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 SPACED AREA, WELD COUNTY, COLORADO

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CAUSE NO. 407

ORDER NO. 407-65

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 16, 1991, in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Conquest Oil Company for an order to rescind the part of Order No. 407-59, which involuntarily pooled all interests in the N1/2 NE1/4 of Section 23, Township 5 North, Range 65 West, 6th P.M., Weld County, Colorado for production of oil and gas and associated hydrocarbons from the Codell and Niobrara formations underlying said lands for the development and operation of oil and gas from the Codell-Niobrara formation underlying said unit, pursuant to Colorado Revised Statutes, 34-60-116, 1984.

FINDINGS

The Commission finds as follows:

1. Conquest Oil Company 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 E1/2 and W1/2 or the N1/2 and S1/2 of each governmental quarter-quarter section with a tolerance of 200 feet and the 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 NE1/4 of Section 23, Township 5 North, Range 65 West, 6th P.M. [sic] Weld County, Colorado lies within the area spaced by these orders.

5. There are two wells currently producing from the Codell-Niobrara formation in the 80-acre drilling and spacing unit consisting of the N1/2 of the NE1/4 of said Section 23.

6. One hundred percent of the leasehold interest for the 80-acre unit consisting of the N1/2 NE1/4 of Section 23, Township 4 North, Range 65 West, 6th P.M. has been obtained by the applicant since Order No. 407-59 was issued on November 19, 1990; thus that part of the order for involuntary pooling is not necessary.

7. Based on the facts stated in the verified application and having been heard by the Hearing Officer who recommended approval of the application, and having received no protests, the Commission should approve the applicant's request and rescind the part of Order No. 407-59 which involuntarily pooled all interests in the N1/2 NE1/4 of said Section 23 for the commingled production of oil, gas and associated hydrocarbons from the Niobrara and Codell formations, pursuant to Colorado Revised Statutes, 34-60-116, 1984.

8. Based on the facts stated in the verified application, and receiving no protests and having been heard by the Director as Hearing Officer on April 10, 1991, and recommended for approval, the Commission should enter an order to confirm the establishment of the S1/2 NE1/4 of Section 23, Township 5 North, Range 65 West, 6th P.M as an 80-acre drilling and spacing unit.

9. At the time of administrative hearing the parties agreed to be bound by the verbal order of the Commission in this matter.

ORDER

NOW, THEREFORE, IT IS ORDERED, that, Order 407-59 which was issued September 30, 1990 to establish an 80-acre drilling and spacing unit consisting of the S1/2 NE1/4 in Section 23, Township 5 North, Range 65 West, 6th P.M., Weld County, Colorado for production of oil, and gas [sic] and associated hydrocarbons from the Codell and Niobrara formations underlying said lands, be confirmed.

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 3rd day of May, 1991, as of April 16, 1991.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado 80203