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 Dietrich Petroleum Corporation for an order to segregate the 160-acre drilling and spacing units consisting of the NW1/4 and SW1/4 of Section 30, Township 2 South, Range 49 West, 6th P.M. into four 80-acre dril ling and spacing units consisting of the N1/2 NW1/4 and S1/2 NW1/4, and the N1/2 SW1/4 and S1/2 SW1/4 for production from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1. Dietrich Petroleum Corporation, as applicant herein, is an interested party in the subject matter of the above-entitled 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 issued Order No. 342-1 which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation, with the units consisting of a governmental quarter section, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section. Subsequent Order No. 342-2 extended the provisions of Order No. 342-1 to include additio nal lands. Section 30, Township 2 South, Range 49 West, 6th P.M. was included in the Spear Field. Order No. 342-3 issued July 15, 1985 allowed an additional well to be drilled on each 160-acre drilling and spacing unit, with said well to be located no closer than 600 feet from the outer boundary of the unit and no closer than 1000 feet from any other well producing from the Niobrara Formation.

5. Having received no protests to the application, the Hearing Officers held an administrative hearing on December 16, 1993, and were prepared to recommend to the Commission at its hearing on December 20, 1993 that the application be approved. On December 17, 1993, the Hearing Officers were informed that one party was not included in the list of interested parties and therefore did not receive a notice of hearing. A written request was filed on behalf of Rex H. Paullus, Jr. to continue the matter to the January hearing or to dismiss the application for lack of notice.

6. At the time of the December hearing, the Commission continued the matter to the January 19, 1994 hearing. On January 12, 1994, protests to the application were filed on behalf of Rex H. Paullus, Jr. and Sensor Oil & Gas, Inc.

7. Based on testimony presented by the protestants that 80-acre drilling and spacing units would not be uniform within the Spear Field and that correlative rights would not be protected, the Commission denied the application.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the verified application of Dietrich Petroleum Corporation for an order to segregate the 160-acre drilling and spacing units consisting of the NW1/4 and SW1/4 of Section 30, Township 2 South, Range 49 West, 6th P.M. into four 80-acre drilling and spacing units consisting of the N1/2 NW1/4 and S1/2 NW1/4, and the N1/2 SW1/4 and S1/2 SW1/4 for production from the Niobrara Formation is hereby denied.

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 2, 1994 ??

(342#4)