REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 20, 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 Chandler & Associates, Inc., for an order establishing 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the "D" Sand underlying certain lands in Morgan County, Colorado. The application was amended to delete certain lands from the proposed area.

FINDINGS

The Commission finds as follows:

1. Chandler & Associates, Inc., as applicant 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. Evidence presented at the hearing indicates that the "D" Sand constitutes a common source of supply of oil and associated hydrocarbons underlying the following described lands in Morgan County, Colorado, to-wit:

Township 4 North, Range 59 West, 6th P.M. Section 1: W /2 Section 10: NE/4 Section 2: All Section 11: N/2 Section 3: E/2 Section 12: NW/4

Township 5 North, Range 59 West, 6th P.M. Section 34: SE/4 Section 35: S/2 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 development and promote conservation of the oil and gas resources, an order should be made establishing 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the "D" Sand, a common source of supply underlying the lands defined herein; that said units should be 80-acres, more or less, and consist of the E/2 and W/2 or the N/2 and S/2 of each quarter section, according to the governmental survey, and the permitted well locations in Township 5 North, Range 59 West, 6th P.M. should be in the SW/4 and NE/4 of each quarter section and no closer than 300 feet to the boundaries of the 40-acre tract upon which it is located, and in Township 4 North, Range 59 West, 6th P.M., the permitted well location should be in the NW/4 and SE/4 of each quarter section and no closer than 300 feet to the boundaries of the 40-acre tract upon which it is located. The existing producing or producible wells should be considered the permitted wells for the units upon which they are located.

6. All geological and engineering data concerning the "D" Sand indicate that one well will efficiently and economically drain an area of approximately 80-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 "D" Sand.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the "D" Sand underlying the Travois 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.

Rule 1. Eighty (80) acre drilling and spacing units shall be and the same is hereby established for the production of oil and associated hydrocarbons from the "D" Sand underlying the following described lands in the Travois Field, Morgan County, Colorado, to-wit:

Township 4 North, Range 59 West, 6th P.M. Section 1: W /2 Section 10: NE/4 Section 2: All Section 11: N/2 Section 3: E/2 Section 12: NW/4

Township 5 North, Range 59 West, 6th P.M. Section 34: SE/4 Section 35: S/2

Rule 2. Said drilling units shall consist of 80-acres, more or less, and consist of the E/2 and W/2 or the N/2 and S/2 of each quarter section, according to the governmental survey, and the permitted well locations in Township 5 North, Range 59 West, 6th P.M. shall be in the SW/4 and NE/4 of each quarter section and no closer than 300 feet to the boundaries of the 40-acre tract upon which it is located, and in Township 4 North, Range 59 West, 6th P.M., the permitted well location shall be in the NW/4 and SE/4 of each quarter section and no closer than 300 feet to the boundaries of the 40-acre tract upon which it is located. The existing producing or producible wells shall be considered the permitted wells for the units upon which they are located.

IT IS FURTHER ORDERED, that the provisions contained in the above order 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 order.

ENTERED this 17th day of January, 1983,

as of December 20, 1982.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 --(394-1)