REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 18, 1983 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 Mull Drilling Co., for an order establishing 80-acre drilling and spacing units for the production of oil from the Morrow formation underlying certain lands in Lincoln County, Colorado.

FINDINGS

The Commission finds as follows:

1. Mull Drilling Co., 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. Evidence presented at the hearing indicates that the Morrow formation constitutes a common source of supply of oil and associated hydrocarbons underlying the following described lands in Lincoln County, Colorado, to-wit:

Township 11 South, Range 52 West, 6th P.M. Section 31: All Township 11 South, Range 53 West, 6th P.M. Section 35: All Section 36: All Township 12 South, Range 52 West, 6th P.M. Section 6: All Section 7: All -- Township 12 South, Range 53 West, 6th P.M. Section 1: All Section 2: All Section 11: All Section 12: All

5. In order to prevent waste of oil and gas, as defined by law; to protect 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 of the State, an order should be made establishing 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow formation, common source of supply underlying the lands defined herein; that said units should be 80-acres, more or less, and consisting of the E/2 and W/2 of each quarter section according to the governmental survey thereof, and the permitted well located in the center of the NW/4 and SE/4 of each quarter section with a tolerance of 150-feet in any direction, and the existing producing or producible wells from said formation should be considered the permitted wells for the units upon which each is located.

6. All available geological and engineering data concerning said Morrow formation indicate that one well will efficiently and economically drain an area of approximately 80-acres, and that drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently and economically drained by one well producing from said Morrow formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the Morrow formation underlying the Clifford 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:

Township 11 South, Range 52 West, 6th P.M. Section 31: All Township 11 South, Range 53 West, 6th P.M. Section 35: All Section 36: All

Township 12 South, Range 52 West, 6th P.M. Section 6: All Section 7: All

Township 12 South, Range 53 West, 6th P.M. Section 1: All Section 2: All Section 11: All Section 12: All

Rule 2. Said drilling units shall consist of eighty (80) acres, more or less and each unit shall consist of the E/2 and W/2 of each quarter section according to the governmental survey thereof, with the permitted well located in the center of the NW/4 and SE/4 of each quarter section with a tolerance of 150-feet in any direction and the existing producing or producible wells from the Morrow formation shall be considered the permitted wells for the units upon which each is 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 28th day of February 1983, as of February 18, 1983.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

-- 2 " (396-1)