IN THE MATTER OF THE PROMULGATION AND          CAUSE NO. 424
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE CHANNING FIELD,                      ORDER NO. 424-5
PROWERS COUNTY, COLORADO                                   AMENDED/CORRECTED

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on January 7, 1998 in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, on the verified application of Murfin Drilling Company, Inc. for an order to remove Section 19, Township 21 South, Range 46 West, 6th P.M. from the provisions of Cause No. 424 and place the lands under the provisions of Rule No. 318.

FINDINGS

The Commission finds as follows:

1. Murfin Drilling Company, Inc., as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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 February 1, 1985, the Commission issued Order No. 424-1 which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Middle Morrow Sandstone (McClave Sandstone) underlying certain lands located in the Channing Field, Prowers County, Colorado, with the units to consist of a section of land, according to the governmental survey, with the permitted well located no closer than 990 feet from the section lines. On May 31, 1988, the Commission issued Order No. 424-3 (Corrected) which extended Order No. 424-1 to encompass the below-described lands:

Township 21 South, Range 46 West, 6th P.M.
Section 19: All
Sections 28 – 34: All

Township 22 South, Range 46 West, 6th P.M.
Sections 2 – 5: All
Sections 9 – 11: All

5. Testimony and evidence was presented at the administrative hearing describing how well control and seismic data define the field limits, and thus why Section 19 should be removed from the provisions of the Channing Field.

6. Testimony was presented that approval of the application is necessary to allow a well to be optimally located for production from the Middle Morrow Formation to prevent waste and protect correlative rights.

7. At the time of the administrative hearing, Murfin Drilling Company, Inc. agreed to be bound by oral order of the Commission.

8. Based on the facts stated in the application, having received no protests to the application, and having been heard by the Hearing Officer who recommends approval of the application, the Commission should enter an order removing Section 19, Township 21 South, Range 46 West, 6th P.M. from the provisions of Cause No. 424 for the Channing Field. The lands should become subject to Rule No. 318.

ORDER

NOW, THEREFORE, IT IS ORDERED that Section 19, Township 21 South, Range 46 West, 6th P.M., shall be removed from the provisions of Cause No. 424 governing operations in the Channing Field and hereby become subject to Rule No. 318, for production from the Middle Morrow Formation.

IT IS FURTHER ORDERED, that the below-described lands shall remain under the provisions of Cause No. 424 governing operations in the Channing Field:

Township 21 South, Range 46 West, 6th P.M.
Sections 28 – 34: All

Township 22 South, Range 46 West, 6th P.M.
Sections 2 – 5: All
Sections 9 – 11: All

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.

ENTERED this 30th day of January, 1998 , as of January 7, 1998.

AMENDED this 9th day of February, 1998, as of January 7, 1998.

CORRECTED this 12th day of April, 1999, as of January 7, 1998.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801, 1120 Lincoln Street, Denver, Colorado 80203 April 12, 1999

(424-5)