REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on March 18, 1996, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, on the verified application of Apache Corporation for an order to allow a well to be drilled at an exception location 1,700 feet FSL and 1,987 feet FWL in the NE1/4 SW1/4 of Resurvey Tract 39 (Section 18), Township 12 North, Range 91 West, 6th P.M., for production from the Lewis "A" Formation. FINDINGS The Commission finds as follows: 1. Apache Corporation, 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 March 18, 1985, the Commission issued Order No. 427-1, amended on February 15, 1995, which established irregular drilling and spacing units ranging in size from 130.67 to 204.04 acres for production of gas and associated hydrocarbons from the Lewis "A" Formation, with the permitted well to be located no closer than 600 feet from the boundaries of the unit, allowing exceptions to the permitted well location to be granted by the Director for topograph ic reasons or provided offset owners consent to exception locations.

5. At the time of the administrative hearing, testimony was presented to describe the Lewis Formation as a turbidic sand which forms discreet traps that change drastically from one location to the next. Additional testimony indicated the geological risks associated with the drilling of a well in a legal location in either Unit 9 or 1 0, to the west or east of the proposed location, would not allow an economic well to be drilled.

6. The correlative rights of the mineral interest owners and overriding royalty owners have been protected by the execution of a pooling agreement which allows for participation in a pooled area consisting of Units 9 and 10 with production to be allocated on an acreage basis. All mineral interest owners have signed the agreement except for one owner who Apache Corporation could not locate who represents approximately .5% of the pooled area.

7. Based on the facts stated in the verified application and having been heard by the Hearing Officer who recommends approval of the application, the Commission should enter an order allowing a well to be drilled at an exception location 1,700 feet FSL and 1,987 feet FWL in the NE1/4 SW1/4 of Resurvey Tract 39 (Section 18), Township 12 North, Range 91 West, 6th P.M., for production from the Lewis "A" Formation.

O R D E R

NOW, THEREFORE, IT IS ORDERED that Order No. 427-1 shall be amended to allow a well to be drilled at an exception location 1,700 feet FSL and 1,987 feet FWL in the NE1/4 SW1/4 of Resurvey Tract 39 (Section 18), Township 12 North, Range 91 West, 6th P.M., for production from the Lewis "A" Formation.

IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

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 29th day of March, 1996, as of March 18, 1996.

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 March 29, 1996