REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 17, 1984 at 9:00 A.M., in Suite 380, Logan Tower Building, 1580 Logan Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Caribou Energy, Inc. for an order pooling all interests in the drilling and spacing unit consisting of the SE/4SE/4 Section 11 and the NE/4NE/4 Section 14, Township 10 North, Range 55 West, 6th P.M.., Logan County, Colorado, for the development and operation of the "J" Sand for the production of gas and associated hydrocarbons underlying said unit, pursuant to 34-60-116 C.R.S., as amended.

FINDINGS

The Commission finds as follows:

1. Caribou Energy, Inc., 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. The S/4SE/4 Section 11 and the NE/4NE/4 Section 14, Township 10 North, Range 55 West, 6th P.M. has been established as a drilling and spacing Unit No. 2 by the Commission by Order No. 423-1.

5. Effort has been made to obtain the voluntary pooling of all interests in said drilling unit for the development and operation thereof, but that it has not been possible to secure the agreement of all owners of interest in said unit for the voluntary pooling thereof.

6. In order to insure proper and efficient development of said drilling unit and to promote conservation of the oil and/or gas resources of the State, an order should be made pooling all interests in the 80-acre drilling unit described herein.

7. An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the, oil and/or gas from the common source of supply underlying said drilling unit

8. Production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within said drilling unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that:

1. 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 No. 2 consisting of the SE/4SE/4 Section 11 and the NE/4NE/4 Section 14, Township 10 North, Range 55 West, 6th P.M., Logan County, Colorado, are hereby pooled for the development of gas and associated hydrocarbons tom the "J" Sand underlying said unit.

2. The production obtained from said drilling unit shall be allocated to each owner therein in the unit on the basis of the proportion that the number of acres in each tract bears to the total number of m neral 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.

3. The non-consenting owner should be afforded the opportunity to elect whether to participate in the drilling and operating of said well, and pay a 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 unit.

4. The operator responsible for drilling the well on the said unit shall prepare an Authorization for Expenditure ("AFE"), which shall be submitted to the non-consenting owner in the unit.

5. Within thirty (30) days from the date of receipt of said AFE by the non-consenting owner, such owner shall indicate whether he consents to the drilling of the well and agrees to partic:pate 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 a non-consenting owner within such time. period, said owner shall be deemed to have elected not to participate and shall therefcre be deemed to be non-consenting as to the well.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall be 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 , 1985, as of December 17, 1984.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 --