DATE FILED: December 4, 2017 3:07 PM

DISTRICT COURT, DENVER COUNTY, COLORADO

FILING ID: 50A92BC0221D6
Court Address: CASE NUMBER: 2017CV34483

1437 Bannock Street

Denver, Colorado 80203

Notice of Appeal from the Colorado Oil and Gas

Conservation Commission, Weld and Broomfield
Counties:
Order No. 407-2209 (Docket No. 170700471)
Order No. 407-2213 (Docket No. 170900535)
Order No. 407-2216 (Docket No. 170900596)
Order No. 407-2245 (Docket No. 171000749)

CRESTONE PEAK RESOURCES OPERATING LLC, COURT USE ONLY

Plaintiff,

V.

COLORADO OIL AND GAS CONSERVATION

COMMISSION, an agency of the State of Colorado,
EXTRACTION OIL AND GAS, INC., AND CITY AND
COUNTY OF BROOMFIELD,

Defendants.

Attorneys for Plaintiff: Case Number:

Jamie L. Jost, #34317
Kelsey H. Wasylenky, #37775
Jost Energy Law, P.C.
1401 17th Street, Suite 370
Denver, Colorado 80202 Division Courtroom
Telephone: (720) 446-5620
jjost@jostenergylaw.com
kwasylenky@jostenergylaw.com

COMPLAINT FOR JUDICIAL REVIEW OF FINAL AGENCY ACTION AND

REQUEST FOR STAY

Complaint 1
 Plaintiff Crestone Peak Resources Operating LLC (Crestone), by and
through its undersigned counsel, and pursuant to 24-4-106, C.R.S., C.R.C.P.
106(a)(2) and (4), and 2 CCR 404-1 501.c., respectfully submits this Complaint
for Judicial Review of Final Agency Action concerning the October 31, 2017
Reports of the Colorado Oil and Gas Conservation Commission, an Agency of
the State of Colorado, (Commission), in which the Commission, over
Crestones protest and continuing objection, denied its drilling and spacing
unit application in Docket No. 170900535 (Order No. 407-2213) and
improperly approved three applications filed by Extraction Oil and Gas, Inc.
(Extraction) in Docket Nos. 170700471 (Order No. 407-2209), 171000596
(Order No. 407-2216) and 171000749 (Order No. 407-2245) (Order Nos. 407-
2213, 403-2209, 407-2216 and 407-2245 are hereinafter referred to collectively
as the Orders). Crestone files this appeal against the Commission, Extraction,
and the City and County of Broomfield (Broomfield) (collectively,
Defendants). As grounds for this Complaint, Crestone states as follows:

I. PARTIES

1. Crestone is a limited liability company duly authorized to do

business in the State of Colorado, and is a registered oil and gas operator in
good standing with the Commission.

2. Defendant Colorado Oil and Gas Conservation Commission is the

Colorado regulatory agency with jurisdiction and authority to implement the
Colorado Oil and Gas Conservation Act, 34-60-101, C.R.S. et seq. The
Commission promulgates rules and regulations to implement the provisions of
the establishment of spacing units under 34-60-116, C.R.S. The
Commissions authority is outlined in 34-60-105 and 106, C.R.S.

3. The Commissions authority is subject to several express

limitations as set forth in the Colorado Administrative Procedure Act, 24-4-
101, C.R.S., et seq.

4. The Commission is a resident of the City and County of Denver

pursuant to 24-4-106(4), C.R.S.

5. Defendant Extraction Oil & Gas, Inc., Operator No. 10459, is a

corporation authorized to conduct business in the State of Colorado and is
registered as an operator in good standing with the Commission.

6. Defendant City and County of Broomfield is a consolidated city and

county in the State of Colorado. A portion of the lands subject to Extractions
applications subject to this Complaint are located in Broomfield, Colorado.

Complaint 2
 II. JURISDICTION AND VENUE

7. Jurisdiction is proper in this Court pursuant to the Colorado

Administrative Procedures Act, as a Court of general jurisdiction under the
Colorado Constitution.

8. Venue is proper in this Court pursuant to C.R.C.P. 98(a) and 24-

4-106(4), C.R.S., because the Commission resides in the City and County of
Denver.

9. Section 24-4-106(4), C.R.S., provides that the residence of a state

agency for the purposes of judicial review shall be deemed to be the city and
county of Denver.

10. Crestone was adversely affected by the Commissions October 31,

2017 Orders in which the Commission denied Crestones application to
establish a drilling and spacing unit in Weld County and approved Extractions
applications to establish drilling and spacing units in weld and Broomfield
counties over Crestones protests and objections. Copies of the Orders are
attached to this Complaint as Exhibits A-D.

11. The Orders constitute final agency action for the purposes of
judicial review. The Orders of the Commission acknowledge that they are
effective immediately.

12. For the reasons discussed herein, the Orders exceed the
Commissions jurisdiction, are arbitrary, capricious, and constitute an abuse of
discretion not in accordance with law.

13. Pursuant to 24-4-106 and 34-60-111, C.R.S. and Commission

Rule 501(c), any person adversely affected or aggrieved by a final Order of the
Commission is entitled to judicial review of the Commissions action.

I. Colorado Oil and Gas Conservation Act

14. Jurisdiction is proper pursuant to the Judicial Review Provision of

the Colorado Oil and Gas Conservation Act which states that any final order or
determination by the commission shall be subject to judicial review in
accordance with the provisions of the Colorado Administrative Procedure Act.
34-60-111, C.R.S.

Complaint 3
 15. Plaintiff is challenging the Commissions October 31, 2017 Orders
Nos. 407-2209, 407-2213, 407-2216, and 407-2245.

16. Upon information and belief, the effective date of relevant final
determination by the Commission in the Orders is October 31, 2017. But see
c.f. Richmond Petroleum v. Oil & Gas Conservation Comm'n, 907 P.2d 732 (Colo.
App. 1995) (providing that the [t]ime for filing appeal runs from date order
mailed pursuant to 24-4-106(16) rather than from date order entered into
records of commission pursuant to 34-60-108(6).)

17. The Commissions adjudicatory proceedings and determinations

made in the Orders of the Commission for the four above-referenced dockets
constitutes clear reversible legal error.

II. Colorado Administrative Procedures Act

18. Jurisdiction is also appropriate pursuant the Judicial Review

provision of the Colorado Administrative Procedure Act (APA), 24-4-106,
C.R.S.

