REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 19, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of J-W Operating Company, for an order to allow an additional well to be drilled on each 160-acre drilling and spacing unit, at the option of the operator, at a location no closer than 560 feet from the outer boun daries of the 160-acre unit to establish production from the Niobrara Formation underlying each unit in the Mildred Field.

FINDINGS

The Commission finds as follows:

1. J-W Operating 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 August 21, 1978, the Commission issued Order No. 327-3 (Corrected) which established 160-acre drilling and spacing units for the production of gas from the Niobrara Formation for the below-listed lands, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section:

Township 2 South, Range 46 West, 6th P.M. Sections 12 through 16: All Sections 23 and 24: All

5. On November 19, 1990, the Commission issued Order No. 327-8 which included the below-listed lands under the provisions established in Order No. 327-3 for the Mildred Field:

Township 2 South, Range 45 West, 6th P.M. Section 7: W1/2 Section 18: W1/2 Section 19: All

Township 2 South, Range 46 West, 6th P.M. Section 1: All Sections 9 through 11: All Section 22: All

6. Protests were filed by Meridith Mallory, Thomas J. Jeffrey, JG-Kansas No.2 Venture, and KN Gas Supply Services, Inc. On December 17, 1993, a joint motion to continue the matter to the January hearing was filed and the Commission approved the continuance at the December 20, 1993 hearing. On January 14, 1994, Meridith Mallory et al filed a written request with the Commission to withdraw their protest.

7. Geological and engineering evidence presented at the hearing indicates that one (1) well will not in some cases adequately drain an area of 160-acres and that an option to drill an additional well should be allowed in order to economically and efficiently drain the gas and associated hydrocarbons from the Niobrara Formation underlying each 160-acre unit.

8. Based on the facts stated in the verified application and testimony presented by the applicant and the protestant at the hearing, the Commission should enter an order authorizing a second well to be drilled, at the option of the operator, on each 160-acre drilling and spacing unit at a location no closer than 560 feet from the outer boundaries of the 160-acre unit for the lands comprising Mildred Field described herein below.

ORDER

NOW, THEREFORE, IT IS ORDERED, that an additional well may be drilled and completed in the Niobrara Formation on each 160-acre drilling and spacing unit at the option of the operator, with the second permitted well to be located no closer than 560 feet from the outer boundaries of the 160-acre unit for the below-listed lands in Mildred Field, Yuma County, Colorado, to-wit:

Township 2 South, Range 45 West, 6th P.M. Section 7: W1/2 Section 18: W1/2 Section 19: All

Township 2 South, Range 46 West, 6th P.M. Section 1: All Sections 9 through 16: All Sections 22 through 24: All

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 day of , 1994, as of January 19, 1994.

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 February 8, 1994 ??

(327#9)