REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 21, 1988 at 8:30 A.M. in Room 101, Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the Commission's own motion to extend the application of Order No. 451-8 to the production of gas and associated hydrocarbons from the Cretaceous D' Sand, Lilli Member, underlying certain lands adjacent to Lilli Field.

FINDINGS

The Commission finds as follows:

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

2. 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.

3. By Order No. 451-2, 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Cretaceous D' Sand, Lilli Member. The units shall consist of a quarter section according to the governmental survey with the permitted well location to be at a location no closer than 600 feet to the boundaries of the quarter section.

4. By Order No. 451-8, the production of each well whose gas to oil ratio is greater than 3,000 cubic feet per barrel shall be limited to 700 mcfg per day on a monthly basis.

5. Testimony at the hearing indicated that a well Jim H was drilled and completed by Petroleum Energy Corporation in the SE/4 NE/4 Section 15, Township 8 North, Range 58 West in the Cretaceous D' Sand Lilli Member. Further testimony indicated the well was producing with a gas to oil ratio of about 39,000 to 1 with flowing tubing pressure of 850 psi.

6. At the July hearing of the Commission the Lilli Technical Committee reported the known limits of the D' Sand, Lilli Member on Exhibit A, which showed the member present in the N/2 of Section 15 and the NW/4 of Section 14. Finding 5 herein above confirms that the Lilli Member is present even farther south than Exhibit A postulated.

7. The following lands are underlain by the same common source of supply as Lilli Field which is the Cretaceous D' Sand:

Township 8 North, Range 58 West, 6th P.M. Section 14: NW/4 Section 15: N/2 and the Commission should enter an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the D' Sand for the above listed lands and restricting production to the amounts allowed under Order No. 451-8 or any additional orders in this cause.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the D' Sand underlying certain lands in the Lilli Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. One hundred sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the D' Sand underlying the following described lands in Weld County, Colorado, to-wit: Township 8 North, Range 58 West, 6th P.M. Section 14: NW/4 Section 15: N/2

Rule 2. Each unit shall consist of 160-acres, more or less, and consist of a quarter section of land, according to the governmental survey. The permitted well shall be at a location no closer than 600 feet from the boundaries of the unit.

Rule 3. A well shall be classified as a gas well if its initial productive test results in a gas - oil ratio of 10,000 cubic feet per barrel or greater.

IT IS FURTHER ORDERED, that the provisions of Order 451-8 including all production limits, tests and reports shall be applicable to all wells completed in the D' Sand, Lilli Member in the above listed lands. 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 25th day of 1988, as of November 21, 1988.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

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