REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 16, 1994 at 8:30 a.m. in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Chaparral Resources, Inc. for an order to repeal the permitted well location provided for in Order No. 311-5 and replace it with the well location rules as specified in Rule 316 of the Oil and Gas Conservation Commission Rul es and Regulations to promote additional drilling and development and to prevent waste for production from the Morapos-Castlegate Formation.

FINDINGS

The Commission finds as follows:

1. Chaparral Resources, 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 August 17, 1981, the Commission authorized Order No. 311-5 to be issued, which among other things, established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Morapos-Castlegate Formation underlying certain lands in Rio Blanco County, Colorado, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section upon which it is located.

5. Protests were filed by Davie D. and Cheryl D. Robertson, Ruby L. Kirby, Irvin S. Larson, First Congregational Church, Jerry Parker, Lenora S. Gerrard, and Gordon K. Gerrard. At the time of the hearing, Chaparral Resources, Inc. requested that the Commission dismiss the protests because none of the protestants were present.

6. That testimony presented at the hearing indicated that due to topographical considerations, it is necessary to modify the permitted well locations established in Order No. 311-5 to promote additional drilling and development, and to prevent waste. Further testimony indicated that correlative rights would not be adversely affected by a change in the permitted well location requirements.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the permitted well location provided for in Order No. 311-5 is appealed and that the provisions of Rule 316 of the Oil and Gas Conservation Commission Rules and Regulations are hereby adopted for the below-listed lands, for production from the Morapos-Castlegate Formation:

Township 4 South, Range 101 West, 6th P.M. Sections 5 through 7: All Section 8: NW1/4

Township 4 South, Range 102 West, 6th P.M.

Section 1: All Section 2: SE1/4 Sections 11 and 12: All

IT IS FURTHER ORDERED, that the provisions in the above order shall become effective forthwith.

Entered this day of , 1994, as of May 16, 1994.

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 June 6, 1994 ??

(311#6)