IN THE MATTER OF ALLEGED VIOLATIONS OF THE CAUSE NO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE            CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO OIL
AND GAS CONSERVATION COMMISSION BY GOPHER      ORDER NO. 1V-183
DRILLING COMPANY, YUMA COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Colorado Oil and Gas Conservation Commission on December 2, 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 Gopher Drilling Company is not in violation of Order No. 1C-3 and why the Commission should not authorize a claim the on the Five Thousand dollar ($5000) plugging bond submitted by Gopher Drilling Company for the Doug and Robin Renzelman #1 Well located in the SW¼ SE¼ of Section 18, Township 1 North, Range 42 West, 6th P.M to properly plug and abandon the well and reclaim the site.

FINDINGS

The Commission finds as follows:

1. Gopher Drilling Company 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 and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On September 27, 1996 the Colorado Oil and Gas Conservation Commission (“COGCC”) issued Order No. 1V-114 which among other things, found Jim Snyder in violation of certain Rules, assessed a fine and found that no Applications for Permits-to-Drill shall be issued to Mr. Jim Snyder or to any company in which Mr. Snyder is a principal until Mr. Snyder complies with Order No. 1V-114. As of this date, Mr. Snyder has not paid the fine assessed in Order No. 1V-114.

5. On May 26, 1998 an Application for Permit-to-Drill was approved and issued to Gopher Drilling Company to drill the Doug & Robin Renzelman #1 Well located in the SW¼ SE¼ of Section 18, Township 1 North, Range 42 West, 6th P.M.

6. Subsequent to the issuance of the Application for Permit-to-Drill it came to COGCC staff’s attention and was confirmed with the Colorado Secretary of State that Mr. Snyder is a Director of Gopher Drilling Company.

7. On December 14, 1998 the COGCC Director issued a Cease and Desist Order to Gopher Drilling Company for the Doug & Robin Renzelman #1 Well.

8. On March 26, 1999 the COGCC Director sent a letter notifying Gopher Drilling Company that by June 30, 1999 the Well must either: 1) be taken over by a properly bonded operator in which Mr. Snyder is not a principal; 2) Mr. Snyder must comply with Order No. 1V-114 by paying the fine assessed, or; 3) the well must be properly plugged and abandoned.

9. On June 28, 1999, Mr. Snyder responded by letter informing the COGCC Director that Gopher Drilling Company would not comply with the Cease and Desist order dated December 14, 1998 or with the Director’s letter of March 26, 1999.

10. On September 3, 1999 the Commission entered Order No. 1C-3 approving a Cease and Desist Order against Gopher Drilling Company. Order No. 1C-3 required Gopher Drilling Company to bring the Doug and Robin Renzelman #1 Well into compliance within thirty (30) days of the date the order was entered by performing one of the following options: 1) a properly bonded operator, of which Mr. Jim Snyder is not a principal, shall submit a COGCC Form 10, a Change of Operator, for the Doug & Robin Renzelman #1 Well, or 2) the civil penalties assessed by Order No. 1V-114 against Mr. Snyder, plus the interest accrued to June 30, 1999, a total of Eleven Thousand ninety-three dollars and eleven cents ($11,093.11) shall be paid, or 3) the Doug & Robin Renzelman #1 Well shall be properly plugged and abandoned and the site reclaimed.

11. As of November 8, 1999 Gopher Drilling Company is still the operator of the Doug & Robin Renzelman #1 Well.

12. As of November 8, 1999 Mr. Snyder has not paid the fine assessed by Order No. 1V-114.

13. As of November 8, 1999 Gopher Drilling Company has not plugged and abandoned the Doug & Robin Renzelman #1 Well, nor has the reserve pit been backfilled.

14. Gopher Drilling Company, of which Mr. Jim Snyder is a principal, is in continuing violation of Commission Order 1C-3.

15. Mr. Jim Snyder or companies in which he is a principal has demonstrated a pattern of violation of Commission Rules and Orders.

16. In accordance with Rule 523.d. COGCC staff considers the following to be aggravating factors for fine determination; 523.d.(1), the violation was intentional or reckless; 523.d.(2), the violation had a significant negative impact, or threat of significant impact on the environment or on public health, safety, or welfare; 523.d.(6), the violation involved recalcitrance or recidivism upon the part of the violator.

ORDER

NOW, THEREFORE, IT IS ORDERED that Gopher Drilling Company is hereby found in violation for failure to comply with the provisions of Order No. 1C-3.

IT IS FURTHER ORDERED that in accordance with Commission Rule 523.a.(4) Gopher Drilling Company shall be assessed a fine of Two Thousand dollars ($2000) for violation of Order No. 1C-3, payable within thirty (30) days of the date the order is entered.

IT IS FURTHER ORDERED that in accordance with Commission Rule 709 the Colorado Oil and Gas Conservation Commission shall authorize a claim on the Five Thousand dollar ($5000) plugging bond submitted by Gopher Drilling Company for the Doug and Robin Renzelman #1 Well located in the SW¼ SE¼ of Section 18, Township 1 North, Range 42 West, 6th P.M to properly plug and abandon the well and reclaim the site. If plugging and reclamation costs exceed the bond amount COGCC staff shall be authorized to confiscate available equipment and tubulars for salvage in accordance with §34-60-124 (6)(c), C.R.S.

IT IS FURTHER ORDERED that the provisions of Commission Order No. 1V-114 shall remain in effect and that no Application for Permits-to-Drill shall be issued to Mr. Jim Snyder, Gopher Drilling Company, or any other company of which Mr. Snyder is a principal until such time as compliance with the requirements of Order No. 1C-3 and Order No. 1V-114 is secured.

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 14th day of December, 1999, as of December 2, 1999.

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 December 14, 1999.

(1V#183)