REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 14, 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 J-W Operating Company for an order granting an exception to the permitted well locations as provided for in Order No. 328-3, to allow a well to be drilled 660 feet FNL and 1980 feet FEL in the NW/4 NE/4 of Section 32 for the unit consisting of the NE/4 of said Section 32, in Township 4 North, Range 46 West, 6th P.M., Yuma County, Colorado, for production from the Niobrara formation underlying these lands.

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.

On August 22, 1978, the Commission authorized Order No. 328-3 to be issued, which established 160-acre drilling and spacing units for the production of gas from the Niobrara formation underlying the below-listed lands in Yuma County, Colorado:

Township 3 North, Range 46 West, 6th P.M. Section 6: All

Township 4 North, Range 46 West, 6th P.M. Section 8: All Sections 16 through 17: All Sections 20 through 21: All Sections 29 through 32: All

The drilling units consist of a governmental quarter section of land,

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according to the governmental survey thereof, with the permitted well to be located no closer than 900 feet to the boundaries of the quarter section upon which it is located.

5. The matter was heard by the Hearing Officer who recommends approval based upon the geologic 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. 328-3 for the Waverly Field is hereby granted for a well to be drilled 660 feet FNL and 1980 feet FEL in the NW/4 NE/4 of Section 32, Township 4 North, Range 46 West, 6th P.M., Yuma County, Colorado, for production from the Niobrara formation for the unit consisting of the NE/4 of Section 32.

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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.

Entered this day of , 1991, as of June 14, 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 June 27, 1991 1279I - 3 -(328-7)