BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND   ESTABLISHMENT OF FIELD RULES TO GOVERN  OPERATIONS IN THE IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO	) ) ) )	CAUSE NO.   112 ORDER NO.   112-108

REPORT OF THE COMMISSION

                                  This cause came on for hearing before the Commission on March 15, 1993 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Amerada Hess Corporation for an order pooling all interests in the drilling and spacing unit consisting of the W1/2 of Section 9, Township 33 North, Range 8 West, South of the Ute Line, N.M.P.M.  for the development and operation of the Fruitland coal seams underlying said unit and the production of coalbed methane gas from said formations, pursuant to the provisions of C.R.S. 34-60-116, 1984 for the Ford-Olson Gas Unit "A" No. 2 Well located in the NW1/4 of said Section 9.

FINDINGS

                                  The Commission finds as follows:

                                  1.  That Amerada Hess Corporation, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

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

                                  3.  That 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.  That the W1/2 of Section 9, Township 33 North, Range 8 West, South of the Ute Line, N.M.P.M., has been established as a drilling and spacing unit for the Fruitland coal seams by the Commission by Order No. 112-60 issued June 15, 1988.

                                  5.  That efforts have been made to obtain the voluntary pooling of all interests.

                                  6.  That based on the facts stated in the verified application, receiving no protests, and having been heard by the Hearing Officer on March 12, 1993, and recommended for approval, the Commission should enter an order pooling all interests in the 320-acre drilling and spacing unit herein described for the Fassett No. 2 Well in order to insure proper and efficient development of the oil and gas from the Fruitland coal seams underlying said unit.

                                  7.  That an order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying said drilling unit.

                                  8.  That production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres with said drilling unit.

                                  9.  That Amerada Hess Corporation  should be designated as operator for the Ford-Olson Gas Unit "A" No. 2 Well which has been drilled and is being completed in the said drilling unit.

ORDER

                                  NOW, THEREFORE IT IS ORDERED, that, 1.  Pursuant to the provisions of C.R.S. 34-60-116, as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing unit consisting of the W1/2, Section 9, Township 33 North, Range 8 West, South of the Ute Line, N.M.P.M., La Plata County, Colorado, for the Ford-Olson Gas Unit "A" No. 2 Well are hereby pooled for the development of gas from the Fruitland coal seams underlying said unit.

                                  2.  The production obtained from said drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.

                                  3.  The owner of the unleased tract should be afforded the opportunity to elect whether to participate in the drilling and operation of said well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of acres in each unleased tract to the total number of acres within said drilling unit.

                                  4.  Within thirty (30) days from the date of receipt of said AFE by the owner of said tract, such owner shall indicate whether he consents to the cost of the drilling of the wells and agrees to participate in such costs.  Such election shall be made in writing either by executing the AFE or similar document.  In the event a written election to participate is not made by said owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non-consenting as to the wells  and be subject to the penalties as provided for by C.R.S. 34-60-116 (7).

                                  5.  Any non-consenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his or her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non-consenting owner's proportionate 87.5% share of production, the costs specified in C.R.S. 34-60-116 (7)(b), as amended. After recovery of such costs, the non-consenting mineral owner shall then own his proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with the well as if he had originally agreed to the drilling.

                                  6.  The operator of any well drilled on the above described unit shall furnish all non-consenting owners with a monthly statement of all costs incurred, together with the quantity  of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.

                                  7.  Amerada Hess Corporation is hereby designated as operator for the Ford-Olson Gas Unit "A" No. 2 Well which has been drilled and are being completed in the NW1/4 of Section 9, Township 33 North, Range 8 West, South of the Ute Line, N.M.P.M., La Plata County, Colorado.

                                  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 March, 1993, as of March 12, 1993.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By_________________________________

                                                                          Patricia C. Beaver,Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado 80203

March 25, 1993