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 CODELL-NIOBRARA SPACED AREA, WELD COUNTY, COLORADO

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CAUSE NO. 407

ORDER NO. 407-18

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 17, 1986 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 verified application of Shepler & Thomas, Inc. for an order to amend Order No. 407-1 and establish 40-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell formations underlying certain lands in Weld County, Colorado and to allow downhole commingling of production from said formations.

FINDINGS

The Commission finds as follows:

1. Shepler & Thomas, Inc., as applicants herein, are interested parties 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 production of oil, gas and associated hydrocarbons from the Codell formation. The units consist of the E1/2 and W1/2 or the N1/2 and S1/2 of each quarter section with the permitted well located in the center of a quarter-quarter section with a 200 foot tolerance and the option to drill a second well in the undrilled quarter-quarter section. Subsequent orders included the Niobrara formation; however, by Order No. 407-10, certain 80-acre units were excluded.

5. Based on the facts stated in the verified application and exhibits submitted, and having received no objections, and having been reviewed by the Director as hearing officer and recommended for approval, the Commission should enter an order amending Order No. 407-1 and establish 40-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell formations underlying the following described lands in Weld County, Colorado, to-wit:

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

Section 10: E1/2NE1/4

Section 18: E1/2SE1/4

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

Section 27: E1/2SE1/4

Section 28: W1/2NW1/4, E1/2SW1/4

Section 32: N1/2SW1/4

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

and further that downhole commingling for production from said formations be allowed.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 407-1 is hereby amended and 40-acre drilling and spacing units are hereby established for the production of oil, gas and associated hydrocarbons from the Codell & [sic] Niobrara formations underlying the following described lands in Weld County, Colorado, to-wit:

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

Section 10: E1/2NE1/4

Section 18: E1/2SE1/4

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

Section 27: E1/2SE1/4

Section 28: W1/2NW1/4, E1/2SW1/4

Section 32: N1/2SW1/4

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

IT IS FURTHER ORDERED, that the remaining provisions of the orders in Cause No. 407 shall apply to the above described lands and that downhole commingling of production from the Niobrara and Codell formations shall be allowed.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

ENTERED this day of 1986, as of January 17, 1986.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary