REPORT OF THE COMMISSION

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

This cause came on for hearing before the Commission on February 22, 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 application of Stewart Petroleum Corporation for an order to extend the field rules in the Shire Gulch Field for additional lands, and to allow the downhole commingling of production of oil, gas, and associated hydrocarbons from the Cozzette and Corcoran Formations underlying said lands.

FINDINGS

The Commission finds as follows:

1. Stewart Petroleum Corporation, 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 January 15, 1979, the Commission issued Order No. 347-1 which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Cozzette and Corcoran Formations, underlying certain lands in the Shire Gulch Field, Mesa County, with the units to consist of a governmental quarter section and the permitted well to be located no closer than 600 feet to the boundaries of the unit in which it is located. Orde r No. 347-4 included additional lands under the field rules of the Shire Gulch Field for the Corcoran Formation.

5. Protests were filed by Koch Exploration Company and the Bureau of Land Management, and a request to continue the matter was filed by Celsius Energy Company.

6. On April 19, 1991, the General Assembly of the State of Colorado enacted Senate Bill 91-87, which among other things, authorized the Commission, when unable to determine the existence of a pool and the appropriate acreage to be embraced with a drilling unit, to establish the existence of a pool and the appropriate size and shape of the drilling unit to be applied.

7. At the time of the administrative hearing, Stewart Petroleum Corporation requested a continuance of certain lands, including those lands in which the Bureau of Land Management has an interest, to the March hearing, and Koch Exploration Company withdrew its protest on the remaining lands in the application. Stewart Petroleum Corporation amended its application to request 160-acre exploratory units to be established for the below-listed lands, with th e downhole commingling of production from the Cozzette and Corcoran Formations:

Township 9 South, Range 97 West, 6th P.M. Section 7: SE1/4 and SW1/4 Section 18: NE1/4 and SE1/4

8. Based on the facts stated in the verified application, having continued certain lands in the application, having withdrawn a protest on the remaining lands, and having been heard by the Hearing Officers on February 21, 1994, the Hearing Officers recommend that the Commission enter an order establishing 160-acre exploratory units for production from the Cozzette and Corcoran Formations, for the lands described in Finding 7, and allow the downhole comm ingling of production from the Cozzette and Corcoran Formations.

9. At the time of administrative hearing the parties agreed to be bound by the verbal order of the Commission in this matter.

O R D E R

NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of 34-60-116, C.R.S., 1991, as amended, of the Oil and Gas Conservation Act of the State of Colorado, 160-acre exploratory units are hereby established for production from the Cozzette and Corcoran Formations for the below-listed lands:

Township 9 South, Range 97 West, 6th P.M. Section 7: SE1/4 and SW1/4 Section 18: NE1/4 and SE1/4

IT IS FURTHER ORDERED, that the downhole commingling of production from the Cozzette and Corcoran Formations is hereby approved.

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 February 22, 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 March 21, 1994 ??

(347#6)