REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 13, 1988 at 9:00 A.M. in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, as a result of Order No. 451-3 which established a production restriction on wells located in the spaced area of the Lilli Field as established by Order Nos. 451-1 and 451-2 and further ordered that such restrictions shall remain in effect until January 31, 1988 and that operators in the field and any interested parties are to appear at the hearing scheduled for January 13, 1988 and present additional information including production data, concerning production practices in the field.

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. 451-3, a maximum allowable of 200 bbls of oil per day and 300 MCF of gas per day was 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 have a maximum allowable of 200 MCF of gas per day. A well is 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. Gas-oil ratio tests were taken on each well located in the area described therein.

4. Testimony presented at the hearing indicated that the production allowables of 200 bbls of oil per day and 300 MCF of gas per day for wells with a gas-oil ratio of 3000 cubic feet of gas per barrel of oil or less, and production allowables of 200 MCF of gas per day for wells with a gas-oil ratio greater than 3000 cubic feet of gas per barrel or oil should be further adjusted based on quarterly gas-oil ratio tests and a field wide static bottom hole pressure survey of each well in the field should be run in order to prevent waste and to protect the correlative rights of owners in the field of wells producing from the D' Sand reservoir underlying the following described lands in 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

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 February 1, 1988, the maximum daily allowable, during any one month, for wells producing with a gas-oil ration of 3000 cubic feet of gas per barrel of oil or less shall be 125 barrels of oil per day or 250 MCF of gas per day, whichever is produced first. Wells producing with a gas-oil ratio in excess of 3000 cubic feet of gas per barrel of oil shall have a maximum daily allowable, during any one month, of 350 MCF of gas per day. A well shall be considered a gas well with a gas-oil ration in excess of 3000 to 1 cubic feet per barrel.

Rule 2. Individual gas-oil ration tests shall be conducted on all wells with a gas-oil ratio of 5000 cubic feet per barrel, or less, between February 1, 1988 and February 15, 1988, and again between May 1, 1988, and May 15, 1988. Each well is to be individually tested with the amount of gas, oil and water accurately measured. Each well shall be produced under each operator's 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 work-over or a test failure, approval for a second test may be allowed and is to be conducted in the same manner as above. Notification of when such tests are to be run shall be delivered to the office of the Commission and all operators in the field at least twenty-four (24) hours prior to the commencement of the seventy-two (72) hour testing period. Tests may be witnessed by the staff of the Commission and any operator in the field at his own risk.

Rule 3. Results of the individual tests shall be submitted to the office of the Commission and to other operators in the field by February 17, 1988 and May 17, 1988 respectively. The amount of oil, gas and water produced during the last twenty-four (24) hour test period shall be the basis for computing the gas-oil ratio and shall be the basis for the daily allowable as set by the Commission.

Rule 4. Preliminary monthly production data shall be submitted to the Commission and the other operators in the field on a letter head format by the twentieth (20th) of the month following production. 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.

Rule 5. The Director shall meet with the operators in the field prior to June 1, 1988 to establish a time and procedures for static bottom hole pressure tests to be conducted on the entire field before June 30, 1988.

IT IS FURTHER ORDERED, that the above Order shall remain in effect until July 31, 1988 and that operators and any interested party in the Lilli Field shall appear at the July 1988 hearing with the results of the bottom hole pressure survey, production data, gas-oil ratio test results and additional information concerning production practices in the field.

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(451-4)

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 rights, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

Entered this 9th day of February 1988, as of January 13, 1988.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

(451-4)