REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 20, 1991 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax Avenue, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Martin Exploration Management Company and Petrogulf Corporation, for an order to establish a 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the "J" Sandstone formation, consisting of the E/2 of Section 15, Township 1 South, Range 68 West, 6th P.M., with an infill well allowed in the undrilled 160-acre tract consisting of the NE/4.

FINDINGS

The Commission finds as follows:

1. Martin Exploration Management Company and Petrogulf Corporation, as applicants herein, are interested parties 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. That evidence presented at the hearing indicates that the "J" Sandstone formation constitutes a common source of supply in the following described lands in Adams County, Colorado, to-wit:

Township 1 South, Range 68 West Section 15: E/2

5. The Commission took note of previous geologic and engineering evidence presented which established 320-acre drilling and spacing units for the "J" Sandstone formation with the allowance of an infill well. Testimony was presented at the hearing that one well will economically and efficiently drain an area of approximately 160-acres, and that drilling units the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well producing from said "J" Sandstone formation.

- 1 -(order 467-4)

6. During the course of the hearing the applicants revised the application to request 160-acre drilling and spacing units for the SE/4 and the NE/4 of said Section 15.

7. That the SE/4 should be established as the 160-acre drilling and spacing unit for the Pergola No. 1-15 Well, located in the NE/4 SE/4 and the NE/4 should be established as a 160-acre drilling and spacing unit, both in Section 15, Township 1 South, Range 68 West, 6th P.M.

8. That a protest to the application was received from Vessels Oil and Gas Company but agreement was reached between both parties upon the applicants' revision of the application to request 160-acre drilling and spacing units for the "J" Sandstone formation.

O R D E R

NOW, THEREFORE, IT IS ORDERED, 1. One Hundred Sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of "J" Sandstone formation underlying the following described lands in the Wattenberg Field, Adams County, Colorado, to-wit: - 2 -(order 467-4)

Township 1 South, Range 68 West, 6th P.M. Section 15: E/2

Rule 2. Said drilling units shall consist of one hundred sixty (160) acres, and each such drilling unit shall consist of a governmental quarter section.

Rule 3. The SE/4 of Section 15, Township 1 South, Range 68 West, 6th P.M. is established as the 160-acre drilling and spacing unit for the Pergola No. 1-15 Well, and the NE/4 of Section 15, Township 1 South, Range 68 West, 6th P.M. is established as a 160-acre drilling and spacing unit.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith as all parties present at the hearing agreed to accept the verbal order of the Commission.

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 , 1991, as of May 20, 1991.

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 May 31, 1991 1243I

- 3 -(order 467-4)