IN THE MATTER ALLEGED VIOLATIONS OF THE              CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO OIL
AND GAS CONSERVATION COMMISSION BY                  ORDER NO. 1V-216
FOUR STAR OIL AND GAS COMPANY,
LA PLATA COUNTY, COLORADO

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

1. The Southern Ute Well #27 is located in the NW1/4 NW1/4 of Section 27, Township 33 North, Range 9 West, N.M.P.M. The well was drilled in October, 1964 and was completed in the Dakota Formation.

2. The Southern Ute Well #28 is located in the NW1/4 NE1/4 of Section 28, Township 33 North, Range 9 West, N.M.P.M. The well was drilled in July, 1981 and was completed in the Dakota Formation.

3. The Southern Ute Wells #27 and #28 (the “Wells”) were purchased by Four Star Oil and Gas Company (“Four Star”) in August, 2000.

4. Both Wells were recompleted to the Fruitland Formation in September and October, 2000. A complaint was filed by the surface owner, Mr. Alton Hess, on December 5, 2000, alleging that the Wells were recompleted without approval of the Colorado Oil and Gas Conservation Commission (“COGCC”).

5. COGCC staff investigated the complaint. The Wells were recompleted without prior approval of the COGCC. A Notice of Alledged Violation (“NOAV”) was issued to Four Star on December 26, 2000, requiring Four Star to submit the appropriate forms. Four Star submitted Applications for Permits to Recomplete, Form 2 for both wells on January 9, 2001. The NOAV’s were considered resolved.

6. On December 22, 2001, Mr. Hess filed a new complaint stating that Four Star did not provide him with proper notice prior to recompleting the wells, that Four Star did not consult with him prior to recompleting the wells, and that Four Star did not obtain appropriate COGCC permits prior to building special purpose pits.

7. COGCC staff investigated the complaint. Notice of the recompletions was not given to the surface owner as required by Rule 305. Pits were constructed without prior approval in violation of Rule 903. During the investigation the field inspector also noted possible violations of Rule 902.e. requiring fencing of pits, Rule 210. requiring proper well signage, Rule 603.g. prohibiting junk on location, and Rule 306. requiring consultation with the surface owner. NOAV’s were issued on February 23, 2001 for these violations.

8. A meeting with Allen Davis and Rocky Holly of Four Star was held in Denver on April 4, 2001. During the meeting it was determined that alleged violations of Rules 902.e, 210., and 630.g. have been remediated, and that Rule 306. had not been violated.

9. Texaco recognizes the Director's authority to provisionally resolve alleged violations through negotiation and execution of Administrative Orders by Consent ("AOC") prepared for Commission approval pursuant to Rule 522.b. The Director's consent to enter into this AOC is conditioned upon the Director finding that Texaco violated Rules 305. and 903. In entering into this AOC with the Director, Texaco does not admit any violation of these rules. Texaco does not waive and expressly reserves all its' rights, defenses, and claims in any proceeding by or against any party, other than a proceeding by the COGCC to enforce this AOC.

10. A monetary fine of Four Thousand Dollars ($4,000) should be assessed against Four Star in accordance with Rule 523.a., and for violation of Rules 305. and 903.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Four Star Oil and Gas Company shall be
found in Violation of Rule 305., failure to notify the surface owner of pending recompletion and Rule 903., failure to obtain an approved pit permit prior to construction of special use pits for the Southern Ute Well #27 and the Southern Ute Well #28.

IT IS FURTHER ORDERED, that Four Star Oil and Gas Company shall be assessed a fine of Two Thousand Dollars ($2,000) per well for a total fine of Four Thousand Dollars ($4,000) 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 9th day of May, 2001.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 Morris Bell, Hearing Officer 1120 Lincoln Street Denver, Colorado 80203 May 7, 2001.

(1V#216)