BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                                  OF THE STATE OF COLORADO

IN THE MATTER OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION, KIOWA COUNTY, COLORADO

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CAUSE NO. 1 ORDER NO. 1-54 (Formerly 1-190)

REPORT OF THE COMMISSION

                        This matter came on for hearing before the Commission on December 19, 1994 at 8:30 a.m. in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, on the application of Bristol Resources Corporation to re-enter and convert the Leathers No. "B" 3 Well in the NE¼ NE¼ Section 1, Township 18 South, Range 42 West, Kiowa County, Colorado, for the purpose of water disposal.

FINDINGS

                        The Commission finds as follows:

                        1.  The Commission has jurisdiction over the subject matter and of the parties interested herein, and jurisdiction to promulgate the hereinafter prescribed order.

                        2.  Bristol Resources Corporation gave notice as per Rule 323(e) to each surface owner and owner as defined in C.R.S. 34-60-103(7), within one-quarter (1/4) mile of the proposed well and to owners and operators of oil and gas wells producing from the proposed injection zone within one-half (1/2) mile of the disposal well or to owners of cornering and contiguous units where injection will occur into the producing zones, whichever is the greater distance.

                        3.  The Commission received written requests for public hearing from Duncan Energy Company, Bradley and DeeAnna Schneider, and Willa Mae Silliman Southard.

                        4.  At the time of the hearing, Duncan Energy Company verbally agreed to withdraw its protest to the issuance of the permit for saltwater disposal and enter into a written Stipulation For Settlement with Bristol Resources Corporation.  The stipulation should be conditioned that, in the event the Duncan Energy Company drills an additional well to the Morrow Sand Formation in the NW¼ of Section 6, Township 18 South, Range 41 West, 6th P.M., or the SW¼ of Section 31, Township 17 South, Range 41 West, 6th P.M., within eighteen (18) months, and if the well is completed as a producer of oil from the Morrow Sand Formation, and Duncan Energy Company requests, Bristol Resources Corporation agrees to cease injection of saltwater into the Leathers "B" 3 Well until such time as it is determined by the parties or by the Colorado Oil and Gas Conservation Commission or a court of competent jurisdiction, that said injection will not adversely affect production from said offset oil well.

                        5.  The Director should include the Stipulation to be provided by Bristol Resources Corporation and Duncan Energy Company as a condition of approval for the application to convert the Leathers No. "B" 3 Well.

                        6.  On January 23, 1995, subsequent to the hearing, Bradley K. and DeeAnna P. Schneider submitted in writing a letter to withdraw their objections to the issuance of the permit for saltwater disposal into the Leathers No. "B" 3 Well.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that the Director shall be authorized to process and approve the application of Bristol Resources Corporation to re-enter and convert the Leathers No. "B" 3 Well in the NE¼ NE¼ of Section 1, Township 18 South, Range 42 West, and further, upon completion of all requirements of Rule 323 of the Rules and Regulations of the Commission, to authorize the underground disposal of produced water into the above-described Leathers No. "B" 3 Well.

                        IT IS FURTHER ORDERED, that the Director shall include the Stipulation For Settlement and Conditional Withdrawal Of Objection agreed to on January 9, 1995, effective January 1, 1995, provided by Bristol Resources Corporation and Duncan Energy Company as described in Finding 4 above.

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

                        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.

                        ENTERED this  day of , 1995, as of December 19, 1994.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                           OF THE STATE OF COLORADO

                                                                        By

                                                                                          Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

February 9, 1995