IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE PEACE PIPE FIELD, ARAPAHOE COUNTY COLORADO Cause No. 259 Order No. 259-3

REPORT OF THE COMMISSION

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

This cause came on for hearing before the Commission on August 17, 1987, 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 application of H & R Well Services, Inc. which was amended for an order amending said Order No. 259-1 and segregate the 320-acre drilling and spacing unit consisting of the 5/2 Section 35, Township 4 South, Range 62 West, 6th P.M. into two separate 160-acre units consisting of the SW/4 and SE/4 of said Section 35, and that a well be allowed to be drilled in said SW/4 at a location no closer than 990 feet to the boundaries of the quarter section, for the production of gas and associated hydrocarbons from the J' Sand.

FINDINGS

1. H & R Well Services, Inc., 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. On October 17, 1972, the Commission authorized Order No. 259-1 to be issued by which 320-acre drilling and spacing units were established for the production of gas and associated hydrocarbons from the J' Sand underlying certain lands in the Peace Pipe Field. The units consist of the E/2 and W/2 or the N/2 and 5/2 of a section with the permitted well located in the NW/4 and SE/4 of Section 35, Township 4 South, Range 62 West, 6th P.M. has been designated a drilling and spacing unit. 5. Based on the facts stated in the verified application and exhibits submitted and receiving no objections and having been heard by the Director as Hearing Officer on August 14, 1987 and recommended for approval, the Commission should enter an order amending Order No. 259-1 and segregate the drilling and spacing unit consisting of the 5/2 Section 35, Township 4 South, Range 62 West, 6th P.M., Peace Pipe Field, Arapahoe County, Colorado, into separate 160-acre units consisting of the SW/4 and the SE/4 of said Section 35 for the production of gas and associated hydrocarbons from the J' Sand and that a well be allowed to be drilled for such production in the SW/4 unit at a location no closer than 990 feet from the boundaries of the quarter section.

ORDER

NOW THEREFORE, IT IS ORDERED, that order No. 259-1-is hereby amended and the 320-acre drilling and spacing unit consisting of the S/2 Section 35, Township 4 South, Range 62 West, 6th P.M., Peace Pipe Field, Arapahoe County, Colorado, is hereby segregated into two separate 160-acre units consisting each of the SW/4 and the SE/4 of said Section 35 for the production of gas and associated hydrocarbons underlying said units and that a well be allowed to be drilled in the SW/4 for such production at a location no closer than 990 feet from the boundaries of the quarter section.

IT IS FURTHER ORDERED, that the above order shall become effective forthwith. : Entered this 3rd day of September 1987, as of August 17, 1987.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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