REPORT OF THE COMMISSION

This cause came on for hearing before tim Commission on November 19, 2979 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of MGF Oil Corporation, for an order approving a certain Unit Agreement and Unit Operating Agreement, and further approving a proposed plan for injection of water into the "D" Sand underlying lands adjacent to the Lanyard "D" Sand Unit Area in Weld County, Colorado.

FINDINGS

The Commission finds as follows:

1. MGF Oil Corporation, as applicant herein, is an interested party in the subject matter off 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 January 16, 1978, the Commission issued Order No. 292-2 in which a certain Unit Agreement and Unit Operating Agreement was approved for the Lanyard "D" Sand Unit Area, and further approved a waterflood project for the "D" Sand reservoir underlying said Unit Area.

5. The "D" Sand underlying the Lanyard "D" Sand Extension Unit Area, as set forth in the Unit Agreement by the applicant, constitutes a common source of supply of oil and gas, and that said Unit Area consists of the following described lands adjacent to the Lanyard Unit Area as approved by Order No. 292-2, in Weld County, Colorado, to-wit:

Township 2 North, Range 62 West, 6th P.M. Section 4: N/2 N/2SW/4, SW/4SW/4

Section 5: E/2SE/4, SW/4SE/4 Section 8: N/2NE/4, SW/4NE/4, E/2NW/4, SW/4NW/4, N/2SW/4 Township 3 North, Range 62 West, 6th P.M. Section 33: SW/4, SW/4SE/4

6. The terms and conditions provided in the Unit Agreement and Unit Operating Agreement are just and reasonable to all interests contained within said "D" Sand Unit Area and that said agreements as presented by the applicant are necessary to increase the ultimate recovery of oil and gas from said reservoir.

7. The proposed waterflood operation for secondary recovery is necessary to increase the ultimate recovery of oil and gas, and that such operation, pursuant to said Unit Agreement and Unit Operating Agreement, will result in an estimated additional recovery of oil and gas with a value in excess of the estimated additional cost incident to conducting such operation.

(over) / DATE OF ENTRY

8. Testimony presented at the hearing indicates that, as of that date, said Unit Agreement and Unit Operating Agreement have not been approved in writing by those persons required to pay at least eight percent (80%) of the costs of unit opera-tions and also by the owners of at least eighty percent (80%) of the production or proceeds thereof that will be credited to interests which are free of costs. However, such addi-tional approval in writing is in the process of being obtained and [hat the Commission approval of the unit plan of operation should not become effective until said additional signatures are obtained.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regula-tions shall apply hereafter to the lands set forth in this order, in addition to other appli-cable rules and regulations and orders or the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. The "D" Sand underlying the Lanyard "D" Sand Extension Unit Area as set forth in the Unit Agreement presented by the applicant constitutes a common source of supply of oil and gas underlying said Unit Area composed of the following lands in Weld County, Colorado, to-wit:

Township 2 North, Range 62 West, 6th P.M. Section 4: N/2, N/2SW/4, SW/4SW/4 2 4, Section 5: E/2SE/4, SW/4SE/4 Section 8: N/2NE/4, SW/4-NE/4, E/2NW/4 SW/4NW/4, N/2SW/4 Township 3 North, Range 62 West, 6th P.M. Section 33: SW/4, SW/4SE/4 Rule 2. Said Unit Agreement and Unit Operating Agreement covering the Lanyard "D" Sand Extension Unit Area herein defined, and providing fop unit operations of the "D" Sand underlying said Unit Area, are hereby approved.

Rule 3. The waterflood project for the "D" Sand reservoir of the Lanyard "D" Sand Extension Unit Area, as presented by the applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir, and the operator is authorized to inject water into said reservoir through Well No. 14-8 Vernon Preston, SW/4SW/4 Section 8 and Well No. 44-7 Vernon Preston, SE/4SE/4 Section 7, Township 2 North, Range 62 West, 6th P.M. and further, to utilize any other wells in the Unit Area whenever it is determined by the OperatOr to be necessary.

IT IS FURTHER ORDERED, that approval of the plan of unit operations shall become effective when the persons owning the required percentage or interests have signed said plan and it has been submitted to the Commission.

IT IS FURTHER ORDERED, that the Commission expressly preserves its right, after notice and hearing, to alter, amend of repeal any and/or all of the above orders, rules and regulations.

ORDERED this 19th day of November, 1979.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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