BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

DOCKET NO. 1407-UP-219

ORDER NO. 407-2008

The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO, upon application for an order to pool all interests within two approximate 479-acre designated wellbore spacing units established for Sections 25 and 26, Township 3 North, Range 68 West, 6^th P.M. and Section 30, Township 3 North, Range 67 West, 6^th P.M., for the drilling of the Barefoot 32C-25HZ Well and Barefoot 32N-25HZ Well, for the development and operation of the Codell and Niobrara Formations.

1. Kerr-McGee Oil & Gas Onshore LP (“Kerr-McGee” or “Applicant”), 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 pursuant to the Oil and Gas Conservation Act.

4. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 25 and 26, Township 3 North, Range 68 West, 6^th P.M. and Section 30, Township 3 North, Range 67 West, 6^th P.M. are subject to Rule 318A for the Codell and Niobrara Formations.

5. On May 29, 2014, Kerr-McGee, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to pool all interests in two approximate 479-acre designated wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Codell and Niobrara Formations, effective as of the date of the Application, for the drilling of the Barefoot 32C-25HZ Well (API No. 05-123-39187) and the Barefoot 32N-25HZ Well (API No. 05-123-39193) (“Wells”):

6. On July 15, 2014, Kerr-McGee, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.

7. Land testimony and exhibits submitted in support of the Application by Jim Grant, Staff Landman for Applicant, showed that Applicant has not been able to effect voluntary pooling of the interests within the two approximate 479-acre wellbore spacing units established for the Application Lands. Applicant stated that Commission Rule 530 does not apply as there are no working interest owners or unleased mineral interest owners subject to the Application, and Applicant is not seeking cost recovery pursuant to §34-60-116(7) for the Wells.

8. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

10. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Unit review of the Application under Rule 511., the Commission should enter an order to pool all interests in two approximate 479-acre designated wellbore spacing units established for the Application Lands, for the development and operation of the Codell and Niobrara Formations, effective as of the date of the Application, for the drilling of the Barefoot 32C-25HZ Well and Barefoot 32N-25HZ Well.

1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests in two approximate 479-acre designated wellbore spacing units established for the below-described lands, are hereby pooled, for the development and operation of the Codell and Niobrara Formations, effective as of the date of the Application, for the drilling of the Barefoot 32C-25HZ Well (API No. 05-123-39187) and the Barefoot 32N-25HZ Well (API No. 05-123-39193):

2. The production obtained from the wellbore spacing unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within the wellbore spacing unit; each owner of an interest in the wellbore spacing unit shall be entitled to receive its share of the production of the Well located on the wellbore spacing unit applicable to its interest in the wellbore spacing unit.

3. Nothing in this order is intended to conflict with §34-60-116, C.R.S., as amended. Any conflict that may arise shall be resolved in favor of the statute.

4. The wellbore spacing unit described above, shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a.

1. The provisions contained in the above order shall become effective immediately.

2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.