REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 1, 1971, in the Auditorium, Social Services Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Edward Mike Davis for an order granting two exceptions to the spacing pattern established by Order No. 237-1 for the Poncho Field, Adams and Arapahoe Counties, 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 on February 16, 1971, the Commission issued its Order No. 237-1 which, among other things, established 80-acre drilling and spacing units for the pro-duction of oil from the "J" Sand, with the permitted well to be located in the NW/4 and SE/4 of each quarter section.

4. That the applicant drilled a well in the NW/4 SW/4 Section 34, Township 3 South, Range 59 West, 6th P.M., and also in the SE/4 NW/4 Section 3, Township 4 South, Range 59 West, 6th P.M., and that both wells were plugged and abandoned as dry holes.

5. That testimony presented at the hearing indicates that an exception to the spacing pattern established in the Poncho Field should be granted for a well to be drilled in the NE/4 SW/4, 2,040 feet from the West line and 1, 980 feet from the South line of Section 34, Township 3 South, Range 59 West, 6th P.M., and that it be the per-mitted well for the drilling unit comprising the N/2 SW/4 of said Section 34; and for a well to be drilled in the NE/4 NW/4, 1, 980 feet from the West line and 600 feet from the North line of Section 3, Township 4 South, Range 59 West, 6th P.M., and that it be the per-mitted well for the drilling unit comprising the E/2 NW/4 of said Section 3.

6. That in order to offset any advantage said wells may have over other producers by reason of the drilling of the wells as exceptions and in order to protect correlative rights and prevent waste, it may be necessary to restrict production from said wells drilled as exceptions and/or control and allocate production from the field; however, information available to the Commission at this time is not sufficient to properly determine what steps, if any, should be taken to accomplish the above objec-tives.

(over)

ORDER

NOW, THEREFORE, IT IS ORDERED that exceptions are hereby granted for a well to be drilled in. the NE/4 SW/4, 2,040 feet from the West line and 1, 980 feet from the South line of Section 34, Township 3 South, Range 59 West, 6th P.M., and that it be the permitted well for the drilling unit comprising the N/2 SW/4 of said Sec-tion 34; and for a well to be drilled in the NE/4 NW/4 1,980 feet from the West line and 600 feet from the North line of Section 3, Township 4 South, Range 59 West, 6th P.M., and that it be the permitted well for the drilling unit comprising the E/2 NW/4 of said Section 3; however, if a commercial well is drilled on each location set forth above instead of on a location as provided by Order No. 237-1, the Commission shall, at the request of interested persons, take such action as will offset any advantage which the person securing each exception may have over other producers by reason of the drilling of each well as an exception.

IT IS FURTHER ORDERED that all operators of wells producing from the "J" Sand in the Poncho Field shall cooperatively conduct and report to the Commission by October 10, 1971, results of production tests designed to determine the most efficient production rate for each well and for the field. All operators in the field shall have the opportunity to witness all tests and a schedule of test dates shall be submitted to the Director in sufficient time so that a Commission engineer can be in the field to witness the tests.

IT IS FURTHER ORDERED that within thirty (30) days following the com-pletion of each well to be drilled as an exception in the NE/4 SW/4 of Section 34, Town-ship 3 South, Range 59 Weal 6th P.M., and in the NE/4 NW/4 of Section 3, Township 4 South, Range 59 West, 6th P.M., Edward Mike Davis; and Midwest Oil Corporation, Champlin Petroleum Company and R. C. Quails shall cooperatively design, conduct and report results to the Commission of interference tests between the wells drilled as exceptions and the surrounding offset wells to determine the drainage effects of various producing rates within the above-mentioned group of wells. A schedule of the test dates shall be submitted. to the Director in sufficient time so that a Commission engineer can be in the field to witness such tests.

The Director may waive or alter the interference tests required above if in his opinion the results of the drilling of the exception wells indicate that such tests would be unnecessary or meaningless.

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.

ORDERED this 1st day of September 1971.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

(#237-3)