REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 16, 1987 at 9:00 A.M., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the Commission's own motion, requesting operators in the field to appear and present testimony and recommendations concerning the production practices in the field in order to prevent waste in accordance with 34-60-117 C.R.S., as ameded.

FINDINGS

The Commission finds as follows:

1. The Commission has jurisdiction over the subject matter embraced in the notice of the aforesaid hearing, and of the parties interested therein, as well as jurisdiction to promulgate the hereinafter prescribed order.

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

3. By Order No. 451, 80 acre drilling and spacing units were established for the production of oil and associated hydrocarbons from the D' Sand underlying the following described lands in the Lilli Field.

Township 8 North, Range 58 West, 6th P.M.

Section 4: All Section 7: All Section 5: All Section 8: All Section 6: All Section 9: All

4. By Order No. 451-2, 160 acre drilling and spacing units were established for the production of gas and associated hydrocarbons from the D' Sand underlying the following described lands in the Lilli Field:

Township 8 North, Range 58 West, 6th P.M.

Section 2: All Section 10: All Section 3: All Section 11: All

5. Testimony presented at the hearing indicates that the present production practices in the field constitutes waste by the inefficient, excessive, and improper use and dissipation of the reservoir energy and in order to prevent such waste and to protect the correlative rights of owners in the field, a production restriction should be placed on wells producing from the D' Sand reservoir located in the area described in Findings 3 and 4.

6. A maximum allowable of 200 bbls of oil per day and 300 MCF of gas per day should be imposed on wells with a gas-oil ratio of 3000 cubic feet of gas per barrel of oil or less. Wells in excess of 3000 cubic feet of gas per barrel of oil should have a maximum allowable of 200 MCF of gas per day. A well should be considered a gas well with a GOR in excess of 3000 to 1 cubic ft/bbl. Such restrictions to remain in effect until January 31, 1988.

7. Gas-oil ratio tests should be taken on each well located in the area described herein between December 1 and December 10, 1987 and again between January 1 and January 10, 1988 and reported to the Commission by the 15th of December 1987 and the 13th of January 1988.

ORDER

NOW, THEREFORE IT IS ORDERED, that the following rules and regulations shall apply to wells producing from the D' Sand reservoir underlying the following described lands in the Lilli Field, Weld County, Colorado:

Township 8 North, Range 58 West, 6th P.M.

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

Rule 1. Commencing November 16, 1987, the maximum daily allowable, during any one month, for wells producing with a gas-oil ratio of 3000 cubic feet of gas per barrel of oil or less shall be 200 barrels of oil per day and 300 MCF of gas per day. Wells producing with a gas-oil ratio in excess of 3000 cubic feet of gas per barrel of oil shall have a maximum allowable, during any one month, of 200 MCF of gas p day. A well shall be considered a gas well with a gas-oil ratio in excess of 3000 to 1 cubic ft/bbl.

Rule 2. Individual gas-oil ratio tests shall be conducted between December 1 and December 10, 1987 and again between January 1 and January 10, 1988. Each well is to be individually tested with the amount of gas, oil and water accurately measured. The entire battery shall be produced under each operators existing plan of operation for a period of seventy-two (72) hours with the individual well tests taken during the last twenty-four (24) hours of such period. In the event of a workover or a test failure, approval for a second test may be allowed and is to be conducted in the same manner as above. The schedule of testing shall be submitted to the Commission's office by the first of each month with a copy to each operator in the field. Tests may be witnessed by the staff of the Commission and any operator in the field at his own risk. Exception to the requirement for individual well tests may be granted by the Director for leases consisting of no more than two wells each and each well capable of producing the allowable and having a gas-oil ratio of less than 3000 cubic feet of gas per barrel of oil.

Rule 3. Results of the tests shall be submitted to office of the Oil and Gas Conservation Commission and to other operators in the field by the 15th of December 1987 and January 13, 1988. Under production may be made up only during the month following the month in which it occurred, and any over production, which shall not exceed ten (10) percent of the allowable, shall be made up in the month following such over production.

IT IS FURTHER ORDERED that the above Order shall remain in effect until January 31, 1988 and that operators and any interested party in the Lilli Field shall appear at the January 13, 1988 hearing with additional information, including production data thru December 31, 1987.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

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(451-3)

IT IS FURTHER ORDERED, that the Commission expressly reserves its rights, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

ENTERED this 27th day of 1987, as of November 16, 1987.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO By Frank J. Piro, Secretary

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(451-3)