IN THE MATTER Of THE PROMULGATION AND ESTABLISHMENT Of FIELD RULES TO GOVERN OPERATIONS IN THE PEACHTREE FIELD, MESA COUNTY, COLORADO Cause No. 366 Order No. 366-2

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 18, 1981 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 Walter Fees, Jr., Robert J. Gutru, Mark B' Gatman, LeRoy Bacon, Jerry E. Shawyet and Beartooth Oil & Gas Company, which application was amended on April 16, 1981 to include additional lands, for an order to extend the limits of the spaced area of the Peachtree Field as established by Order No. 366-1.

FINDINGS

The Commission finds as follows:

1. Walter Fees, Jr., Robert J. Gutru, Mark B. Gatman, LeRoy Bacon, Jerry E. Shawvet and Beartooth Oil and Gas Company, as applicants herein, are interested parties 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 July 28, 1980, the Commission issued Order No. 366-1 which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Dakota and Morrison formations. The units consist of a quarter section of land according to the governmental survey with the permitted well location in the NW/4 of each quarter section and in addition certain specific locations on certain lands.

5. Testimony presented at the hearing indicates a common source of supply of gas and associated hydrocarbons from the Dakota and Morrison formations, underlies, in addition to the area set forth in Order No. 366-1, the following described lands in Mesa County, Colorado, to-wit:

Township 9 South, Range 103 West, 6th P.M. Section 7: All Section 18. All Section 8. All Section 19- All Section 17: All Section 20' All and that such area should be made subject to the provisions of Order No. 366-1; however, the permitted well locations for the additional area should be at a location within 900 feet of the center of each quarter section and no closer than 1500 feet from a well producing from the same formation, and that existing wells be designated the permitted well for the unit upon which it is located.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the area set forth in Finding 5 herein shall be subject to the provisions of Order No. 366-1 and the spaced area of the Peachtree Field shall henceforth include the following described lands in Mesa County, Colorado, to-wit:

(over)

Township 9 South, Range 103 West, 6th P.M. Section 7: All Section 18: All Section 8: All Section 19: All Section 15: All Section 20: All Section 16: All Section 21: All Section 17: All Section 22: All Township 2 North, Range 3 West, Ute P.M. Section 6: All Section 7: All

IT IS FURTHER ORDERED, that the permitted well location for the addi-tional area as described in Finding 5 herein shall be at a location within 900 feet of the center of each quarter section and no closer than 1500 feet from a well producing from the same formation, and that existing wells shall be designated the permitted well for the unit upon which it is located.

IT IS FURTHER ORDERED, that the provision contained in the above orders 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 15th day of June, 1981, as of May 18, 1981.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 --