IN THE MATTER Of THE PROMULGATION AND ESTABLISHMENT Of FIELD RULES TO GOVERN OPERATIONS IN THE CODELLNIOBRARA SPACED AREA, WELD COUNTY, COLORADO Cause No. 407 Order No. 407-33

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 13, 1988, at 9:00 A.M., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Shepler & Thomas, Inc. for an order to amend Order No. 407-1 and 407-10 and establish two 40-acre drilling and spacing units for production from the Codell and Niobrara formation underlying a 80-acre unit.

FINDINGS

The Commission finds as follows:

1. Shepler & Thomas, Inc. as applicant herein, is an interested party in the subject matter of the above-entitled 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. On December 19, 1983 the commission authorized Order No. 407-1 to be issued which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell formation. The units consist of the E/2 and W/2 or the N/2 and S/2 of each governmental quarter-quarter section with a tolerance of 200 feet and the option to drill a additional well in the undrilled 40-acre tract. Subsequent Order No. 407-10 included the Niobrara formation and allowed downhole commingling of production from the Codell and Niobrara formations. The E/2 NE/4 Section 10, Township 4 North, Range 67 West 6th P.M. is a drilling and spacing unit.

5. Based on the facts stated in the verified application and the exhibits submitted and having received no objections and having been reviewed by the Director as Hearing Officer, the Commission should approve the request and amend Order Nos. 407-1 and 407-10 and establish two 40-acre drilling and spacing units consisting of (1) the NE/4 NE/4 and (2) the SE/4 NE/4, Section 10, Township 4 North, Range 67 West, 6th P.M., Adams County for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell formations.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1 and 407-10 are hereby amended and 40-acre drilling and spacing units are hereby established for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formation consisting of (1) the NE/4 NE/4, and (2) the SE/4 NE/4, Section 10, Township 4 North, Range 67 West, 6th P.M., Weld County, Colorado.

IT IS FURTHER ORDERED, that the above order shall become effective forthwith

Entered this 2nd day of February 1988, as of January 13, 1988.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 --(407-33)