REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 24, 1996, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, a required by law on the application of Snyder Oil Corporation, for an order to amend Cause No. 407 to allow the Varra Companies No. 31-6L Well, located 1,600 feet FNL and 1,451 feet FWL, in the SE1/4 NW1/4 of Section 31, Township 3 North, Range 67 West, 6th P.M., to be recomplet ed at an exception location for commingled production from the Codell, Niobrara and "J" Sand Formations and to approve the proposed allocation method.

FINDINGS

The Commission finds as follows:

1. Snyder Oil Corporation, 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 No. 407-1, the Commission established 80-acre drilling and spacing unit 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 20 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 allo w the downhole commingling of production from the Codell and Niobrara Formations, including Section 31, Township 3 North, Range 67 West, 6th P.M.

5. In Cause No. 232, the Commission established 320-acre drilling and spacing units with said units to consist of the N1/2 and S1/2 or the E1/2 and W1/2 of a governmental section for production from the "J" Sand Formation and with the authorized well to be located in the NE1/4 and the SW1/4 of each section no closer than 990 feet from the boundaries of the quarter section. By Order No. 232-20, the Commission authorized the drilling of a second well for e ach 320-acre drilling and spacing unit with the additional well to be located no closer than 990 feet from the boundaries of the quarter section upon which it is located, including Section 31, Township 3 North, Range 67 West, 6th P. M.

6. Order Nos. 407-66 and 232-47 issued April 16, 1991, among other things, allowed the recompletion, downhole commingling and approval of allocation methods for production from the "J" Sand, Codell, and Niobrara Formations, including Section 31, Township 3 North, Range 67 West, P.M.

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 due to a gravel pit being located at the permitted location for a Codell-Niobrara Formation well.

8. An order of the Commission should be entered allowing the Varra Companies No. 31-6L Well, located 1,600 feet FNL and 1,451 feet FWL, in the SE1/4 NW1/4 of Section 31, Township 3 North, Range 67 West, 6th P.M., to be recompleted at an exception location for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the E1/2 NW1/4 of Section 31, and to allow the commingling of production with the "J" Sand Formation, for the 320-acre drilling and spacing unit consisting of the W1/2 of Section 31, and approve the proposed allocation method.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 407-1 is hereby amended t allow the Varra Companies No. 31-6L Well, located 1,600 feet FNL and 1,451 feet FWL, in the SE1/4 NW1/4 of Section 31, Township 3 North, Range 67 West, 6th P.M., to be recompleted at an exception location for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the E1/2 NW1/4 of Section 31, and to allow the commingling of producti on with the "J" Sand Formation, for the 320-acre drilling and spacing unit consisting of the W1/2 of Section 31, and approve the proposed allocation method.

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 an and/or all of the above orders.

ENTERED this 3rd day of July, 1996, as of June 24, 1996

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 July 3, 1996