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. 407-19

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 Sunshine Valley Petroleum for an order to amend Order No. 407-1 and establish two (2) 40-acre drilling and spacing units for production from the Codell and Niobrara formations.

FINDINGS

The Commission finds as follows:

1. Sunshine Valley Petroleum, 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 established 80-acre drilling and spacing units for the 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 governmental quarter section with the permitted well located in the center of the quarter-quarter section with a tolerance of 200 feet and the option to drill an additional well in the undrilled 40-acre tract. Subsequent Order No. 407-6 included the Niobrara formation and allowed downhole commingling of production from the Codell and Niobrara formations.

5. Based on the facts stated in the verified application and the exhibits submitted and having received no objections and having been reviewed by the Director as hearing officer, the Commission should approve the request and amend Order Nos. 407-1 and 407-6 and establish two (2) 40-acre drilling and spacing units consisting of (1) SW1/4SW1/4 and (2) SE1/4SW1/4 Section 29, Township 5 North, Range 65 West, 6th P.M., Weld County for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell formations.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1 and 407-6 are hereby amended and two (2) 40-acre drilling and spacing units are hereby established for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara formations consisting of (1) SW1/4SW1/4 and (2) SE1/4SW1/4 Section 29, Township 5 North, Range 5 West, 6th P.M., Weld County, Colorado.

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

ENTERED this 7th day of February, 1986, as of January 17, 1986.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary