REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 17, 1984 at 9:00 Kkktt, in Suite 380 Logan Tower Building, 1580 Logan Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Mull Drilling Co., Inc., for an order confirming that the plan for unit operations has been approved in writing by those persons required to pay at least eighty percent (80%) of the cost of unit operation and by those owners of at least eighty percent (80%) of the production or proceeds that will be credited to interests which are free of costs.

FINDINGS

The Commission finds as follows:

1. Mull Drilling Co., 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 July 16, 1984, the Commission authorized Order No. 349-5 to be issued by which approval was given to a certain Unit Agreement and Unit Operating Agreement for the Mull Unit/Sorrento Field comprising certain lands in the Sorrento Field, Cheyenne County, Colorado. It was further ordered that the plan of unit operations shall not become effective unless, or until the persons owning the required percentages of interest in the unit approve the plan.

5. On September 5, 1984, attorneys for James L. McCormick, Jr. filed an objection to said application alleging that more than twenty percent (20%) of the royalty interests within the Mull Unit/Sorrento Field, as described in paragraph 2 of Order No. 349-5, had not approved the plan for unit operations.

6. The basis for Mr. McCormick's objection was that Champlin Petroleum Company should not be allowed to participate in the Unit both as a royalty owner and as a working interest owner by virtue of owning an unleased mineral interest. A further basis for Mr. McCormicks objection was that Mr. McCormick had acquired a royalty interest from Champlin Petroleum Company which interest was not included by the Unit Operator in making the required eighty percent (80%) calculation. The parties stipulated that the latter objection need not be addressed by the Commission, if it found that, with respect to the first objection, Champlin may participate in the Unit and in the Unit election, both as a royalty owner and a working interest owner.

7. The Unit Agreement, Unit Operating Agreement and the provisions thereof which allow an unleased mineral owner to participate as a one-eighth royalty owner, and a seven-eighths working interest owner complies with Section 34-60-118 C.R.S. 1973, as amended, and are consistent with generally accepted state, federal and industry standards for units of this kind.

8. The plan for unit operations as approved by the Commission in paragraph 1 of Order No. 349-5 has been approved, in writing, by at least eighty percent (80%) of those persons required by said plan to pay the costs of unit operations and by at least eighty percent (80%) of those persons who own production or proceeds thereof which are free of such costs.

9. That plan of operations should become effective forthwith.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the order approving the Plan of Unit Operations for operation of the Mull Unit/Sorrento Field, as described in paragraph 2, Order No. 349-5, is effective forthwith and the plan shall become effective in accordance with the terms contained therein.

ENTERED this 10th day of October, 1984, as of September 17, 1984.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

William R. Smith, Director for Frank J. Piro, Secretary

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(349-6)