REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 17, 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 verified application of Davis Oil Company for an order establishing 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Barker Creek formation underlying certain lands in La Plata County, Colorado

FINDINGS

The Commission finds as follows:

1. Davis Oil Company, 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 all of Sections 21, 28, 32, 33, and 34, Township 33 North, Range 12 West, and Sections 1and 2 Township 32 North, Range 13 West, 6th P.M. should be deleted from the requested area to be spaced.

5. Evidence presented at the hearing indicates that the Barker Creek formation constitutes a common source of supply of oil and associated hydrocarbons underlying the following described lands in La Plata County, Colorado, to-wit:

Township 33 North, Range 12 West, 6th P.M. Sections 13, 14, 15, 22, 23, 24, 26 and 27: All

6. 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 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Barker Creek formation, a common source of supply underlying the lands defined herein, that said units should be 320-acres, more or less, and consist of the E/2 and W/2 or the N/2 and S/2 of a section, according to the governmental survey, the unit to be designated by the operator upon drilling the first well in the section. The permitted well location should be in the center of the NW/4 and the SE/4 of each section with a tolerance of 200 feet in any direction for topographical reasons. Well No. 1 Red Mesa Deep, located 2055 feet from the north line and 2355 feet from the west line of said Section 23, should be considered the permitted well for the unit upon which it is located. Only one well should be permitted to be drilled on each unit and produced from the common source of supply.

7. All available geological and engineering data concerning said Barker Creek formation indicate that one well will efficiently and economically drain an area of approximately 320-acres and that the drilling unit of the size and shape hereinabove described not smaller than the maximum area that can be efficiently and economically drained by one well producing from said Barker Creek 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 Barker Creek formation underlying the Red Mesa 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. Three hundred twenty (320) acre drilling and spacing units shall be and the same is hereby established for the production of gas and associated hydrocarbons from the Barker Creek formation underlying the following described lands in the Red Mesa Field, La Plata County, Colorado, to-wit:

Township 33 North, Range 12 West, 6th P.M. Sections 13, 14, 15, 22, 23, 24, 26 and 27: All

Rule 2. Said drilling units shall consist of 320-acres, more or less, and consist of the E/2 and W/2 or the N/2 and S/2 of a section, according to the governmental survey, the unit to be designated by the operator upon drilling the first well in the section. The permitted well location shall be in the center of the NW/4 and the SE/4 of each section with a tolerance of 200 feet in any direction for topographical reasons. Well No. 1. Red Mesa Deep, located 2055 feet from the north line and 2355 feet from the west line of said Section 23, shall be considered the permitted well for the unit upon which it is located. Only one well shall be permitted to be drilled on each unit and produced from the common source of supply.

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 14th day of November 1983, as of October 17 1983.

CORRECTED this 5th day of July 1991.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

1580 Logan Street Denver, Colorado 80203 July 5, 1991 13001 -- 2 --(404-1)