REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 20, 1992, 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 Basin Operating Company for an order to amend Cause Nos. 407 and 232 to allow a well to be recompleted at an exception location for production from the "J" Sand Formation, and further, to allow the downhole commingling production o f oil, gas and associated hydrocarbons from the "J" Sand Formation with production from the Codell-Niobrara Formations.

FINDINGS

The Commission finds as follows:

1. Basin Operating 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. In Order Nos. 407-66 and 232-37, the Commission among other things, allowed wells drilled, completed or recompleted in the Codell and/or Niobrara Formations, where the production is commingled or dually completed with the "J" Formation, to be approved administratively, with additional rules established for well locations, unit designations and production allocation methods, for certain lands, including Section 21, Township 2 North, Range 68 West, 6th P.M.

5. The Arthur Stromquist No. 2 Well was drilled, completed and produced at a legal location 1980 feet FNL and 660 feet FWL, in accordance with Order Nos. 407-1 and 407-10, for production from the Codell and Niobrara Formations. Recompletion of the existing wellbore for production from the "J" Sand Formation should result in an increase of recoverable reserves and the downhole commingling of production from the "J" Sand, Codell and Niobrara Formations w ill not result in irremediable reservoir damage.

6. That evidence presented at an administrative hearing indicates that over eighty (80) percent of the working interest owners and approximately over eighty (80) percent of the royalty interest owners have approved the proposed allocation method for the three hundred and twenty (320) acre drilling and spacing unit consisting of the W1/2 of said Section 21, for production from the "J" Sand Formation. In addition, over eighty (80) percent of the working interest owners and approximately over eighty (80) percent of the royalty interest owners have approved the proposed allocation method for the eighty (80) acre drilling and spacing unit consisting of the S1/2 NW1/4 of said Section 21, for production from the Codell and Niobrara Formations.

7. The matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that an exception to allow the Arthur Stromquist No. 2 Well located 1980 feet FNL and 660 feet FWL in the SW1/4 NW1/4 of Section 21, Township 2 North, Range 68 West, 6th P.M., to be recompleted for production from the "J" Sand Formation is hereby granted and the production from the "J" Sand Formation shall be allowed to be commingled with the production from the Codell and Niobrara Formations.

IT IS FURTHER ORDERED, that the allocation method described in Finding 6 shall be approved for the three hundred and twenty (320) acre drilling and spacing unit consisting of the W1/2 of said Section 21 for production from the "J" Sand Formation and for the eighty (80) acre drilling and spacing unit consisting of the S1/2 NW1/4 of said Section 21 for production from the Codell-Niobrara Formations.

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 day of , 1992, as of July 20, 1992.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 August 22, 1992 ??

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