REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 15, 1986 at 9:00 A.M. in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing, as required by law. On the verified application of Guy F. Atkinson Company of California, Robert Martin and Margaret A. Mull, Co-Executors of the Estate of J.A. Mull Jr., deceased, Lewis M. Mull, Margaret A. Mull, Ostrander Construction Company and Mull Drilling Company (Mull Drilling Company et al) for an order appropriately restricting production from the B' reservoir in the Morrow formation underlying the Mount Pearl Field spaced area and further to determine gas - oil ratios for wells located therein.

FINDINGS

The Commission finds as follows:

1. Mull Drilling Company, et al as applicants herein, are interested parties 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. Testimony at the time of hearing indicated that present production practices in the B' Morrow reservoir constitutes waste in that reservoir pressure has been, and is being unreasonably reduced and the reservoir energy disipated. Such indiscriminate production practices will result in a substantial volume of oil being unrecoverable therefore restriction of production should be imposed on wells in the field producing from the Morrow Reservoir. Such restrictions should be based on a formula in which the daily allowable of a well would be 400 divided by a test GOR times a test BOPD. Such restrictions should become effective October 1, 1986.

5. Unless a unit agreement and unit operating agreement have been entered by the time of the Commission hearing on December 1 =, 1986, the field should be shut in on December 31, 1986 pending a resolution of a plan for unit operations.

6. Wells producing from the Morrow Reservoir and located in the area described in the Order should be subject to the restriction provisions

7. Wells drilled as exceptions to the permitted well location should be subject to the restriction provision of the Order or to the restriction provision of Order No. 426-6, whichever results in the lesser allowable.

ORDER

NOW THEREFORE IT IS ORDERED that the following rules and regulations shall apply to wells producing from the Morrow Reservoir underlying the following described lands in the Mount Pearl Field, Cheyenne County, Colorado:

Township 13 South, Range 47 West, 6th P.M. Section 28: W/2 Section 30: All Section 29: All Section 31:N/2 Township 13 South, Range 48 West, 6th P.M.

Section 25: All Section 32:NE/4 Section 26: S/2 Section 33: N/2, SE/4 Section 27: S/2 Section 34: All Section 28:S/2 Section 35: All Section 29:S/2 Section 36:N/2 RULE 1. Commencing October 1, 1986, the maximum daily allowable from any well producing from the Morrow Reservoir and located in the area described herein above shall be based on the following formula:

Daily Allowable = 400 X Test BOPD Test GOR

RULE 2. Individual well tests shall be conducted between October 1 and October 15, 1986. Each well is to be individually tested with the amount of gas, oil and water accurately measured. The entire battery shall be produced under each operators existing plan of operation for a period of seventy-two (72) hours with the individual well tests taken during the last twenty-four (24) hours of such period. In the event of a workover or a test failure, approval for a second test may be allowed and is to be conducted in the same manner as above. The schedule of testing shall be submitted to the Commission office by October 1, 1986 with a copy to each operator in the field. Tests may be witnessed by the staff of the Commission and any operator in the field at his own risk.

RULE 3. Results of the tests shall be submitted to the office of the Oil and Gas Conservation Commission and to other operators in the field by October 20, 1986, and shall be the basis for establishing the allowables for the months of October, November and December. Under production may be made up only during the month following the month in which it occurred, and any over production, which shall not exceed ten (10) percent of the allowable, shall be made up in the month following such over production.

RULE 4. Allowables may be transferred between wells on a common lease; provided however, that no well which is a direct offset to that of another operator may produce more than one hundred fifty (150) percent of its allowable during any month.

RULE 5. Wells drilled as exceptions to the permitted well location as provided for in Order No. 426-1 shall be subject to the above restriction provisions or to the restriction provisions in Order No. 426-6, whichever results in the lesser allowable.

IT IS FURTHER ORDERED that unless a unit agreement and unit operating agreement have been entered by the time of the December 15, 1986 hearing date, the field shall be shut-in on December 31, 1986, pending a resolution of a plan for unit operations.

IT IS FURTHER ORDERED that the provisions contained in the above order shall become effective October 1, 1986.

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IT IS FURTHER ORDERED that the Commission expressly reserves its right after notice and hearing, to alter, amend or repeal any part of the above order.

ENTERED this 24th day of September, 1986, as of September 15, 1986.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

Corrected on October 14, 1986 3 " (426-9)