REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 18, 1993 at 8:30 a.m. in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified amended application of OXY USA Inc, for an order approving a certain Unit Agreement and Unit Operating Agreement for the S. E. Campo Unit, providing for unit operations of the reservoir consisting of the Pennsylvanian Lansing "C" Sandstone Formation underlying certain lands in Baca County, Colorado.

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. The Pennsylvanian Lansing "C" Sandstone Formation was encountered in the stratigraphic interval between the depths of 3990 feet and 4008 feet measured from the Kelly Bushing, in the Comanche Federal B-1 Well located in the SW1/4 NE1/4 of Section 1, Township 35 South, Range 46 West, Baca County, Colorado, and as so encountered, is a common source of supply and has been defined and determined by drilling, to be productive underlying the following descr ibed lands in Baca County, Colorado:

Township 34 South, Range 46 West, 6th P.M. Section 34: S1/2 SE1/4, S1/2 N1/2 SE1/4 Section 35: S1/2 SW1/4, S1/2 N1/2 SW1/4, SW1/4 SE1/4, Lots 7 and 8 Section 36: Lots 16 and 17

Township 35 South, Range 45 West, 6th P.M. Section 6: Lots 9 and 10

Township 35 South, Range 46 West, 6th P.M. Section 1: W1/2, SE1/4, S1/2 NE1/4, and Lot 2 Section 2: SE1/4 NE1/4, N1/2 SW1/4 NE1/4, Lots 1, 2, 3 and 4 Section 12: N1/2 NE1/4 NW1/4, N1/2 NW1/4 NE1/4

containing 1300.5 gross acres, more or less.

5. The terms and conditions provided by the S.E. Campo Unit Agreement and Unit Operating Agreement meet the requirements of the statute and are just and reasonable to all interests contained within said unit area. The plan for unit operations as presented by the Applicant, providing for a secondary recovery program by the injection of water into the Lansing "C" Formation reservoir underlying the S.E. Campo Unit Area, as described herein is necessary to increase the ultimate recovery of oil and gas and the value of the estimated additional recovery of oil and gas exceeds the estimated additional cost incident to conducting such operations.

6. The provisions contained in said Unit Agreement and Unit Operating Agreement are just and reasonable and include the following:

a. The description of the pool to be so operated;

b. The nature of said operation:

c. The allocation to the separately owned tracts in the S.E. Camp Unit Area of all the oil and gas that is produced from said Unit Area and is saved;

d. The provision for the credits and charges to be made in the adjustment among the owners in the S.E. Campo Unit Area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributed to the unit operations;

e. The provision providing how the costs of unit operations, including capital investments, shall be determined and charged to the separately owned tracts, and how said costs shall be paid, including the provision providing when, how, and by whom the unit production allocated to an owner who does not pay the share of the cost of unit operations charged to such owner, or the interest of such owners, may be sold and the proceeds applied to the payment of such costs;

f. The provision for the supervision and conduct of the unit operations, in respect to which person shall have a vote with a value corresponding to the percentage of the costs of unit operations chargeable against the interest of such person; and

g. The time when the unit operations shall commence, and the manner in which, and the circumstances under which the unit operations shall terminate.

7. At the time of the administrative hearing before the Commission, OXY USA Inc. indicated that those persons having ninety eight (98)% of the working interests and ninety (90) percent of the non-cost bearing interests had approved in writing the afore mentioned plan of unit operations.

8. Order No. 406-1 should be amended to delete the above lands included within the S.E. Campo Unit.

9. Based on the facts stated in the verified application, and having been heard by the Hearing Officer and recommended for approval, the Commission should enter an order approving the S.E. Campo Unit Agreement and Unit Operating Agreement becoming effective as of 7:00 a.m. on the first day of the month following approval by the Secretary of the Interior.

ORDER NOW, THEREFORE, IT IS ORDERED, that:

1. The S.E. Campo Unit Agreement and Unit Operating Agreement, covering lands in the S.E. Campo Unit Area, which agreements are attached to, and made a part of the original order of this Commission on file in the office of the Commission, are approved as being in the public interest for conservation.

2. The Pennsylvanian Lansing "C" Sand reservoir, common source of supply, underlies the following lands in Baca County, Colorado:

Township 34 South, Range 46 West, 6th P.M. Section 34: S1/2 SE1/4, S1/2 N1/2 SE1/4 Section 35: S1/2 SW1/4, S1/2 N1/2 SW1/4 SW1/4 SE1/4, Lots 7 and 8 Section 36: Lots 16 and 17

Township 35 South, Range 45 West, 6th P.M. Section 6: Lots 9 and 10

Township 35 South, Range 46 West, 6th P.M. Section 1: W1/2, SE1/4, S1/2 NE1/4, and Lot 2 Section 2: SE1/4 NE1/4, N1/2 SW1/4 NE1/4 Lots 1, 2, 3 and 4 Section 12: N1/2 NE1/4 NW1/4, N1/2 NW1/4 NE1/4

containing 1300.5 gross acres, more or less.

3. The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to C.R.S. Section 34-60-118, as amended, of the Oil and Gas Conservation Act are just and reasonable, and are incorporated herein as the Commission's plan of involuntary unit operations for such lands.

4. The secondary recovery project by the injection of water into the Lansing "C" Sandstone Formation of said Unit Area, as presented by the applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir.

5. Any injection well to be located in the Unit Area shall be approved by the Director in accordance with the rules and regulations of the Commission.

6. Forty (40) acre drilling and spacing units shall be and the same is hereby established for the production of oil and associated hydrocarbons from the Lansing Formation underlying the following described lands in the Campo Field, Baca County, Colorado, to-wit

Township 34 South, Range 46 West, 6th P.M. Section 34: NE1/4, N1/2 N1/2 NE 1/4 Section 35: N1/2, N1/2 N1/2 SW1/4, N1/2 SE1/4 Section 36: N1/2, SE1/4, N1/2 SW1/4, SE1/4 SW1/4

Township 35 South, Range 46 West, 6th P.M. Section 1: Lot 1 Section 2: S1/2, S1/2 NW1/4, S1/2 SW1/4 NE1/4 Section 3: NE1/4 Section 12: W1/2 NW1/4, SE1/4 NW1/4, S1/2 NE1/4 NW1/4 E1/2 NE1/4, SW1/4 NE1/4, S1/2 NW1/4 NE1/4

7. Said drilling units shall consist of 40-acres, more or less, and consist of a quarter-quarter section, according to the governmental survey, and the permitted well for each unit shall be located in the center of the quarter-quarter section with a tolerance of 200 feet in any direction and the existing producing or producible wells or permitted locations 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 shall become effective as of 7:00 a.m. on the first day of the month following approval of the agreement by the Secretary of the Interior.

IT IS FURTHER ORDERED, that the Unit Operator shall advise the Commission in writing as to the effective date of commencement of operations and include all documentation required at that time, and further that the Unit Operator shall advise the Commission in writing as to the termination of the unit.

IT IS FURTHER ORDERED, that the Commission expressly reserves it rights, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

ENTERED this 25th day of June , 1993, as of June 18, 1993.

CORRECTED this day of , 1995, as of June 18, 1993.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 801 1120 Lincoln Street Denver, Colorado April 5, 1995 ??

(406#5)