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

REPORT OF THE COMMISSION

The Commission heard this matter on August 20, 2012, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to vacate Order No. 535-52 which pooled all nonconsenting interests in an approximate 640-acre drilling and spacing unit for Section 34, Township 7 North, Range 62 West, 6^th P.M., for the development and operation of the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Marathon Oil Company (“Marathon” 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, 1988, 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 Cretaceous Age Formations from the base of the Dakota Formation to the surface. Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells.   On December 5, 2005, Rule 318A was amended, among other things, to allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  On August 8, 2011, Rule 318A was again amended, among other things, to address drilling of horizontal wells. Section 34, Township 7 North, Range 62 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

5.         On June 27, 2011, the Commission issued Order No. 535-38 which, among other things, established an approximate 640-acre drilling and spacing unit, and approved one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries.  Section 34, Township 7 North, Range 62 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

6.         On August 8, 2011, the Commission issued Order No. 535-52 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit, to accommodate the Franks 7-62 34-1H Well (API No. 05-123-33809), for the development and operation of the Niobrara Formation. Section 34, Township 7 North, Range 62 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

7.         On June 21, 2012, Marathon, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Concurrent Application”), Docket No. 1208-AW-17, seeking to amend Order 535-38, to approve up to four wells within the unit for Section 34, Township 7 North, Range 62 West, 6^th P.M.

8.    On June 21, 2012, Marathon, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an order to vacate Order 535-52, which pooled all interests in an approximate 640-acre drilling and spacing unit in the below-described lands (“Application Lands”), for the development and operation of the Niobrara Formation:

                        Township 7 North, Range 62 West, 6^th P.M.
                        Section 34:    All

Applicant stated the abandonment of the Application for Permit to Drill (“APD”) upon which Order No. 535-52 was approved voids the basis for the forced pooling action.

9.         On August 7, 2012, Marathon, 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.

            10.       Land testimony and exhibits submitted in support of the Application by Tricia Clarke, Land Professional for Marathon, showed that the Applicant has partially leased the mineral interests in the Application Lands, that the Application Lands are private fee leases and that the interested parties received notice of the Application.

11.       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.

12.       Marathon agreed to be bound by oral order of the Commission. 

13.       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 to vacate Order No. 535-52 which pooled all nonconsenting interests in an approximate 640-acre drilling and spacing unit for Section 34, Township 7 North, Range 62 West, 6^th P.M., for the development and operation of the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that Order No. 535-52, pooling all nonconsenting interests in Section 34, Township 7 North, Range West, 6^th P.M., is hereby vacated.

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                      day of August, 2012, as of August 20, 2012.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Robert J. Frick, Secretary

Dated: August 30, 2012