REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 20, 1990 at 8:30 a.m. in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Mull Drilling Company, Inc. for an order establishing the N/2 and S/2 of the SW/4 of Section 2, Township 14 South, Range 42 West, 6th P.M., Cheyenne County, Colorado as drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations, said Section 2 being within the area spaced by Order No. 449-20 (Corrected), and further that an exception location be authorized to drill the #1 Rother "A" in the NW/4 SW/4 of said Section 2 no closer than 460 feet to the unit boundaries with production limited to the amounts established by the latest order in Cause No. 449 for wells at exception locations.

FINDINGS

The Commission finds as follows:

1. Mull Drilling Company, 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. On October 11, 1988, the Commission entered Order No. 449-20 (Corrected) establishing 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations underlying certain lands in Cheyenne County, Colorado. It further ordered that said drilling units shall consist of 80-acres, more or less, and shall consist of the E/2 and W/2 or the N/2 and S/2 of a governmental quarter section, with the unit designated by the operator of the first well drilled in the quarter section, with the permitted well location to be in the NE/4 and SW/4 and no closer than 460 feet from the unit tract boundaries. The order further established production restrictions for wells located in the Arapahoe Field spaced area and further limited the production of wells at exception locations to fifty

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percent of a well producing at the designated location.

5. Based on the facts stated in the verified application, no protests being filed, and having been heard by the Director as Hearing Officer On February 16, 1990 who recommended the application be granted, the Commission should enter an order establishing the N/2 and S/12 of said Section 2 as drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations, and that an exception location be authorized to drill the #1 Rother "A" in the NW/4 SW/4 of said Section 2 no closer than 460 feet to the unit boundaries.

6. Should a commercial well be completed at the above exception location, production from said well should be restricted to fifty percent (50%) that allowed at a well producing at a permitted location as established by the latest order in Cause No. 449.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the N/2 and S/2 of the SW/4 of Section 2, Township 14 South, Range 42 West, 6th P.M., Cheyenne County, Colorado are established as drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formation.

IT IS FURTHER ORDERED, that an exception location is authorized to drill the #1 Rother "A" in the NW/4 SW/4 of said Section 2 at a location no closer than 460 feet to the unit boundaries with production limited to the amounts established by the latest order in Cause No. 449 for wells at exception locations. - 2 -

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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 ,

1990, as of February 20, 1990.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203

1115A

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