IN THE MATTER OF THE PROMULGATION AND          CAUSE NO. 407
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE CODELL-NIOBRARA                   ORDER NO. 407-237
SPACED AREA, WELD COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 1, 1997, Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of Prima Oil & Gas Company for an order allowing certain wells to be drilled at exception locations for production from the Codell Formation.

FINDINGS

The Commission finds as follows:

1. Prima Oil & Gas Company, 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 Sections 11-13 and 23, in Township 5 North, Range 67 West, 6th P.M.

5. Prima Oil & Gas Company wishes to drill the following wells at the locations described below:

Section 11 Wells: SE¼ bottomhole locations (BHL)1 Section 12 Wells: SW¼ bottomhole locations (BHL)1
Tri-Pointe 11-4C Tri-Pointe 12-3C
Sec. 11 T5N, R67W Sec. 12 T5N, R67W
BHL 2000' FEL 1200' FSL BHL 460’ FWL 1200’ FSL
SL 450' FNL 700' FWL Sec. 13 SL 450’ FNL 760’ FWL Sec. 13
80 acre unit: W½SE¼ 80 acre unit: W½SW¼

Tri-Pointe 11-4B Tri-Pointe 12-3B
Sec. 11 T5N, R67W Sec. 12 T5N, R67W
BHL 1300' FEL 1200' FSL BHL 1200’ FSL 1300’ FWL
SL 450' FNL 720' FWL Sec. 13 SL 450’ FNL 780’ FWL Sec. 13
80 acre unit: E½SE¼ 80-acre unit: W½SW¼

Tri-Pointe 11-4A Tri-Pointe 12-3A
Sec. 11 T5N, R67W Sec. 12 T5N, R67W
BHL 460' FEL 1200' FSL BHL 2000’ FWL 450’ FNL Sec. 13
SL 450' FNL 740' FWL Sec. 13 SL 450’ FNL 800’ FWL Sec. 13
80-acre unit: E½SE¼ 80-acre unit: E½SW¼

1 All six (6) wells to be drilled from one surface location (SL) in Section 13, Township 5 North, Range 67 West, 6th P.M., at 700’ to 800’ FWL, 450’ FNL.

Section 13 Wells: NW¼ and SW¼ Section 23 Wells: SW¼
same surface and bottomhole locations same surface and bottomhole locations
Shupe 13-23 Kinzer 23-3A
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
1750' FNL 460' FWL 1320' FSL 2180' FWL
80-acre unit: S½NW¼ 80-acre unit: E½SW¼

Shupe 13-2B Kinzer 23-3B
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
1320' FNL 1620' FWL 1320' FSL 1607' FWL
80-acre unit: S½NW¼ 80-acre unit: E½SW¼

Shupe 13-2A Kinzer 23-3C
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
2180' FWL 1320' FNL 1320' FSL 1034' FWL
80-acre unit: N½NW¼ 80-acre unit: W½SW¼

Moore 13-35 Kinzer 23-3D
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
1315' FSL 1305' FWL 1320' FSL 460' FWL
80-acre unit: W½SW¼ 80-acre unit: W½SW¼

6. That testimony presented at the administrative hearing indicated that the most efficient pattern for reservoir drainage is to place wells in an east-west line and perform large fractures to recover natural gas reserves to the north and south. Wells located in this manner will prevent waste, have greater economic recovery, and will reduce surface impacts.

7. That the 200 foot drilling windows establish a normal 460 foot setback from the unit boundaries. No exception locations are closer than this setback except for the proposed Shupe 13-2A Well in the NW¼ of Section 13, Township 5 North, Range 67 West, 6th P.M., which is 439 feet from the unit boundary.

8. The proposed wells in Sections 11 and 12, Township 5 North, Range 67 West have bottom hole locations under the Tri Pointe development located within the City of Greeley boundary. All six (6) of these wells will be drilled directionally from a single location located 450 feet outside of the Greeley city boundary. Three (3) wells instead of four (4) will be drilled per quarter quarter section in this area due to the economics of directional drilling.

9. 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 an existing well to be recompleted for production from shallower zones.

10. At the time of the administrative hearing, Prima Oil & Gas Company agreed to be bound by oral order of the Commission.

11. Based on the facts stated in the application, having received no protests, and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order approving the wells described in Finding No. 5 to be drilled at exception locations for production oil, gas and associated hydrocarbons from the Codell Formation, for the specified drilling and spacing units.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1 and 407-10 shall be amended to allow the below-listed wells to be drilled at exception locations for production oil, gas and associated hydrocarbons from the Codell Formation, for the specified drilling and spacing units.

Section 11 Wells: SE¼ bottomhole locations (BHL)1 Section 12 Wells: SW¼ bottomhole locations (BHL)1
Tri-Pointe 11-4C Tri-Pointe 12-3C
Sec. 11 T5N, R67W Sec. 12 T5N, R67W
BHL 2000' FEL 1200' FSL BHL 460’ FWL 1200’ FSL
SL 450' FNL 700' FWL Sec. 13 SL 450’ FNL 760’ FWL Sec. 13
80 acre unit: W½SE¼ 80 acre unit: W½SW¼

Tri-Pointe 11-4B Tri-Pointe 12-3B
Sec. 11 T5N, R67W Sec. 12 T5N, R67W
BHL 1300' FEL 1200' FSL BHL 1200’ FSL 1300’ FWL
SL 450' FNL 720' FWL Sec. 13 SL 450’ FNL 780’ FWL Sec. 13
80 acre unit: E½SE¼ 80-acre unit: W½SW¼

Tri-Pointe 11-4A Tri-Pointe 12-3A
Sec. 11 T5N, R67W Sec. 12 T5N, R67W
BHL 460' FEL 1200' FSL BHL 2000’ FWL 450’ FNL Sec. 13
SL 450' FNL 740' FWL Sec. 13 SL 450’ FNL 800’ FWL Sec. 13
80-acre unit: E½SE¼ 80-acre unit: E½SW¼

1 All six (6) wells to be drilled from one surface location (SL) in Section 13, Township 5 North, Range 67 West, 6th P.M., at 700’ to 800’ FWL, 450’ FNL.

Section 13 Wells: NW¼ and SW¼ Section 23 Wells: SW¼
same surface and bottomhole locations same surface and bottomhole locations
Shupe 13-23 Kinzer 23-3A
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
1750' FNL 460' FWL 1320' FSL 2180' FWL
80-acre unit: S½NW¼ 80-acre unit: E½SW¼

Shupe 13-2B Kinzer 23-3B
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
1320' FNL 1620' FWL 1320' FSL 1607' FWL
80-acre unit: S½NW¼ 80-acre unit: E½SW¼

Shupe 13-2A Kinzer 23-3C
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
2180' FWL 1320' FNL 1320' FSL 1034' FWL
80-acre unit: N½NW¼ 80-acre unit: W½SW¼

Moore 13-35 Kinzer 23-3D
Sec. 13 T5N, R67W Sec. 23 T5N, R67W
1315' FSL 1305' FWL 1320' FSL 460' FWL
80-acre unit: W½SW¼ 80-acre unit: W½SW¼

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.

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 18th day of July, 1997, as of July 1, 1997.

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 18, 1997

(407-237)