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 IV-267

PETROGULF CORPORATION,                                                         )                   

LAS ANIMAS COUNTY, COLORADO                                                   )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

                        1. A drilling permit was issued to Petrogulf Corporation (“Petrogulf”) on July 19, 2003, to drill the Hand 8-44V Well located in Section 8, Township 33 South, Range 67 West, 6^th P.M.

                        2. On or about November 25, 2003, Petrogulf began building the access road and location for the Hand 8-44V Well.

                        3. On December 3, 2003, a complaint was filed by Mr. William Ruane, an adjacent land owner, alleging Petrogulf built a portion of the access road across his land without consulting him.

                        4.  A Notice of Alleged Violation (“NOAV”) was issued to Petrogulf on December 17, 2003. The NOAV alleged Petrogulf failed to provide thirty (30) days notice as required by Rule 305.b.1., failed to consult with the affected surface owner as required by Rule 306., and failed to provide information to the landowner and local governmental designee as required by Rule 306.a. The NOAV required Petrogulf to provide documentation to show that proper notice and consultation took place prior to building the access road. The abatement action was to be completed by January 15, 2004.

5.  Colorado Oil and Gas Conservation Commission (“COGCC”) staff received Petrogulf’s reply on January 9, 2004. Petrogulf stated that they sent Mr. Ruane an easement agreement and a survey showing the location of facilities. Mr. Ruane received this information on November 19, 2003. Mr. Ruane did not reply. Petrogulf contacted Mr. Ruane on December on 7 or 8, 2003, and sent him additional information on December 9, 2003. Petrogulf is continuing to correspond with Mr. Ruane concerning a damage settlement.

                        6.  Petrogulf should be found in violation of Rule 305.b.1., failure to provide thirty (30) days notice to surface owner, Rule 306., failure to consult with the affected surface owner, and Rule 306.a., failure to provide information to the landowner and local governmental designee.

                        7.  Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each violation of Rule 305 and 306.

                        8. A total monetary penalty of Three Thousand dollars ($3,000) for violation of Rules 305.b.1., 306., and 306.a. should be assessed against Petrogulf in accordance with Rule 523.a.

 ORDER

                        NOW, THEREFORE IT IS ORDERED, that Petrogulf Corporation shall be found in violation of Rule 305.b.1., failure to provide thirty (30) days notice to surface owner, Rule 306., failure to consult with the affected surface owner, and Rule 306.a., failure to provide information to the landowner and local governmental designee for the Hand 8-44V Well located in Section 8, Township 33 South, Range 67 West, 6^th P.M.

IT IS FURTHER ORDERED, that Petrogulf Corporation shall be assessed a total fine of Three Thousand dollars ($3,000) for the violation of the above rules, payable within thirty (30) days of 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.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        RECOMMENDED this  day of January, 2004.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                               OF THE STATE OF COLORADO

                                                                        By______________________________________                                                                                                              David K. Dillon, Hearing Officer

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

January 15, 2004

                        AGREED TO AND ACCEPTED THIS ________DAY OF ____________, 2004

                                                                        Petrogulf Corporation

                                                                        BY____________________________________

                                                                        TITLE_________________________________