundaries of the unit and no closer than 1,200 feet from any well producing from the Lewis Formation.

Township 8 North, Range 90 West, 6th P.M.
Sections 13 and 14: All
Sections 23 and 24: All

6. On October 24, 2001, Beartooth amended its application to remove the E½ of Section 23, Township 8 North, Range 90 West, 6th P.M. from its application to remain subject to the provisions of Order No. 113-5, and requested that 160-acre drilling and spacing units be established for the W½ of said Section 23.

7. Testimony and exhibits presented at the administrative hearing indicated that Beartooth has 100% of the leasehold ownership in all the lands except two 160-acre tracts and one 40-acre tract.

8. Testimony and exhibits presented at the administrative hearing indicated the Lewis Formation is continuous across the application area and that production occurs from various intervals within the Lewis Formation

9. Testimony and exhibits presented at the administrative hearing indicated that 160-acres is not smaller than the maximum area that can be efficiently and economically drained by one well. Additional testimony indicated that approval of the application would protect correlative rights and prevent the waste of hydrocarbons.

10. Beartooth agreed to be bound by oral order of the Commission.

11. Based on the amended verified application, the testimony presented at the administrative hearing and the Hearing Officer recommendation, the Commission should approve the amended application to remove the W½ of Section 23, Township 8 North, Range 90 West, 6th P.M. from the provisions of Order No. 113-5 and establish 160-acre drilling and spacing units for the lands described in Findings 5 and 6 above for the production of gas from the Lewis Formation. Permitted wells shall be located no closer than 600 feet from the boundaries of the unit and no closer than 1,200 feet from any well producing from the Lewis Formation.

ORDER

NOW, THEREFORE, IT IS ORDERED that the W½ of Section 23, Township 8 North, Range 90 West, 6th P.M. is hereby removed from the provisions of Order No. 113-5 and 160-acre drilling and spacing units are hereby established for the below-listed lands for the production of gas from the Lewis Formation, with the permitted well to be located no closer than 600 feet from the boundaries of the unit and no closer than 1,200 feet from any well producing from the Lewis Formation:

Township 8 North, Range 90 West, 6th P.M.
Sections 13 and 14: All
Section 23: W½
Section 24: All

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 8th day of November, 2001, as of October 29, 2001.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801, 1120 Lincoln Street, Denver, Colorado 80203 November 8, 2001

(113-7)