REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 16, 1989 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Union Pacific Resources Company for an order amending Order No. 254-1 allowing for an exception location in the NE/4 of Section 33, Township 2 South, Range 62 West, 6th P.M., Adams County, Colorado for a well to be drilled into the "J" Sand Formation subject to the rules contained within Cause No. 254.

FINDINGS

The Commission finds as follows:

1. Union Pacific 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. On April 18, 1972, the Commission issued Order No. 254-1 which established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the "J" Sand underlying lands in the Longbranch Field, Adams County, Colorado. The units consist of the E/2 and W/2 or the N/2 and S/2 of each section, according to the governmental survey, with the permitted well for each unit located in the NW/4 and SE/4 of each section and no closer than 990 feet to the boundaries of each quarter section.

5. On April 29, 1973, the 1-33 UPRR - Kersick well was drilled in the NW/4 of Section 33, Township 2 South, Range 62 West, 6th P.M., and plugged at drilling as a dry hole. On October 10, 1972, the 1-33 Brummel well was drilled in the SE/4 of the same Section 33 and plugged at drilling as a dry hole.

6. Based on the facts stated in the verified application and exhibits submitted, having received no objections, and having waivers

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submitted, and having been reviewed and recommended by the Director as Hearing Officer, the Commission should grant the request and allow an exception location in the NE/4, Section 33, Township 2 South, Range 62 West, 6th P.M., Adams County, Colorado for a well to be drilled into the "J" Sand Formation subject to the rules contained within Cause No. 254, and that there should be no production restriction placed on a well completed at this location as previously ordered in Cause No. 254.

7. If a commercial well is completed at the location set forth above, the Commission should, upon application of any interested person, take such action as will offset any advantages which the person securing the exception, may have over other producers by reason of drilling the well as an exception, including suitable provisions to prevent the production from the well drilled as an exception of more than its just and equitable share of the oil and gas in the pool.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Order No. 254-1 is amended to allow an exception location in the NE/4 of Section 33, Township 2 South, Range 62 West, 6th P.M., Adams County, Colorado for a well to be drilled into the "J" Sand Formation subject to the rules contained within Cause No. 254 and that there shall be no production restrictions placed on a well completed at this location as previously ordered in Cause No. 254.

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IT IS FURTHER ORDERED, that if a commercial well is completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantages which the person securing the exception, may have over other producers by reason of drilling the well as an exception, including suitable provisions to prevent the production from the well drilled as an exception of more than its just and equitable share of the oil and gas of the pool.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith as all parties agreed to be bound by the oral order of the Commission.

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 ,

1989, as of June 16, 1989.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary - 3 -(254-15)