REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 19, 1992 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 application of Gerrity Oil and Gas Corporation, for an order to establish a 160-acre drilling and spacing unit for production from the Codell and Niobrara Formations, for the SE1/4 of Section 25, Township 4 North, Range 65 West, 6th P.M. and to allow a fifth well to be drilled on the proposed 160-acre unit for production from the Codell and Niobrara Formations with the downhole commingling of production to be allowed.

FINDINGS

The Commission finds as follows:

1. Gerrity Oil and Gas Corporation, 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 issued Order No. 407-1 which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the permitted well to be located in the center of either a 40-acre tract or a quarter-quarter section with a tolerance of 200 feet in any direction. Order No. 407-3 included additional lands to be established for production from the Codell Formation . On October 15, 1984, the Commission issued Order No. 407-6 which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, in accordance with those provisions in Order No. 407-1 and further allowed the dual completion and downhole commingling of production from the Codell Formation with production from the Niobrara Formation. In Order No. 407-10, the Commission amended Order No. 407-3 to include production from the Niobrara Formation for certain lands and to allow the dual completion and downhole commingling of production from the Codell and Niobrara Formations. The SE1/4 of Section 25, Township 4 North, Range 65 West, 6th P.M., Weld County, Colorado lies within the area established by these orders.

5. There are currently four existing wells in the SE1/4 of said Section 25 producing from the Codell and Niobrara Formations.

6. A total of five wells drilled to and completed in the Codell and Niobrara Formations with commingled production should be allowed to produce for the drilling and spacing unit consisting of the SE1/4 of said Section 25.

7. The fifth well should be located no farther than 200 feet from the center of the quarter section and no closer than 800 feet from an existing well drilled to the Codell and/or Niobrara Formations.

8. The fifth well is necessary to evaluate the economic and efficient recovery of the hydrocarbons contained within the Codell and Niobrara Formations and the operator of the five wells should report to the Commission on the reservoir information and production obtained from the five wells.

9. Based on the facts stated in the verified application, having received no protests, and having been heard by the Director as Hearing Officer on February 13, 1992, who has recommended the application for approval, the Commission should enter an order establishing a 160-acre drilling and spacing unit for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations with a fifth well on the aforementioned unit, said dri lling unit being not smaller than the maximum area that can be efficiently and economically drained by the authorized five wells producing from said Codell and Niobrara Formations.

10. At the time of the 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 the application of Gerrity Oil and Gas Corporation, for an order to establish a 160-acre drilling and spacing unit consisting of the SE1/4 of Section 25, Township 4 North, Range 65 West, 6th P.M., Weld County, Colorado is hereby approved in order to insure proper and efficient development of the oil, gas and associated hydrocarbons from the Codell and Niobrara Formations underlying said unit.

IT IS FURTHER ORDERED, that a fifth well may be drilled on the above-described 160-acre unit at a location no farther than 200 feet from the center of said SE1/4 of Section 25, nor closer than 800 feet from any existing well drilled to the Codell and/or Niobrara Formations, and that the downhole commingling of the production from the Codell and/or Niobrara Formations from all five wells on said unit shall be allowed.

IF IS FURTHER ORDERED, that the operator of the five wells shall report to the Commission on the reservoir information and production obtained from the five wells.

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 day of , 1992, as of February 19, 1992.

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 March 12, 1992 ORDERS\407-90 ??