REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 16, 1990 at 10:00 a.m., at the La Plata County Extension Building, 2500 North Main Avenue, Durango, Colorado, after giving Notice of Hearing as required by law, on the verified application of Coors Energy Company for an order amending Order NO. 464-1 to include Sections 26, 27, 35 and 36, Township 6 North, Range 65 West, 6th P.M., Weld County, Colorado under the provisions of Cause No. 464 for the production of oil and associated hydrocarbons from the Parkman formation underlying the above sections.

FINDINGS

The Commission finds as follows:

1. Coors Energy Company, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

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

3. That 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. That evidence was presented to the Acting Director as Hearing Officer showing the above sections were included in the original application of Bristol Production, Inc. in Cause No. 464 and that testimony and exhibits were presented at the time of administrative hearing concerning the nature of the Parkman Sand and its productive capability.

5. That evidence and testimony presented by Coors Energy Company at an administrative hearing substantiated the findings in Order No. 464-1, and that the Hearing Officer recommends approval of the application and that Sections 26, 27, 35 and 36, Township 6 North, Range 65 West, 6th P.M. be included in the area established in Order No. 464-1 subject to all provisions of said order for the production of oil and associated hydrocarbons from the Parkman formation underlying the above listed sections.

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O R D E R

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the Parkman Sandstone formation underlying certain lands in the Greeley Field, Weld County, Colorado, herein described, in addition to any other applicable rules and regulations and orders of the Commission if any, heretofor adopted and not in conflict herewith:

Rule 1. The following rules shall be and the same are hereby established for the production of oil and associated hydrocarbons from the Parkman Sandstone formation underlying the following described lands in Weld County, Colorado to-wit:

Township 6 North, Range 64 West, 6th P.M. Section 7: All Section 29: All Section 18: All Section 30: All Section 19: All Section 31: All Section 20: All Section 32: All

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Township 6 North, Range 65 West, 6th P.M Section 12: All Section 24: All Section 13: All Section 25: All Section 14: All Section 26: All Section 15: All Section 27: All Section 21: All Section 35: All Section 22: All Section 36: All Section 23: All

Rule 2. A well shall be located no closer than 300 feet from the boundaries of a lease and no closer than 600 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.

Rule 3. Application to Drill or Recomplete shall be accompanied by sufficient geologic and reservoir evidence to show that no significant drainage across lease lines shall occur, and that this evidence shall include a structural exhibit map which will be used in conjunction with Exhibit D, a part of this Cause file, to demonstrate this fact.

Rule 4. Wells drilled to formations below the Parkman formation shall be assumed to have encountered a productive interval and completion procedures shall include protecting the Parkman Sandstone interval with cement as required by Rule 317.f of the Rules and Regulations of the Commission. Upon application and a showing that the Parkman Sandstone formation is not productive, this requirement may be waived on an individual basis.

Rule 5. Where Codel/Niobrara wells exist on a common 40-acre tract or are located within 1200 feet of a proposed Parkman Sandstone formation well, or where a Parkman Sandstone formation well exists and a Codel/Niobrara well or a well to any formation below the Parkman formation shall be drilled within a common 40-acre tract or be located within 1200 feet of the existing well, the operators shall collect, interpret, and maintain engineering data during completions, workovers, stimulations and ongoing operations to demonstrate that no interference is being caused to existing or new wells within the field. Any evidence or indications to the contrary shall be promptly reported to the Commission.

IT IS FURTHER ORDERED, that the following rules from Commission Order No. A-1-3 shall be a part of this order:

Rule 6. Surface Casing A minimum of two hundred (200) feet of surface casing shall be run. In those areas where the base of the Fox Hills aquifer, which shall include the transition zone, is five hundred (500) feet deep or less, surface casing shall be set at least fifty feet

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below the base of the aquifer. In those areas where the base of the Fox Hills aquifer is at a depth in excess of five hundred (500) feet, the operator may select between the options provided in Rule 317 (h), (k) and (i), the general rules and regulations of the Commission; however, such operation shall result in cement from fifty (50) feet below the base of the Fox Hills aquifer across all aquifers above it. Cement shall be circulated to the surface or one hundred (100) feet into the surface casing if stage cementing is selected and allowed to set a minimum of eight (8) hours prior to commencing drilling operations (Note: Logs of wells in the vicinity of Hydrologic Atlas No. 650 of the U.S. Geologic Survey may be reviewed for estimating the depth to the base of the Fox Hills aquifer).

Rule 7. Production Casing After thorough circulation of a hole, cement of good quality shall be pumped behind the production casing as provided for in Rule 317 (h), to a height in the annulus sufficient to result in a good bond extending at least 300 feet above the top of the Parkman formation.

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Rule 8. Completion Requirements and Monitoring Upon completion of any well for production and on wells presently completed, the operator shall equip the bradenhead access to the annulus between the production and surface casing with a needle valve and fittings to allow for a pressure reading. Following release of any pressure developed during completion operations and at least 24 hours thereafter, pressure readings shall be taken for a period of 96 hours and the date, time and pressure shall be recorded. In the event that the pressure exceeds a value equal to the setting depth of the surface casing X 0.7 or 250 psi, whichever is less, the operator shall contact the Director within 8 hours for a well located in a residential area and within 24 hours in other areas. A residential area shall be an area that has a platted density of two (2) acres per dwelling or within five hundred (500) feet of a residence or building of public assembly. In the case of the platted area, the Director shall determine that development is to take place within 3 years. A remedial plan shall be prepared by the operator to determine the source of the gas subject to the approval of the Director. If the gas is found to be coming from a shallow sand or aquifer, then such gas shall be utilized by the operator to prevent waste, and to remove the gas from that shallow zone which will help eliminate potentially hazardous situations.

If no pressure in excess of the setting depth of the surface casing X 0.07 or in excess of 250 psi is noticed following the initial bleeding of this annulus after completion and for a period of 96 hours, the operator shall observe the pressure every month, and maintain such records in their office for a period of three years. These records shall be submitted to the Commission upon request.

Rule 9. Requirements Before Fracing Before any operator fracs a well for production in an area as defined in the above, he must submit a Form 4, Sundry Notice, indicating his intention to frac, setting fourth the interval to be fraced, the method of fracing, a detailed account of the work performed, and the name of the contractor doing the work. The Commission shall be advised of the height of cement properly bonded above the zone to be fraced. Approval of procedures must be obtained prior to undertaking such work, but the Commission shall endeavor to respond within 24 hours of receipt of such notice of intention to frac. Cement placed behind the production casing in accord with Rule 2 shall be allowed to set a minimum of forty-eight (48) hours prior to the undertaking of any frac operation. Verbal approval may be given, but must be confirmed in writing.

Rule 10. Workover Prior to undertaking any workover which involves the pulling of tubing from a well located in a residential area as defined in 3 above, the operator or contractor shall contact the Commission by submitting a Sundry Notice, Form 4, and shall indicate thereon the name of the operator and contractor, the location of the well with a detailed description of the work to be done and the date on which

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the work is to commence. Verbal approval may be given, but must be confirmed in writing.

Rule 11. Blow-out Preventors Blow-out preventors and a kill line or lines shall be installed prior to commencement of any operation to remove tubing from any well completed in the Parkman Sandstone, Niobrara, Codell or "J" Sand formations unless waived by the Director upon a showing that no danger from blow-out exists. All blow-out equipment must be in good working order and operated once each 24 hours. Sufficient fluid equipment shall be on location to kill the well immediately in the event of an operational accident.

Rule 12. Timing and Operations The cooperation of the various operators is solicited in timing work events to allow maximum opportunity for observance or work procedures by Commission personnel. The operator and/or contractor shall notify the Commission of fracing, cementing and workovers in the defined area. The Commission and the County Officer of Emergency Management shall be notified immediately of any leaking or other incidents that may affect the safety of the citizens and property in the area.

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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.

ENTERED this day of ,

1990, as of January 16, 1990.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203

1076A

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