IN THE MATTER OF THE PROMULGATION AND              CAUSE NO. 232
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE WATTENBERG GAS SPACED         ORDER NO. 232-224
AREA, WELD COUNTY, COLORADO 

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on March 31 and April 29, 1998, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Bataa Oil, Inc., for an order to allow seven (7) wells to be drilled as third wells for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing units described.

FINDINGS

The Commission finds as follows:

1. Bataa 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. 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.

5. On March 18, 1998, the Applicant filed with the Commission a written request to withdraw from its application the well to be located in the NE¼ NE¼ of Section 24, Township 2 North, Range 68 West, 6th P.M. pending resolution of surface location issues. On March 30, 1998, the Applicant amended the application to add the well back into the application and to change the location of the well to the NW¼ NE¼ of Section 24, Township 2 North, Range 68 West, 6th P.M., with a tolerance of 200 feet in any direction.

6. On March 23, 1998, Otto David J. Brooks and Brooks Farms filed a protest to the well to be located in the SW¼ NW¼ of Section 6, Township 2 North, Range 67 West, 6th P.M. On March 30, 1998, the Applicant requested to continue the hearing for this well pending further negotiations with the protestant.

7. In Order No. 232-115, issued March 31, 1998, the Commission allowed five (5) of seven (7) wells to be drilled as third wells for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing units described.

8. On April 16, 1998, the protest to the well proposed in the SW¼ NW¼ of Section 6, Township 2 North, Range 67 West, 6th P.M. was withdrawn.

9. The Applicant proposes to drill the below-listed wells in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction as third "J" Sand Formation wells for the 320-acre units as described.

Well Name Proposed Location 320-acre Drilling/Spacing Unit
Coors Fee 12-6 SW¼ NW¼ Sec 6-2N-67W W½
Fox 31-24 NW¼ NE¼ Sec 24-2N-68 W N½

10. Evidence submitted by the Applicant and reviewed by the Hearing Officer shows that the original gas in place in the "J" Sand Formation is 3.0 BCF in Section 6 and 2.8 BCF in Section 24. The estimated ultimate recovery from the NW¼ of Section 6 will be 0.3 BCF, which equates to a 14% recovery factor. The estimated ultimate recovery from the SE¼ of Section 24 will be 0.2 BCF, which equates to a 8% recovery factor.

11. Bottomhole pressure tests will not be obtained for either well.

12. That in order to prevent waste and protect the correlative rights, additional wells are necessary to recover remaining "J" Sand Formation reserves.

13. The Applicant agreed to be bound by oral order of the Commission.

14. Based on the facts stated in the application, having and having been reviewed by the Hearing Officer who recommends approval of the application, an order of the Commission should be entered amending Cause No. 232, allowing the drilling of a third "J" Sand Formation well for each of the 320-acre drilling and spacing units described in Finding #9 to be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Cause No. 232 is hereby amended to allow the drilling of a third "J" Sand Formation well for each of the 320-acre drilling and spacing units in the below-listed lands to be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction.

Well Name Proposed Location 320-acre Drilling/Spacing Unit
Coors Fee 12-6 SW¼ NW¼ Sec 6-2N-67W W½
Fox 31-24 NW¼ NE¼ Sec 24-2N-68 W N½

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 21st day of May, 1998, as of April 29, 1998.

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 May 21, 1998

(232-224)