REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 16, 1984 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Frizzell Oil Company, for an order pooling all interests in the unit consisting of the E/2NE/4 and the unit consisting of the W/2NE/4 Section 33, Township 7 North, Range 66 West, 6th P.M., Weld County, Colorado, for the development and operation of said unit for the production of oil and associated hydrocarbons from the Codell formation according to C.R.S. 34-60-116, as amended.

FINDINGS

The Commission finds as follows:

1. Frizzell Oil Company, as applicant herein (hereinafter referred to as "Applicant"), is an interested party in the subject matter of the above-referenced hearing by virtue of its present ownership of leasehold interests and mineral interests in the subject lands.

3. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

4. 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.

5. Evidence presented at the hearing shows that J. Gale Moody is an interested party by virtue of his ownership of an unleased 1/3 mineral interest under the lands which are the subject thereof.

6. The Commission has previously established two (2) 80-acre drilling and spacing units consisting of the E/2NE/4 and the W/2NE/4 Section 33, Township 7 North, Range 66 West, 6th P.M., Weld County, Colorado (hereinafter referred to as the "Spacing Unit"), and permitting two wells to be drilled on each unit.

7. In order to insure proper and efficient development of the Spacing Units and to promote conservation of the oil and gas resources of the State, an order should be made pooling all interests in the Spacing Units.

8. An order of the Commission pooling all interests in the Spacing Units is necessary in order to afford each owner of an interest in said units the opportunity to recover and receive his just and equitable share of the oil and associated hydrocarbons from the common source of supply underlying said unit.

9. Production obtained from the Spacing Unit should be allocated to each mineral owner therein on the basis of the proportion that the number of net mineral acres owned by each owner bears to the total number of mineral acres within said unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that pursuant to the provisions of 34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing unit consisting of the E/2NE/4 and the unit consisting of the W/2NE/4, Section 33, Township 7 North, Range 66 West, 6th P.M., Eaton Field, Weld County, Colorado, are hereby pooled for the development of oil and associated hydrocarbons from the Codell formation underlying said unit.

IT IS FURTHER ORDERED, that the production obtained from said drilling unit shall be allocated to each owner therein in the unit to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.

IT IS FURTHER ORDERED, that the unleased mineral owner should be afforded the opportunity to consent to the drilling of the proposed wells on each Spacing Unit and to elect whether to participate in the drilling and operating of said well, and pay his or her proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of net mineral acres owned by said unleased mineral owner by the total number of mineral acres in the Spacing Unit.

IT IS FURTHER ORDERED, that the operator responsible for drilling the proposed wells on each Spacing Unit shall prepare an Authorization for Expenditure ("AFE"), which shall be submitted to the unleased mineral owner in the Spacing Unit.

IT IS FURTHER ORDERED, that within thirty (30) days from the date of receipt of said AFE by the unleased mineral owner, suc mineral owner shall indicate whether he consents to the drilling of the well and agrees to participate in the cost thereof. Such election shall be made in writing, either by executing the AFE or similar document. In the event a written election to participate is not made by an unleased mineral owner within such time period, said unleased mineral owner shall be deemed to have elected not to participate and shall therefore be deemed to be non-consenting as to the well.

IT IS FURTHER ORDERED, that the non-consenting unleased mineral owner within each Spacing Unit shall be treated as the owner of. the landowner's royalty to the extent of 12.5% of his or her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non-consenting owners proportionate 87.5% share of production the costs specified in C.R.S. 34-60-116 (7) (b), as amended. After recovery of such costs, the non-consenting mineral owner shall then own his proportionate 8/8 the-share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with the well as if he had originally agreed to the drilling.

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 1984, as of January 16, 1984.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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