19. Any person adversely affected or aggrieved by any final agency

action may commence an action for judicial review within thirty-five days (35)
days after such agency action becomes effective. 24-4-106(4), C.R.S.

20. Section 24-4-106(3), C.R.S., provides that:

An action may be commenced in any court of competent

jurisdiction by or on behalf of an agency for judicial enforcement of
any final order of such agency. In any such action, any person
adversely affected or aggrieved by such agency action may obtain
judicial review of such agency action.

21. The APA serves as a gap-filler, and its provisions apply to agency
actions unless they conflict with a specific provision of the agencys statute or
another statutory provision preempts the provisions of the APA. See V Bar
Ranch LLC v. Cotton, 233 P.3d 1200, 1205 (Colo. 2010). If a provision of the
APA and the agencys statute conflict, the agency-specific provision controls.
Id.; see 24-4-107, C.R.S.

22. The agency-specific authority on jurisdiction applicable to this

Complaint are the Colorado Oil and Gas Conservation Act (the Act) and the
Commissions Procedural Rules which governs hearings before it.

Complaint 4
 23. The final Orders issued by the Commission also specify that the
Orders are final agency action for purposes of judicial review.

24. Crestone has exercised and exhausted all of its administrative

remedies and no plain, speedy, and adequate remedy is otherwise provided by
law.

III. Colorado Oil and Gas Conservation Commission Regulations

25. The Commissions procedural rule 501 also provides that the
statutory time period for filing a notice of appeal from any Commission decision
shall commence on the date the order is served or that is three (3) business
days after the date the order is mailed. See Dep't of Nat. Res. Reg. 501.c., 2
Code Colo. Regs. 404-1.

26. Due to the inconsistencies in the time period allowed for appeal,
Crestone files this Complaint pursuant to the thirty-five (35) days mandated
under 24-4-106(4), C.R.S.

III. PROCEDURAL AND FACTUAL BACKGROUND

27. The following is a summary of all the relevant dockets referred to

during the October 30-31, 2017 Commission hearing. The dockets in bold are
subject to this appeal:

Complaint 5
Docket No. Applicant County Unit Size Consent Protestant
or
Protested
170700471 Extraction Weld 1000-acre Protested Crestone
170900535 Crestone Weld 1920-acre Protested Extraction
170900596 Extraction Broomfield 1260-acre Protested Crestone/
/Weld Broomfield
170900598 Extraction Broomfield 1600-acre Protested Broomfield/
Wildgrass
170900601 Extraction Broomfield 1600-acre Consent N/A
170900602 Extraction Broomfield/ Reduced Consent N/A
Adams setbacks
170900603 Extraction Broomfield/ 1920-acre Consent N/A
Adams
170900605 Extraction Broomfield 640-acre Consent N/A
171000752 Extraction Broomfield Additional Consent N/A
wells
171000749 Extraction Broomfield Additiona Protested Crestone/
l wells Wildgrass

28. Below is an Exhibit originally created by Broomfield and modified

by Crestone for use during the Commissions October 30-31, 2017 hearing to
demonstrate the number of Extraction Commission applications involving
Broomfield County and the location of Crestones proposed drilling and spacing
unit (outlined in red below):

Complaint 6
 County Line Road

County Road 7
13 16 14 13 18 17 16
Pending Spacing Unit Applications
16 15 14 18 17 15
17
County Road 8 County Road 8
21

Coyote (North PSU)

1- 20
22 23 24 19 20 170700469 22 23 24 19 20 21
21
20
Crestone Peak Pending
170700535
County Road 6
Pending

T0N, R0W
T0N, R0W

T0N, R0W
T0N, R0W
County Road 11
County Road 5

Interstate 25
28 27 26 25 30 29 28
28 27 26 25 30 29
29

E County Line Road

st County Road 4

Vi
a
Coyote (West PSU) Huron (North)

Pk w y
1-12 1-10

Weld/Broomfield ntai n V
170700471 170900605

County Road 7
ou w 33

ie

Sheridan Pkwy
M Pk 31 32 33
35 36
35 36 31

Bonanza Dr
33 34 Pending Pending

wy
County Line
32 34
32

State Highway 7 E 168th Ave T0N, R0W T0N, R0W

T0N, R0W
T0S, R0W T0S, R0W
T0S, R0W

5
te 2
Lowell (North) Coyote (South PSU)
1-20 03

rsta
01 1-20
170900596 06 170700470 05

Inte
05 04 03 02
Extraction Density
05 02 Extraction 01 06
04
y 04 170900582
w
l Blvd

171000749 Pending k Pending

kP
Pending eble C r
ee Pending

Pkwy
Pr
wel
Lo

Huron (South)

ridan
09
1-20
United (South)
he

Washington St
08 170900603
S

Huron St
09 10 11 12 wy 07
1-20 11 12 07 08 09
08
120th St

k
tP Sheridan (South) 170900602 Pending
es
rt hw 1-20
P kw y

No 10

Interstate 25
170900601 Pending
W 152nd Ave
an

id

T0S, R0W
T0S, R0W
er Pending
T0S, R0W
T0S, R0W

Sh
S

Extraction Density
Zuni St

Lowell (South) 171000752

Lowell Blvd

1-20 Extraction
17 16 15 14 13 18 170900598 17 Pending 15 14 170900586 13 18 17 16

Pending
Pending 16
st Pkwy
Northwe Dillon Rd W 144th Ave W 144th Ave
Aspen St

Interstate 25
S

Huron St
96
th

22 23 19 20 21 23 24 19 20 21
20 21 22
St

24
S 104th St

V
ia V
arra

W 136th Ave W 136th Ave Broomfield City and County Limits
Sections
Washington St

k
Lowell Blvd

Producing Oil Gas Wells

29 28 27 26 25 30 29 28 27 26 25 30 Constructed Street 29 28
Planned Street Date: 10/27/2017

U.
S.
3C:\Users\jsanchez\Google
6 Drive\ACTIVE PROJECTS\Oil_Gas_Wells\Overlapping_Spacing_Unit_Apps_NorthBroomfield__with_External_10252017updates.mxd
0 2,250 4,500 9,000 13,500 18,000
Feet

29. Crestone is an Owner as defined by the Commission Rules and the

Act, 34-60-101, C.R.S. et seq., and owns leasehold interests and holds the
right to drill and operate on the lands subject to Crestones application in
Docket No. 170900535 and Order No. 407-2213 (Crestone Unit):

