REPORT OF THE COMMISSION

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

This cause came on for hearing before the Commission on July 18, 1994 at 8:30 a.m., in Room 610, State Services Building, 1525 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Celsius Energy Company 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. Celsius Energy 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.

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 Corcoran Formation, 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. Order No. 347 incl uded additional lands under the field rules of the Shire Gulch Field for the Corcoran Formation.

5. On February 22, 1994, the Commission issued Order No. 347-6 which established 160-acre exploratory 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. Further, the order approved the downhole commingling of production from the Cozzette and Corcoran Formations.

6. That a protest to the application was filed with the Commission by Stewart Petroleum Corporation and letters in support of the protest to the application were filed by Barrett Resources Corporation and LB Industries, Inc.

7. Testimony presented by the protestant indicated that the SE1/4 NW1/4 of Section 17, Township 9 South, Range 97 West, 6th P.M. is included in the Horseshoe Canyon Federal Unit and should not be subject to a spacing order of the Commission.

8. After testimony was presented by both the applicant and protestant, the Commission voted two in favor and three against the application; therefore the application was denied.

O R D E R

NOW, THEREFORE IT IS ORDERED, that the application to extend the field rules for the Shire Gulch Field to establish 160-acre drilling and spacing units for production from the Cozzette and Corcoran Formations, to include the NW1/4 of Section 17, Township 9 South, Range 97 West, 6th P.M., 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 July 18, 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 August 5, 1994 ??