IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CODEL/NIOBRARA SPACED AREA, WELD COUNTY, COLORADO Cause No. 407 Order No. 407-53

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 20, 1990 at 9:00 a.m., in the 1st Floor Assembly Room, Weld County Building, 905 10th Street, Greeley, Colorado, after giving Notice of Hearing as required by law, on the verified application of Francis Energy, Inc. for an order to amend Order Nos. 407-1 and 407-10 and to establish two 40-acre drilling and spacing units for production from the Codell and Niobrara formations from one 80-acre unit and to allow downhole commingling of production from said formations.

FINDINGS

The Commission finds as follows:

1. Francis Energy, 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. 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 section with a tolerance of 200 feet with an option to drill an 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 SE/4 of SEction 11, Township 6 North, Range 65 West, 6th P.M., Weld County, Colorado lies within the area spaced by these areas.

5. A well Vannoy 16-11, has been drilled in the SE/4 SE/4 of Section 11 for the unit consisting of the S/2 SE/4. The well has never been completed for production from any zone.

6. Based on the facts stated in the verified application

- 1 -(407-53)

and having been heard by the Hearing Officer who recommended approval of the application, and having received no protests, the Commission should approve the request and amend Order Nos. 407-1 and 407-10 to establish and segregate the S/2 unit into two 40-acre units consisting of the SE/4 SE/4 and SW/4 SE/4 of said Section 34 for the commingled production of oil, gas and associated hydrocarbons from the Niobrara and Codell formations.

7. The well, Vannoy 16-11, should be the designated well for the 40-acre unit consisting of the SE/4 SE/4 of said Section 11, and that Francis Energy, Inc. should file a Form 10, Change of Operator form for this well within thirty days of the effective date of this order.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1 and 407-10 are hereby amended and that the unit consisting of the S/2 of Section 11, Township 6 North, Range 65 West, 6th P.M., Weld County, Colorado be segregated into two 40-acre drilling and spacing units consisting of the SE/4 SE/4 and the SW/4 SE/4 of said Section 11 for the commingled production of oil, gas and associated hydrocarbons from the Codell and Niobrara formations underlying these lands. - 2 -(407-53)

IT IS FURTHER ORDERED, that the existing well Vannoy 16-11 located in the SE/4 SE/4 of said Section 11 shall be the designated well for the 40-acre unit consisting of the SE/4 SE/4 of Section 34, and that Francis Energy, Inc. shall file with the Commission a Form 10, Change of Operator Form within thirty days of the effective date of this order.

IT IS FURTHER ORDERED, that with the verbal consent of the interested parties at the time of hearing, this 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 ,

1990, as of April 20, 1990.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203

1213A

- 3 -(407-53)