REPORT OF THE COMMISSION

This cause came on for hearing before the commission on December 17, 1991 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Energy Minerals Corporation for an order segregating the 320-acre drilling and spacing units consisting of the N1/2 and the S1/2 of said Section 35 describe herein below into two 160-acre drilling and spacing units consisting of the NE1/4 and the NW1/4 of Section 35, Township 4 South, Range 62 West, 6th P.M., for the production of gas and associated hydrocarbons from the "J" Sand Formation.

FINDINGS

The Commission finds as follows:

1. Energy Minerals Corporation, as applicant herein, is an interested party in the subject matter of the above-reference 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 issued Order No. 259-1 by which 320-acre drilling and spacing units were established for the production of gas and associated hydrocarbons from the ""J" Sand Formation, with the permitted well to be located in the NW1/4 and SE1/4, underlying certain lands in Arapahoe County, Colorado. The N1/2 and S1/2 of Section 35, Township 4 South, Range 62 West, 6th P.M. have been designated as drilling and spacing units.

5. That upon the Commission's review of the exploration and production in the lands established by Order No. 259-1 for the development of the "J" Sand Formation in Peace Pipe Field and having found no production and limited exploration, the Commission, should rescind the rules and regulations of Order No. 259-1 for the below listed lands to-wit:

Township 4 South, Range 62 West, 6th P.M. Section 34: E1/2

Township 5 South, Range 62 West, 6th P.M. Sections 1 through 3: All

6. Based on the facts stated in the verified application and the exhibits submitted and having been heard by the Director as Hearing officer on December 12, 1991, the Commission should approve the request and amend Order No. 259-1 and establish two 160-acre drilling and spacing units consisting of the NE1/4 and the NW1/4 of Section 35, Township 4 South, Range 62 West, 6th P.M. for the production of gas and associated hydrocarbons from the "J" Sand Formati on. Further, certain lands in Peace Pipe Field should be deleted from provisions of Order No. 259-1 and be subject to the provisions of the general rules and regulations of the Colorado Oil and Gas Conservation Commission.

ORDER

NOW, THEREFORE IT IS ORDERED, that Order No. 259-1 is hereby amended and two one hundred sixty (160) acre drilling and spacing units are hereby established consisting of the NE1/4 and the NW1/4 of Section 35, Township 4 South, Range 62 West, 6th P.M. for the production of gas and associated hydrocarbons from the "J" Sand Formation underlying said unit.

IT IS FURTHER ORDERED, that the lands described in Finding 5 shall be deleted from the spacing provisions of Order No. 259-1 and said lands shall henceforth be subject to the general rules an regulations of the Colorado Oil and Gas Conservation Commission.

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 22nd day of January, 1992 as of December 17, 1991.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 January 10, 1992