407-231, 499-25, 232-171

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 WATTENBERG FIELD, THE WATTENBERG GAS SPACED AREA, AND THE CODELL-NIOBRARA SPACED AREA, WELD COUNTY, COLORADO

)

CAUSE NOS. 499, 232 and 407

ORDER NOS. 499-25, 232-171

and 407-231

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 11, 1997, at 9:00 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of HS Resources, Inc., for an order to allow the Eichthaler No. 1 Well, currently producing or capable of producing from the "J" Sand, Codell and Niobrara Formations, to be produced from the Dakota Formation as an additional well for the 320-acre drilling and spacing unit consisting of the N½ of Section 34, Township 2 North, Range 65 West, 6th P.M.

FINDINGS

The Commission finds as follows:

1. HS Resources, Inc., 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. 499-1, the Commission established 320-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Dakota Formation in certain lands, with the 320-acre drilling and spacing units to be identical to those previously established for the "J" Sand Formation under Cause No. 232, with the permitted wells to be located in the NW¼ and the SE¼ of the section and no closer than 990 feet from the boundaries of the quarter section, including Section 34, Township 2 North, Range 65 West, 6th P.M.

5. In Cause No. 232, the Commission established 320-acre drilling and spacing units for the production of gas from the "J" Sand Formation in the Wattenberg Field with one well allowed for each unit to be located in the NE¼ and SW¼ and no closer than 990 feet to the boundaries of the quarter section. On August 21, 1979, the Commission issued Order No. 232-20 which allowed a second well to be drilled on each 320-acre unit, including Section 34, Township 2 North, Range 65 West, 6th P.M.

6. 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 34, Township 2 North, Range 65 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 320-acres is not less than the area that could be efficiently and economically drained by two (2) wells on this unit and that waste would occur if an additional well was not allowed to be produced on the 320-acre unit.

8. That at the time of the administrative hearing, HS Resources, Inc., agreed to be bound by verbal order of the Commission.

9. Based on the facts stated in the application, having received no protests to the application, and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order allowing the Eichthaler No. 1 Well, currently producing or capable of producing from the "J" Sand, Codell and Niobrara Formations, to be produced from the Dakota Formation as an additional well for the 320-acre drilling and spacing unit consisting of the N½ of Section 34, Township 2 North, Range 65 West, 6th P.M.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Eichthaler No. 1 Well, currently producing or capable of producing from the "J" Sand, Codell and Niobrara Formations, is hereby approved to be produced from the Dakota Formation as an additional well for the 320-acre drilling and spacing unit consisting of the N½ of Section 34, Township 2 North, Range 65 West, 6th P.M.

IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith, as the party agreed to accept the verbal order of the Commission.

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 14th day of February, 1997, as of February 10, 1997.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

February 14, 1997