REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 15, 1985 at 9:00 A.M., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as. required by law, on the verified application of Niobrara Illuminating Gas Associates, for an order permitting an additional well on each 160-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Niobrara formation.

FINDINGS

The Commission finds as follows:

1. Niobrara Illuminating Gas Associates, 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 September 18, 1978, the Commission authorized Order No. 342-1 to be issued which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara formation. The units consist of a governmental quarter section with the permitted well located no closer than 900 feet from the boundaries of the quarter section. By Order No. 342-2, the spaced area was extended and presently includes the following described lands in Washington County, Colorado, to-wit:

Township 2 South, Range 49 West, 6th P.M. Section 19 SW/4 Section 30 W/2 Section 31: NW/4 Township 2 South, Range 50 West, 6th P.M. Section 24: S/2 Section 25: All Section 26: E/2 Section 35: NE/4 Section 36: N/2

5. Based upon the facts stated in the verified application and exhibits submitted, and receiving no objections and having been reviewed and recommended by the Director, the Commission should enter an order permitting an additional well to be drilled, at the option of the operator, on each 160-acre drilling and spacing unit in the area described in Finding 4 herein for the production of gas and associated hydrocarbons from the Niobrara formation

6. Said additional well should be at a location no closer than 600 feet from the boundary of the unit and no closer than 1000 feet from the existing well.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the provisions of Order No. 342-1 and 342-2 pertaining to the permitted well location for each 160-acre drilling and spacing unit in the Spear Field, are hereby amended and the following shall apply hereafter to wells drilled, completed or recompleted in the Niobrara formation underlying the lands described herein in addition to other applicable rules and regulations and orders of the Commission heretofore adopted.

Rule 1. A second well, in addition to the permitted well as provided for in Order No. 342-1, is hereby authorized to be drilled, at the option Dr the operator, on each 160-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Niobrara formation underlying the following described lands in the Spear Field, Washington County, Colorado, to-wit:

Township 2 South, Range 49 West, 6th P.M. Section 19: SW/4 Section 30 W/2 Section 31: NW/4

Township 2 South, Range 50 West, 6th P.M. Section 24: S/2 Section 25: All Section 26: E/2 Section 35: NE/4 Section 36: N/2

Rule 2. Said additional well shall be located no closer than 600 feet from the boundary of the unit and no closer than 1000 feet from any other well producing from the Niobrara formation.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

ENTERED this 25th day of July, 1985, as of July 15, 1985

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary - 2 -(342-3)