IN THE MATTER OF THE PROMULGATION AND          CAUSE NO. 407
AND ESTABLISHMENT OF FIELD RULES TO
GOVERN OPERATIONS IN CODELL-NIOBRARA          ORDER NO. 407-245
SPACED AREA, WELD COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on January 7, 1998, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Patina Oil & Gas Corporation for an order allowing the KFKA J 25-13 Well to be drilled at exception location 460 feet FSL and 367 feet FWL, in the SW¼ SW¼ of Section 25, Township 5 North, Range 66 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

FINDINGS

The Commission finds as follows:

1. Patina Oil & Gas 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 25, Township 5 North, Range 66 West, 6th P.M. Order No. 407 1 also allows the Director to grant a waiver to location exceptions provided the owners of contiguous and cornering units file a waiver or consent in writing agreeing to the location exception.

5. At the time of the administrative hearing, testimony was presented that on October 24, 1997, Patina requested a consent from Mr. Merel T. Meyer. Mr. Meyer sent back the request to Patina indicating he did not agree with this location exception, therefore Patina filed the application for hearing. Mr. Meyer did not file a protest to the hearing notice.

6. Testimony and evidence was presented that the location exception was required due to topography restrictions and to address surface owner concerns.

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 recover additional reserves from the Codell and Niobrara Formations.

8. At the time of the administrative hearing, the Applicant agreed to be bound by oral order of the Commission.

9. Based on the facts stated in the application, having received no protests and having been heard by the Hearing Officer who recommends approval of the application, an order of the Commission should be entered allowing the KFKA J 25-13 Well to be drilled at exception location 460 feet FSL and 367 feet FWL, in the SW¼ SW¼ of Section 25, Township 5 North, Range 66 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1 and 407-7 are hereby amended allowing the KFKA J 25-13 Well to be drilled at exception location 460 feet FSL and 367 feet FWL, in the SW¼ SW¼ of Section 25, Township 5 North, Range 66 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

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 29th day of January, 1998, as of January 7, 1998.

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 January 29, 1998

(407-245)