REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 17, 1983 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Cities Service Oil and Gas Corporation, for an order establishing 40-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Lansing formation underlying certain lands in Baca County, Colorado.

FINDINGS

The Commission finds as follows:

1. Cities Service Oil and Gas Corporation, 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 S/2 Section 24, all of Sections 25 and 26, Township 34 South, Range 46 West, 6th P.M., should be deleted from the requested area to be spaced.

5. Evidence presented at the hearing indicates that the Lansing formation constitutes a common source of supply of oil and associated hydrocarbons underlying the following described lands in Baca County, Colorado, to-wit:

Township 34 South, Range 46 West, 6th P.M. Section 34: E/2 Section 35: All Section 36: All Township 35 South, Range 46 West. 6th P.M. Section 1: All Section 2: All Section 3: NE/4 Section 12: N/2

6. In order to prevent waste of oil and 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 oil and gas resources, an order should be made establishing 40-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Lansing formation, a common source of supply underlying the lands defined herein; that said units should be 40-acres, more or less, and consist of a quarter-quarter section, according to the governmental survey. Only one well should be permitted to be drilled on each unit and produced from the common source of supply. The permitted well for each unit should be located in the center of the quarter-quarter section with a tolerance of 200 feet in any direction and the existing producing or producible wells or permitted locations should be considered the permitted wells for the units upon which they are located.

7. All available geological and engineering data concerning said Lansing formation indicate that one well will efficiently and economically drain an area of approximately 40-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently and economically drained by one well producing from said Lansing formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the Lansing formation underlying the Campo Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Rule 1. Forty (40) acre drilling and spacing units shall be and the same is hereby established for the production of oil and associated hydrocarbons from the Lansing formation underlying the following described lands in the Campo Field, Baca County, Colorado, to-wit:

Township 34 South, Range 46 West, 6th P.M. Section 34: E/2 Section 35: All Section 36: All Township 35 South, Range 46 West, 6th P.M. Section 1: All Section 2: All Section 3: NE/4 Section 12: N/2 Rule 2. Said drilling units shall consist of 40-acres, more or less, and consist of a quarter-quarter section, according to the governmental survey, and the permitted well for each unit shall be located in the center of the quarter-quarter section with a tolerance of 200 feet in any direction and the existing producing or producible wells or permitted locations should be considered the permitted wells for the units upon which they are located.

IT IS FURTHER ORDERED, that the provisions contained in the above order 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. 16th November ENTERED this day of . 1983, as of October 17, 1983

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 -(406-1)