IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WATTENBERG FIELD AND THE CODELL-NIOBRARA SPACED AREA, ADAMS COUNTY, COLORADO Cause No. 407, 467 Order No. 467-12, 407-123

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 19, 1992 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 application of Basin Operating Company for an order to segregate an 80-acre drilling and spacing unit into two 40-acre drilling and spacing units and to allow a well to be recompleted at an exception location for production from the Codell and Niobrara Formations and to approve the downhole commingling of production from the "J" Sand, Codell and Niobrara Formations underlying Section 13, Township 1 South, Range 68 West, 6th P.M.

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. On July 16, 1991 the Commission issued Order No. 467-6, which among other things, established 160-acre drilling and spacing units for certain lands in the Wattenberg Field, for production of gas and associated hydrocarbons from the "J" Sand Formation no closer than 990 feet from the boundaries of the quarter section. The NE1/4 of Section 13, Township 1 South, Range 68 West, 6th P.M., Adams County, Colorado lies within the area spaced by these orders .

5. In Order No. 407-1, the Commission established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation. Wells shall be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction. In Order Nos. 407-10 and 407-13, the Commission amended Order No. 407-1 to include production from the Niobrara Formation in certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations. The E1/2 NE1/4 of Section 13, Township 1 South, Range 68 West, 6th P.M., Adams County, Colorado lies within the area spaced by these orders.

6. Engineering testimony presented indicated that prudent production engineering practices would allow commingled production from the "J" Sand, Codell and Niobrara Formations resulting in increased recovery of reserves and no irremediable reservoir damage.

7. No objections to the application were received, the matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing and the Commission should enter an order segregating the 80-acre drilling and spacing unit consisting of the E1/2 NE1/4 of Section 13, Township 1 South, Range 67 West, 6th P.M. into two 40-acre drilling and spacing units consisting of the SE1/4 NE1/4 and the NE1/4 NE1/4 of said Section 13, for production from the Codell and Niobrara Formations. Further, the order should allow the recompletion of the North Colorado Blvd. No. 41-13 (7) Well at an exception location 881 feet FNL and 833 feet FEL in the NE1/4 NE1/4 of Section 13 for production from the Codell and Niobrara Formations, approve the downhole commingling of production from the "J" Sand, Codell and Niobrara Formations and the allocation method for the NE1/4 of Sect ion 13 for production from the "J" Sand Formation and the NE1/4 NE1/4 of Section 13 for production from the Codell and Niobrara Formations.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the 80-acre drilling and spacing unit consisting of the E1/2 NE1/4 of Section 13, Township 1 South, Range 67 West, 6th P.M. shall be segregated into two 40-acre drilling and spacing units consisting of the SE1/4 NE1/4 and the NE1/4 NE1/4 of said Section 13, for production from the Codell and Niobrara Formations and the recompletion of the North Colorado Blvd. No. 41-13 (7) Well at an exception location 881 feet FNL and 833 feet FEL in the NE1/4 NE1/4 of Section 13 for production from the Codell and Niobrara Formations is hereby granted. In addition, the order shall approve the downhole commingling of production from the "J" Sand, Codell and Niobrara Formations and the allocation method for the NE1/4 of Section 13 for production from the "J" Sand Formation and the NE1/4 NE1/4 of Section 13 for production from the Codell and Niobrara Formations.

IT IS FURTHER ORDERED, that the provision 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 October 19, 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 October 28, 1992 ??