REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 3, 2003 at 10:00 a.m. in the Conference Center, Holiday Inn Express, 2121 E. 2nd Ave, Cortez, Colorado for an order to allow up to two (2) additional wells to be drilled on the 160-acre drilling and spacing units for certain lands in the Rock Creek Field, for production of gas and associated hydrocarbons from the Niobrara Formation, with the additional well or wells to be located on any undrilled quarter-quarter section within the spacing unit and any wells drilled subsequent to the issuance of the order to be located no closer than 600 feet from the outer boundaries of the spacing unit.

FINDINGS

The Commission finds as follows:

1. J-W Operating Company, as applicant herein, 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 embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On August 21, 1979, the Commission issued Order No. 351-1 establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation for the below-listed lands, with the permitted well to be located no closer than 900 feet from the boundaries of the drilling unit. In addition, any wells that were producing or capable of producing were designated as the permitted well for the unit upon whi ch each well was located.

Township 5 North, Range 46 West, 6th P.M. Sections 19 and 20: All Sections 29 through 31: All

Township 5 North, Range 47 West, 6th P.M. Section 25: All Section 36: All

5. On December 19, 1983, the Commission issued Order No. 351-3 which added the below-listed lands to the provisions of Order No. 351-1 for the production for gas and associated hydrocarbons from the Niobrara Formation. The Commission further authorized the drilling of one (1) additional well upon each 160-acre drilling and spacing unit to be located in the diagonal offset quarter-quarter section from the existing well and no closer than 600 feet t o the boundaries of the said quarter-quarter section.

Township 5 North, Range 46 West, 6th P.M. Sections 17 and 18: All Sections 32 and 33: All

Township 5 North, Range 47 West, 6th P.M. Sections 23 and 24: All Section 26: All

6. On April 11, 2003, J-W Operating Company, by its attorney, filed with the Commission a verified application for an order to allow up to two (2) additional wells to be drilled on the 160-acre drilling and spacing units for the below-listed lands, for production of gas and associated hydrocarbons from the Niobrara Formation, with the additional well or wells to be located on any undrilled quarter-quarter section within the spacing unit and any wel ls drilled subsequent to the issuance of the order to be located no closer than 600 feet from the outer boundaries of the spacing unit.

Township 5 North, Range 46 West, 6th P.M. Sections 17 through 20: All Sections 29 through 33: All

Township 5 North, Range 47 West, 6th P.M. Sections 23 through 26: All Section 36: All

7. Testimony and exhibits presented at the administrative hearing indicated that J-W Operating has most of the application lands under lease and that the notice requirement in Rule 507 has been met.

8. Testimony and exhibits show the Beecher Island member of the Niobrara Formation and the Island is approximately 30 feet thick under the application lands with an average porosity of 34%. Additional testimony showed that the average estimated ultimate recoveries for wells in the application lands are 309 million cubic feet of gas. Further testimony indicated that the average original gas in place for eighty (80) acres is 762 million cubic feet of gas, with an average ultimate recovery of 40% and an average drainage of forty (40) acres. In addition, testimony showed that the drilling of additional wells will be economic with a gas price of $3.50 MCF, a 45% rate of return and a 1.9 year payout.

9. Testimony indicated that additional wells are necessary to recover remaining reserves and to prevent waste while protecting correlative rights of mineral owners.

10. At the time of the administrative hearing, J-W Operating Company agreed to be bound by an oral order of the Commission.

11. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should approve an order to allow up to two (2) additional wells to be drilled on the 160-acre drilling and spacing units for the lands described in Finding No. 6, for production of gas and associated hydrocarbons from the Niobrara Formation, with the additional well or wells to be located on any undrilled quarter-quarter section within the spacing unit and any wells drilled subsequent to the issuance of the order to be located no closer than 600 feet from the outer boundaries of the spacing unit.

ORDER

NOW, THEREFORE IT IS ORDERED, that Order No. 351-3 shall be amended to allow up to two (2) additional wells to be drilled on the 160-acre drilling and spacing units for the below-listed lands for production of gas and associated hydrocarbons from the Niobrara Formation, with the additional well or wells to be located on any undrilled quarter-quarter section within the spacing unit and any wells drilled subsequent to the issuance of the order to be locate d no closer than 600 feet from the outer boundaries of the spacing unit:

Township 5 North, Range 46 West, 6th P.M. Sections 17 through 20: All Sections 29 through 33: All

Township 5 North, Range 47 West, 6th P.M. Sections 23 through 26: All Section 36: All

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 June 2003, as of June 3, 2003.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 June 4, 2003

(351-4)

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