REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on September 16, 1991 in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the amended application of Tidelands Energy Company et al for an amendment effective October 19, 1982 to Order No. 389-1 which approved the McElmo Dome Unit Operating Agreement concerning small working interest owners and the manner in which these owners make an election under Section 17.3 of the Unit Operating Agreement.

FINDINGS

The Commission finds as follows:

1. Tidelands Energy Company, as applicant herein, is an interested party in the subject matter of the reference.

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 herein prescribed order.

4. On September 9, 1991, Shell oil Company and Shell Western E&P, Inc., by their attorney, filed with the Commission a protest to the application.

5. On September 16, 1991, after receiving testimony by the applicants and protestants, the Commission voted to continue the matter to the October 23, 1991 hearing of the Commission and that briefs should be submitted to the Commission by October 11, 1991.

6. On October 8, 1991, the applicants and respondents, filed with the Commission a joint request to continue the matter to the November 18, 1991 hearing and to reschedule the date for submission of briefs to November 8, 1991. The request was granted by the Commission at its October 23, 1991 hearing.

7. On November 15, 1991, the applicants and respondents filed with the Commission a joint request to reschedule the matter to the January 21, 1992 hearing as the parties had reached a tentative settlement. The request was granted by the Commission at its November 18, 1991 hearing.

8. On January 21, 1992, the applicants and protestants presented a joint motion and stipulation to amend the unit operating agreement as approved by the Commission on October 19, 1982 by Order No. 398-1. The Commission approved the amendment of Section 17.3 (2) of the Unit Operating Agreement and the Unit Order to read as follows:

(2) Each small share Working Interest Owner shall have the right to share in any sale of carbon dioxide theretofore contracted for, or in any taking of carbon dioxide in kind, by any Working Interest Owner on the same terms and conditions provided for in the contract of sale or taking in kind arrangements made by any selling or taking Working Interest Owner. Each carbon dioxide sales contract or taking arrangement by any Working Interest Owner shall ex pressly be made subject to the provisions of this Article 17, and after each such sale contract or taking arrangement is made, the Working Interest Owner selling or taking shall annually give written notice thereof to all small share Working Interest Owners. Each of the latter shall have thirty (30) days after receipt of such notice to notify the seller or taker in writing of its election to participate or not to participate in the contract of sale or ta king. Failure to notify the seller or taker timely and properly shall be deemed to be an election to participate in such sale or taking. This right of participation is subject to the following limitations:

(a) [No change proposed.] (b) [No change proposed.]

and further that the above amendment should become effective upon Shell Western E&P, Inc., submitting an affidavit to the Commission that shows the above amendment has been approved in writing by those persons who under the Unit Order, are required to pay at least eighty percent of the costs of the Unit operation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the McElmo Dome Unit Operating Agreement, Section 17.3(2) is amended as in Finding 8 herein above and such amendment will be effective upon written confirmation to the Commission by the unit operator that the above amendment has been approved in writing by those persons who are required to pay at least eighty percent of the costs of the unit operation as contained in Unit Order No. 389-1.

IT IS FURTHER ORDERED, that the Commission shall issue a written notice, upon submission of written confirmation that the order of amendment has become effective in accordance with its terms as of the date such notice is issued.

IT IS FURTHER ORDERED, that should written confirmation not be submitted to the Commission from the date the order of amendment is entered, the above order shall be ineffective and shall be revoked unless for good cause shown the Commission extends said time.

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 1992, as of January 21, 1992.

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 February 28, 1992 C:\WP51\ORDERS\389-4 ??