REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on January 8, 2001, in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of hearing as required by law, on the application of Petroleum Development Corporation to segregate the 320-acre drilling and spacing unit consisting of the S1/2 of Section 9, Township 5 North, Range 67 West, 6th P.M. into two 160-acre drilling and spacing units for productio n of gas and associated hydrocarbons from the "J" Sand Formation.

FINDINGS

The Commission finds as follows:

1. Petroleum Development Corporation ("PDC"), 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 for the production of gas and associated hydrocarbons from the "J" Sand in the Wattenberg Field with one well allowed for each unit to be located in the NE1/4 and the SW1/4 and no closer than 990 feet to the boundaries of the quarter section. On October 19, 1981, the Commission issued Order No. 232-23 which allowed a second well to be drilled on each 320-acre unit. Sect ion 9, Township 5 North, Range 67 West, 6th P.M. is included in the area established in Cause No. 232.

5. On November 22, 2000, PDC, by its attorney, filed with the Commission a verified application to segregate the 320-acre drilling and spacing unit consisting of the S1/2 of Section 9, Township 5 North, Range 67 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the SW1/4 and SE1/4 of said Section 9, for production of gas and associated hydrocarbons from the "J" Sand Formation. PDC proposes to drill a well in the SE1/4 of said Sec tion 9 for production of gas and associated hydrocarbons from the "J" Sand Formation.

6. Testimony and exhibits presented at the administrative hearing showed that no wells have been drilled and no spacing units have been declared in Section 9.

7. Testimony and exhibits presented at the administrative hearing showed that PDC controls all of the oil and gas mineral leases under the SE1/4 of Section 9 where the "J" Sand Formation well is proposed to be drilled and that the ownership of the mineral leases in the SW1/4 are uncertain due to lease ownership by companies no longer in business.

8. Testimony presented at the administrative hearing indicated that PDC desires to segregate the S1/2 of Section 9 into two 160-acre drilling and spacing units consisting of the SW1/4 and the SE1/4 of said section to allow a well to be drilled without the lease uncertainties that exist in the SW1/4.

9. At the time of the administrative hearing, PDC agreed to be bound by oral order of the Commission.

10. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order to segregate the 320-acre drilling and spacing unit consisting of the S1/2 of Section 9, Township 5 North, Range 67 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the SW1/4 and SE1/4 of said Section 9, for production of gas and associate d hydrocarbons from the "J" Sand Formation.

ORDER

NOW, THEREFORE IT IS ORDERED that the 320-acre drilling and spacing unit consisting of the S1/2 of Section 9, Township 5 North, Range 67 West, 6th P.M. is hereby segregated into two 160-acre drilling and spacing units consisting of the SW1/4 and SE1/4 of said Section 9, for production of gas and associated hydrocarbons from the "J" Sand Formation.

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 January 2001, as of January 8, 2001.

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 January 11, 2001 ??

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