REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 20, 1991 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 application of North American Resources Company for an order granting an exception to the permitted well location as provided for in Order No. 291-1, for production from the "J" Sand formation underlying these lands.

FINDINGS

The Commission finds as follows:

1. North American 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 May 21, 1974 the Commission issued Order No. 291-1, which among other things, established 320-acre drilling and spacing units for certain lands in the Chieftain Field, for production of gas and associated hydrocarbons from the "J" Sand formation, with wells to be located in the NW/4 and the SE/4 of each section and no closer than 990 feet from the boundaries of the quarter section. Order Nos. 291-3 and 291-9 were subsequently issued which added lands to the Chieftain Field. The NE/4 of Section 8, Township 2 South, Range 63 West, 6th P.M., Adams County, Colorado lies within the area spaced by these orders.

5. The matter was heard by the Hearing Officer who recommends approval based upon the geologic and surface obstruction testimony presented at an administrative hearing.

6. No objections to the application were received and an order of the Commission should be entered allowing a well to be drilled at the above-described exception location.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that an exception to the permitted well location as provided for in Order No. 291-1 for the Chieftain Field is hereby granted for a well to be drilled 2280 feet FNL and 1400 feet FEL in the SW/4 NE/4 of Section 8, Township 2 South, Range 63 West, 6th P.M., Adams County, Colorado, for production from the "J" Sand formation for the unit consisting of the E/2 of said Section 8.

IT IS FURTHER ORDERED, that if a commercial well shall be 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 in the pool.

IT IS FURTHER ORDERED, that the provision 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 day of , 1991, as of August 20, 1991.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 August 23, 1991 1393I