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 "D" SAND OF THE CANAL FIELD, MORGAN COUNTY, COLORADO	) ) ) )	CAUSE NO. 142 ORDER NO. 142-2

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 21, at 10 a.m., in Room 320B, State Capitol, Denver, Colorado, after publication of Notice of Hearing and appropriate service thereof, all as required by law on the application of the Skelly Oil Company, a Delaware corporation authorized to do business in the State of Colorado; for an order from the Commission requiring the pooling of all interests within Unit No. 1, a drilling and spacing unit heretofore established by the Commission by Order No. 142-1, for the development and production of gas and associated hydrocarbons from the Dakota "D" Sand formation underlying said unit and within the Canal Field, Morgan County, Colorado.

FINDINGS

The Commission finds as follows:

1.      That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

2.      That 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.

3.      That By its Order No. 142-1 of April 26, 1960, the Commission has established Unit No. 1, a drilling and spacing unit for the production of gas from the Dakota "D" Sand formation of the Canal Field, Morgan County, Colorado; containing approximately 600 acres, and comprising the following lands:

Unit No. 1 - Challis Gas, NW¼ Section 3, NE¼ and E½NW¼ Section 4, Township 3 North, Range 59 West; and S½SE¼ and SE¼SW¼ Section 33, S½SW¼ Section 34,Township 4 North, Range 59 West, 6th P.M.

4.      That the Skelly – J.W. Challis Well No. 1, located in the SW¼SW¼ of Section 34, Township 4 North, Range 59 West, 6th P.M. is the permitted gas well for said drilling and spacing Unit No. 1; and that said well was completed at the time Order No. 142-1 was entered.

5.      That all of the owners of working interests along with owners of unleased mineral interests within said Unit No. 1 have joined in voluntary pooling, along with a number of persons owning royalty interests therein, and that a reasonable effort has been made to obtain the voluntary pooling of all interests in the said unit for the development and operation thereof, but that it has not been possible to secure the agreement of all owners of interests in said unit.

6.      That Applicant is an "interested person" within the meaning of 100-6-4(6), 1953, Colorado Revised Statutes.

7.      That the gas production from the Dakota "D" Sand obtained from said unit should be allocated to each tract therein on the basis of the proportion that the number of acres in such tract bears to the total number of acres within said unit; and that the order of the Commission pooling all interests in said unit and allocating the gas production therefrom on the basis of the proportion that the number of acres in such tract bears to the total number of acres within said drilling unit is necessary, just and reasonable in order to afford each owner of an interest within said drilling unit the opportunity to recover and receive his just and equitable share of the gas from the common source of supply underlying said drilling unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that pursuant to the provisions of 100-6-4 of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling unit heretofore established by the Commission as Unit No. 1, for the production of gas from the Dakota "D" Sand formation underlying the following lands:

NW¼ Section 3; NE¼ and E½NW¼ Section 4, Township 3 North, Range 59 West; and S½SE¼ and SE¼SW¼ Section 33; S½SW¼ Section 34, Township 4 North, Range 59 West, 6th P.M., Morgan County, Colorado,

be and the same are hereby pooled; and the Skelly No. 1 J.W. Challis well, located in the SW¼ of the SW¼ of Section 34, Township 4 North, Range 59 West, 6th P.M., Morgan County, Colorado, is the permitted well for the production of gas from the Dakota "D" Sand within said unit.

IT IS FURTHER ORDERED, that the gas and associated hydrocarbon production obtained from the permitted well within said unit shall be allocated to each tract therein on the basis of the proportion that the number of acres in such tract bears to the total number of acres within said unit, and each owner of interest in said tracts in said unit shall be entitled to receive its share of the production from the said well located on said unit which is applicable to his interest in said unit.  The portion of the production allocated or applicable to each tract in said unit shall, when produced, be deemed for all purposes to have been produced from such tract by a well drilled thereon.

ORDERED this 21st day of November 1961.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
	By	D.V. Rogers, Secretary