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

REPORT OF COMMISSION

                        The Commission heard this matter on September 19, 2011, at Broomfield City & County Building, One Descombes Drive, Broomfield, Colorado 80020, upon application for an order authorizing one additional horizontal well, for a total of up to two horizontal wells, for the approximate 640-acre drilling and spacing units established for Sections 22 and 23, Township 5 North, Range 62 West, 6th P.M., for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.    EOG Resources, Inc. (“EOG” 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., which among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  On December 5, 2005, Rule 318A. was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  The NW¼ and SW¼ of Section 25, Township 3 North, Range 66 West, 6^th P.M. were included in this Rule.  Rule 318A.f. provides that there shall be no more than eight producing completions in the Codell or Niobrara Formations in any 160-acre governmental quarter section.

5. On February 22, 2011, the Commission issued Order No. 535-4, which, among other things, established approximate 640-acre drilling and spacing units for certain lands, including Sections 22 and 23, Township 5 North, Range 62 West, 6^th P.M., and approved one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

6.  On July 21, 2011, EOG, by its attorneys, filed with the Commission a verified application (the “Application”) for an order authorizing one additional horizontal well, for a total of up to two horizontal wells, for the approximate 640-acre drilling and spacing units established for the below-listed lands (the “Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted well to be located no closer than 600 feet from the boundaries of the unit and no interwell setback required:

Township 5 North, Range 62 West, 6^th P.M.

7.  On September 7, 2011, EOG, by its attorney, 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.

                        8.  Testimony and exhibits submitted in support of the Application Testimony and exhibits submitted in support of the Application shows that EOG owns a 100% mineral interest in the Application Lands. The Niobrara Formation underlies the entire Application Lands, with a thickness range of 260 to 270 feet. The range of estimated drainage areas for the horizontal wells is between 35 acres to 248 acres, assuming matrix contribution. The drainage areas could be significantly larger if fractures are encountered. The testimony concluded that development of the Application Lands is expected to be economic.

9.  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.  EOG agreed to be bound by oral order of the Commission. 

                        11.  Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order authorizing one additional horizontal well, for a total of up to two horizontal wells, for the approximate 640-acre drilling and spacing units established for Sections 22 and 23, Township 5 North, Range 62 West, 6th P.M., for the production of oil, gas, and related hydrocarbons  of the Niobrara Formation.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that two approximate 640-acre drilling and spacing unit are hereby established for the below-listed lands, and one additional horizontal well, for a total of up to two horizontal wells per unit is hereby authorized, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted well to be located no closer than 460 feet from the boundaries of the unit as provided by Rule 318A, without any inter-well setback:

Township 5 North, Range 62 West, 6^th P.M.

                        IT IS FURTHER ORDERED, that nothing in this Order shall be interpreted as allowing surface locations that are not consistent with those set forth in Rule 318A.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

                        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 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.

                        ENTERED this    23^rd   day of September, 2011, as of September 19, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Peter J. Gowen, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

September 23, 2011