REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on July 17, 1989 in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Lloyd Hayes for an amendment to the McElmo Dome Unit Agreement specifically deleting therefrom Paragraph [18](f), and such other and additional provisions as may appear to be appropriate from the evidence in the record, that are consistent with the request made in said application. FINDINGS

1. Lloyd Hayes, 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 April 6, 1989, the Commission issued a Notice of Hearing for the above matter to be heard on May 15, 1989. On May 4, 1989 a Protest to the Application was filed by Chevron U.S.A. Inc. On May 4, 1989 a Protest to the Application was filed by Shell Western E & P, Inc. On May 5, 1989 a Protest to the Application was filed by the United States Department of the Interior, Bureau of Land Management. On May 4, 1989, a Motion for Continuance was filed by Chevron U.S.A. Inc. On May 8, 1989, the Commission granted the motion for continuance to the July, 1989 hearing.

5. On July 14, 1989 the parties filed briefs in support of their respective positions, as well as stipulated facts and exhibits. These filings were received by the Commissioners at the time of the hearing on July 17, 1989. At the hearing, the Commission heard testimony from a Shell witness concerning the prior federal units in the area especially the Yellow Jacket Unit. In addition, the Commission heard

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legal arguments from all parties in support of their respective positions.

6. After receiving and reviewing all evidence and hearing the aforesaid legal arguments, the Commission continued the matter for further hearing to July 28, 1989, at 11:00 a.m. In addition, the Applicant was directed to submit a proposed order on or before July 21, 1989, and the Protestants were directed to file a response to such proposed order on or before July 24, 1989.

7. The hearing in this matter was reconvened at 11:00 a.m. on July 28, 1989 before the Commissioners Welborn, Anderson, Johnson and Krey at 1580 Logan Street, Logan Tower Building, Denver, Colorado. At that hearing no further evidence was offered, and the parties through their counsel responded to questions propounded by the Attorney General and the Commissioners.

8. After deliberation among the Commissioners, the Commission found that the McElmo Dome Unit Agreement and Order No. 389-1 are unambiguous with and continue to be consistent with the language and intent of C.R.S. 34-60-118 as amended, and that to grant the application and the relief requested by the Applicant would undermine the efforts of the Commission to encourage unit operations that are in the public interest and that it would be contrary to the intent and purpose of the Colorado Oil and Gas Conservation Act and specifically 34-60-118 thereof.

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O R D E R

NOW, THEREFORE, IT IS ORDERED, that the application of Lloyd Hayes in the above matter is hereby denied.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith as all parties agreed to be bound by the oral order of the Commission.

ENTERED this day of ,

1989, as of July 28, 1989.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

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