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 CODELL-NIOBRARA SPACED AREA AND THE WATTENBERG GAS SPACED AREA, WELD COUNTY, COLORADO	) ) ) )	CAUSE NO.  232 ORDER NO. 232-155 and 407-209 AMENDED

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on March 18, 1996, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of North American Resources Company, for an order to amend Cause No. 407 to allow the Sprague #1 Well to be recompleted at an exception location 1,030 feet FNL and 1,650 feet FEL, in the NW¼ NE¼ of Section 9, Township 2 North, Range 67 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the W½ NE¼ of Section 9; and for an order to allow the Sprague #3-9 Well to be recompleted at an exception location 1,645 feet FSL and 990 feet FEL, in the NE¼ SE¼ of Section 9, Township 2 North, Range 67 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the N½ SE¼ of Section 9.  The applicant also requests to commingle production from the Codell and Niobrara Formations with production from the "J" Sand Formation for the 320-acre drilling and spacing unit consisting of the E½ of Section 9, and requests approval of the proposed allocation method.

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‑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 Order No. 407‑1, the Commission established 80‑acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation.  Wells shall be located in the center of the 40‑acre tract or quarter‑quarter section with a tolerance of 200 feet in any direction.  In Order Nos. 407‑10 and 407‑13, the Commission amended Order No. 407‑1 to include production from the Niobrara Formation in certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations, including Section 9, Township 2 North, Range 67 West, 6th P.M.

                        5.  In Cause No. 232, the Commission established 320-acre drilling and spacing units with said units to consist of the N½ and S½ or the E½ and W½ of a governmental section for production from the "J" Sand Formation and with the authorized well to be located in the NE¼ and the SW¼ 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, including Section 9, Township 2 North, Range 67 West, 6th P.M.

                        6.  Order Nos. 407-66 and 232-47 issued April 16, 1991, among other things, allowed the recompletion, downhole commingling and approval of allocation methods for production from the "J" Sand, Codell, and Niobrara Formations, including Section 9, Township 2 North, Range 67 West, 6th P.M.

                        7.  This matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing that exceptions to the permitted well locations is necessary to reduce surface impact and recover additional Codell and Niobrara reserves.

                        8.  An order of the Commission should be entered allowing the Sprague #1 Well to be recompleted at an exception location 1,030 feet FNL and 1,650 feet FEL, in the NW¼ NE¼ of Section 9, Township 2 North, Range 67 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the W½ NE¼ of Section 9; and for an order to allow the Sprague #3-9 Well to be recompleted at an exception location 1,646 feet FSL and 990 feet FEL, in the NE¼ SE¼ of Section 9, Township 2 North, Range 67 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the N½ SE¼ of Section 9.  Commingled production should be allowed from the Codell and Niobrara Formations with production from the "J" Sand Formation for the 320-acre drilling and spacing unit consisting of the E½ of Section 9, and the proposed allocation method should be approved.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that Order No. 407-1 is hereby amended to allow the Sprague #1 Well to be recompleted at an exception location 1,030 feet FNL and 1,650 feet FEL, in the NW¼ NE¼ of Section 9, Township 2 North, Range 67 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the W½ NE¼ of Section 9; and for an order to allow the Sprague #3-9 Well to be recompleted at an exception location 1,646 feet FSL and 990 feet FEL, in the NE¼ SE¼ of Section 9, Township 2 North, Range 67 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the N½ SE¼ of Section 9.  Commingled production from the Codell and Niobrara Formations with production from the "J" Sand Formation for the 320-acre drilling and spacing unit consisting of the E½ of Section 9, and approval of the allocation method.

                        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       29th           day of       March                , 1996, as of March 19, 1996.

                        CORRECTED this  day of , 1996, as of March 19, 1996.

                                                                        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

April 11, 1996