IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

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 CODELL-NIOBRARA FORMATION AREA, WELD COUNTY, COLORADO

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CAUSE NO. 407

ORDER NO. 407-6

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 15, 1984 at 9:00 a.m., in Suite 380 Logan Tower Building, 1580 Logan Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Energy Oil, Inc., for an order establishing 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Niobrara formation underlying certain lands in Weld County, Colorado, and that the units and permitted well locations be in accordance with the provisions of Order No. 407-1. It was further requested the production from the Codell and Niobrara formations be allowed to be dually completed and commingled.

FINDINGS

The Commission finds as follows:

1. Energy Oil, 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, among other things, established 80-acre drilling and spacing units for the production of oil and/or gas from the Codell formation underlying certain lands in Adams, Boulder, Jefferson, Larimer and Weld Counties, Colorado. The units consist of the W1/2 and E1/2 or the N1/2 and S1/2 of a governmental quarter section with the permitted well located in the center of a quarter-quarter section with a tolerance of 200 feet with the option to drill an additional well in the undrilled 40-acre tract.

5. Evidence presented at the hearing indicates that the Niobrara formation constitutes a common source of supply of oil, gas and associated hydrocarbons underlying the following described lands in Weld County, Colorado, to-wit:

Township 4 North, Range 64 West, 6th P.M.

All

Township 4 North, Range 65 West, 6th P.M.

All

Township 5 North, Range 64 West, 6th P.M.

Sections 25 thru 36

Township 5 North, Range 65 West, 6th P.M.

Sections 2 thru 29

Section 30: E1/2

Sections 32 thru 36: All

Township 6 North, Range 65 West, 6th P.M.

Sections 31, 32 and 33

Township 5 North, Range 66 West, 6th P.M.

Sections 1, 12 and 13

6. In order to prevent waste of oil and gas, as defined by law, to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources in the State, an order should be made establishing 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Niobrara formation underlying the following described lands herein and that said units and permitted well locations be in accordance with the provisions of Order No. 407-1. Dual completion and downhole commingling of the Codell and Niobrara formations should be allowed.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed or recompleted in the Niobrara formation underlying lands described herein, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Rule 1. Eighty (80) acre drilling and spacing units shall be and the same is hereby established, for the production of oil and/or gas from the Niobrara formation underlying the following described lands in Weld County, Colorado, to-wit:

Township 4 North, Range 64 West, 6th P.M.

All

Township 4 North, Range 65 West, 6th P.M.

All

Township 5 North, Range 64 West, 6th P.M.

Sections 25 thru 36

Township 5 North, Range 65 West, 6th P.M.

Sections 2 thru 29

Section 30: E1/2

Sections 32 thru 36: All

Township 6 North, Range 65 West, 6th P.M.

Sections 31, 32 and 33

Township 5 North, Range 66 West, 6th P.M.

Sections 1, 12 and 13

Rule 2. Said units and permitted well locations shall be in accordance with the provisions of Order No. 407-1.

Rule 3. Dual completion and downhole commingling shall be allowed as to both oil and gas in the Codell and Niobrara formations in wells drilled, or to be drilled in the above-described area.

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 13th day of November, 1984, as of October 15, 1984.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary