IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CODELL-NIOBRARA SPACED WELD COUNTY, COLORADO Cause No. 232, 407 Order No. 407-220 AREA AND THE WATTENBERG GAS SPACED AREA, ) 232-164

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 29, 1996, in Rifle Town Hall, Council Chambers, Rifle, Colorado, after giving Notice of Hearing, as required by law on the application of SOCO Wattenberg Corporation, for an order to amend Cause No. 407 to allow the Ruff No. 8-1I4 Well, located 990 feet FNL and 990 feet FEL, in the NE1/4 NE1/4 of Section 8, Township 4 North, Range 64 West, 6th P.M., to be recompleted at an exception location fo r commingled production from the Codell, Niobrara and "J" Sand Formations.

FINDINGS

The Commission finds as follows:

1. SOCO Wattenberg 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 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, including Section 8, Township 4 North, Range 64 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 each 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 8, Township 4 North, Range 64 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 8, Township 4 North, Range 64 West, 6th 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 to reduce surface impact and recover additional reserves from the Codell and Niobrara Formations.

8. An order of the Commission should be entered allowing the Ruff No. 8-1I4 Well to be recompleted at an exception location 990 feet FNL and 990 feet FEL, in the NE1/4 NE1/4 of Section 8, Township 4 North, Range 64 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the E1/2 NE1/4 of Section 8, and to allow the commingling of production with the "J" Sand Formation, for the 320-a cre drilling and spacing unit consisting of the E1/2 of Section 8.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 407-1 is hereby amended to allow the Ruff No. 8-1I4 Well to be recompleted at an exception location 990 feet FNL and 990 feet FEL, in the NE1/4 NE1/4 of Section 8, Township 4 North, Range 64 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the E1/2 NE1/4 of Section 8, and to allow the commingling of production with the "J" Sand For mation, for the 320-acre drilling and spacing unit consisting of the E1/2 of Section 8.

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 August, 1996, as of July 29, 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 March 25, 1997 ??

(407#220)