Township 1 North, Range 68 West, 6th P.M. (1920-acre)

Section 19: All
Section 30: All
Section 31: All

30. The lands in the Crestone Unit are located exclusively in Weld
County.

31. Crestone is also an Owner as defined by the Commission Rules

and the Act and owns leasehold interests and holds the right to drill and
operate on the lands subject to Extractions application in Docket No.
170700471 and Order No. 407-2209 (Extraction Coyote Unit):

Complaint 7
 Township 1 North, Range 68 West, 6th P.M. (1000-acre)
Section 31: N, NNS
Section 32: N, NNS
Section 33: NW, NNSW

32. The lands in the Extraction Coyote Unit are located exclusively in
Weld County.

33. Crestone is also an Owner as defined by the Act and owns

leasehold interests and holds the right to drill and operate on the lands subject
to Extractions applications in Docket Nos. 170900596 and 171000749 and
Order Nos. 407-2216 and 407-2245 (the Extraction Lowell North Unit):

Township 1 North, Range 68 West, 6th P.M.

Section 31: S S, SNS
Section 32: SW SW, SNWSW

Township 1 South, Range 68 West, 6th P.M.

Section 6: All
Section 7: N

1,260-acres, more or less.

34. Sections 31 and 32 of the Extraction Lowell North Unit are located
in Weld County.

35. Sections 6 and 7 of the Extraction Lowell North Unit are located in
Broomfield County.

36. On or about May 25, 2017, Extraction filed the Extraction Coyote
Unit application for an order to establish an approximate 1,000-acre drilling
and spacing unit for the Coyote Unit, requesting up to twelve (12) new
horizontal wells within the unit, for the production of oil, gas and associated
hydrocarbons from the Codell and Niobrara Formations. Extraction also
requested setbacks of 460 feet from the northern, southern and western unit
boundaries and 150 feet from the eastern unit boundary.

37. On July 10, 2017, Crestone filed a timely and legally sufficient
Protest in compliance with Commission Rule 509 to Extractions Coyote Unit
Application.

Complaint 8
 38. On July 10, 2017, Crestone filed the Crestone Unit application for
an order to establish an approximate 1,920-acre drilling and spacing unit and
allow up to fifty-four (54) new wells within the unit (later reduced to twenty-
nine (29) wells), for the production of oil, gas and associated hydrocarbons
from the Codell and Niobrara Formations. Crestone also requested 460-foot
subsurface setbacks from the unit boundaries. The surface and minerals in the
proposed Crestone Unit are 100% owned in fee.

39. Crestone has two executed Surface Use Agreements to develop all
of its proposed wells within the Crestone Unit to ensure that there is minimal
surface impact as it develops its minerals. The surface locations for the
wellpads subject to the applicable Surface Use Agreements are both in Weld
County.

40. On July 13, 2017, as amended on August 31, 2017, Extraction

filed the Extraction Lowell North Unit application in Docket No. 170900596 for
an order to establish an approximate 1,260-acre drilling and spacing unit. The
Extraction Lowell North Unit is located in Broomfield and Weld Counties and
requests an order approving one (1) well with the option to drill and complete
up to twenty (20) new horizontal wells in the unit, for the production of oil, gas,
and associated hydrocarbons from the Codell and Niobrara Formations.
Extraction also requested subsurface setbacks of 460 feet from the eastern and
western unit boundaries and 150 feet from the northern and southern unit
boundaries.

41. On August 28, 2017, Crestone filed a timely and legally sufficient
Protest in compliance with Commission Rule 509 to Extractions Lowell North
Application in Docket No. 170900596. Crestone alleged that Extractions
development plan proposed in the Lowell North Application, which incorporates
the S of Section 31 already included in the Crestone Unit Application Lands
in Docket No. 170900535, will cause waste, will affect Crestones correlative
rights and will not result in efficient and economic development of the
hydrocarbon resource as required by the Act, for the Extraction Lowell North
Unit.

42. On August 24, 2017, Broomfield filed a timely Protest of

Extractions Lowell North Unit application in Docket No. 170900596, which
resulted in Extractions amended application for only one well within the Lowell
North Unit.

43. On September 6, 2017, Extraction filed an increased density

application in Docket No. 171000749 for the Extraction Lowell North Unit for
an order to allow up to twenty (20) horizontal wells for the production of oil, gas

Complaint 9
and associated hydrocarbons of the Codell and Niobrara Formations in the
Extraction Lowell North Application (Increased Density Application). On
October 6, 2017, the Wildgrass Master Association filed a Protest to
Extractions Increased Density Application in Docket No. 171000749.

44. On October 4, 2017 Crestone filed a timely Protest to Extractions

Increased Density Application in Docket No. 171000749 as it owns an interest
in the lands subject to the Extraction Lowell North Application.

45. Extraction also filed applications to establish drilling and spacing

units, to increase density and to reduce subsurface setbacks for lands located
in Broomfield County in Docket Nos. 170900598, 170900601, 170900602,
170900603, 170900605, and 171000752, which are not subject to this
Complaint but were heard at the Commissions October 30-31, 2017 hearing.

46. Over Crestones continuing objection to any consolidation of the

four dockets subject to this Complaint, the Commission Hearing Officer initially
consolidated Docket Nos. 170700471, 170900535, 170900596 and 171000749
with Docket Nos. 170900598, 170900601, 170900602, 170900603,
170900605, and 171000752 for one hearing on October 30-31, 2017, all of
which include lands located within the City and County of Broomfield,
Colorado. The Commission Hearing Officers reasoning for initially
consolidating the ten (10) Dockets described herein was because the ten (10)
Dockets involved overlapping lands.

47. Crestone objected to the consolidation of the four Dockets subject

to this Complaint with the additional six (6) dockets because Crestones entire
leasehold interest is located in Weld County and outside Broomfield County.
Crestone argued that consolidating the matters would lead to confusion of the
issues relating to Broomfields protest of the surface locations and not the
downhole issues contemplated by the Crestone Unit Application and Crestones
Protests to Extractions applications for the Extraction Lowell North Unit and
Extraction Coyote Unit.

48. The Commission consolidated all 10 matters for hearing over

Crestone Peaks continuing objection and set the five Dockets subject to this
Complaint for a consolidated hearing on October 30-31, 2017.

