REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 25, 2000 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 verified application of J-W Operating Company, for an order to allow two additional wells to be drilled for the production of gas and associated hydrocarbons from the Niobrara Formation on each 160-acre drilling and spacing unit in Section s 9 and 10, Township 4 North, Range 46 West, 6th P.M., with said wells to be located upon any undrilled quarter-quarter section within the spacing unit at a location in the center of each such quarter-quarter section with a tolerance of 100 feet for topographic or geological reasons.

FINDINGS

The Commission finds as follows:

1. J-W Operating Company ("J-W Operating"), 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 December 19, 1983, the Commission issued Order No. 328-5 which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation underlying the lands described below in the Waverly Field (outside area), with the permitted well to be located in the center of either the NW quarter-quarter section or the SE quarter-quarter section, with a tolerance of 100 feet in any direction. An addit ional well shall be allowed to be drilled, at the option of the operator, and shall be located in the center of the undrilled diagonal offset quarter-quarter section with a tolerance of 100 feet in any direction.

Township 4 North, Range 46 West, 6th P.M. Sections 2 through 7, 9, 10, 15, 18 and 19: All Section 22: W1/2 Section 28, 33 and 34: All

5. On March 6, 2000, J-W Operating, by its attorney, filed with the Commission a verified application for an order to allow two additional wells to be drilled for the production of gas and associated hydrocarbons from the Niobrara Formation on each 160-acre drilling and spacing unit described below with the said wells to be located upon any undrilled quarter-quarter section within the spacing unit at a location in the center of each such quarter-quarter section with a tolerance of 100 feet for topographic or geological reasons.

Township 4 North, Range 46 West, 6th P.M. Section 9: All Section 10: All

6. Testimony and exhibits presented at the administrative hearing showed that the average recovery of wells in Sections 9 and 10 is approximately 58.6%. Additional testimony and exhibits presented indicated that approximately 276,722 MCF of gas per well remains to be recovered.

7. Testimony and exhibits presented at the administrative hearing showed that the drilling of additional wells will be economic with gas prices at either $5.82/MCF or $2.00/MCF.

8. Testimony and exhibits presented at the administrative hearing showed that in order to protect correlative rights, to prevent waste and to recover additional reserves, two additional wells should be allowed to be drilled and completed on each 160-acre drilling and spacing unit in Sections 9 and 10, Township 4 North, Range 46 West, 6th P.M.

9. At the time of the administrative hearing, J-W Operating agreed to be bound by oral order of the Commission.

10. Based on the facts stated in the verified application, having received no protests to the application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow two additional wells to be drilled for the production of gas and associated hydrocarbons from the Niobrara Formation on each 160-acre drilling and spacing unit in Sections 9 and 10, Township 4 North, Range 46 West, 6th P.M., with said wells to be located upon any undrilled quarter-quarter section within the spacing unit at a location in the center of each such quarter-quarter section with a tolerance of 100 feet for topographic or geological reasons.

ORDER

NOW, THEREFORE IT IS ORDERED that Order No. 328-5 is hereby amended to allow two additional wells to be drilled for the production of gas and associated hydrocarbons from the Niobrara Formation on each 160-acre drilling and spacing unit in Sections 9 and 10, Township 4 North, Range 46 West, 6th P.M., with said wells to be located upon any undrilled quarter-quarter section within the spacing unit at a location in the center of each such quarter-quarter se ction with a tolerance of 100 feet for topographic or geological reasons.

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 May, as of April 25, 2000.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 May 9, 2000 ??

(328#10)