IN THE MATTER OF THE PROMULGATION AND          CAUSE NO. 467
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE WATTENBERG FIELD,                 ORDER NO. 467-13
ADAMS COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on September 17, 1999, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado on the application of Bataa Oil, Inc. for an order pooling all interests in the 151.5-acre drilling and spacing unit consisting of the NW¼ of Section 1, Township 1 South, Range 68 West, 6th P.M., for the development and operation of the “J” Sand and Dakota Formations pursuant to the provisions of §34 60 116, C.R.S., 1984.

FINDINGS

The Commission finds as follows:

1. Bataa Oil, Inc. (“Bataa”), as applicant herein, in 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. On July 16, 1991 the Commission issued Order No. 467-6, which among other things, established 160-acre drilling and spacing units for certain lands in the Wattenberg Field, for production of oil, gas and associated hydrocarbons from the “J” Sandstone Formation with the permitted well to be located no closer than 990 feet from the boundaries of the quarter section. The NW¼ of Section 1, Township 1 South, Range 68 West, 6th P.M. lies within the area spaced by these orders.

5. On April 7, 1992, amended on August 20, 1993, the Commission issued Order Nos. 467-9 and 407-88 which among other things established 160-acre drilling and spacing units for the Dakota Formation in accordance with those established in Order No. 467-6 for the “J” Sandstone Formation. The NW¼ of Section 1, Township 1 South, Range 68 West, 6th P.M. lies within the area spaced by these orders.

6. Exhibits and testimony presented at the administrative hearing showed the drilling and spacing unit consists of approximately 151.5 acres, with Bataa having 115.1 acres leased. Further, 6.75 of the unleased acres comprise streets and alleys in the Preble and Wiesner Subdivisions.

7. Exhibits and testimony presented at the administrative hearing indicated that letters were sent on August 4, 1999 to all unleased mineral interest owners. The letters contained a reasonable offer to lease with terms no less favorable than those prevailing in the area and an Authorization for Expenditure (AFE). In accordance with Rule 530., the AFE included the location and objective depth of the well, the estimated drilling and completion costs of the well, and the estimated spud date for the well.

8. That the granting of the application would prevent waste and protect correlative rights.

9. At the time of the administrative hearing the applicant agreed to be bound by oral order of the Commission.

10. Based on the facts stated in the application, having received no protests and having been heard by the Hearing Officer who recommends approval the Commission should enter an order pooling all interests in the 151.5-acre drilling and spacing unit consisting of the NW¼ of Section 1, Township 1 South, Range 68 West, 6th P.M., for the development and operation of the “J” Sand and Dakota Formations pursuant to the provisions of §34-60-116, C.R.S., 1984.

ORDERED

NOW, THEREFORE IT IS ORDERED that the Oil and Gas Conservation Commission hereby pools all interests in the 151.5-acre drilling and spacing unit consisting of the NW¼ of Section 1, Township 1 South, Range 68 West, 6th P.M., for the development and operation of the “J” Sand and Dakota Formations pursuant to the provisions of §34 60 116, C.R.S., 1984.

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.

ORDERED this 1st day of October, as of September 17, 1999.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Hearing Officer

Dated at Suite 801, 1120 Lincoln Street, Denver, Colorado 80203 October 1, 1999

(467-13)