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. 407-71

AMENDED

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 20, 1991 at 8:30 a.m., 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 Eddy Oil Company, to establish two 40-acre drilling and spacing units for production from the Codell and Niobrara formations underlying an undrilled 80-acre unit.

FINDINGS

The Commission finds as follows:

1. Eddy Oil Company, 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 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. The S1/2 NW1/4 of Section 26, Township 4 North, Range 67 West, 6th P.M., Weld County, Colorado lies within the area spaced by these orders.

5. No wells have been drilled in the S1/2 of the SW1/4 of said Section 26 to establish production from the Codell or Niobrara formations.

6. Protests were filed on August 12, 1991 by Michael Ptasnik and on August 14, 1991 on behalf of John Schultz. Agreement was reached between Eddy Oil and Dr. Ptasnik at the time of administrative hearing.

7. Based on the facts stated in the verified application, and having been heard by the Director as Hearing Officer on August 16, 1991, and with additional testimony presented at the time of hearing, 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 the SW1/4 NW1/4 and the SE1/4 NW1/4 of said Section 26 for the commingled production of oil, gas and associated hydrocarbons from the Codell and Niobrara formations.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the unit consisting of the S1/2 of the NW1/4 of Section 26, Township 4 North, Range 67 West, 6th P.M., Weld County, Colorado be segregated into two 40-acre drilling and spacing units consisting of the SW1/4 NW1/4 and the SE1/4 NW1/4 for the commingled production of oil, gas and associated hydrocarbons from the Codell and Niobrara formations underlying these lands, and that Eddy Oil Company be designated the operator for the unit consisting of the SE1/4 NW1/4 of said Section 26.

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 23rd day of August, 1991, as of August 20, 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

August 23, 1991