OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                     CAUSE NO. 510

ESTABLISHMENT OF FIELD RULES TO GOVERN                             )

OPERATIONS IN THE SKINNER RIDGE FIELD,                                  )                     ORDER NO. 510-24

                        This cause came on for hearing before the Commission at 8:30 a.m. on August 16, 2006, in the Meeker Town Hall, 345 Market Street, Meeker 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 for the Williams Fork Formation and no closer than 600 feet for the Iles and Sego Formations, from the outside boundary of the application lands for certain lands in Townships 4 through 7 South, Ranges 97 through 99 West, 6^th P.M.

                        The Commission finds as follows:

                        1. Chevron USA Inc. ("Chevron"), 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation 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. Certain lands in Townships 4 through 7 South, Ranges 97 through 99 West, 6^th P.M. are subject to this rule.

                        5. On June 21, 2006, Chevron, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres for production of gas and associated hydrocarbons from the Williams Fork, Iles and Sego Formations, for the below-listed lands. For the Williams Fork Formation wells, the permitted well shall be located no closer than one hundred (100) feet from the outside boundary of the application lands, unless such boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the Williams Fork Formation wells to be drilled on the application lands should be drilled downhole no closer than two hundred (200) feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission. For Iles Formation and Sego Formation wells, the permitted wells shall be located no closer than six hundred (600) feet from the outside boundary of the application lands.

That, except as previously authorized by order of the Commission, wells to be drilled under this application will be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

                        6. At the time of the administrative hearing on August 2, 2006, Chevron USA Inc., by its attorney, requested that the application be amended to withdraw the following lands from the application:

                        7. Testimony and exhibits presented at the administrative hearing showed that mineral ownership within the application lands is either Chevron or Bureau of Land Management and that there are no unleased lands within the application lands.

                        8. Testimony and exhibits presented at the administrative hearing showed the lateral extent of the formations in the application, the discontinuity of the formations, and that 10-acre well density is necessary to efficiently drain hydrocarbons from the formations.

                        9. Testimony and exhibits presented at the administrative hearing showed various analytical methods used to calculate the number of acres being drained by various wells. Additional testimony showed that by utilizing these analytical methods, the drainage varied from 7.1 acres to 9.6 acres for these wells, indicating that 10-acre well density will most efficiently drain the application lands.

                        10. Testimony and exhibits presented at the administrative hearing showed that the recovery factor for the Williams Fork Formation will be 76% for 10-acre well density versus 38% for 20-acre well density.

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

                        12. No protests to the application have been filed with the Commission or the Applicant.

                        13. Chevron USA Inc. agreed to be bound by oral order of the Commission.

                        14. 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 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 for the Williams Fork Formation and no closer than 600 feet for the Iles and Sego Formations, from the outside boundary of the application lands for certain lands in Townships 4 through 7 South, Ranges 97 through 99 West, 6^th P.M.

                        NOW, THEREFORE IT IS ORDERED, that 10-acre density is hereby approved for wells to be drilled on the below-listed lands, for production of gas and associated hydrocarbons from the Williams Fork, Iles and Sego Formations.

                        IT IS FURTHER ORDERED, that for the Williams Fork Formation wells, the permitted well shall be located no closer than one hundred (100) feet from the outside boundary of the application lands, unless such boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the Williams Fork Formation wells to be drilled on the application lands shall be drilled downhole no closer than two hundred (200) feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.

                        IT IS FURTHER ORDERED, that for Iles Formation and Sego Formation wells, the permitted wells shall be located no closer than six hundred (600) feet from the outside boundary of the application lands.

                        IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

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

                        ENTERED this 25^th day of August, 2006, as of August 16, 2006.

                                                            OIL AND GAS CONSERVATION COMMISSION

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

March 1, 2007