REPORT OF THE COMMISSION

This cause came on for hearing before the Colorado Oil and Gas Conservation Commission on December 4, 1998 and March 25, 1999 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 Plainview Operating Company, Inc. is in continuing violation of Rule 208., 319.b. (3), 324.A. and why the Commission should not invoke the provisions of 34-60-121 C.R.S., as amended, t o assess penalties for violations of the Rules and Regulations of the Commission.

FINDINGS

The Commission finds as follows:

1. Plainview Operating Company, Inc. ("Plainview") 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 of the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On April 9, 1998 the Colorado Oil and Gas Conservation Commission ("COGCC") received a Change of Operator, Form 10 from Plainview for the Church #22-1 Well located in the NE1/4 NE1/4 of Section 22, Township 2 South, Range 70 West, 6th P.M. The Form 10 was signed by Mr. A.J. Carter as President of Plainview and was approved by the Director on May 5, 1998.

5. On May 1, 1998 the COGCC received from Plainview a COGCC Form 3 Performance Bond for bond #23881 in the amount of $5,000 for the Church #22-1 Well.

6. On July 15, 1998 the COGCC received a letter from Mr. Carter stating that the Church #22-1 Well was leaking hydrocarbons from the wellhead. The letter stated that Plainview recognized the compelling need to completely repair the tubing head and service the valves.

7. On July 16, 1998 COGCC staff inspected the Church #22-1 Well. The well was temporarily abandoned with tubing in the well. There was no production equipment or flowline connection. The well was leaking a slight amount of gas and condensate at the wellhead. There was no evidence of soil contamination at the well. COGCC staff agreed with Mr. Carter's position that the well required repair, however staff did not believe that the well posed an immedia te threat to public safety and health.

8. On August 16, 1998 COGCC staff received correspondence via facsimile from Mr. Carter. Included in the correspondence was a letter dated July 24, 1998 from Mr. John Neiley, attorney representing the surface and mineral owners, to Mr. Carter. Mr. Neiley's letter indicated that his clients desired that the well be plugged and abandoned.

9. On August 17, 1998 COGCC staff spoke with Mr. Carter by telephone and discussed the situation. Mr. Carter informed COGCC staff that Plainview did not have a valid mineral lease for the Church #22-1 Well.

10. On August 19, 1998 COGCC staff received a letter from Mr. Neiley requesting Commission assistance in getting the Church #22-1 Well plugged and abandoned.

11. On August 26, 1998 COGCC staff spoke with Mr. Neiley by telephone and confirmed that he was an attorney representing the surface and mineral owners, that Plainview did not have a valid mineral lease for the Church #22-1 Well and that his clients desired that the Commission take action to have the well plugged and abandoned. This conversation was confirmed in a letter from Mr. Neiley to COGCC staff received on August 27, 1998.

12. On August 27, 1998 COGCC staff sent a Notice of Alleged Violation ("NOAV") to Plainview for the Church #22-1 Well. The NOAV cited violations of Rules 208., the Commission shall require correction, in a manner to be prescribed or approved by it, of any condition which is causing or is likely to cause waste or pollution; and require the proper plugging and abandonment of any well or wells no longer used or useful in accordance with such reasonable pla n as may be prescribed by it; Rule 319.b.(3)., a well which has ceased production or injection or is incapable of production or injection shall be abandoned within six (6) months thereafter unless the time is extended by the Director upon application by the owner; Rule 324.A., the operator shall take precautions to prevent significant adverse impacts to air, water, soil, or biological resources to the extent necessary to protect public health, safety, and welfare, etc. COGCC records indicate that the Church #22-1 Well has not produced since it was initially completed on January 3, 1983.

13. On September 1, 1998 the Director received a letter from Mr. Carter contesting the NOAV issued for the Church #22-1 Well and requesting that the NOAV be revoked.

14. On September 8, 1998 the Director received a letter from Mr. Neiley which again stated that his clients desire that the Church #22-1 Well be plugged and abandoned.

