IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE HAMBERT FIELD AND THE CODELL-NIOBRARA SPACED AREA, WELD COUNTY, COLORADO Cause No. 407, 304 Order No. 304-9, 407-190

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 21, 1995, in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of Basin Operating Company, for an order to amend Cause No. 304 and 407 to allow six (6) wells to be recompleted to the Sussex Formation and to allow the downhole commingling of production from the Sussex Formation with production from t he Codell and Niobrara Formations. In addition, the applicant seeks an order approving an allocation method.

FINDINGS

The Commission finds as follows:

1. Basin Operating Company as applicant 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. In Order No. 304-4, which amended Order No. 304-1, the Commission established 160-acre drilling and spacing units for production from the Sussex Formation. The Commission issued Order No. 304-5 on February 17, 1978, which established 160-acre drilling and spacing units for production of gas from the Sussex Formation underlying the entire spacing area of the Hambert Field, with the permitted well located no closer than 600 feet from the boundaries of the unit.

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.

6. In Order Nos. 304-6 and 407-28, issued April 20, 1987, the Commission authorized the location of an additional well at either the center of the NE1/4 or the SW1/4 of each quarter section, with a tolerance of 200 feet in any direction for production from the Sussex Formation. In addition, the order allowed the downhole commingling of production from the Sussex Formation with production from the Codell and Niobrara Formations when no difference in own ership between the formations existed within the 160-acre unit.

7. This matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing that an exception to the permitted well location is necessary to avoid multiple wellhead facilities by allowing one wellbore to be drilled to recover additional reserves from multiple zones, and because the working interest ownership is not common between the Codell and Niobrara Formations and the Sussex Formation.

8. A protest to the application was filed by Churchill Energy, Inc. At the time of the administrative hearing, the Applicant amended the application to withdraw the Dinner No. 14-18 and continue the Stromberger No. 34-12 to the April hearing and the protest was withdrawn.

9. That an allocation formula has been proposed to allocate production from the Sussex Formation on 160-acre drilling and spacing units, and from the Codell and Niobrara Formations for 80-acre drilling and spacing units.

10. An order of the Commission should be entered allowing the below-listed wells to be recompleted to the Sussex Formation, allowing the downhole commingling of production from the Sussex Formation with production from the Codell and Niobrara Formations, for the below-listed wells, and approving the proposed allocation method for said formations.

Well Location Spacing Unit

Ewing 33-10 NW1/4SE1/4-Section 10-4N-66W W1/2SE1/4 API 33-11 NW1/4SE1/4-Section 11-4N-66W N1/2SE1/4 Blake 23-12 NE1/4SW1/4-Section 12-4N-66W N1/2SW1/4 Ewing 11-14 NW1/4NW1/4-Section 14-4N-66W W1/2NW1/4 Ewing 41-14 NE1/4NE1/4-Section 14-4N-66W E1/2NE1/4 API 31-15 NW1/4NE1/4-Section 15-4N-66W N1/2NE1/4

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 304-6 and 407-28 shall be amended to allow the below-listed wells to be recompleted to the Sussex Formation.

Well Location Spacing Unit

Ewing 33-10 NW1/4SE1/4-Section 10-4N-66W W1/2SE1/4 API 33-11 NW1/4SE1/4-Section 11-4N-66W N1/2SE1/4 Blake 23-12 NE1/4SW1/4-Section 12-4N-66W N1/2SW1/4 Ewing 11-14 NW1/4NW1/4-Section 14-4N-66W W1/2NW1/4 Ewing 41-14 NE1/4NE1/4-Section 14-4N-66W E1/2NE1/4 API 31-15 NW1/4NE1/4-Section 15-4N-66W N1/2NE1/4

IT IS FURTHER ORDERED, that downhole commingling of production from the Sussex Formation with production from the Codell and Niobrara Formations shall be allowed, and that the proposed allocation method for said formations shall be approved.

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 , 1995, as of February 21, 1995.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 March 30, 1995 ??

(304#9)