IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CAMPANA FIELD, ADAMS COUNTY, COLORADO Cause No. 243 Order No. 243-6

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 21, 1986 at 9:00 A.M., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the Petition for Compliance filed by Gene Lee, alleging National Petroleum, Inc. with non-compliance with Order No. 243-5 and requested remedial action by the Oil and Gas Conservation Commission as stated in the petition.

FINDINGS

The Commission finds as follows:

1. Gene Lee, as petitioner herein, is an interested part 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 19, 1984, the Commission authorized Order No. 243-5 to be issued which pooled all interests in the drilling and spacing unit consisting of the NW/4 SE/4 Section 12, Township 2 South, Range 59 West, 6th P.M. for the operation and development of oil and associated hydrocarbons from the "J" Sand underlying said unit.

Paragraph 4 of the order provides that in accordance with Section 34-60-116 (8) C.R.S., as amended, the non-consenting owner be furnished with a monthly statement of costs incurred from the date of drilling the well on the unit, amount of production, proceeds of sales and to continue such statements, as well as the status of the non-consenting owners account. National Petroleum, Inc. is the designated operator of the well. In addition, it is stated in the order that the non-consenting mineral interest ownership is considered to be 32.5% unless otherwise changed by agreement of the parties or by a court of competent jurisdiction.

5. Testimony at the hearing indicated that National Petroleum, Inc. has not complied with said Order NO. 243-5 by not submitting a monthly statement as required by paragraph 4 of the order In addition, royalty distribution to the Petitioner, non-consenting owner, has been on the basis of 30% instead of 32.5% as stated in the order.

6. National should comply with Order No. 243-5 and supply Gene Lee, as well as the Commission, with monthly statements as required by paragraph 4 of Order No. 243-5. In addition, National should take necessary action to inform the purchaser that the interest of Gene Lee is based on 32.5% as stated in said order.

7. No penalty should be assessed National Petroleum at this time for non-compliance with an order of the Oil and Gas Conservation Commission.

ORDER

NOW, THEREFORE, IT IS ORDERED, that National Petroleum Inc., is hereby ordered to comply with Order No. 243-5 and supply Gene Lee, as non-consenting mineral owner in the drilling and spacing unit consisting of the NW/4 SE/4 Section 12, Township 2 South, Range 59 West, 6th P.M., with monthly statements as required by paragraph 4 of Order No. 243-5. Such statements shall also be filed with the Oil and Gas Conservation Commission.

IT IS FURTHER ORDERED, that National Petroleum, Inc., shall take steps necessary to inform the purchaser that the percentage mineral interest of Gene Lee shall be 32.5 as stated in Order No. 243-5.

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 10th day of March, 1986, as of February 21, 1986.

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THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO By Frank J. Piro, Secretary

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