118-5

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE LITTLE HOOT FIELD, LOGAN COUNTY, COLORADO

)

CAUSE NO. 118

ORDER NO. 118-5

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 21, 1985 at 9:00 a.m., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Winslow Resources for an order establishing a 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the "D" Sand underlying certain lands in Logan County, Colorado.

FINDINGS

The Commission finds as follows:

1. Winslow Resources, 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.

4. Based upon the facts stated in the verified application and exhibit submitted, and receiving no objections, and having been reviewed and recommended by the Director as Hearing Officer on October 18, 1985, the Commission should enter an order establishing a 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the "D" Sand underlying the following described lands in Logan County, Colorado:

Township 10 North, Range 54 West, 6th P.M.

Section 4:	SE1/4
Section 9:	NE1/2 [sic]

5. In order to prevent the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made establishing a 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the "D" Sand underlying the lands described herein. The permitted well for the unit should be Well No. 1 Nelson located in the NE1/4NE1/4 of said Section 9.

6. All available geological and engineering data concerning said "D" Sand indicate that one well will efficiently and economically drain an area of approximately 320-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently and economically drained by one well producing from said "D" Sand.

7. An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying said drilling unit.

8. Production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within said drilling unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the "D" Sand underlying certain lands in the Little Hoot Field, herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. A three hundred twenty (320) acre drilling and spacing unit shall be and the same is hereby established for the production of gas and associated hydrocarbons from the "D" Sand underlying the following described lands in Logan County, Colorado, to-wit:

Township 10 North, Range 54 West, 6th P.M.

Section 4:	SE1/4
Section 9:	NE1/4

Rule 2. The permitted well for the unit shall be Well No. 1 Nelson located in the NE1/4NE1/4 of said Section 9.

IT IS FURTHER ORDERED, that, 1. [sic] Pursuant to the provisions of 34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing unit consisting of the SE1/4 Section 4 and the NE1/4 Section 9, Township 10 North, Range 54 West, 6th P.M., Logan County, Colorado, are hereby pooled for the development of gas from the "D" Sand underlying said unit.

2. The production obtained from said drilling unit shall be allocated to each owner therein in the unit on the basis of the proportion that the number of acres in each tract bears to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.

3. The non-consenting owner should be afforded the opportunity to elect whether to participate in the drilling and operating of said well, and pay a proportionate share of the actual costs thereof which proportionate share shall be determined by dividing the number of net mineral acres owned by said unleased mineral owner by the total number of mineral acres in the unit.

4. The operator responsible for drilling the well on the said unit shall prepare an Authorization for Expenditure ("AFE"), which shall be submitted to the non-consenting owner in the unit.

5. Within thirty (30) days from the date of receipt of said AFE by the non-consenting owner, such owner shall indicate whether he consents to the drilling of the well and agrees to participate in the cost thereof. Such election shall be made in writing, either by executing the AFE or similar document. In the event a written election to participate is not made by a non-consenting owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non-consenting as to the well.

IT IS FURTHER ORDERED, that the provisions contained in the above orders 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 8th day of November, 1985, as of October 21, 1985.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary