IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WATTENBERG GAS SPACED AREA AND THE CODELL AND NIOBRARA SPACED AREA, WELD COUNTY, Cause No. 232, 407 Order No. 407-109, 232-75

REPORT TO 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 of oil, gas and associated hydrocarbons from the "J" Sand Formation with production from the Niobrara Formation.

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 29, Township 2 North, Range 68 West, 6th P.M.

5. The Champlin 86 Amoco "N" No. 1 Well was drilled, completed and produced at a legal location 840 feet FSL and 840 feet FWL, in accordance with Order Nos. 407-1 and 407-10, for production from the Niobrara Formation. 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 and Niobrara Formations will 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 S/2 of said Section 29, 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 S/2 SW/4 of said Section 29, for production from the Niobrara Formation.

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

ORDER

NOW, THEREFORE, IT IS ORDERED, that an exception to allow the Champlin 86 Amoco "N" No. 1 Well located 840 feet FSL and 840 feet FWL in the SW/4 SW/4 of Section 29, 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 Niobrara Formation.

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 S/2 of said Section 29 for production from the "J" Sand Formation and for the eighty (80) acre drilling and spacing unit consisting of the S/2 SW/4 of said Section 29 for production from the Niobrara Formation.

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 25th day of, 1992, as of July 20, 1992.

CORRECTED this 6th day of October, 1992, as of July 20, 1992.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 October 1, 1992