IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER Of THE PROMULGATION AND ESTABLISHMENT Of FIELD RULES TO GOVERN OPERATIONS IN THE CODELLNIOBRARA FORMATION AREA, WELD COUNTY COLORADO

)

CAUSE NO. 407

ORDER NO. 407-10

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 18, 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 application of Golden Buckeye Petroleum Corporation, for an order establishing 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Niobrara formation underlying certain lands in Weld County, Colorado, and that the units and permitted well locations be in accordance with the provisions of Order No. 407-1. It was further requested the production from the Codell and Niobrara formations be allowed to be dually completed and commingled. The Commission, on its own motion included additional lands in the area to be considered in this matter.

FINDINGS

The Commission finds as follows:

1. Golden Buckeye Petroleum Corporation, 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 December 19, 1983, the Commission authorized Order No. 407-1 to be issued which, among other things, established 80-acre drilling and spacing units for the production of oil and/or gas from the Codell formation underlying certain lands in Adams, Boulder, Jefferson, Larimer and Weld Counties, Colorado. The units consist of the W11/2 and E11/2 or the N11/2 and S11/2 of a governmental quarter section with the permitted well located in the center of a quarter-quarter section with a tolerance of 200 feet with the option to drill an additional well in the undrilled 40-acre tract.

5. Sections in the Ranges from 2 South to 6 North, Townships 68, 69 and 70 West should be excluded from the proposed spaced area for the Niobrara formation.

6. Evidence presented at the hearing indicates that the Niobrara formation constitutes a common source of supply of oil, gas and associated hydrocarbons underlying the following described lands in Weld County, Colorado, to-wit:

Township 1 North, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Township 2 North, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Township 3 North, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Township 4 North, Range 67 West, 6th P.M.

All except the following:

SW1/4 Section 9, T. 4N., R. 67 W.

Township 5 North, Range 64 West, 6th P.M.

Sections 1 thru 24

Township 5 North, Range 67 West, 6th P.M.

All

Township 6 North, Range 64 West, 6th P.M.

All

Township 6 North, Range 65 West, 6th P.M.

Sections 1 thru 18, 23 thru 26, 34 thru 36

Township 6 North, Range 66 West, 6th P.M.

Sections 1 thru 14

Section 19: W1/2

Section 24: N1/2

Sections 30 and 31

Township 6 North, Range 67 West, 6th P.M.

All

Township 1 South, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

7. 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 in the State, an order should be made establishing 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Niobrara formation underlying the following described lands herein and that said units and permitted well locations be in accordance with the provisions of Order No. 407-1. Dual completion and downhole commingling of the Codell and Niobrara formations should be allowed.

8. Units upon which a well has been completed for production from the Niobrara formation prior to February 18, 1985 should be excluded from the provisions of this order except for the provisions of dual completion and downhole commingling of production from the Niobrara and Codell formations. Such units are described as follows:

Township 5 North, Range 67 West, 6th P.M.

Section 10: E1/2NE1/4, W1/2SE1/4

Section 18: E1/2SE1/4

Section 21: W1/2SW1/4, E1/2SW1/4

Section 27: E1/2SE1/4

Section 32: N1/2SW1/4

Section 34: E1/2NW/4, W1/2NW1/4

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed or recompleted in the Niobrara formation underlying lands described herein, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Rule 1. Eighty (80) acre drilling and spacing units shall be and the same is [sic] hereby established for the production of oil and/or gas from the Niobrara formation underlying the following described lands in Weld County, Colorado, to-wit:

Township 1 North, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Township 2 North, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Township 3 North, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Township 4 North, Range 67 West, 6th P.M.

All except the following:

SW1/4 Section 9, T. 4N., R. 67 W.

Township 5 North, Range 64 West, 6th P.M.

Sections 1 thru 24

Township 5 North, Range 67 West, 6th P.M.

All

Township 6 North, Range 64 West, 6th P.M.

All

Township 6 North, Range 65 West, 6th P.M.

Sections 1 thru 18, 23 thru 26, 34 thru 36

Township 6 North, Range 66 West, 6th P.M.

Sections 1 thru 14

Section 19: W1/2

Section 24: N1/2

Sections 30 and 31

Township 6 North, Range 67 West, 6th P.M.

All

Township 1 South, Ranges 64 thru 67 West (inclusive), 6th P.M.

All

Rule 2. Said units and permitted well locations shall be in accordance with the provisions of Order No. 407-1.

Rule 3. Dual completion and downhole commingling shall be allowed as to both oil and gas in the Codell and Niobrara formations in wells drilled, or to be drilled in the above-described area.

IT IS FURTHER ORDERED that units upon which a well has been completed for production from the Niobrara formation prior to February 18, 1985 should be excluded from the provisions of this order except for the provisions of dual completion and downhole commingling of production from the Niobrara and Codell formations. Such units are described as follows:

Township 5 North, Range 67 West, 6th P.M.

Section 10: E1/2NE1/4, W1/2SE1/4

Section 18: E1/2SE1/4

Section 21: W1/2SW1/4, E1/2SW1/4

Section 27: E1/2SE1/4

Section 32: N1/2SW1/4

Section 34: E1/2NW/4, W1/2NW1/4

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 15th day of March, 1985, as of February 18, 1985.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary