REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 17, 1990, 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 verified application of TXO Production Corporation, for an order allowing a well to be drilled at an exception location in the NW/4 NW/4 of Section 25, Township 16 South, Range 42 West, 6th P.M., Cheyenne County, for the production of oil and associated hydrocarbons from the Morrow Sandstone formation underlying the W/2 NW/4 of said Section 25.

FINDINGS

The Commission finds as follows:

1. TXO Production Corporation, as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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. On September 19, 1988 the Commission authorized Order No. 463-1 to be issued which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons underlying Second Wind Field in Cheyenne County, Colorado. The units shall consist of the E/2 and W/2 or the N/2 and S/2 of a governmental quarter section, with the unit designated by the operator of the first well drilled in the quarter section, with the permitted well to be located within the NE/4 or SW/4 of a quarter section and no closer than 460 feet from the boundaries of the unit tract.

5. Evidence presented at the hearing was found to be insufficient to allow a well to be drilled at an exception location in the spacing unit consisting of the W/2 NW/4 of Section 25, at a location in the NW/4 NW/4 Section 25, Township 16 South, Range 42 West, 6th P.M., Cheyenne, County, for the production of oil and associated hydrocarbons from the Morrow Sandstone formation and the application should be denied.

O R D E R

NOW, THEREFORE IT IS ORDERED, that an exception to the

permitted well location as provided for in Order No. 463-1 is hereby denied.

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 the above orders.

Entered this day of , 1990 as of December 17, 1990.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 December 26, 1990 0849I