IN THE MATTER OF THE PROMULGATION AND             CAUSE NO. 449
AND ESTABLISHMENT OF FIELD RULES TO
GOVERN OPERATIONS IN THE ARAPAHOE FIELD,        ORDER NO. 449-32
CHEYENNE COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 9, 1998, at 8:30 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law, on the application of Wiepking-Fullerton Energy, L.L.C., for an order to rescind the production restrictions contained in Order No. 449-20, Rule 3, which established production limits for each well of 300 barrels of fluid per day and 100 MCF of gas per day from the Morrow "B" Sand Formation for lands contained in Arapahoe Field.

FINDINGS

The Commission finds as follows:

1. Wiepking-Fullerton Energy, L.L.C., 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. In Order No. 449-20 issued September 19, 1988 and corrected December 5, 1988, the Commission established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sandstone Formations for the below-listed lands. Said units consist of the E½ and the W½ or the N½ and the S½ of a governmental quarter section, with the unit designated by the operator of the first well in each quarter section. The permitted well for each 80-acre unit shall be located within the NE¼ or SW¼ of a quarter section and no closer than 460 feet from the boundaries of the unit tract. The Order also established a maximum production allowable of 300 barrels of fluid and 100 MCF gas per day per well

Township 13 South, Range 42 West, 6th P.M.
Section 26: W½
Sections 27 - 34: All
Section 35: W½

Township 13 South, Range 43 West, 6th P.M.
Section 25: All
Section 36: All

Township 14 South, Range 42 West, 6th P.M.
Section 2: W½
Section 3 - 6: All
Section 10: All

Township 14 South, Range 43 West, 6th P.M.
Section 1: All

5. Evidence presented at the administrative hearing indicated that when portions of the Arapahoe Field were unitized as the Arapahoe Unit and the NW Arapahoe Unit, production restrictions were rescinded for these areas in September, 1989. Additional testimony was presented to show that there are existing wells in the E½ of Section 26 and the E½ of Section 35 which are located just outside of the Arapahoe Field boundary and are not subject to production restrictions, although these wells also produce from the Morrow "B" Sand Formation.

6. Evidence presented at the administrative hearing indicated that when Order No. 449-20 was entered no market existed in this area for the produced gas and production restrictions were necessary to prevent waste. A gas market now exists for the produced gas.

7. Evidence presented at the administrative hearing indicated that secondary recovery for this area of the Arapahoe Field is not economic and that this portion of the Field should be produced under primary depletion without production limits.

8. Letters in support of the Application have been received by the Commission from Union Pacific Resources and Mull Drilling Company.

9. At the time of the administrative hearing, the Applicant agreed to be bound by oral order of the Commission.

10. Based on the facts stated in the application and the testimony and exhibits presented at the time of the administrative hearing by the applicant, the Commission should approve the request to rescind the production restrictions contained in Order No. 449-20, Rule 3 which established production limits for each well of 300 barrels of fluid per day and 100 MCF of gas per day from the Morrow "B" Sand Formation for lands contained in Arapahoe Field.

ORDER

NOW, THEREFORE, IT IS ORDERED that Order No. 449-20, Rule 3 is hereby rescinded for the production restrictions for production of oil and associated hydrocarbons from the Morrow "B" Sandstone Formation for the below-described lands:

Township 13 South, Range 42 West, 6th P.M.
Section 26: W½
Sections 27 - 34: All
Section 35: W½

Township 13 South, Range 43 West, 6th P.M.
Section 25: All
Section 36: All

Township 14 South, Range 42 West, 6th P.M.
Section 2: W½
Section 3 - 6: All
Section 10: All

Township 14 South, Range 43 West, 6th P.M.
Section 1: 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 15th day of July, 1998 , as of July 9, 1998.

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 July 20, 1998

(449-32)