BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER TO GOVERN OPERATIONS IN THE                 )                    CAUSE NO. 1

McCLAVE FIELD, KIOWA COUNTY, COLORADO                       )                    ORDER NO. 1-70

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on May 20, 1997, at 9:00 a.m., at the Morgan County Administration Building, 231 Ensign Street, Fort Morgan, Colorado, after giving Notice of Hearing, as required by law on the application of Harold Woellner Hough to determine and award proceeds, interest and attorney's fees due production attributable to the royalty and working interest due from Frederick I Shaffer, Jr., for the Pyles No. 1 Well located in the SE¼ of Section 6, Township 20 South, Range 48 West, 6th P.M, from the date of first production.

FINDINGS

                        The Commission finds as follows:

                        1.  Harold Woellner Hough, 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 July, 1, 1990, through §34‑60‑118.5, C.R.S., the Colorado Oil & Gas Conservation Commission was given exclusive jurisdiction to determine several matters concerning the payment of proceeds derived from the sale of oil, gas or associated products from a well in Colorado including the following:

                        (a)  The date on which payment of proceeds is due a payee under section (2) of the section;

                        (b)  The existence or nonexistence of an occurrence pursuant to subsection (3) of this section which would justifiably cause a delay in payment; and

                        (c)  The amount of the proceeds plus interest, if any due a payee or payor.

                        5. On January 8, 1997, Harold Woellner Hough, filed with the Commission an application for an order to be issued to determine and award proceeds, interest and attorney's fees due the Applicant for production attributable to the royalty and working interest due from Frederick I Shaffer, Jr., for the Pyles No. 1 Well located in the SE¼ of Section 6, Township 20 South, Range 48 West, 6th P.M, from the date of first production.

                        6.  At the time of the hearing, testimony and exhibits were presented by Mrs. Hough describing the Hough’s mineral ownership in the above-described lands and the history of their involvement in this matter dating back to 1973.

                        7.  After discussion by the Commission that the mineral interest owned by the Hough’s has never been leased, the Commission determined that based on the fact situation, a payment of proceeds action was not the appropriate remedy.  The Commission agreed that the most appropriate relief was for the Hough’s to seek an involuntary pooling order.   Further discussion ensued as to a valid date for which payment under an involuntary pooling order could be ordered, with a general consensus from the Commission that retroactively to the date the Hough’s notified Frederick I. Shaffer, Jr. of their intent to file an application for hearing in the payment of proceeds matter was acceptable.

                        8.  Based on the testimony presented by the Hough’s, deliberations by the Commission, and the determination that a payment of proceeds application was not the appropriate remedy in this matter, the application should be dismissed without prejudice.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that the application of Harold Woellner Hough to determine and award proceeds, interest and attorney's fees due production attributable to the royalty and working interest due from Frederick I Shaffer, Jr., for the Pyles No. 1 Well located in the SE¼ of Section 6, Township 20 South, Range 48 West, 6th P.M, from the date of first production, is hereby dismissed without prejudice.

                        IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective on the date the order is entered.

                        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 June, 1997, as of May 20, 1997.

                                                                        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

June 13, 1997