REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 20, 1986 at 9:00 A.M., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, on Order No. 243-7 ordering National Petroleum, Inc. (National) to appear at a hearing before the Commission on October 20, 1986 concerning the Petition of Gene Lee alleging National with non-compliance with Order No. 243-5 and 243-6.

FINDINGS

The Commission finds as follows:

1. Gene Lee, as petitioner 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. National failed to appear to respond to the petition of Gene Lee alleging non-compliance with Order Nos. 243-5 and 243-6.

5. The Commission determined that National was in non-compliance with said Order in that it failed to furnish Gene Lee with monthly production reports and well cost summary. In addition, there was no evidence that National took steps to inform the purchaser, Koch Oil Company, that the percentage interest of Gene Lee should be 32.5 percent as stated in Order No. 243-5. Therefore a violation of said Orders did occur and a penalty of Seven Hundred Fifty (750.00) dollars should be assessed for failure to supply monthly reports and a penalty of Five Hundred (500.00) dollars should be assessed for failure to resolve the interest of Gene Lee with Koch Oil Co.

6. Since the well, No. 1 National located in the NW/4 SE /4 Section 12, Township 2 South, Range 59 West, 6th P.M. is now plugged and abandoned, Order No, 243-4 which established an approximate 40-acre drilling and spacing unit consisting of the NW/4 SE/4 of said section 12, and Order No. 243-5 which pooled all interests in said unit for operation and development of the unit for production of oil and associated hydrocarbons from the J' Sand, are no longer necessary and should be terminated.

ORDER

NOW, THEREFORE, IT IS ORDERED that National Petroleum, Inc., in accordance with 34-60-121 C.R.S. as amended, is hereby assessed a total fine of One Thousand Two Hundred Fifty (1250.00) dollars, which is to be remitted to the Oil and Gas Conservation Commission within

thirty (30) days upon receipt of this Order.

IT IS FURTHER ORDERED that Order No. 243-4 and Order No. 243-5 are hereby terminated and the lands consisting of the NW/4 SE/4 Section 12, Township 2 South, Range 59 West, 6th P.M. Adams County, Colorado shall henceforth be subject to the general Rules and Regulations of the Commission.

IT IS FURTHER ORDERED that the above orders shall become effective forthwith.

Entered this 5th day of November, 1986, as of October 20, 1986.

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

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(243-8)