49. On October 12, 2017, the Commission held a local public forum in
Broomfield to address the issues raised by parties who filed statements of
record pursuant to Commission Rule 510 (510 Statements) relating to surface
impacts, well pad locations and development located in Broomfield. All of the

Complaint 10
510 Statements were submitted on behalf of residents of Broomfield and filed
against Extractions Applications located in Broomfield.

50. There were no 510 Statements filed for the Crestone Application or
the Extraction Coyote Unit Application as both were located exclusively in Weld
County. As such, Crestone was not present and did not participate in the local
public forum.

51. On October 24, 2017, Extraction entered into an Amended and

Restated Oil and Gas Operator Agreement with Broomfield governing surface
locations for Extractions operations within Broomfield (Broomfield Operator
Agreement). Crestone is not a party to the Broomfield Operating Agreement
because the proposed Crestone Unit is located exclusively in Weld County and
not in Broomfield County.

52. Upon information and belief, the Commission, Director and

Commission Staff were aware of the discussions between Extraction and
Broomfield leading to the terms, provisions, and ultimate execution of the
Broomfield Operator Agreement on October 24, 2017.

53. On October 25, 2017, Broomfield withdrew its Protests to

Extractions Applications in Docket Nos. 170900601, 170900602, 170900603,
170900605, and 171000752, which all include lands located in Broomfield
County.

54. On October 25, 2017, Broomfield informed Extraction, Crestone

and the Hearing Officer that it intended to limit its participation at the October
30-31, 2017 Commission hearing to making a statement before the
Commission that Broomfield supports the entry of Orders by the Commission
that are consistent with the Broomfield Operator Agreement with respect to
Extractions Applications in Docket Nos. 170900596 and 171000749.

55. At the Commission hearing on October 30, 2017, the

Commissioners received public comments as part of the normal course of the
Commission hearing. During public comment, over 20 individuals testified in
opposition to the development proposed by Extraction in Broomfield. Some of
the individuals who testified also filed Rule 510 Statements in the Extraction
matters located in Broomfield County.

56. After public comment at the October 30, 2017 Commission

hearing, the Commission considered sixty-eight (68) uncontested applications
during the Commissions consent agenda. Among those applications were five
(5) applications filed by Extraction in Docket Nos. 170900601, 170900602,

Complaint 11
170900603, 170900605, and 171000752 involving lands located in Broomfield
and/or Adams County which were objected to by dozens of residents and
surface owners who submitted Rule 510 Statements opposing the applications
and resulted in hours of public comment opposing Extractions Broomfield
applications.

57. Relevant portions of the extensive deliberations and discussions

that followed at the October 30, 2017 hearing are summarized in Paragraphs
58 through 71 below.

58. After almost an hour of deliberation among the Commissioners

during the Commissions consent agenda on October 30, 2017, the
Commission ultimately decided to remove five (5) uncontested Extraction
applications in Docket Nos. 170900601, 170900602, 170900603, 170900605,
and 171000752 from the consent agenda and asked questions of Extraction
and Broomfield relating generally to the Operator Agreement between
Broomfield and Extraction which covered the five (5) items on the consent
agenda. Much of the discussion on the five (5) consent agenda items directly
related to Extractions case-in-chief in support of its positions on the four
dockets at issue in this Complaint.

59. Crestone was not invited to participate in those discussions

between Extraction and Broomfield during the October 30, 2017 hearing
because the lands subject to the Crestone Unit Application are located outside
of Broomfield County and the Broomfield Operator Agreement does not apply to
such lands.

60. After additional discussion with the Commissioners, William

Tuthill, Broomfield County Attorney, advised the Commissioners that
Broomfield withdrew its previously filed Protests in the five (5) Extraction
consent agenda matters in Docket Nos. 170900601, 170900602, 170900603,
170900605, and 171000752 on the condition that the Commission approve a
proposed draft order which references the Operator Agreement between
Broomfield and Extraction.

61. Mr. Tuthill explained that the Operator Agreement between

Broomfield and Extraction refers to specified drilling locations within each of
Extractions drilling and spacing units within Broomfields boundaries and a
cap on the well counts for each location and unit.

62. The Adams County Local Governmental Designee, Chris LaMere

was given an opportunity to participate at the October 30, 2017 hearing
because the Operator Agreement between Broomfield and Extraction resulted

Complaint 12
in Extraction surface locations closer to the Adams County border. Adams
County is not a mineral owner in the subject Extraction applications, and
concern was raised about the confusion of the purpose of spacing unit
applications and the relevancy of surface issues.

63. During the discourse with Broomfield, Extraction and Adams

County regarding the consent agenda matters, Director Lepore informed the
Commissioners that the process of negotiating and executing the Operator
Agreement between Broomfield and Extraction had been a lengthy one which
morphed dramatically through the process. He further informed the
Commissioners that if Broomfield requested a hearing on the surface locations
proposed by Extraction in Broomfield, it would happen at a later Commission
hearing.

64. Before the Commissioners pulled the five (5) uncontested

Extraction applications in Docket Nos. 170900601, 170900602, 170900603,
170900605, and 171000752 from the consent agenda on October 30, 2017,
Mr. Tuthill advised the Commission that his plan in attending the hearing was
not to participate formally, however, Mr. Tuthill declared please, whatever you
do, dont enter an order thats in conflict with our oil and gas operating
agreement.

65. In response to questions asked by the Commissioners at the

October 30, 2017 hearing, counsel for Extraction stated on several occasions
that for the purposes of establishing a spacing unit, surface locations should
not be a consideration for the Commission because the spacing and the
establishment of a drilling unit are solely for the purpose of downhole
development. Yet, Extraction also supported the inclusion of the Broomfield
Operator Agreement language in the Commission Orders setting forth
Extractions surface locations in each unit located within Broomfields
boundaries.

66. Extraction also impressed on the Commissioners that the

objections and Rule 510 Statements filed against Extractions spacing
applications should be disregarded because the most appropriate time to
consider the location of wellpads is during the permitting process when an Oil
and Gas Location Assessment Form 2A is submitted to the Commission, and
not during the filing of the spacing application.

67. Commissioner Boigon highlighted the fact that if a Commission

Order granting or approving Extractions spacing applications references the
Operator Agreement, then the Commission is in fact establishing surface
locations.

