IN THE MATTER OF ALLEGED VIOLATIONS OF THE          CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO OIL
AND GAS CONSERVATION COMMISSION BY                     ORDER NO. 1V-200
NITROTEC CORPORATION,
KIT CARSON COUNTY, COLORADO

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

1. The Pierson #J-3 Well is located in the NW¼ SW¼ of Section 20, Township 11 South, Range 44 West, 6th PM. Nitrotec Corporation (Nitrotec”) posted a $30,000 Certificate of Deposit as financial assurance in July 1993, and purchased this well in October 1994. The well was plugged and abandoned in December 1995, and Nitrotec reclaimed the financial assurance without consent of the Director. A Notice of Alleged Violation (“NOAV”) was issued to Nitrotec on March 8, 2000, alleging violations of Rule 709., requiring financial assurance and Rule 1004.c., requiring financial assurance not be released until final reclamation is approved. The NOAV required Nitrotec post a Two Thousand Dollar ($2,000) bond with the Colorado Oil and Gas Conservation Commission (“COGCC”) until such time as final reclamation has been approved. Corrective action was required by April 8, 2000, and as of May 15, 2000, no bond has been posted.

2. The Beeson #1-A Well is located in the NE¼ SE¼ of Section 1, Township 11 South, Range 46 West, 6th PM. Nitrotec posted a $30,000 Certificate of Deposit as financial assurance in July 1993 and drilled this well in May 1996. The well was plugged and abandoned in May 1998, and Nitrotec reclaimed the financial assurance without consent of the Director. A NOAV was issued to Nitrotec on March 8, 2000, alleging violations of Rule 709., requiring financial assurance and Rule 1004.c., requiring financial assurance not be released until final reclamation is approved. The NOAV required Nitrotec post a Two Thousand Dollar ($2,000) bond with the COGCC until such time as final reclamation has been approved. Corrective action was required by April 8, 2000, and as of May 15, 2000, no bond has been posted.

3. The Beeson #2 Well is located in the W½ SE¼ of Section 1, Township 11 South, Range 46 West, 6th PM. Nitrotec posted a $30,000 Certificate of Deposit as financial assurance in July 1993, and purchased this well in October 1994. The well was plugged and abandoned in February 1996, and Nitrotec reclaimed the financial assurance without consent of the Director. A NOAV was issued to Nitrotec on March 8, 2000, alleging violations of Rule 709., requiring financial assurance and Rule 1004.c., requiring financial assurance not be released until final reclamation is approved. The NOAV required Nitrotec post a Two Thousand Dollar ($2,000) bond with the COGCC until such time as final reclamation has been approved. Corrective action was required by April 8, 2000, and as of May 15, 2000, no bond has been posted.

4. An Administrative Order of Consent (“AOC”) was issued to Nitrotec on May 15, 2000. The AOC recommended that Nitrotec be found in violation of Rules 709. and 1004.c. for the above three wells and fined six thousand dollars ($6,000).

5. On June 2, 2000, COGCC staff met with Dante Zarlengo, Attorney for Nitrotec, to discuss the AOC issued May 15, 2000. Mr. Zarlengo advised COGCC staff that the Pierson #J-3 well site is currently being farmed and therefore no further reclamation is necessary. COGCC staff subsequently inspected the site and confirmed this. Mr. Zarlengo requested that Nitrotec be found in violation of Rule 709. only for the remaining wells.

6. On July 12, 2000, Nitrotec posted financial assurance in the amount of Two Thousand Dollars ($2,000) each for the Beeson #1-A Well and the Beeson #2 Well.

ORDER

NOW, THEREFORE, IT IS ORDERED that Nitrotec Corporation shall be found in violation of Rule 709. for failure to maintain adequate financial assurance the Beeson #1-A Well and the Beeson #2 Well.

IT IS FURTHER ORDERED that Nitrotec Corporation shall be assessed a fine of One Thousand Dollars ($1000) per well for a total fine of Two Thousand Dollars ($2,000) payable within thirty (30) days from the date the order is approved by the Commission.

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.

RECOMMENDED this 25th day of July, 2000.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 David K. Dillon, Hearing Officer 1120 Lincoln Street Denver, Colorado 80203 July 24, 2000.

(1V#200)