REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 18, 1989 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of OXY USA, Inc. for an order granting an exception to the permitted well location as provided for by Order No. 406-1. FINDINGS

The Commission finds as follows:

1. OXY USA, 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 October 17, 1983, the Commission authorized Order No. 406-1 to be issued by which 40-acre drilling and spacing units were established for the production of oil and associated hydrocarbons from the Lansing formation underlying certain lands in Baca County, Colorado. The units consist of a quarter-quarter section according to the governmental survey, with the permitted well located in the center of the quarter quarter section with a tolerance of 200 feet in any direction.

5. Based on facts stated in the verified application and exhibits submitted, and having received no objections and having been heard by the Director as Hearing Officer on December 15, 1989, the Commission should enter an order granting an exception to the permitted well location as provided for by Order No. 406-1 and allow a well to be drilled at a location 1650 feet from the north line and 1650 feet from the west line of Section 1, Township 35 South, Range 46 West, 6th P.M., Baca County, Colorado.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that an exception to the permitted well location as provided for by Order No. 406-1 is hereby granted for a well to be drilled at a location 1650 feet from the north line and 1650 feet from the west line of Section 1, Township 35 South,

Range 46 West, 6th P.M., Baca County, Colorado, and that it be the permitted well for the drilling and spacing unit consisting of the SE/4 NW/4 of said Section.

IT IS FURTHER ORDERED, that the above order shall be effective forthwith as the applicant agreed to be bound by the verbal order of the Commission.

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 ,

1989, as of December 18, 1989.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 380 Dennis R. Bicknell, Secretary 1580 Logan Street Denver, Colorado 80203 1041A