REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 15, 1979 at 9 A.M., in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Martin Oil Services, Inc., for an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Corcoran formation underlying certain lands in Mesa County, Colorado.

FINDINGS

The Commission finds as follows:

1. Martin Oil 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. Evidence presented at the hearing indicates that the Corcoran formation constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Mesa County, Colorado, to-wit:

Township 9 South, Range 96 West, 6th P.M. Section 31: All Township 10 South, Range 96 West, 6th P.M. Section 6: All

Township 9 South, Range 97 West, 6th P.M. Section 35: All Section 36: All Township 10 South, Range 97 West, 6th P.M. Section 1: All Section 2: All

5. In order to prevent the waste of gas, as defined by law; to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the gas resources of the State, an order should be made establishing 160-acre drilling and spacing units for the production of gas from the Corcoran formation, common source of supply underlying the lands defined herein; that said units should be 160-acre drilling units, and consist of a quarter section of land according to the governmental survey thereof, and that the permitted well for each such drilling unit should be located no closer than 600 feet from the boundaries of the quarter section upon which it is located.

6. All available geological and engineering data concerning said Corcoran formation indicate that one well will efficiently and economically drain an area of (over) approximately 160-acres, and that drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well producing from said Corcoran formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regula-tions shall apply hereafter to wells drilled, completed, or recompleted in the Corcoran formation underlying the Shire Gulch Field herein described, in addition to other appli-cable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. One hundred-sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Corcoran formation underlying the following described lands in the Shire Gulch Field, Mesa County, Colorado, to-wit:

Township 9 South, Range 96 West, 6th P.M. Section 31: All Township 10 South, Range 96 West, 6th P.M. Section 6: All

Township 9 South, Range 97 West, 6th P.M. Section 35: All Section 36: All

Township 10 South, Range 97 West, 6th P.M. Section 1: All Section 2: All

Rule 2. Said drilling units shall consist of one hundred-sixty (160) acres, and each such drilling unit shall consist of a quarter section of land, according to the governmental survey thereof, and the permitted well for each such drilling unit shall be located no closer than 600 feet from the boundaries of the quarter section upon which it is located.

IT IS FURTHER ORDERED, that the rules and regulations contained herein shall become effective forthwith.

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, rules and regulations.

ORDERED this 15th day of January, 1979.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- - 2 -

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