IN THE MATTER Of THE PROMULGATION AND ESTABLISHMENT Of FIELD RULES TO GOVERN OPERATIONS IN THE QUAIL FIELD, ADAMS COUNTY, COLORADO Cause No. 355 Order No. 355-2

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 15, 1979 at 9:00 A.M. in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing, as required by law, on the application of L & B Oil Company, to re-consider the decision made by the Commission on August 21, 1979, and enter an order to (a) increase the size of the drilling and spacing units to 160-acres in said Section 35 to conform to the units in the remaining lands, and in so doing and to protect correlative rights, enter an order to offset the advantage the Champlin Well No. 1, located in the NE/4NE/4 of said Section 35 may have as a gas well, or (b) as an alternative, decrease the size of the drilling and spacing units in the remaining lands to 80-acres to conform to the 80-acre units in said Section 35.

FINDINGS

The Commission finds as follows:

1. L & B Oil 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 August 21, 1979, the Commission by Order No. 355-1, established 80-acre drilling and spacing units in Section 35, Township 2 South, Range 63 West, 6th P.M., and 160-acre drilling and spacing units for the remaining lands in the Quail Field, Adams County, Colorado, for the production of gas from the "J" Sand underlying the lands in said field described as follows:

Township 2 South, Range 63 West, 6th P.M. Section 25: All Section 34: E/2 Section 26: All Section 35: All Section 27: E/2 Section 36: All

5. That testimony presented at the hearing indicates that the "3" Sand underlying the Quail Field consists of more than one bench and, that in addition to the gas production from said Sand, there is also oil production and that certain wells can be classified as oil wells rather than gas wells. However, sufficient production data is not available at this time in order for the Commission to determine the classification of wells in the field, and further to determine the proper spacing in said field.

6. In order for the Commission to determine the proper field rules, pro-duction data should be submitted to the Commission on an individual well basis for all wells in the field commencing with the date of first production through December 31, 1979. An additional hearing should then be held concerning this matter.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the decision on the application to reconsider Order No. 355-1 is hereby deferred until a further hearing is held on (over) January 21, 1980, at which time the Commission will meet to consider the additional data to be submitted in order to determine the proper field rules for the Quail Field.

IT IS FURTHER ORDERED, that oil and gas production data, on a monthly basis, shall be submitted to the Commission for each individual well in the field beginning with date of first production through the month of December, 1979. Such production shall be measured according to the rules and regulations of the Commission and submitted on OGCC Form 7, no later than January 15, 1980.

IT IS FURTHER ORDERED, that Order No. 355-1, issued August 21, 1979 is hereby stayed and held in abeyance and its effectiveness postponed pending a further order of the Commission, and no further drilling in the area as described in Order No. 355-1 shall be permitted until that time.

ORDERED this 13th day of November, 1979.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 --(~355-2)