Complaint 13
 68. Commissioner Boigon further questioned what would happen to
the remaining Extraction-Crestone contested matters and whether the
Commissioners would be able to resolve any of the spacing issues. The
contested matters to which Commissioner Boigon was referencing were the four
(4) Extraction and Crestone contested applications subject to this Complaint.

69. Commissioner Hawkins expressed concern about incorporating

language referencing the Operator Agreement between Broomfield and
Extraction into an Order even though the Commissioners had never reviewed
the Operator Agreement.

70. In order to once again clarify the differences between Extractions

applications within Broomfield and Extractions application within Weld
County, counsel for Crestone explained to the Commission that the Crestone
Unit Application and the Extraction Coyote Unit Application are not subject to
the Broomfield Operator Agreement because 100% of the lands subject to those
units are located within Weld County.

71. The Commissioners ultimately determined that they would hear

the newly pulled five (5) Extraction consent agenda items in Docket Nos.
170900601, 170900602, 170900603, 170900605, and 171000752 at the end
of the October 31, 2017 Commission hearing, presumably, after the hearing on
the four consolidated applications in Docket Nos. 170700471, 170900535,
170900596 and 171000749 subject to this Complaint.

72. Relevant portions of the extensive deliberations and discussions

that followed at the October 31, 2017 hearing on the four (4) applications
subject to this Complaint are summarized in Paragraphs 73 through 92 below.

73. On October 31, 2017, the Commission held an approximate 9-hour

hearing (inclusive of breaks and lunch) purportedly on the four (4) contested
applications subject to this Complaint. The first approximate two (2) hours
and twenty (20) minutes were spent on Extractions and Wildgrass oral
arguments on Wildgrass Motion to Continue portions of Extractions
Applications in Docket Nos. 171000749 and 170900598 to the Commissions
December 2017 hearing docket. The Commission ultimately continued Docket
No. 170900598 and the bifurcated portion of 171000749 to the December
Commission hearing.

74. The next few hours were spent presenting Extractions case in chief
and Crestones case in chief in the four (4) contested applications subject to
this Complaint. Before the record closed and prior to the ultimate decision, the

Complaint 14
Commissioners spent an additional hour confusing the relevant issues in the
four contested applications with the irrelevant surface issues related to the
Broomfield/Extraction Operator Agreement and ultimately created substantial
prejudice against Crestone by:

(a) allowing the City and County of Broomfield to present the terms of the
Operator Agreement to the Commission (which do not apply to the
Crestone Unit or the Coyote Unit);

(b) debating and deliberating the issues brought up by the

Commissioners in the unrelated five (5) Extraction consent agenda
items;

(c) discussing and then crafting language for the order approving the five
(5) Extraction consent agenda items;

(d) allowing an Adams County representative to speak about two (2)

additional unrelated Extraction Dockets; and

(e) deliberating upon, and essentially agreeing to, language in an order

for Extraction to be used in the five (5) unprotested Extraction
consent agenda items and Docket Nos. 170900596 and 171000749,
which still had not reached resolution or even allowed for rebuttal or
closing statements by Crestone.

75. By the time the Commissioners closed the record and started
deliberations on the four (4) applications at issue, it had spent over two (2)
hours allowing unrelated testimony to pervade the four (4) applications and
lead to immediate confusion of the issues, lands and positions of Crestone.

76. At the conclusion of the procedurally inadequate and prejudicial

hearing, the Commission ultimately entered an order denying the Crestone
Unit and approving Extractions Coyote Unit and Lowell North Unit.

77. In its case in chief, Crestone presented a land witness, Robert

Spencer, who testified that Crestone has a surface location in the town of Erie
in Weld County to develop the minerals in the Crestone Unit. Mr. Spencer
further testified that Crestone owns 75% of the minerals in Section 19, 100% in
Section 30 and 25% in Section 31 of the Crestone Unit lands and that the
entirety of the unit is located in Weld County.

78. On behalf of Crestone, Mr. Spencer testified that the town of Erie
has not opposed the establishment of the unit and that Crestone has an

Complaint 15
Operator Agreement with Erie. The Crestone-Erie Operator agreement was
executed over two years ago on August 5, 2015, well in advance of the hastily
negotiated Broomfield-Extraction Operator Agreement.

79. Mr. Spencer explained that based on the locations of private

residences and commercial development in Erie, no operator including
Crestone would be able to access the minerals in Sections 19 and 30 should
Extractions Coyote Unit and Lowell North Units be approved, and the Crestone
Unit denied. Accordingly, the minerals in Section 19 and 30 of the Crestone
Unit will be stranded if Extractions Applications were approved.

80. Mr. Spencer elaborated that the Lowell North Unit proposed by
Extraction was filed after Crestones application in an attempt to alleviate the
stranded acreage in Section 31. There is no need for Extractions proposed
abnormally shaped unit which included only a sliver of lands in Weld County.
See Paragraph 28.

81. Also significant to the development of the lands in Weld County is

that Crestone testified to its offer of an alternative to the Extraction Lowell
North and Coyote Unit Applications that would allow both the Crestone Unit as
well as the Extraction Units to proceed. In Crestones case in chief Crestone
testified that its alternative proposal meets the mandates of the Act, protects all
of the correlative rights and prevents waste. Crestone also argued that if
Extractions Units are approved, lands in the E of Sections 19 and 20 within
the Crestone Unit would be stranded because there was no way to access the
minerals due to the residential development on the surface. The alternate
proposal had been disclosed to the Commission, Extraction and Broomfield at
least twenty (20) days before the October 30-31 hearing.

82. Mr. Spencer testified that there would be no stranding or waste if

Extraction were to retract its Coyote Unit to Sections 32 and 33 and its Lowell
North Unit to Sections 6 and 7 which would allow Extraction to develop mid
length laterals. Additionally, 100% of Extractions acreage in the alternative
unit proposed by Crestone would be developed by Crestone and allow both
operators to effectively develop their respective minerals.

83. Crestone further testified that the Crestone Unit is not subject to
the Broomfield Operator Agreement.

84. After Crestone and Extraction presented their respective cases in

chief and before the deliberations began on the four (4) subject contested
applications, several Commissioners expressed concern that the practice of
considering surface locations within proposed contested units is inconsistent

Complaint 16
with past practices of the Commission. The Commissioners had extensive
discussions relating to the Operator Agreement between Extraction and
Broomfield. Ultimately, however, the Commissioners determined that they
would include language in the Orders recognizing the Broomfield Operator
Agreement and Extractions surface locations.

