IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WATTENBERG GAS SPACED AREA AND THE CODELL AND NIOBRARA SPACED AREA, WELD COUNTY, COLORADO Cause No. 232, 407 Order No. 407-83, 232-56

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 17, 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 Basin Operating Company for an order to amend Cause Nos. 407 and 232 to allow to allow the downhole commingling production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formations with production from the "J" Sand Formation.

FINDINGS

The Commission finds as follows:

1. Basin Operating 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. In Order Nos. 407-66 and 232-37, the commission among other things, allowed wells drilled, completed or recompleted in the Codell and/or Niobrara Formations, where the production is commingled or dually completed with the "J" Formation, to be approved administratively, with additional rules established for well locations, unit designations and production allocation methods, for certain lands, including Section 15, Township 2 North, Range 68 West, 6th P .M.

5. The recompletion of the East Rinn No. 1 Well located in the SW1/4 SE1/4 of said Section 15, for production from the Codell-Niobrara Formations, should result in an increase of recoverable reserves and the downhole commingling of production from the Codell, Niobrara and "J" Sand Formations will not result in irremediable reservoir damage.

6. That evidence presented at an administrative hearing indicates that one hundred (100%) percent of the working interest owners and approximately eighty-five (85%) percent of the royalty interest owners have approved the proposed allocation method for the three hundred and twenty (320) acre drilling and spacing unit consisting of the S1/2 of said Section 15, for production from the "J" Sand Formation. In addition, one hundred (100%) percent of the worki ng interest owners and one hundred (100%) percent of the royalty interest owners have approved the proposed allocation method for the eighty (80) acre drilling and spacing unit consisting of the S1/2 SE1/4 of said Section 15, for production from the Codell-Niobrara Formations.

7. That a protest filed by M.D. and Sharon K. Hopper was withdrawn at the time of the administrative hearing.

8. The matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing.

ORDER

NOW, THEREFORE, IT IS ORDERED, that approval to recomplete the East Rinn No. 1 Well located in the SW1/4 SE1/4 of Section 15, Township 2 North, Range 68 West, 6th P.M., for production from the Codell-Niobrara Formations is hereby granted and production from the Codell-Niobrara Formations shall be allowed to be commingled with the production from the "J" Sand Formation.

IT IS FURTHER ORDERED, that the allocation method described in Finding 6 shall be approved for the three hundred and twenty (320) acre drilling and spacing unit consisting of the S1/2 of said Section 15 for production from the "J" Sand Formation and for the eighty (80) acre drilling and spacing unit consisting of the S1/2 SE1/4 of said Section 15 for production from the Codell-Niobrara Formations.

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 22nd day of 1992, as of December 17, 1991.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 January 8, 1992 NBCDJ.cse pgl7