REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 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 amended application of Sensor Oil and Gas, Inc. for an order to extend the field rules for the De Nova Field to include additional lands for the production of gas and associated hydrocarbons from the Niobrara Formation underlying ce rtain lands in Washington County, Colorado.

FINDINGS

The Commission finds as follows:

1. Sensor Oil and Gas, Inc., 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 in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. In Order No. 339-1, issued September 18, 1978, the Commission established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation. Each such drilling and spacing unit shall be a quarter section according to the governmental survey, with the permitted well located no closer than 900 feet from the boundaries of the quarter section upon which it is located. In Order No. 339-2, the Commissio n amended Order No. 339-1 to include the below-described lands:

Township 2 South, Range 49 West, 6th P.M. Section 3: S1/2 Section 9: All Section 4: S1/2 Section 10: All Section 5: S1/2 Section 15: All Section 6: S1/2 Section 16: All Section 7: All Section 17: All Section 8: All Section 18: All

5. In order to prevent the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be entered extending 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation to include the be low-described lands. Each unit should consist of 160 acres, more or less, with the units to be designated by the operator of the first well to be drilled in any governmental section. Such units should consist of a governmental quarter section, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section.

Township 2 South, Range 49 West, 6th P.M. Section 19: N1/2 Section 20: N1/2 and SE1/4 Section 29: E1/2

6. All available and engineering data concerning said Niobrara Formation indicate that one well will efficiently and economically drain an area of approximately 160-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently and economically drained by one well producing from said Niobrara Formation.

7. Based upon the facts stated in the amended application, receiving no objections to the application, and having been heard by the Hearing Officers who recommend approval, the Commission should enter an order amending Order No. 339-1 and 339-2 to extend 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation underlying the additional lands described in Finding 5 in Washington County, Colorad o.

O R D E R

NOW THEREFORE IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the Niobrara Formation in the De Nova Field, herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Rule 1. One hundred and sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Niobrara Formation underlying the following described lands in Washington County, Colorado, to-wit:

Township 2 South, Range 49 West, 6th P.M. Section 3: S1/2 Section 15: All Section 4: S1/2 Section 16: All Section 5: S1/2 Section 17: All Section 6: S1/2 Section 18: All Section 7: All Section 19: N1/2 Section 8: All Section 20: N1/2 and SE1/4 Section 9: All Section 29: E1/2 Section 10: All

Rule 2. Such other units shall consist of the governmental quarter section with the permitted well located no closer than 900 feet from the boundaries of the quarter section upon which it is located. The Director may, without additional notice and hearing, grant exceptions to the permitted well location provided the owners of the contiguous and cornering drilling units toward which the proposed location would be moved, file a waiver or consent in writi ng agreeing to said exceptions.

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 rights, after notice and hearing, to alter, amend, or repeal any and/or all of the above orders.

ENTERED this day of , 1994, as of September 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 October 12, 1994 ??

(339#4)