REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 18, 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 Skaer Enterprises, Inc. for an order approving a certain Unit Agreement for the North Minto Unit Area, providing for involuntary unit operations of the reservoir consisting of the J' Sand including secondary recovery by injection of water into said J' Sandstone reservoir underlying certain lands in the North Minto Field, Logan County, Colorado.

FINDINGS

The Commission finds as follows:

1. Skaer Enterprises, Inc., as applicant herein, is an interested party in the subject matter of the above-referenced 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. The matter was heard by the Director as Hearing Officer and a recommendation for approval was made. No protests were received.

5. The plan for unit operations has not been approved by those persons required to pay at least eighty percent of the costs of the unit operations, nor by the owners of eighty percent of the production or proceeds.

ORDER

NOW THEREFORE IT IS ORDERED that:

1. The Unit Agreement and Unit Operating Agreement covering lands in the North Minto Unit Area which agreements are attached to and made a part of the original order of this Commission on file in the office of the Commission, are approved as being in the public interest for conservation and subject to Number 7 herein below.

2. The Cretaceous J' Sand Reservoir, common source of supply, underlies the following described lands in Logan County, Colorado, to-wit: Township 9 North, Range 53 West, 6th P.M. Section 23: SE/4 Section 25: NW/4 Section 24: S/2 SW/4 Section 26: NE/4 NE/4 containing 440 acres, more of less.

3. The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to C.R.S. 34-60-118 of the Oil and Gas Conservation Act are just and reasonable, and are incorporated herein as the Commission's plan of involuntary unit operations for such lands.

4. The secondary recovery project by the injection of water into the J' Sand reservoir of the North Minto ('J' Sand) Unit Area, as presented by applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir, and the operator is authorized to inject water into said reservoir through injection wells such quantities as shall be reasonably determined by the operator to best achieve the maximum recovery of oil without waste.

5. In the event that it becomes necessary in the future to convert additional producing wells to input wells; to plug and abandon certain wells in the Unit Area, or to drill additional producing or input wells as indicated by developments in the course of the operations of the waterflood, the Unit Operator is authorized to make such changes in the operation of the project as may be required to facilitate the efficient development thereof.

6. All injection wells shall be approved by the Director in accordance with the rules and regulations of the Commission prior to any injection occurring.

7. No order of the Commission providing for unit operations shall become effective unless the plan for unit operations prescribed by the Commission has been approved in writing by those persons who, under the Commission's order, will be required to pay at least eighty percent of the costs of the unit operation, and also by the owners of at least eighty percent of the production or proceeds there that will be credited to interests which are free of cost, such as royalties, overriding royalties, and production payments, and the Commission has made a finding, either in the order providing for unit operations or in a supplemental order, that the plan for unit operations has been so approved. If the plan for unit operations has not been so approved at the time the order providing for unit operations is made, the Commission shall upon application and notice bold such supplemental hearings as may be required to determine if and when the plan for unit operations has been so approved. If the persons owning the required percentage of interest in the unit area do not approve the plan for unit operations within a period of six months from the date on which the order providing for unit operations is made, such order shall be ineffective and shall be revoked by the Commission unless for good cause shown the Commission extends said time.

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. this 5th of May Entered day 1988, as of April 18, 1988.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary