REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 15, 1985 at 9:00 A.M., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Advance Energy, Inc. for an order granting an exception to Rule 318 of the rules and regulations of the Commission for a well, the No. 21-1 Carlson, drilled at a surface location 660 feet from the north line and 1980 feet from the east line and a bottom location 280 feet from the north line and 240 feet from the west line Section 21, Township 2 North, Range 69 West, 6th P.M., Codell-Niobrara Spaced Area, Boulder County, Colorado.

FINDINGS

The Commission finds as follows:

1. Advance Energy, 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 December 19, 1983, the Commission authorized Order No. 40-1 to be issued which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell formation underlying certain lands in Adams, Boulder, Jefferson, Larimer and Weld Counties, Colorado. The units consist of the E/2 and W/2 or the N/2 and S/2 of each quarter section with the permitted well located in the center of a 40-acre tract with a tolerance of 200 feet. An additional well is allowed on the undrilled 40-acre tract at the option of the operator. The Niobrara formation was not included in the lands in Boulder County and location for production from the Niobrara is in accordance with Rule 318.

5. Evidence presented at the hearing indicates that all possible precautions were taken to control the amount of deviation of the hole during the drilling; however, the well bottomed at a location 280 feet from the north line and 280 feet from the west line of Section 21, Township 2 North, Range 69 West, 6th P.M., which is not in conformance with the permitted well location as provided for in the orders in Cause No. 407.

6. Said Well No. 21-1 Carlson should be considered an exception and allowed to produce from the Codell-Niobrara formations; however, in order to offset any advantage the well may have over offset producers, production from the well should be restricted to seventy five percent (75%) of the amount the well is capable of producing.

7. The manner in which the restriction is to be implemented should be upon approval of the Director.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Well No. 21-1 Carlson, located at a surface location 660 feet from the north line and 1980 feet from the east line and a bottom location 280 feet from the north line and 240 feet from the west line of Section 21, Township 2 North, Range 69 West, 6th P.M. shall be considered an exception to the permitted well location as provided for in the orders in Cause No. 4{37 for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara formations.

IT IS FURTHER ORDERED, that the well shall be restricted to seventy five percent (75%) of the amount the well is capable of producing. The manner in which the restriction is to be implemented shall be upon approval of the Director

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 day of 1985, as of July 15, 1985.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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