REPORT OF THE COMMISSION

This cause came on for hearing before the Oil and Gas Conservation Commission on March 21, 1988 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 application of Union Pacific Resources Company for an order establishing 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow 'A' and 'B' Sand formations in cer tain lands of Cheyenne County, Colorado.

FINDINGS

The Commission finds as follows:

1. Union Pacific Resources Company as applicant herein, is an interested party in the subject matter of the above entitled 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. Testimony was presented to the Director as Hearing Officer which indicated the Morrow 'A' and 'B' Sand formations were separate but continuous formations underlying the requested area. The formations have very similar geologic and reservoir characteristics to those underlying Arapahoe Field as established in Order No. 449-1 and appear to be continuations of the same sands.

5. Additional testimony indicated one well should efficiently and effectively drain each 80-acre unit.

6. The units should consist of 80-acres and consist of the El/2 and Wl/2, or the Nl/2 and the Sl/2, of a governmental section, with the unit designated by the operator of the first well drilled in the quarter section. The permitted well for each unit should be located no closer than 460 feet from the unit tract boundaries, resulting in a rectangular location window of an approximate size of 400 feet by 860 feet. The designated well location should be in the NEl/4 and SW1/4 of each quarter section.

7. This requested area is a continuation of Arapahoe Field.

8. The requested area has productive zones which may penetrate a gas zone with a resulting high gas to oil ratio.

ORDER

NOW THEREFORE IT IS ORDERED, that Order No. 449-1 be amended to include wells producing from the Morrow 'A'and 'B'Sand formations, and that the following rules shall apply to such wells located in the additional area, called Area II hereinafter.

Township 14 South, Range 42 West, 6th P.M.

Section 7: All Section 17: All Section 8: All Section 18: All Section 9: All Section 19: All Section 15: W/2 Section 20: All Section 16: All Section 29: El/2

1. The units shall consist of 80-acres, more or less and consist of the El/2 and Wl/2, or the Nl/2 and Sl/2, of a governmental quarter section, with the unit designated by the operator of the first well drilled in the quarter section. The permitted well for each unit shall be located no closer than 460 feet from any unit boundary, and shall be anywhere within the resulting rectangular window of approximate size 400 feet by 860 feet.

IT IS FURTHER ORDERED, that the operators of producing wells in Arapahoe Field Area II shall present testimony concerning production practices and potential restrictions at the earliest possible time but no later than May 16, 1988. This testimony may be heard by the Director as Hearing Officer.

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

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

Entered this 6th day of. April , 1988, as of March 21, 1988.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary