REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 22, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Barrett Resources Corporation, for an order to amend Cause Nos. 440, 479, and 139 to increase the number of wells allowed in each 640-acre, 320-acre, and 160-acre drilling and spacing unit which can be optionally drill ed into and produced from the Williams Fork Formation of the Mesaverde Group.

FINDINGS

The Commission finds as follows:

1. Barrett Resources Corporation, 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. On February 20, 1990, the Commission issued Order No. 440-11, which among other things, established 320-acre drilling and spacing units for certain lands in Townships 6 and 7 South, Range 95 West, 6th P.M., with the permitted well to be located no closer than 600 feet to the outer boundaries of the spacing unit and no closer than 1200 feet to any well or wells producing from the same formation, for the production of gas and associated hydrocarbons fr om the Mesaverde Formation. Subsequent orders allowed additional wells to be drilled on the 320-acre units, established 160-acre drilling and spacing units for certain lands in Township 6 South, Range 95 West, 6th P.M., and established 640-acre drilling and spacing units for certain lands in Township 7 South, Range 95 West, 6th P.M., all for production of gas and associated hydrocarbons from the Mesaverde Formation. The below-listed lands are included i n the Parachute Field: Mesaverde Wells Authorized Description Per 320-Acre Unit

Township 6 South, Range 95 West, 6th P.M.

Section 7: All 1 Section 8: All 1 Section 9: All 1 Section 10: All 1 Section 15: All 1 Section 16: All 1 Section 17: All 1 Section 18: All 1 Section 19: All 1 Section 20: All 1 Section 25: All 2 Section 26: All 2 Section 27: All 2 Section 28: All 2 Section 31: All 2 Section 32: All 2 Section 33: All 2 Section 34: All 2 Section 35: All 2 Section 36: All 2

Mesaverde Wells Authorized Description Per 320-Acre Unit

Township 7 South, Range 95 West, 6th P.M.

Section 1: All 2 Section 5: N/2 2 Section 6: N/2 2

Mesaverde Wells Authorized Description Per 160-Acre Unit

Township 6 South, Range 95 West, 6th P.M.

Section 33: W/2 1

5. In Order No. 479-1 issued February 20, 1990, the Commission, among other things, established 320-acre drilling and spacing units for production from the Mesaverde Formation for certain lands in Townships 6 and 7 South, Range 96 West, 6th P.M. Subsequent Order No. 479-2 issued April 20, 1990 and corrected November 11, 1990, included additional lands to be spaced for production from the Mesaverde Formation and established the NW1/4 and NE1/4 of Secti on 36, Township 6 South, Range 96 West, 6th P.M., as 160-acre drilling and spacing units. Said drilling units consist of the E1/2 and W1/2 or the N1/2 and S1/2 of a section, with the permitted well to be located no closer than 600 feet from the boundaries of the unit and no closer than 1200 feet from any well producing from the Mesaverde Formation. An additional option well may be drilled in accordance with the rule that any permitted well shall be loca ted no closer than 600 feet from the boundaries of any other unit and no closer than 1200 feet from any well producing from the Mesaverde Formation. The below-listed lands are included in the Grand Valley Field:

Mesaverde Wells Authorized Description Per 320-Acre Unit

Township 6 South, Range 96 West, 6th P.M.

Section 23: All 1 Section 24: All 1 Section 25: All 1 Section 26: All 1 Section 27: All 2 Section 34: All 2 Section 35: All 2 Section 36: S/2 2

Township 7 South, Range 96 West, 6th P.M.

Section 1: All 2

Mesaverde Wells Authorized Description Per 160-Acre Unit

Township 6 South, Range 96 West, 6th P.M.

Section 36: N/2 1

6. On December 10, 1959, the Commission issued Order No. 139-1 which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation. Subsequent Order No. 139-3 included additional lands and subsequent Order No. 139-11 amended Order No. 139-1 and allowed an additional well to be drilled on the unit, with the permitted well to be located no closer than 600 feet to the outer boundaries o f the spacing unit and no closer than 1200 feet to any well or wells producing from the same formation, where the second such well is to be located in a quarter section in which there is no well producing from that source of supply. The below-listed lands are included in the Rulison Field:

Mesaverde Wells Authorized Description Per 640-Acre Unit

Township 6 South, Range 94 West, 6th P.M.

Section 25: All 2 Section 26: All 2 Section 34: All 2 Section 35: All 2 Section 36: All 2

Township 7 South, Range 94 West, 6th P.M.

Section 1: All 2 Section 2: All 2 Section 3: All 2 Section 4: All 2 Section 5: All 2 Section 6: All 2 Section 7: All 2 Section 8: All 2 Section 9: All 2 Section 10: All 1 Section 11: All 1 Section 12: All 1

Township 7 South, Range 95 West, 6th P.M.

Section 3: All 3 (645 acres) Section 4: All 3 (645 acres) Section 12: All 1

7. In Order No. 139-8 issued July 16, 1979, the Commission established 320-acre drilling and spacing units for production from the Mesaverde Formation, with the permitted well to be located no closer than 600 feet from the boundaries of the quarter section upon which it is located and no closer than 1200 feet from another producing or producible well in the same formation. The below-listed lands are included in the Rulison Field:

Mesaverde Wells Authorized Description Per 320-Acre Unit

Township 6 South, Range 94 West, 6th P.M.

Section 1: All 1 Section 2: All 1 Section 3: All 1 Section 9: All 1 Section 10: All 1 Section 11: All 1 Section 12: All 1 Section 13: All 1 Section 14: All 1 Section 15: All 1 Section 16: All 1 Section 17: All 1 Section 18: All 1 Section 19: All 1 Section 20: All 1 Section 21: All 1 Section 22: All 1 Section 23: All 1 Section 24: All 1 Section 27: All 1 Section 28: All 1 Section 29: All 1 Section 30: All 1 Section 31: All 1 Section 32: All 1 Section 33: All 1

Township 7 South, Range 95 West, 6th P.M.

Section 2: All 2 Section 6: N/2 2 Section 10: E/2 2 Section 11: All 2

8. That evidence presented at the administrative hearing indicates that the Williams Fork Formation of the Mesaverde Group constitutes a common source of supply of gas and associated hydrocarbons for the above-described lands in Garfield County, Colorado.

9. That the stratigraphic equivalent for the Williams Fork Formation of the Mesaverde Group is found from 3,920 feet to 7,268 feet in the Dual Induction log for the Barrett GV No. 53-34 Well, located in the SW1/4 NE1/4 of Section 34, Township 6 South, Range 95 West, 6th P.M.

10. That based upon extensive field and engineering studies, the sands within the Williams Fork Formation of the Mesaverde Group are tight and contain extensive natural fractures, such fractures however being vertically and lateraly limited in extent and, for the most part, do not extend beyond lithologic boundaries. Evidence presented indicated that there was no pressure communication evident between wells located as close as 1,100 feet apart.

11. That based on testimony presented on reserve estimates, only approximately 4.5 (4.5%) percent of gas in place will be recovered in areas where three (3) wells are producing from the Williams Fork Formation on a typical government section.

12. That a protest was filed by Meridian Oil Inc. and withdrawn at the time of the administrative hearing.

13. That due to the omission of the portion of the application requesting revised setbacks for permitted well locations, the setback request should be considered as a separate application at the March hearing so that proper notice can be given.

14. Based on the facts stated in the application, receiving a protest that was withdrawn, and having been heard by the Hearing Officers on February 21, 1994 and recommended for approval, the Commission should approve the application to increase the number of wells allowed in previously established drilling and spacing units and should consider the setback request for well locations as a separate application to be heard at the March hearing.