15. On September 16, 1998 the Director responded by letter to Mr. Carter's letter of September 1, 1998. The Director addressed each of Mr. Carter's points and stated that the NOAV would not be revoked nor would the NOAV deadline be extended. The letter also stated that if NOAV compliance was not secured the matter would be docketed for Commission hearing and that Plainview would be allowed to present testimony at the hearing.

16. On September 22, 1998 the Commission received copy of a letter from Mr. Carter to Mr. Neiley. The letter requests an access agreement between Plainview Operating and Mr. Neiley's clients.

17. On September 29, 1998 the Commission received a copy of a letter from Mr. Neiley to Mr. Carter. The letter stated that Mr. Neiley has been authorized by his clients to prepare an access agreement.

18. On October 13, 1998 the Director received a letter from Mr. Carter requesting a one-hundred twenty (120) day extension to the NOAV of August 27, 1998. Commission staff sent a response letter to Mr. Carter on October 19, 1998 which emphasized again that no extension would be granted.

19. On October 21, 1998 the Commission received copy of a letter and access agreement prepared by Mr. Neiley. The agreement was signed by one of Mr. Neiley's clients, Perry S. McKay, but had not been signed by Plainview.

20. On October 22, 1998 the Director received a letter from Mr. Carter. The letter addressed various concerns and requested that the COGCC hold in abeyance any decision regarding any fines or penalties against Plainview. Commission staff sent a response letter to Mr. Carter on October 30, 1998 which again emphasized that Plainview would be allowed to present testimony in support of its position at a Commission hearing.

21. On October 28, 1998 the Commission received a copy of a letter from Mr. Carter to Mr. Neiley. The letter stated that the access agreement prepared by Mr. Neiley was inappropriate and unacceptable to Plainview and referred to Ingress and Egress Agreements apparently sent by Plainview to Mr. Neiley as part of the original correspondence.

22. On November 4,1998 the Director made application to the Commission for an Order Finding Violation against Plainview and notice was given for the December 3 and 4, 1998 hearing.

23. On November 18, 1998 Plainview filed with the Commission a written protest in this matter stating they may have no ownership in the well. At the December 4, 1998 hearing after testimony was presented from COGCC staff and Plainview, and comments were made from a surface owner's representative, the Commission directed the parties to convene for a settlement discussion. Subsequently, the Director reported to the Commission that due to the ownership is sues in this matter it was not possible to reach settlement at that time. The Commission accepted the Director's recommendation to amend the notice to determine responsible party status, to notice all mineral owners and surface owners, and to continue this matter to the January hearing.

24. On December 31, 1998 PMS Properties, Inc, by its attorney, submitted a letter requesting the matter be continued to the February hearing.

25. On January 21, 1999, PMS Properties, Inc, by its attorney, verbally requested a continuance in the matter to the March hearing due to the location of the February hearing and the hearing was rescheduled.

26. At the March 25, 1999 hearing, after discussion between the parties and before the Commission, the Commission ordered the Church #22-1 Well to be properly plugged and abandoned and reclaimed by Plainview Operating Company, Inc. or PMS Properties, Inc. within thirty (30) days from the date the written order is issued. If the well is not plugged and abandoned in that timeframe, a Change of Operator, Form 10 should be filed with the Commission by PMS P roperties, Inc. along with adequate financial assurance.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Plainview Operating Company, Inc. or PMS Properties, Inc. shall properly plug and abandon and reclaim the Church #22-1 Well within thirty (30) days of the date the Order is issued.

IT IS FURTHER ORDERED, if the well has not been plugged and abandoned within thirty (30) days of the date this Order is issued, PMS Properties, Inc. shall file with the Commission a Change of Operator, Form 10 and adequate financial assurance.

IT IS FURTHER ORDERED, that all violations in the previously noticed matter shall be dismissed upon the compliance with this Order.

IT IS FURTHER ORDERED, that nothing in this Order shall be intended to affect any civil litigation now or in the future.

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 , 1999 to be in effect as of March 25, 1999.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln St. Denver, Colorado 80203 April 12, 1999

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