REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 16, 1985 at 9:00 A.M., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law on the verified application of Caribou Energy, Inc. for an order granting an exception to the permitted well location as provided for in Order No. 396 and allow a well to be drilled at a location in the center of the SW/4NW/4 Section 31, Township 11 South, Range 52 West, 6th P.M., Clifford Field, Lincoln County, Colorado.

FINDINGS

The Commission finds as follows:

1. Caribou Energy, Inc., 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 February 18, 1983 the Commission authorized Order No. 396-1 to be issued which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow formation underlying certain lands in the Clifford Field, Lincoln County, Colorado. The units consist of the E/2 and W/2 of each quarter section 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.

5. Based on the facts stated in the verified application and exhibits submitted, and having received no objections, the matter was reviewed and recommended for approval by the Director as Hearing Officer. The Commission should therefore grant an exception to the permitted well location as provided for in Order No. 396-1 and allow a well to be drilled in the center of the SW/4NW/4 Section 31, Township 11 South, Range 52 West, 6th P.M., with a tolerance of 150 feet in any direction.

6. If a commercial well is completed at the location set forth above, the Commission should, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the drilling of the well as an exception, including suitable provisions to prevent the production from the well of more than their its just and equitable share.

ORDER

NOW, THEREFORE, IT IS ORDERED, that an exception to the permitted well location as provided for in Order No. 396-1 is hereby granted and a well shall be allowed to be drilled at a location in the center of the SW/4NW/4 Section 31, Township 11 South, Range 52 West, 6th P.M., with a tolerance of 150 feet in any direction.

IT IS FURTHER ORDERED, that if a commercial well is completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the drilling of the well as an exception, including suitable provisions to prevent the production from the well of more than its just and equitable share.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

ENTERED this 10th day January, 1986, as of December 16, 1985.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

(396-2)