ORDER

NOW, THEREFORE IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well or wells drilled, completed or recompleted in the Williams Fork Formation of the Mesaverde Group described herein below, in addition to other applicable rules and regulations and policies and orders of the Commission, if any, heretofore adopted and not in conflict herein:

Rule 1. That the Williams Fork Formation of the Mesaverde Group constitutes a common source of supply of gas and associated hydrocarbons for the lands described in Findings 4 through 8 in Garfield County, Colorado.

Rule 2. That the stratigraphic equivalent for the Williams Fork Formation of the Mesaverde Group is found from 3,920 feet to 7,268 feet in the Dual Induction log for the Barrett GV No. 53-34 Well, located in the SW1/4 NE1/4 of Section 34, Township 6 South, Range 95 West, 6th P.M.

Rule 3. That for the 640-acre drilling and spacing units established for the below-listed lands, eight (8) wells shall be allowed to be optionally drilled into and produced from the Williams Fork Formation, with the permitted well to be located no closer than 600 feet from the lease line nor 1,200 feet from any other producible or drilling oil and gas well in the Williams Fork Formation.

Township 6 South, Range 94 West, 6th P.M.

Section 25: All Section 26: All Section 34: All Section 35: All Section 36: All

Township 7 South, Range 94 West, 6th P.M.

Section 1: All Section 2: All Section 3: All Section 4: All Section 5: All

Township 7 South, Range 94 West, 6th P.M. cont.

Section 6: All Section 7: All Section 8: All Section 9: All Section 10: All Section 11: All Section 12: All

Township 7 South, Range 95 West, 6th P.M.

Section 3: All Section 4: All Section 12: All

Rule 4. That for the 320-acre drilling and spacing units established for the below-listed lands, four (4) wells shall be allowed to be optionally drilled into and produced from the Williams Fork Formation, with the permitted well to be located no closer than 600 feet from the lease line nor 1,200 feet from any other producible or drilling oil and gas well in the Williams Fork Formation.

Township 6 South, Range 94 West, 6th P.M.

Section 1: All Section 2: All Section 3: All Section 9: All Section 10: All Section 11: All Section 12: All Section 13: All Section 14: All Section 15: All Section 16: All Section 17: All Section 18: All Section 19: All Section 20: All Section 21: All Section 22: All Section 23: All Section 24: All Section 27: All Section 28: All Section 29: All Section 30: All Section 31: All Section 32: All Section 33: All

Township 6 South, Range 95 West, 6th P.M.

Section 7: All Section 8: All Section 9: All Section 10: All Section 15: All Section 16: All Section 17: All Section 18: All Section 19: All Section 20: All

Township 6 South, Range 95 West, 6th P.M. cont.

Section 25: All Section 26: All Section 27: All Section 28: All Section 31: All Section 32: All Section 33: E1/2 Section 34: All Section 35: All Section 36: All

Township 6 South, Range 96 West, 6th P.M.

Section 23: All Section 24: All Section 25: All Section 26: All Section 27: All Section 34: All Section 35: All Section 36: S/2

Township 7 South, Range 95 West, 6th P.M.

Section 1: All Section 2: All Section 5: N/2 Section 6: N/2 Section 10: E/2 Section 11: All

Township 7 South, Range 96 West, 6th P.M.

Section 1: All

Rule 5. That for the 160-acre drilling and spacing units established for the below-listed lands, two (2) wells shall be allowed to be optionally drilled into and produced from the Williams Fork Formation, with the permitted well to be located no closer than 600 feet from the lease line nor 1,200 feet from any other producible or drilling oil and gas well in the Williams Fork Formation.

Township 6 South, Range 95 West, 6th P.M.

Section 33: W/2

Township 6 South, Range 96 West, 6th P.M.

Section 36: N/2

IT IS FURTHER ORDER, 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 , 1994, as of February 22, 1994.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 March 9, 1994 ??

(440#14)