REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 19, 1975 at 9 A.M., in Room 532, State Services Building, Denver, Colorado, after giving Notice of Hearing as required by law on the application of Ray H. Shivers for an order affecting lands consisting of the N/2 Section 29, Township 2 North, Range 66 West, 6th P.M., for the protection of applicant, correlative rights by decreasing the size of the 320-acre drilling unit for production of gas from the "J" Sand due to the presence of a fault on said lands, and pool all interests and provide for allocation of production to the various interest, in the new unit of decreased size; and further to enlarge the size of the 80-acre drilling and spacing unit for the production of oil from the Sussex formation, and permit two (2) wells to be on the enlarged unit and pool all interests and provide for allocation of production to the various interests in the new unit of increased size. As an alternative, the applicant requests compensatory royalty or the drilling of an additional well.

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 on November 17, 1970 the Commission issued its Order No. 232-1, which established 320-acre drilling and spacing units for the production of gas from the "J" Sand, underlying an area known as the Wattenberg Gas Spaced Area. Subsequent order extended the limits of the spaced area. On January 16, 1973, the Commission issued its Order No. 262-1, which established 80-acre drilling and spacing units for the production of oil from the Sussex formation, each unit to be the E/2 and W/2 or the N/2 and S/2 of each quarter section, with a tolerance of 200 feet in any direction. Exceptions may be granted provided owners of the contiguous and cornering units toward whom the proposed location would be moved, file a waiver or consent in writing agreeing to said exceptions.

4. That geological evidence presented at the hearing indicates that faulting occurs in the Sussex formation underlying the N/2 of Section 29, Township 2 North, Range 66 West, 6th P.M.; however, the areal extend of such faulting is uncertain. The evidence further indicates that such faulting does not extend in depth to the "J" Sand underlying said lands. Therefore, the size and shape of the drilling and spacing units, as established by the orders in Cause Nos. 232 and 262, should remain the same.

5. That the Well No. 1-A Appel located 2244 feet from the west line and 2050 feet from the north line of Section 29, Township 2 North, Range 66 West, should be considered an exception to the spacing pattern as established by Order No. 262-1, and in order to offset any advantage said well may have by reason of drilling the well as an excep-tion, and to prevent the production from the well of more than its just and equitable share, a restriction should be placed on the production from said well.

(over)

6. That evidence presented at the hearing indicates that production from said well should be restricted to 90% of the amount of oil the well is capable of producing as determined by production tests taken monthly.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the size and shape of the drilling and spacing units, as established by the orders in Cause No. 232 for the production of gas from the "J" Sand, and Order No. 262 for the production of oil from the Sussex formation, underlying the N/2 of Section 29, Township 2 North, Range 66 West, shall remain the same.

IT IS FURTHER ORDERED, that Well No. 1-A Appel, located 2244 feet from the west line and 2050 feet from the north line Section 29, Township 2 North, Range 66 West, 6th P.M., shall be considered an exception to the spacing pattern established by Order No. 262-1 and shall be restricted in oil production to 90% of the amount the well is capable of producing, and the maximum daily allowable, on a monthly basis, shall be determined from production tests as follows: Rule 1. Capacity production tests shall be taken during any 24-hour period between the fifteenth (15th) and twentieth (20th) of each month, the results of which shall be reported to the Commission on or before the 25th day of the month. Such tests shall be taken in accordance with good engineering principles and practices and shall be the basis for calculating the allowable for that particular month. The Commission shall be notified five (5) days prior to the testing of the well in order that it will have an opportunity to witness such tests.

Rule 2. Overproduction and underproduction shall be adjusted on a monthly basis. Overproduction obtained during any month shall be made up during the month imme-diately following. Underproduction may be made up only during the month immediately following.

IT IS FURTHER ORDERED, that these orders shall become effective Septem-ber 1, 1975.

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, rules and regulations.

ORDERED this 4th day of September, 1975.

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

-- 2 --(#262 & #232)