REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 16, 1985 at 9:00 A.M., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Sandlin Oil Corporation for an order to amend Order No. 291-1 and grant as exception to the permitted well location and allow a well to be drilled at a location in the approximate center of the SE/4SE/4 Section 22, Township 2 South, Range 63 West, 6th P.M. for the production of gas and associated hydrocarbons from the "J" Sand.

FINDINGS

The Commission finds as follows:

1. Sandlin Oil Corporation, 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 May 21, 1974, the Commission authorized Order No. 291-1 to be issued which established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the "J" Sand underlying certain lands in Adams County, Colorado. The units consist of the N/2 and S/2 or the E/2 and S/2 of each section with the permitted well located in the NW/4 and SE/4 of the section and no closer than 990 feet from the boundaries of the quarter section. By subsequent orders in Cause 291, certain lands were added to the spaced area of the Chieftain Field. The E/2 Section 22, Township 2 South, Range 63 West, 6th P.M., has been designated the drilling unit with the permitted well, No. 1 Flanders, located 990 feet from the east line and 1650 feet from the south line of said Section 22.

5. A well has been completed at a location in the SW/4/4SW/4/4 of Section 23, Township 2 South, Range 63 West, 6th P.M. for production of gas and associated hydrocarbons from a "J" Sand reservoir.

6. Geological and engineering testimony presented at the hearing indicate that said "J" Sand reservoir encountered by the well described in Finding 5 herein is a separate channel from the "J" Sand reservoir underlying the Chieftain Field and extends into the SE/4 of Section 22, Township 2 South, Range 63 West.

7. In order to protect correlative rights, the applicant should be allowed to drill a well as an exception to the provisions of Order No. 291-1 at a location in the approximate center of the SE/4SE/4 Section 22, Township 2 South, Range 63 West, 6th P.M. for production of gas and associated hydrocarbons from the "J" Sand; however, only one well in the unit consisting of the E/2 of said Section 22 should be allowed to be produced.

8. If commercial production is encountered at the location set forth above, the Commission should, at the- request of interested persons, take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the location of the well as an exception.

ORDER

NOW, THEREFORE, IT IS ORDERED, that an exception to Order No. 291-1 is hereby granted and a well shall be allowed to be drilled at a location in the approximate center of the SE/4SE/4 Section 22, Township 2 South, Range 63 West, 6th P.M., Chieftain Field, Adams County, Colorado; however, only one well shall be allowed to be produced in the unit consisting of the E/2 of said Section 22 for the production of gas and associated hydrocarbons from the "J" Sand.

IT IS FURTHER ORDERED, that if commercial production is encountered at the location set forth above, the Commission shall, at the request of interested persons, take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the location of the well as an exception.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

ENTERED this 14th day of January, 1986, as of December 16, 1985.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

(291-13)