REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 20, 1972, at 9 A.M., in Room 132, State Services Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of American Resources Management Corporation, which application was amended at the time of the hearing to delete from the area to be spaced, the W/2 Section 26 and the N/2 Section 36, Township 2 North, Range 97 West, 6th P.M., for an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Wasatch formation under-lying certain lands in Rio Blanco County, Colorado.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place, and purpose of the hearing has been given in all respects as required by law.

2. That 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.

3. That evidence presented at the hearing indicates that the Wasatch forma-tion constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Rio Blanco County, Colorado, to-wit:

Township 1 North, Range 97 West, 6th P.M. Section 1: All Section 3: All Section 2: All Township 2 North, Range 97 West, 6th P.M. Section 19: All Section 30: E/2 Section 20: All Section 32: All Section 21: All Section 33: All Section 22: W/2 Section 34: All Section 27: All Section 35: All Section 28: All Section 36: S/2 Section 29: All

4. That in order to prevent waste of gas, as defined by law; to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the gas resources of the State, an order should be made establishing 160-acre drilling and spac-ing units for the production of gas and associated hydrocarbons from the Wasatch forma-tion, common source of supply underlying the lands defined herein; and that said units should consist of a quarter section, or lots corresponding thereto, according to the governmental survey thereof, and the permitted well for each drilling unit be located not

(over) less than 600 feet from the boundary of each governmental quarter section, and no closer than 2000 feet from any other producing gas well in the spaced area, and that a well should be deemed a gas well if the gas-oil ratio is fifteen thousand (15,000) cubic feet of gas, or more, to one (1) barrel of oil.

5. That all available geological and engineering data concerning said Wasatch formation indicate that one well will efficiently and economically drain an area of approxi-mately 160 acres, and that drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well pro-ducing from said Wasatch formation.

6. That the wells already drilled should be considered the permitted wells for the drilling units upon which they are located and that the Well No. 1 Ivory, located in the SE/4, Section 34, Township 2 North, Range 97 West, 6th P.M., should be considered an exception and that it be the permitted well for the drilling unit upon which it is located.

ORDER

NOW, THEREFORE, IT IS ORDERED that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the Wasatch forma-tion underlying the White River Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. One Hundred Sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Wasatch formation underlying the following described lands in the White River Field, Rio Blanco County, Colorado, to-wit: Township 1 North, Range 97 West, 6th P.M. Section 1: All Section 3: All Section 2: All Township 2 North, Range 97 West, 6th P.M. Section 19: All Section 30: E/2 Section 20: All Section 32: All Section 21: All Section 33: All Section 22: W/2 Section 34: All Section 27: All Section 35: All Section 28: All Section 36: S/2 Section 29: All Rule 2. Said drilling units shall consist of One Hundred Sixty (160) acres, and each such drilling unit shall be a quarter section, or lots corresponding thereto, according to the governmental survey thereof; and the permitted well for each drilling unit shall be located not less than 600 feet from the boundary of the quarter section upon which it is located, and no closer than 2000 feet from any other producing gas well in the spaced area, and that a well shall be deemed a gas well if the gas-oil ratio is fifteen thousand (15,000) cubic feet of gas, or more, to one (1) barrel of oil.

IT IS FURTHER ORDERED that the wells already drilled in the spaced area as described herein shall be the permitted wells for the drilling units upon which they are located and that the Well No. 1 Ivory, located in the SE/4 Section 34, Township 2 North, Range 97 West, 6th P.M., shall be considered an exception and be the permitted well for the drilling unit upon which it is located. - 2 - (#256-1)

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 order, rules and regulations.

ORDERED this 20th day of June 1972.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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