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

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

IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 191

AND ESTABLISHMENT OF FIELD RULES TO )

GOVERN OPERATIONS IN THE MAMM CREEK ) ORDER NO. 191-66

FIELD, GARFIELD COUNTY, COLORADO )

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission 9:00 a.m. on July 14, 2009 at the Hotel Colorado, in the Devereux Room, 526 Pine Street, Glenwood Springs, Colorado, for an order to pool a nonconsenting interest in the 80-acre drilling and spacing unit consisting of the E½ NE¼ of Section 11, Township 6 South, Range 93 West, 6^th P.M., for the development and operation of the Williams Fork, Iles and Mancos Group Formations.

FINDINGS

The Commission finds as follows:

1. Antero Resources Piceance Corporation (“Antero”), 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. On January 9, 2006, corrected February 28, 2006, the Commission issued Order No. 191-15, which among other things, approved of the equivalent of one well per 10 acres for Section 11, Township 6 South, Range 93 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.

5. On June 5, 2006, the Commission issued Order No. 191-25, which among other things, approved of the equivalent of 10-acre well density for certain lands including the N½ of Section 11, Township 6 South, Range 93 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Iles Formation of the Mesaverde Group.

6. On July 15, 2008, the Commission issued Order No. 191-54, which among other things, established an approximate 80-acre drilling and spacing unit consisting of the E½ NE¼ of Section 11, Township 6 South, Range 93 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

7. On January 13, 2009, the Commission issued Order No. 191-60, which among other things, established an 80-acre drilling and spacing unit, in a manner consistent with those previously established for the Williams Fork and Iles Formations, consisting of the E½ NE¼ of Section 11, Township 6 South, Range 93 West, 6^th P.M., and approved the equivalent of one well per 10 acres, for the production of gas and associated hydrocarbons from the Mancos Group Formation, which is comprised of the stratigraphic equivalent of the Mancos Shale, the Niobrara Formation, and the Mowry Shale.

8. On February 9, 2009, Antero, by its attorney, filed with the Commission a verified application for an order to pool a nonconsenting interest in the 80-acre drilling and spacing unit consisting of the E½ NE¼ of Section 11, Township 6 South, Range 93 West, 6^th P.M., for the development and operation of the Williams Fork, Iles and Mancos Group Formations.

9. On June 30, 2009, Antero, 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.c. Sworn written testimony and exhibits were submitted in support of the application.

10. Testimony and exhibits submitted in support of the application showed that Antero is the majority mineral leaseholder of lands underlying the application lands. Additional testimony showed a list of all consenting and nonconsenting owners within the application lands, and demonstrated that Antero has 97.08750% of the lands leased and that a sole unleased and non-participating interest comprises 2.91250% of the lands. Further testimony indicated that an offer to lease or to participate was sent to the nonconsenting owner, and that said offer was sent via US Mail, at least 30 days prior to the July 14, 2009 hearing, to the nonconsenting owner. Testimony showed that the offer to lease/participate and the Authorizations for Expenditures were fair and reasonable, and similar to those prevailing in the area, and that Antero has complied with the requirements of Rule 530.a. and §34-60-117(7)(d), C.R.S.

11. Antero Resources Piceance Corporation 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.c., the Commission should enter an order to pool the nonconsenting interest in the 80-acre drilling and spacing unit consisting of the E½ NE¼ of Section 11, Township 6 South, Range 93 West, 6^th P.M., for the development and operation of the Williams Fork, Iles and Mancos Group Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, the nonconsenting interest in the 80-acre drilling and spacing unit consisting of the E½ NE¼ of Section 11, Township 6 South, Range 93 West, 6^th P.M., is hereby pooled, for the development and operation of the Williams Fork, Iles and Mancos Group Formations.

2. The production obtained from the drilling and spacing 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 the drilling and spacing unit; each owner of an interest in each drilling and spacing unit shall be entitled to receive his/her share of the production of the well located on the drilling and spacing unit applicable to his/her interest in the drilling and spacing unit.

3. Said unleased mineral owner is hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the well(s) and be subject to the penalties as provided for by §34-60-116 (7), C.R.S.

4. The nonconsenting unleased mineral owner within the drilling and spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his/her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116 (7)(b), C.R.S. as amended. After recovery of such costs, the nonconsenting mineral owner shall then own his/her proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his/her proportionate share of further costs incurred in connection with the well as if he/she had originally agreed to the drilling.

5. The operator of any well drilled on the above-described units shall furnish the nonconsenting owner 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 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.

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 thirty (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 this__________day of July, 2009, as of July 14, 2009.

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

July 22, 2009