BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                               OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE                     )                    CAUSE NO. 1V

RULES AND REGULATIONS OF THE COLORADO OIL                  )

AND GAS CONSERVATION COMMISSION BY                                 )                    ORDER NO. IV-246

PUCKETT ENERGY CO., LOGAN COUNTY, COLORADO )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                       1. Puckett Energy Co. (“Puckett”) is operator of the Dalke #2 Well located in the SW¼ SW¼ of Section 11, Township 8 North, Range 54 West, 6th P.M.

                        2. On October 15, 1996, the well passed a mechanical integrity test (“MIT”). The well was required to pass a MIT because it had been shut-in since August of 1988. Rule 326.b. requires shut-in wells to pass a MIT within two (2) years of the initial shut-in date. The Form 14, Mechanical Integrity Report, dated October 28, 1996, noted that a disposal application must be approved prior to injection.

                        3. In a letter dated November 26, 1996, Puckett submitted an application to convert the Dalke # 2 Well to a disposal well.

4. On September 9, 1997 Puckett withdrew the disposal well permit by telephone conversation with the Colorado Oil and Gas Conservation Commission (“COGCC”) staff.

5. On February 4, 1998, the COGCC received a Form 4, Sundry Notice, from Puckett. The Form 4 indicated the plans to convert the Dalke #2 Well to a disposal well had been abandoned. The Form 4 was approved by COGCC staff on February 13, 1998.

                        6. On April 3, 2003, COGCC staff inspected the Dalke #2 Well and determined the well was being utilized as a disposal well without an approved disposal permit. COGCC staff directed the pumper to cease injection operations immediately and disconnect the well from the injection line. Injection into the well ceased and the well was disconnected from the injection line.

                        7. On April 3, 2003 a Notice of Alleged Violation (“NOAV”) was issued to Puckett for violation of Rule 325.a., injecting without first obtaining written authorization for injection, Rule 210, not having a well sign, and Rule 326.b, not conducting a MIT on shut-in wells every five (5) years. The NOAV required the well cease injection immediately and not be reconnected to the flowline until Puckett receives written approval from the COGCC. The NOAV also required that Puckett submit an explanation by May 1, 2003, for why the well was injecting without authorization. Further, the NOAV required that a MIT be conducted on the well and a well sign be installed on the well by June 1, 2003.

                        8. In a letter dated April 18, 2003, Puckett submitted the explanation required by the NOAV, stating its belief that they were authorized to inject into the well.

                        9. On April 21, 2003, Puckett submitted Form 7’s, Operator’s Monthly Report of Operations, for January and February of 2003. The Form 7’s indicate the Dalke #2 Well is shut-in. They did not report Dalke #2 Well as an injection well and did not report the injected volumes into the well.

10. Puckett should be found in violation of Rule 325.a., injection without obtaining written authorization for injection, Rule 210, not installing a well sign, and Rule 326.b, not conducting a MIT on a shut-in well every five (5) years.

11. Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each violation of Rules 325. and 326. and a base fine of Two Hundred Fifty dollars ($250) for each violation of Rule 210.

                        12. A monetary penalty of Ten Thousand dollars ($10,000.00) should be assessed against Puckett, in accordance with Rule 523.a. and Rule 523.d., for violation of Rules 325.a., 326.b., and 210. Aggravating factors in determining the fine recommendation are: 1.) the violation was reckless; 2.) the violation had a threat of significant negative impact on the environment; 3.) the violation resulted in economic benefit to the violator.

13. Puckett should plug and abandon the well by July 1, 2003 or submit a new disposal application to the COGCC by July 1, 2003 to authorize the Dalke #2 Well be converted to a disposal well.

14. Puckett should submit by July 1, 2003 corrected Form 7’s, Operator’s Monthly Report of Operations, for the Dalke #2 Well and report accurate injection volumes and accurate injection pressures for the well since injection began.

15. Puckett should submit a wellbore diagram showing injection perforations, packer setting depth, casing information, and cement information for the Dalke #2 Well by July 1, 2003.

16. Puckett should not conduct any operations on the Dalke #2 Well without prior written authorization from the COGCC.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that Puckett Energy Company shall be found in violation of Rule 325.a., injection without obtaining written authorization for injection, Rule 210, not installing a well sign, and Rule 326.b., not performing a mechanical integrity test every five (5) years for the Dalke #2 Well located in the SW¼ SW¼ of Section 11, Township 8 North, Range 54 West, 6th P.M.

IT IS FURTHER ORDERED, that Puckett Energy Company shall plug and abandon the Dalke #2 Well by July 1, 2003 or submit a new application to the COGCC by July 1, 2003 to authorize the Dalke #2 Well be converted to an injection well.

IT IS FURTHER ORDERED, that Puckett Energy Company shall submit by July 1, 2003, corrected Form 7’s, Operator’s Monthly Report of Operations, for the Dalke #2 Well and report accurate injection volumes and accurate injection pressures for the well since injection into the well began.

IT IS FURTHER ORDERED, that Puckett Energy Company shall submit a wellbore diagram showing injection perforations, packer setting depth, casing information, and cement information for the Dalke #2 Well by July 1, 2003.

IT IS FURTHER ORDERED, that Puckett Energy Company shall not conduct any operations on the Dalke #2 Well without prior written authorization from the COGCC.

                        IT IS FURTHER ORDERED, that Puckett Energy Company shall be assessed a fine of Ten Thousand dollars ($10,000) payable within thirty (30) days of the date the order is approved by the Commission for the Dalke #2 Well.

                        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 May, 2003, as of May 30, 2003.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        By

Morris J. Bell, Hearing Officer

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

May 30, 2003

                        AGREED TO AND ACCEPTED THIS _________DAY OF MAY, 2003.

PUCKETT ENERGY CO

                                                                        By ____________________________________________

                                                                        Title ___________________________________________