REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 20, 1985 at 9:00 A.M., in Room 110, State Centennial Building, 1313 Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Riviera Drilling & Exploration Company for an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Cozzette & Corcoran formations underlying certain lands in Gunnison and Delta Counties, Colorado.

FINDINGS

The Commission finds as follows:

1. Riviera Drilling and Exploration Co., 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 following described lands which are included in the Electric Mr. Federal Unit should excluded from the area to be spaced.

Township 10 South, Range 91 West, 6th P.M. Section 35: E/2 Township 11 South, Range 91 West, 6th P.M. Section 1: All, except HES 270, 313, 257 & 312 Section 12:E/2 Section 13:E/2 Section 24:NE /4

5. Based upon the facts stated in the verified application and exhibits submitted, and receiving no objections and having been reviewed and recommended by the Director, the Commission should enter an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Cozzette and Corcoran formations underlying the following described lands in Gunnison and Delta Counties Colorado:

Gunnison County Township 10 South, Range 90 West, 6th P.M. Section 34:All Section 35:All Section 36:W/2

Township 11 South, Range 90 West, 6th P.M. Section 1: N/2, SW/4 Sections 2 thru 4: All Section 5: N/2, N/2S/2, SW/4SW/4 Sections 6 and 7: All Section 8: Lots 5 and 6, SW/4SW/4 Sections 9 and 10: All Section 11: N/2, SW/4

Section 15: NW/4 Section 16: N/2, SW/4 Section 17: All, except HES 256 Section 18: All Section 19: N/2 Section 20: NW/4

Gunnison and Delta Counties Township 11 South, Range 91 West, 6th P.M. Section 1: Hes 270, 313, 257 and 312

6. In order to prevent, the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Cozzette and Corcoran formations. Each unit should consist of 160-acres, more or less, and consist of a quarter section of land, according to the governmental survey with the permitted well located in the center of each unit with a tolerance of 300 feet in any direction. Wells presently producing or producible, or permitted within the proposed area should be designated the permitted well for the unit upon which they are located.

7. All available geological and engineering data concerning said Cozzette and Corcoran formations indicate that one well will efficiently and economically drain an area of approximately 160-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently and economically drained by one well producing from said formations.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the Cozzette and Corcoran formations underlying certain lands in the Coal Basin Field, herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. One hundred sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Cozzette and Corcoran formations underlying the following described lands in Gunnison & Delta Counties, Colorado, to-wit:

Gunnison County Township 10 South, Range 90 West, 6th P.M. Section 34: All Section 35: All Section 36: W/2

Township 11 South, Range 90 West, 6th P.M. Section 1: N/2, SW/4 Sections 2 thru 4: All Section 5: N/2, N/2S/2, SW/4SW/4 Sections 6 and 7: All Section 8: Lots 5 and 6, SW/4SW/4 Sections 9 and 10: All Section 11: N/2, SW/4 Section 15: NW/4 Section 16: N/2, SW/4 Section 17: All, except HES 256 Section 18: All Section 19: N/2 Section 20: NW/4

Gunnison and Delta Counties Township 11 South, Range 91 West, 6th P.M. Section 1: Hes 270, 313, 257 and 312

2

(431-1)

Rule 2. Each unit shall consist of 160-acres, more or less, and consist of a quarter section of land, according to the governmental survey with the permitted well located in the center of each unit with a tolerance of 300 feet in any direction. Wells presently producing or producible, or permitted within the proposed area shall be designated the permitted well for the unit upon which they are located.

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 31st day of May 1985, as of May 20, 1985.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary 3 --(431-1)