85. The Commissioners also acknowledged the time spent by

Extraction on the Broomfield Operator Agreement but failed recognize the time
spent by Crestone and the primacy of the Erie Crestone Operator agreement.

86. Director Lepore minimized the fact that Crestone had been working
with Weld County and the town of Erie for over two years and erroneously
offered that Extraction seemed more committed or likelier to to drill than
Crestone.

87. Immediately after the record closed and during the course of the
deliberations, the Commissioners approved a Motion that the wording in the
Operator Agreement between Broomfield and Extraction be incorporated into
all of the consent agenda items in Docket Nos. 170900601, 170900602,
170900603, 170900605, and 171000752 as they moved forward with all the
decisions involving Extraction and Broomfield, including the matters related to
the Crestone Unit.

88. The Broomfield Operating Agreement dominated the discussions

on all of the Extraction applications and adversely and arbitrarily impacted the
Crestone Unit located exclusively in Weld County, prior to the decision on the
merits of the four (4) contested cases at issue.

89. The Commissioners used the Broomfield-Extraction Operator

Agreement as one of the reasons for approving the Extraction Applications and
denying the Crestone Application.

90. During the deliberations, Commissioner Wolk expressed concern

regarding the possibility of stranding acreage and suggested, as an option to
consider, reducing the Crestone Unit to include only Sections 19 and 30.
Commissioner Benton asked whether the Commission is permitted to reduce
the size of a proposed unit. Director Lepore, Assistant Attorney General
Davenport and Hearing Officer Rouse held a private discussion after which
Assistant Attorney General Davenport erroneously advised the Commissioners,
without any supporting reference to any applicable regulation, rule or statute,
that the Commissioners lacked the authority to change the units as proposed.

Complaint 17
 91. Assistant Attorney General Davenport also stated that there was
no request by any party to approve an alternative proposed unit. This, in and
of itself, is an error of fact. Commissioner Benton explicitly stated that there
was a request by Crestone to modify the Extraction units.

92. Ultimately, the Commissioners denied Crestones Application for

the Crestone Unit in Docket No. 170900535 (Order No. 407-2213) and
approved the Extraction Applications in Docket Nos. 170700471 (Order No.
407-2209), 170900596 (Order No. 407-2216) and 171000749 (Order No. 407-
2245).

93. Crestone timely filed its Designation of Record on November 20,

2017, pursuant to 24-4-106, C.R.S., requesting that the Commission prepare
the entire Commission record involving the Crestone Peak application and the
Extraction applications including the Protests, Motions and Orders for the
purpose of judicial review.1

94. The October 31, 2017 Orders of the Commission are in violation of
the Act, Commission Regulations, and the Colorado Administrative Procedure
Act. The Colorado Administrative Procedure Act expressly states:

If it finds that the agency action is arbitrary or capricious, a denial

of statutory right, contrary to constitutional right, power, privilege,
or immunity, in excess of statutory jurisdiction, authority,
purposes, or limitations, not in accord with the procedures or
procedural limitations of this article or as otherwise required by
law, an abuse or clearly unwarranted exercise of discretion, based
upon findings of fact that are clearly erroneous on the whole
record, unsupported by substantial evidence when the record is
considered as a whole, or otherwise contrary to law, then the court
shall hold unlawful and set aside the agency action and shall
restrain the enforcement of the order or rule under review, compel
any agency action to be taken which has been unlawfully withheld
or unduly delayed, remand the case for further proceedings, and
afford such other relief as may be appropriate. 24-4-106(7), C.R.S.

95. Crestone Peak hereby requests judicial review of the Commissions

Order Nos. 407-2209, 407-2213, 407-2216, and 407-2245, for the following
reasons:

1 Crestones Designation of Record is attached as Exhibit E.

Complaint 18
 A. The Commissions Orders rely on an interpretation and application of
the Act that is contrary to the plain language of the statute and
applicable law, which sets forth how the applications should be
interpreted and enforced.

B. The Commissions Orders ignore the plain language of the statute,

34-60-116, C.R.S. which provides that the Commission, upon its
own motion or on a proper application of an interested party, has the
power to establish drilling units of specified and approximately
uniform size and shape covering any pool.

C. The Commissions Orders ignore the plain language of the statute,

34-60-116, C.R.S., which provides that the Commission may
increase or decrease the size of the drilling units in order to prevent
waste or to avoid the drilling of unnecessary wells, or to protect
correlative rights.

D. The Commissioners admitted that waste could occur in violation of

34-60-107, C.R.S., which prohibits the waste of oil and gas in
Colorado because portions of Sections 19 and 30 in the Crestone Unit
would be inaccessible and stranded.

E. The Commission erroneously considered information relating to

Extractions surface locations in Broomfield when determining
whether to approve the Crestone Unit.

F. The Commission relied on the AAG Davenports erroneous statement

that no alternative units were proposed by Crestone, when Crestone
specifically proposed an alternative which would allow the units to be
established with minor modifications and all of the wells drilled with
no changed to the existing APDs.

G. The Commissions consolidation of the Crestone Unit with

Extractions Lowell North Unit and the Coyote Unit with all of the
other Broomfield matters was in violation of procedural due process
and Commission Rule 516 and was fundamentally unfair to Crestone.

FIRST CLAIM FOR RELIEF

(Colorado Oil and Gas Conservation Act)
(Review of Commission Orders)

96. Crestone hereby restates and incorporates by reference as if fully

set forth herein the allegations contained in paragraphs 1 through 95 above.

Complaint 19
 97. The Orders of the Commission do not accurately reflect the
proceedings and the testimony presented by the parties. The Commission spent
a significant portion of the October 30 and 31, 2017, hearing discussion the
language to be proposed in the Order of the Commission in order to alleviate the
concerns raised by Broomfield.

98. Because Crestone was not part of the Operator Agreement between
Extraction and Broomfield and because the Broomfield Operator Agreement
does not and will not apply to any lands within Weld County, Crestone should
not be penalized and the Commission should not consider the Broomfield
Operator Agreement in establishing a spacing unit and the downhole density of
wells within such unit.

99. Consolidating the hearing for the Crestone Unit and the Extraction
Coyote Unit located in Weld County with the five (5) Broomfield uncontested
matters in Docket Nos. 170900601, 170900602, 170900603, 170900605, and
171000752 confused the issues. Allowing the consolidation of the applications
for the purposes of hearing was an abuse of discretion.

