BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND     AND ESTABLISHMENT OF FIELD RULES TO           GOVERN OPERATIONS IN THE IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO	) ) ) )	CAUSE NO.   112 ORDER NO.   112-111

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on June 18, 1993 at 8:30 a.m. in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing, as required by law, on the verified application of Meridian Oil Inc., for an order to allow a well to be horizontally drilled at an exception location, with the surface location 1950 feet FNL and 2450 feet FEL in Section 20, Township 32 North, Range 6 West, N.M.P.M. for the drilling and spacing unit consisting of the E1/2 of said Section 20 and the W1/2 W1/2 of Section 21, Township 32 North, Range 6 West, N.M.P.M. for production from the Mesaverde Formation.

FINDINGS

                        The Commission finds as follows:

                        1.  Meridian Oil 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 November 9, 1959, the Commission issued Order No. 112-6 which, among other things, established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation underlying certain lands in the Ignacio-Blanco Field including Sections 20 and 21, Township 32 North, Range 6 West, N.M.P.M. with the units to consist of a governmental half section, except for normal variations in legal subdivisions of the United States Land Surveys, including fractional sections in Township 32 North, Ranges 6 through 11 West, N.M.P.M., and with the permitted well to be located no closer that 990 feet from the boundaries of the quarter section.

                        5.  On July 16, 1979, the Commission issued Order No. 112-46 which allowed an additional well to be drilled on each 320-acre drilling and spacing unit and on each fractional section, with the additional well to be located no closer than 990 feet to the boundaries of the unit and no closer than 990 feet from another well producing from the same formation.

                        6.  The E1/2 of said Section 20 and the W1/2 W1/2 of said Section 21 are established as a prescribed drilling unit in Cause No. 112 and further are located entirely within the boundaries of the Allison Unit Agreement, as are the lands adjacent to the drilling and spacing units on the east, south and west.

                        7.  Meridian Oil Inc. proposes to drill a horizontal well at a surface location 1950 feet FNL and 2450 feet FEL in said Section 20 and complete the horizontal portion of the well in the Mesaverde Formation at an exception location within a rectangle, at a distance of 150 feet from the western, southern and eastern boundaries and 990 feet from the northern boundary of the drilling and spacing unit.

                        8.  Based on the facts stated in the verified application and having been heard by the Hearing Officer on June 16, 1993, and recommended for approval, the Commission should approve the application.

ORDER

                        NOW, THEREFORE, IT IS ORDERED that Cause No. 112 is hereby amended and an exception location is approved for a well to be drilled horizontally for production from the Mesaverde Formation at a surface location 1950 feet FNL and 2450 feet FEL in Section 20, Township 32 North, Range 6 West, N.M.P.M. with the horizontal portion of the well to be located within a rectangle at a distance no closer than 150 feet from the western, southern, and eastern boundaries of the drilling and spacing unit and no closer than 990 feet from the northern boundary of the drilling and spacing unit which  consists of the E1/2 of said Section 20 and the W1/2 W1/2 of said Section 21.

                        IT IS FURTHER ORDERED that the New Mexico Oil Conservation Division of the New Mexico Energy & Mineral Department be furnished a complete set of documentation associated with this order.

                        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 ________________, 1993, as of June 18, 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

June 23, 1993