REPORT OF THE COMMISSION TO ALL INTERESTED PERSONS AND TO WHOM IT MAY CONCERN:

This cause come on for hearing before the Commission on June 15, 1987 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 Commission's own motion to consider the rescinding of Order No. 435-1.

FINDINGS

The Commission finds as follows:

1. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

2. The Commission has jurisdiction over the subject matter embraced in the, notice of the aforesaid hearing, and of the parties interested therein, as well as jurisdiction to promulgate the hereinafter.

3. On August 19, 1985, the Commission authorized Order No. 435-1 to be issued by which 160-acre drilling and spacing units were established for the production of oil, gas and associated hydrocarbons from the Desert Creek zone of the Paradox formation underlying the following described lands in Montezuma County, Colorado:

Township 36 North, Range 18 West, N.M.P.M. Section 6: N1/2

Township 36 North, Range 19 West, N.M.P.M. Section 1: N1/2 Section 2: N1/2

Township 37 North, Range 18 West, N.M.P.M. Section 30: All Section 31: All

Township 37 North, Range 19 West, N.M.P.M. Section 2: W1/2 Section 3: All (Fractional) Section 4: All (Fractional) Section 5: E1/2 (Fractional) Section 9: All (Fractional) Section 10: All (Fractional) Section 11: All (Fractional) Section 15: All Section 22: E1/2 Section 23: All Section 24: S1/2 (Fractional) Section 25: All (Fractional) Section 26: All Section 27: E1/2 Section 34: E1/2 Section 35: All (Fractional) Section 36: All (Fractional) Tract 39: being a portion of Section 3 Tract 40: being a portion of Section 3 Tract 49: being a portion of Section 3 Tract 50: being a portion of Section 3

Tract 51: being a portion of Sections 3, 4, 9 and 10 Tract 52: being a portion of Sections 2, 3, 10 and 11 Tract 57: that portion situated in resurveyed Section 9 Tract 62: that portion situated in resurveyed Section 24 Tract 65 : being a portion of Sections 35 and 36 Tract 66: being a portion of Section 36 Tract 67: being a portion of Sections 25 and 36 Tract 71: being a portion of Section 4 and Section 33 of Township 38 North, Range 19 West Tract 72: being a portion of Section 5 and Section 32 of Township 38 North, Range 19 West

Township 38 North, Range 19-West N.M.P.M. Section 32: E1/2 (Fractional) Section 33: All (Fractional) Section 34: All Section 35: W1/2 Tract 67: being a portion of Section 33 Tract 68: being a portion of Section 33 Tract 69: being a portion of Section 33 Tract 70: being a portion of Section 33

4. Although the provisions of said Order No. 435-1 are liberal as to permitted well locations, problems have continued to exist due to topography and archeological findings in the spaced area.

5. Celsius Energy Company as applicant for Order No. 435-1, has applied to the Bureau of Land Management for the formation of a federal exploratory unit covering lands subject to said spacing order.

6. In view of the above and also as a requirement of the Bureau of Land Management and in order to promote future development in the area Order No. 435-1 should be rescinded and the lands described in Finding 3 herein be made subject to the general Rules and Regulations of the Commission.

O R D E R

NOW THEREFORE IT IS ORDERED that Order no. 435-1 is hereby rescinded and the lands described in Finding 3 herein are henceforth subject to the general Rules and Regulations of the Commission.

IT IS FURTHER ORDERED that the above order shall become effective forthwith.

ENTERED this 6th day of July, 1987, as of June 15, 1987.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO By Frank J. Piro, Secretary