100. The Director stated that establishing a drilling and spacing unit
does not include the process for determining the specific oil and gas location
within the proposed units.

101. Paragraph 5 of each Order of the Commission provides that

evidence presented at hearing showed that Extraction had negotiated with
Broomfield to plan for development which culminated in an agreement to
development within Broomfield County. The Orders also inaccurately state that
the Commissioners never determined that the Applications were more likely to
ensure orderly, economic, and efficient development of oil and gas resources in
Broomfield.

102. The Orders intentionally lack detail and minimize the extensive
testimony provided by Crestone related to its Operator Agreement with Erie.

103. As such, the Commissions Orders erroneously and arbitrarily

denied Crestone its administrative and statutory right, exceeded the
Commissions statutory authority and purposes, and abused any discretion
which the Commission might have had in this matter. The Commission also
exercised its discretion in a manner contrary to law.

SECOND CLAIM FOR RELIEF

(Colorado Oil and Gas Conservation Act)

Complaint 20
 (The Commissions Orders were based on a flawed and unlawful
interpretation of the Act in violation of governing law)

104. Crestone hereby restates and incorporates by reference as if fully

set forth herein the allegations contained in paragraphs 1 through 103 above.

105. The Commissions Orders ignore the plain language of the statute,
34-60-116, C.R.S. which provides that the commission may increase or
decrease the size of the drilling units in order to prevent waste or to avoid the
drilling of unnecessary wells, or to protect correlative rights.

106. The Commission violated Colorado law by applying several

pertinent and applicable statutory and regulatory definitions in an
impermissible manner that is not consistent with applicable state law.

107. Several Commissioners expressed concern that the configuration of

the drilling and spacing units in Docket Nos. 170700471, 170900596 and
171000749 as proposed by Extraction would preclude development of
hydrocarbons underlying the E of Sections 19 and 30 of Crestones
application lands resulting in stranding of valuable hydrocarbon minerals
owned in fee by mineral owners and leased to Crestone.

108. Several Commissioners mentioned that some form of waste will

occur if Extractions applications in Docket Nos. 170700471, 170900596 and
171000749 are approved. However, the final Orders included no findings
regarding waste. There is no way to determine how, or even if the Commission
fully considered the issue of waste or if the Commission abused its discretion
at the time that entered its order

109. Waste, as defined by the Act and Commission 100 Series Rules,
would occur if the Extraction unit is approved as proposed.

110. Section 34-60-107, C.R.S., prohibits the waste of oil and gas. By
failing to provide for the drilling of acreage which will be stranded, the
Commission is allowing the waste of the hydrocarbons underlying Sections 19
and 30 of the Crestone Unit.

111. The Act declares that it is in the public interest to [p]rotect the
public and private interests against waste in the production and utilization of
oil and gas. 34-60-102(1)(a)(II), C.R.S. It is appropriate for the Commission
to consider various factors, including waste, in determining if a unit should be
established. See 34-60-102(1)(a)(I), C.R.S.2011 (it is in the public interest to
protect against waste in the production and utilization of oil and gas); 34-60-

Complaint 21
105(1) (the Commission "has jurisdiction... necessary to enforce the provisions
of this article, ... and has the power to make and enforce rules, regulations,
and orders pursuant to this article, and to do whatever may reasonably be
necessary to carry out the provisions of this article").

112. The Commission has the authority and obligation to prevent and
prohibit waste as required by the Act.

113. By failing to rely on a correct interpretation and application of the

Act, the Commission violated the Act and exceeded its statutory authority.

THIRD CLAIM FOR RELIEF

(Colorado Administrative Procedure Act)

114. Crestone hereby restates and incorporate by reference as if fully

set forth herein the allegations contained in paragraphs 1 through 113 above.

115. Any agency action that is arbitrary, capricious, contrary to a

constitutional right, in excess of statutory authority, an abuse of discretion,
unsupported by the record, or otherwise contrary to law shall be held unlawful
and set aside. 24-4-106(7), C.R.S.

116. [A]n agency should not regulate or restrict the freedom of any
person to conduct his or her affairs, use his or her property, or deal with others
on mutually agreeable terms unless it finds, after a full consideration of the
effects of the agency action, that the action would benefit the public interest
and encourage the benefits of a free enterprise system for the citizens of this
state. ... [A]gency action taken without evaluation of its economic impact may
have unintended effects, which may include barriers to competition, reduced
economic efficiency, reduced consumer choice, increased producer and
consumer costs, and restrictions on employment. ... [A]gency rules can
negatively impact the states business climate by impeding the ability of local
businesses to compete with out-of-state businesses, by discouraging new or
existing businesses from moving to this state, and by hindering economic
competitiveness and job creation. Accordingly, it is the continuing
responsibility of agencies to analyze the economic impact of agency actions and
reevaluate the economic impact of continuing agency actions to determine
whether the actions promote the public interest. 24-4-101.5, C.R.S. (entitled
legislative declaration).

117. State agencies shall ensure [that] the conduct of state business is
not impeded when it adopts or upholds policies or procedures for the

Complaint 22
purpose of implementing the Colorado Administrative Procedure Act. 24-4-
105, C.R.S.

118. The Orders of the Commission are sparse with information relating
to how the decision was made and how the decision comports with the Act,
which requires that the Commission foster the responsible, balanced
development, protect the public against waste, and to safeguard, protect and
enforce correlative rights.

119. The Commissions decision to deny Crestones Application for the

Crestone Unit is arbitrary, capricious, in excess of statutory authority, an
abuse of discretion, unsupported by the record, or otherwise contrary to laws
by relying on an inaccurate interpretation of the law; failing to consider an
alternative to the proposed Extraction Units, either as proposed by Crestone or
on its own motion; and by considering and adopting a private agreement to
which the Commission and Crestone were not parties.

FOURTH CLAIM FOR RELIEF

(Injunctive Relief)

120. Crestone hereby restates and incorporates by reference as if fully

set forth herein the allegations contained in paragraphs 1 through 119 above.

121. Defendant Extraction can at any time file for an Application for
Permit to Drill (APD) to conduct operations on its leasehold interest.
Crestone would lack standing to raise any issues contained herein during the
Commissions APD process.

