BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                         CAUSE NO. 429
ESTABLISHMENT OF FIELD RULES TO GOVERN                             )
OPERATIONS IN THE BRUSH CREEK FIELD,                                     )                         ORDER NO. 429-4

MESA COUNTY, COLORADO                                                                 )

                        This cause came on for hearing before the Commission at 10:00 a.m. on June 5, 2006, in the Council Chamber Room of the Ambulance Building, 304 West 3^rd Street, Wray, Colorado, for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary, for certain lands In Townships 8 through 10 South, Ranges 93 through 94 West, 6^th P.M., for production of gas from the Mesaverde Formation.

                        The Commission finds as follows:

                        1. Laramie Energy, LLC, ("Laramie"), 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 May 20, 1985, the Commission issued Order No. 429-1, which established 160-acre drilling and spacing units for the below-listed lands in the Brush Creek Field, for production of gas and associated hydrocarbons from the Mesaverde Formation (including the Cozzette-Corcoran Sandstones), with the permitted wells to be located no closer than 600 feet from the quarter section lines.

                        5. On August 16, 2004, the Commission issued Order 429-2, which amended Order No. 429-1 to allow three (3) additional wells to be drilled, for a total of (4) wells, at the option of the operator, within the existing 160-acre drilling and spacing units for the below-listed lands, for the production of gas and associated hydrocarbons from the Mesaverde Formation.

                        6. On August 16, 2004, the Commission issued Order 429-3, which amended Order No. 429-1 to allow up to three (3) additional wells to be optionally drilled, for a total of (4) wells, and completed in the 160-acre drilling and spacing unit for the below-listed lands, for production of gas and associated hydrocarbons from the Mesaverde Formation.

                        7. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. The below-listed lands are subject to this rule:

                        9. On May 22, 2006, EnCana Oil & Gas (USA) Inc. ("EnCana"), by its attorney, submitted a protest to the application alleging that EnCana owned working interest in portions of the Application Lands and that granting the Application would constitute waste in this portion of the field.

                        10. On May 25, 2006, Laramie agreed to withdraw the below-listed lands containing a working interest owned by EnCana from its application. Based on this revision, EnCana agreed to withdraw its protest to the application.

                        11. On May 26, 2006, subsequent to the administrative hearing, the Board of County Commissioners of Mesa County submitted a letter to the COGCC staff indicating they had no specific comments or concerns regarding Laramie’s applications.

                        12. Testimony and exhibits presented at the administrative hearing showed that the Mesaverde Formation is composed of the Williams Fork Formation and the Iles Formations, which is further composed of the Rollins, the Cozzette, and the Corcoran Formations.

                        13. Testimony and exhibits presented at the administrative hearing showed that the gas saturated interval of the Williams Fork Formation in the application area increases to the northeast, the variability in the thickness of the net sand in the Cozzette and Corcoran Formations and the depositional discontinuities in the sands of the Williams Fork Formation and the Cozzette and Corcoran Formations.

                        14. Testimony and exhibits presented at the administrative hearing showed that wells in the Brush Creek Field contain an average of 205 feet of net Williams Fork pay interval and 34 feet of net Iles pay interval, and that the ultimate recovery from wells drilled on 10 acre spacing in this area will be approximately 0.6 bcf per well.

                        15. Testimony and exhibits presented at the administrative hearing showed that drilling wells on 10-acre density is required to recover all oil and gas in the application area and that wells drilled on 10-acre density in the application area would be economic.

                        16. The above-referenced testimony and exhibits show that the proposed density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

                        17. Laramie Energy, LLC, agreed to be bound by oral order of the Commission.

                        18. Based on the facts stated in the verified amended application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary or lease lines, for certain lands in Townships 8 through 10 South, Ranges 93 through 94 West, 6^th P.M., for production of gas from the Mesaverde Formation.

                        NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved to be optionally drilled in each 160-acre drilling and spacing unit or in the unspaced lands, for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 100 feet from the boundary of the unit or lease line (if unspaced), without exception granted by the Director for the amended lands described below:

                                                            Township 8 South, Range 94 West 6^th P.M.

                                                            Section 33: All

                                                            Township 8.5 South, Range 93 West 6^th P.M.

                                                            Section 6: All

                                                            Township 8.5 South, Range 94 West 6^th P.M.

Section 1 through 4: All

Section 5: E½

                                                            Township 9 South, Range 93 West 6^th P.M.

Section 18: NW¼, NE¼ SW¼

Section 31: NE¼ SW¼, N½ SE¼

Section 33: N½ NW¼

                                                            Township 9 South, Range 94 West 6^th P.M.

Section 2: All

Section 11 through 14: All

Section 15: SW¼, E½ E½, SW¼ SE¼

Section 16: W½ NE¼, SE¼ NW¼, W½ SE¼, E½ SW¼, NE¼ SE¼, W½ SE¼ SE¼

Section 22: E½ SW¼, W½ SE¼, NE¼, SE¼ NW¼

Section 23: W½ NE¼, NW¼, S½

Section 24: All

Section 25: S½ SW¼, NE¼ SW¼, SW¼ SE¼, E½ NW¼

Section 26: E½, E½ W½

Section 27: E½ NW¼, NE¼ SW¼, NW¼ NE¼, W½ SE¼

Section 35: NE¼ NW¼, N½ NE¼, SE¼ NE¼, NE¼ SE¼, S½ SE¼

                                                            Section 36: W½ W½

                                                            Township 10 South, Range 94 West 6^th P.M.

Section 1: NW¼

Section 2: N½ NE¼, SE¼ NE¼, NE¼ SE¼

                        IT IS FURTHER ORDERED, that in cases where the application lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Mesaverde Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit or lease line (if unspaced) abutting or cornering such lands, without exception granted by the Director.

                        IT IS FURTHER ORDERED, that no more than four (4) Mesaverde Formation wells shall be drilled on the application lands per governmental quarter quarter section. Mesaverde Formation wells to be drilled on the application lands shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on any quarter quarter section unless exception is granted by the Director.

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

                        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.

                                                                OIL AND GAS CONSERVATION COMMISSION

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 23, 2006