REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 19, 1982 and continued to August 16, 1982, 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 MGF Oil Corporation, for an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the "J" Sand underlying certain lands in Weld County, Colorado.

FINDINGS

The Commission finds as follows:

1. MGF Oil 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 juris-diction to promulgate the hereinafter prescribed order.

4. Evidence presented at the hearing indicates that the "J" Sand constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Weld County, Colorado, to-wit:

Township 1 North, Range 63 West, 6th P.M. Section 20: All

5. In order to prevent waste of oil and gas, as defined by law; to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient deve-lopment and promote conservation of the oil and gas resources, an order should be made establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the "J" Sand, a common source of supply underlying the lands defined herein; that said units should be 160-acres and consist of a quarter section, according to the governmental survey, and the permitted well for each unit should be located in the NE/4 of each quarter section and no closer than 500 feet to the boundaries of the quarter-quarter section, and Well No. 23-20 Hummel, located in the NE/4SW/4 )f said Section 20 should be the permitted well for the unit upon which it is located.

6. All geological and engineering data concerning the "J" Sand indicate that one well will efficiently and economically drain an area )f approximately 160-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently drained by one well producing from said "J" Sand.

7. Additional hearing in the matter should be held in order =0 determine if Sections 19, 29 and 30, Township 1 North, Range 63 West, should be included in the spaced area of the field.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed or recompleted in the "J" Sand underlying the Barbwire Field, herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

(over)

Rule 1. One hundred-sixty (160) acre drilling and spacing units shall be and the same is hereby established for the production of gas and associated hydrocarbons from the "J" Sand underlying the following described lands in the Barbwire Field, Weld County, Colorado, to-wit:

Township 1 North, Range 63 West, 6th P.M. Section 20: All

Rule 2. Said drilling units shall consist of 160-acres and consist of a quarter section, according to the governmental survey. The permitted well shall be located in the NE/4 of each quarter section and no closer than 500 feet to the boundaries of the quarter-quarter section, and Well No. 23-20 Hummel, located in the NE/4SW/4 of said Section 20 shall be the permitted well for the unit upon which it is located.

IT IS FURTHER ORDERED, that a hearing shall be held on the October 1982 hearing date to determine if Sections 19, 29 and 30, Township 1 North, Range 63 West, 6th P.M., should be included in the spaced area of the field.

IT IS FURTHER ORDERED, that the provisions contained in the above orders and rules and regulations 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 13th day of September 1982, as of August 16, 1982.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

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

(#387-1)