122. If Defendant Extraction is allowed to conduct oil and gas

operations, as defined by Commission Rules and Regulations, on the Crestone
Unit Application Lands as approved by the Commission, Crestone will be
immediately adversely affected and aggrieved by such allowance as the
minerals in the E of Sections 19 and 30 of the Crestone Unit Application
Lands will be stranded and ultimately undevelopable.

123. Pursuant to 24-4-106(5), C.R.S. and C.R.C.P. 65, Crestone is

entitled to a preliminary injunction to preserve the status quo and to protect its
rights pending the final determination of this case. The danger of real,
immediate, and irreparable injury can be prevented by injunctive relief.

124. Crestone has no plain, speedy or adequate remedy at law.

Complaint 23
 125. The granting of the preliminary injunction will not disserve the
public interest, and the balance of equities favors the granting of such
injunctive relief. Such an injunction will also preserve the status quo pending a
trial on the merits.

126. Crestone has a reasonable probability of success on the merits in

this case.

127. Due to the danger of irreparable harm, Crestone also requests a

stay of the Commissions Orders.

FIFTH CLAIM FOR RELIEF

(Colorado Oil and Gas Conservation Act)
(The Commission relied on inaccurate and incorrect interpretation of the
Act)

128. Crestone hereby restates and incorporates by reference as if fully

set forth herein the allegations contained in paragraphs 1 through 127 above.

129. When the Assistant Attorney General advised the commission that
they lacked the authority to reduce or modify the size and shape of the
proposed of the units, the Commission relied on the statements. The legal
advice was incorrect and such reliance is a clear error of law warranting
reversal to the Commission.

130. Pursuant to 34-60-116(1), (2) and (4), C.R.S., the Commission,

upon its own motion or on a proper application of an interested party, has the
power to establish drilling units of specified and approximately uniform size and
shape covering any pool.

131. Section 34-60-116(2), C.R.S. also provides that in establishing a

drilling unit, the acreage to be embraced within each unit and the shape thereof
shall be determined by the commission from the evidence introduced at the
hearing.

132. Additionally, 34-60-116(4), C.R.S., provides that the Commission,

upon application, notice, and hearing, may decrease or increase the size of the
drilling units or permit additional wells to be drilled within the established units
in order to prevent or assist in preventing waste or to avoid the drilling of
unnecessary wells, or to protect correlative rights, and the Commission may
enlarge the area covered by the order fixing drilling units, if the commission
determines that the common source of supply underlies an area not covered by
the order.

Complaint 24
 133. The Commission relied on an incorrect and inaccurate
interpretation of the Act, by stating that the Commission lacks the authority to
modify the shape and size of a proposed unit. Accordingly, the Commission
violated its duties and authority under the Act.

SIXTH CLAIM FOR RELIEF

(Violation of Due Process and Fundamental Fairness)

134. Crestone hereby restates and incorporates by reference as if fully

set forth herein the allegations contained in paragraphs 1 through 133 above.

135. A factfinder necessarily abuses its discretion if it bases its ruling

on erroneous view of the law or on a clearly erroneous assessment of the
evidence.

136. By consolidating the Weld County applications with the Broomfield

applications, considering the Broomfield Operating Agreement in the
consolidated hearing, engaging in lengthy deliberations and considerations
regarding the matters in Broomfield unrelated to the Crestone Unit, and
considering the unrelated statements by the Adams County local government
designee, the Commission ultimately confused the issues subject to the hearing
on the four dockets subject to this Complaint, and the Commission violated
Crestones due process rights.

137. Additionally, the Orders of the Commission do not reflect that two
(2) of the Commissioners were not present to participate in voting, one (1)
Commissioner abstained and two (2) Commissioners voted against approving
the Extraction applications because of the possibility of stranding of minerals
and creating waste.

138. The lack of adequate instructions and regulations sets a chilling

precedent that has the potential to deter operators from setting matters for
hearing.

139. The Commission lacks sufficient instructions to address the issues

raised in these applications. There are no Rules or Regulations which provide
for the consolidation of matters or the standards for consolidation. Although
the contours of substantive due process are not precise, Stemler v. City of
Florence, 126 F.3d 856, 867 (6th Cir.1997), substantive due process requires
that the law contain explicit standards in order to prevent arbitrary decisions.

IV. PRAYER FOR RELIEF

Complaint 25
 WHEREFORE, Crestone respectfully requests that this Court enter an Order
finding:

A. That the Commissions Orders approving Extractions Coyote Unit, Lowell

North Unit and Increased Density in Order Nos. 407-2209, 407-2216,
and 407-2245 exceed its jurisdiction, are arbitrary, capricious and an
abuse of discretion, and are not in accordance with law and should be
set aside and vacated.

B. That this Court remand the Docket Nos. 170700471, 170900535,

170900596 and 170900749 to the Commission for a new hearing on the
merits.

C. That this Court provide instructions to the Commission addressing

clarification on contested hearing procedures, specifically consolidation,
allowance of testimony on dockets not scheduled for a contested hearing,
multiple parties to hearing, and separate counties to a hearing.

D. That the Commissions Order denying the Crestone Unit in Order No.
407-2213 exceeds its jurisdiction, is arbitrary, capricious and an abuse
of discretion, and is not in accordance with law and should be set aside
and vacated.

E. That this Court issue an immediate stay of the Commissions Orders on

the grounds that they will cause irreparable harm.

F. That the Defendants shall be enjoined from conducting any oil and gas
operations in Section 31, Township 1 North, Range 68 West, 6th P.M.,
including siting and permitting, until there has been a final
determination on the four dockets subject to this Complaint, and that
the status quo be preserved during the pendency of this and the
remanded Commission proceeding.

G. That Crestone is entitled to its attorney fees, costs of suit, damages as

may be proven and such other relief as may be appropriate.

H. Grant any other such relief as this Court deems just and proper.

DATED this 4th day of December, 2017.

Respectfully submitted,

Complaint 26
 JOST ENERGY LAW, P.C.

Attorneys for Plaintiff Crestone Peak

Resources Operating LLC

BY: s/Jamie L. Jost

Jamie L. Jost, #34317
Kelsey H. Wasylenky, #37775
Jost Energy Law, P.C.
1401 17th Street, Suite 370
Denver, Colorado 80202
720-446-5620
jjost@jostenergylaw.com
kwasylenky@jostenergylaw.com

Plaintiffs Address:
Crestone Peak Resources Operating LLC
1801 California Street, Suite 2500
Denver, Colorado 80202

Complaint 27