IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WAGON TRAIL FIELD, BENT COUNTY, COLORADO Cause No. 271 Order No. 271-6

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 21, 1997, at 8:30 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of Ellora Energy, LLC. for an order to allow the drilling of an additional well to be produced from the Morrow Formation for the 640-acre drilling and spacing unit consisting of Section 8, said well to be located in the center of the NE1/4 of Section 8; and an additional well to be produced from the Morrow Formation for the 640-acre drilling and spacing unit consisting of Section 9, said well to be located in the center of the SW1/4 of Section 9, both in Township 23 South, Range 48 West, 6th P.M.

FINDINGS

The Commission finds as follows:

1. Ellora Energy, LLC. as applicants herein, are interested parties 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 August 21, 1973, the Commission authorized Order No. 271-1 to be issued, establishing 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Morrow Formation underlying certain lands in Bent County, Colorado, including Section 8 and 9, Township 23 South, Range 48 West, 6th P.M. Said drilling and spacing units consist of the section according to the governmental survey thereof, and the permitted well for each drilling unit shall be located no closer than 1,320 feet to the boundaries of the section upon which it is located.

5. Testimony presented at the administrative hearing indicated that one well would not efficiently and economically drain an area of approximately 640-acres, and that in order to prevent the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be entered allowing an additional well to be drilled on each of the requested 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Morrow Formation for the above-described lands.

6. That at the time of the administrative hearing, Ellora Energy, LLC. agreed to be bound by oral order of the Commission.

7. Based on the facts stated in the verified Application, having received no protests, and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order allowing an additional well to be drilled on two (2) 640-acre drilling and spacing units, with said well to be located in the center of the NE1/4 of Section 8; and in the center of the SW1/4 of Section 9, both in Township 23 South, Range 48 West, 6th P.M for prod uction of gas and associated hydrocarbons in the Morrow Formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 271-1 shall be amended to allow an additional well to be drilled on two (2) 640-acre drilling and spacing units, with said well to be located in the center of the NE1/4 of Section 8; and in the center of the SW1/4 of Section 9, both in Township 23 South, Range 48 West, 6th P.M for production of gas and associated hydrocarbons in the Morrow Formation.

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 7th day of May, 1997, as of April 21, 1997.

AMENDED this day of December, 1998.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated in Suite 801 1120 Lincoln Street Denver, Colorado 80203 December 11, 1998 ??