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 WATTENBERG GAS SPACED AREA, ADAMS COUNTY, COLORADO	) ) ) )	CAUSE NO.   232 ORDER NO.   232-106

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on February 22, 1994 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 application of North American Resources Company for an order to establish 320-acre drilling and spacing units, to amend Cause No. 232 to segregate one 320-acre drilling and spacing unit into two 160-acre drilling and spacing units, and to allow a well to be recompleted at an exception location for production from the "J" Sand Formation for a 160-acre drilling and spacing unit.

FINDINGS

                        The Commission finds as follows:

                        1.  North American Resources Company, as applicant herein, is an interested party in the subject matter of the above-entitled 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 with said units to consist of the N1/2 and S1/2 or the E1/2 and W1/2 of a governmental section for production from the "J" Sand Formation and with the authorized well to be located in the NE1/4 and the SW1/4 of each section no closer than 990 feet from the boundaries of the quarter section.  By Order No. 232-20, the Commission authorized the drilling of a second well for each 320-acre drilling and spacing unit with the additional well to be located no closer than 990 feet from the boundaries of the quarter section upon which it is located.

                        5.  That North American Resources Company wishes to recomplete the Nies No. 44-6 Well, previously completed in the "D" Sand Formation, into the "J" Sand Formation at an exception location, and commingle production from both the "D" Sand and the "J" Sand Formations, in order to obtain an economic well.

                        6.  That because North American Resources Company did not include the request to approve the downhole commingling of production from the "D" Sand Formation with production from the "J" Sand Formation, notice of intent to commingle was sent on February 24, 1994 to each producer within one-half (1/2) mile of the Nies No. 44-6 Well, pursuant to Rule 320.  No written objections were filed with the Commission within fifteen (15) days of the notice and the order should include the approval of the commingling request.

                        7.  Based on the facts stated in the verified application, receiving no protests, and having been heard by the Hearing Officers on February 18, 1994 and recommended for approval, the Commission should enter an order establishing the N1/2 and the S1/2 of Section 6, Township 2 South, Range 64 West, 6th P.M., as 320-acre drilling and spacing units, amending Cause No. 232 to segregate the 320-acre drilling and spacing unit consisting of the S1/2 of Section 6, Township 2 South, Range 64 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the SW1/4 and the SE1/4 of said Section 6, and allowing the Nies No. 44-6 Well located 600 feet FEL and 600 feet FSL in the SE1/4 SE1/4 of said Section 6 to be recompleted at an exception location for production from the "J" Sand Formation for the 160-acre drilling and spacing unit consisting of the SE1/4 of Section 6.  Further, the Commission should approve the downhole commingling of production from the "D" Sand Formation with production from the "J" Sand Formation, if no protests are received by March 11, 1994, on the notice of intent to commingle.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that the N1/2 and the S1/2 of Section 6, Township 2 South, Range 64 West, 6th P.M. are hereby established as 320-acre drilling and spacing units and that Cause No. 232 is hereby amended to segregate the 320-acre drilling and spacing unit consisting of the S1/2 of Section 6, Township 2 South, Range 64 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the SW1/4 and the SE1/4 of said Section 6.

                        IT IS FURTHER ORDERED, that the Nies No. 44-6 Well located 600 feet FEL and 600 feet FSL in the SE1/4 SE1/4 of said Section 6 is hereby approved to be recompleted at an exception location for production from the "J" Sand Formation for the 160-acre drilling and spacing unit consisting of the SE1/4 of Section 6, and that the downhole commingling of production from the "D" Sand Formation with production from the "J" Sand Formation is approved.

                        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 it right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        ENTERED this  day of  , 1994, as of February 22, 1994.

                                                                        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

February 25, 1994