IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CHANNING FIELD, PROWERS COUNTY, COLORADO Cause No. 424 Order No. 424-6

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on March 25, 1999 in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado on the verified application of Murfin Drilling Company, Inc. for an order to remove Section 30, Township 21 South, Range 46 West, 6th P.M. from the provisions of Cause No. 424, with said lands becoming subject to Rule No. 318 of the Colorado Oil and Gas Conservation Commission Rules and Regulations .

FINDINGS

The Commission finds as follows:

1. Murfin Drilling Company, Inc., as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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 January 21, 1985, the Commission issued Order No. 424-1 which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Middle Morrow Sandstone (McClave Sandstone) underlying certain lands located in the Channing Field, Prowers County, Colorado, with the units to consist of a section of land, according to the governmental survey, with the permitted well located no closer than 990 feet from the se ction lines. Subsequent orders issued by the Commission extended Order No. 424-1 to encompass the below-described lands:

Township 21 South, Range 46 West, 6th P.M. Section 19: All Sections 28 thru 34: All

Township 22 South, Range 46 West, 6th P.M. Sections 2 thru 5: All Sections 9 thru 11: All

5. On January 30, 1998, the Commission issued Order No. 424-5 which removed Section 19, Township 21 South, Range 46 West, 6th P.M. from the provisions of Order No. 424-3, placing them under the provisions of the Colorado Oil and Gas Conservation Commission Rules and Regulations.

6. On February 9, 1999, Murfin Drilling Company, Inc., by its attorney, filed with the Commission a verified application for an order to delete Section 30, Township 21 South, Range 46 West, 6th P.M. from the Channing Field and place the lands under the provisions of the Colorado Oil and Gas Conservation Commission Rules and Regulations.

7. Testimony and evidence was presented at the administrative hearing describing the range of sand thickness in the field and how well control defines the field limits, demonstrating why Section 30 should be removed from the provisions of the Channing Field.

8. Testimony and evidence was presented that approval of the application is necessary to allow a well to be optimally located for production from the Middle Morrow Formation to prevent waste and protect correlative rights.

9. At the time of the administrative hearing, Murfin Drilling Company, Inc. agreed to be bound by oral order of the Commission.

10. Based on the facts stated in the application, having received no protests to the application and having been heard by the Hearing Officer who recommends approval of the application, the Commission should enter an order removing Section 30, Township 21 South, Range 46 West, 6th P.M. from the provisions of Cause No. 424 for the Channing Fields. The lands should become subject to Rule No. 318 of the Colorado Oil and Gas Conservation Commission Rules a nd Regulations.

ORDER

NOW, THEREFORE IT IS ORDERED that Section 30, Township 21 South, Range 46 West, 6th P.M. shall be removed from the provisions of Cause No. 424 governing operations in the Channing Field and hereby become subject to Rule No. 318 of the Colorado Oil and Gas Conservation Commission Rules and Regulations.

IT IS FURTHER ORDERED that the below-described lands shall remain under the provisions of Cause No. 424 governing operations in the Channing Field:

Township 21 South, Range 46 West, 6th P.M. Sections 28 and 29: All Sections 31 thru 34: All

Township 22 South, Range 46 West, 6th P.M. Sections 2 thru 5: All Sections 9 thru 11: All

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 April, 1999, as of March 25, 1999.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 April 12, 1999