REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 18, 1989 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 Diversified Operating Company for an order pursuant to Rule 401 of the Commission and Section 34-60-118, et seq of the Colorado Revised Statutes, 1973 as amended establishing the Lilli Field Pilot Gas Injection Project Agreement and plan of operation including the injection of gas into the "D" Sandstone formation underlying the below listed lands:

Township 8 North, Range 58 West, 6th P.M. Section 4: SW/4 Section 8: NE/4 S/2 NW/4 Section 5: SE/4 Section 9: NW/4

FINDINGS

The Commission finds as follows:

1. That Diversified Operating Company, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

2. That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. That 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. That the application was for unit operations on less than the whole of the pool as established in the orders of Cause No. 451 and that testimony and evidence was insufficient to show that no adverse effect would occur upon other portions of the pool.

5. That the application should be denied.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the application of Diversified Operating company for a Pilot Gas Injection Project Agreement is hereby denied.

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 ,

1989, as of December 18, 1989.

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

1051A