BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                             OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                      )        CAUSE NOS. 232 and 1

ESTABLISHMENT OF FIELD RULES TO GOVERN                   )

OPERATIONS IN THE WATTENBERG GAS SPACED              )        ORDER NOS. 232-145 and 1-55 

AREA AND THE WATTENBERG FIELD, WELD COUNTY,      )         (Formerly 1-194)

COLORADO                                                                                        )

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission at 8:30 a.m. on February 21, 1995, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado on the application of Gerrity Oil and Gas Corporation, for an order to allow the Gerkin Y No. 13-4J Well to be drilled at an exception location for production from the "J" Sand Formation and to authorize the downhole commingling of production from the "J" Sand Formation with production from the "D" Sand Formation.

FINDINGS

                        The Commission finds as follows:

                        1.  Gerrity 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.  In Cause No. 232, the Commission established 320‑acre drilling and spacing units for the production of gas from the "J" Sand Formation in the Wattenberg Field with one well allowed for each unit to be located in the NE¼ and SW¼ and no closer than 990 feet to the boundaries of the quarter section.  On August 21, 1979, the Commission issued Order No. 232‑20 which allowed a second well to be drilled on each 320‑acre unit, including Section 13, Township 2 North, Range 64 West, 6th P.M.

                        5.  Rule 316. of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission requires that wells drilled to a depth of 2500 feet or deeper be located no closer than 600 feet from any lease line, and not less than 1,200 feet from any other producible or drilling oil or gas well drilling to the same common source of supply, unless authorized by an order of the Commission or unless waivers are obtained from those parties who will be affected by the exception location.  The "D" Sand Formation falls under the provisions of Rule 316.

                        6.  Rule 320 of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission requires that an application be submitted for approval for multiple zone completion or commingling in one well bore.

                        7.  This matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing that an exception to the permitted well location is necessary to avoid multiple wellhead facilities by allowing one wellbore to be drilled to recover additional reserves from multiple zones.

                        8.  An order of the Commission should be entered allowing the Gerkin Y No. 13-4J Well to be drilled at an exception location 1950 feet FSL and 600 feet FEL in the NE¼ SE¼ of Section 13, Township 2 North, Range 64 West, 6th P.M., for production from the "J" Sand Formation, for the 320-acre drilling and spacing unit consisting of the S½ of Section 13, and to allow the downhole commingling of production from the "J" Sand Formation with production from the "D" Sand Formation.

                        8.  Based on the facts stated in the application, having received no protests, and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order approving the application.

ORDER

                        NOW, THEREFORE, IT IS ORDERED that Order No. 232-1 is hereby amended to allow the Gerkin Y No. 13-4J Well to be drilled at an exception location 1950 feet FSL and 600 feet FEL in the NE¼ SE¼ of Section 13, Township 2 North, Range 64 West, 6th P.M., for production from the "J" Sand Formation, for the 320-acre drilling and spacing unit consisting of the S½ of Section 13, and to allow the downhole commingling of production from the "J" Sand Formation with production from the "D" Sand Formation.

                        IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

                        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 , 1995, as of February 21, 1995.

                                                                        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

March 15, 1995