REPORT OF THE COMMISSION

This matter came on for hearing before the Commission on August 21, 1989 at 8:30 a.m. in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, on the verified application of Union Pacific Resources Company for approval of a certain Unit Agreement and Unit Operating Agreement within the proposed Bledsoe Ranch Unit Area after being continued from the July 17, 1989 hearing of the Commission.

FINDINGS

The Commission finds as follows:

1. Union Pacific Resources Company as applicant herein, is an interested party in the subject matter of the above-entitled 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 17, 1989, Union Pacific Resources Company amended the application to exclude the E/2 SE/4 of Section 2, the N/2 and SW/4 of Section 11, and all parts of Section 11, and all parts of Section 10, Township 13 South, Range 51 West, 6th P.M.

5. On July 17, 1989, the Commission issued Order No. 468-2 which ordered that the matter be continued until August 21, 1989, at which time Commissioners Welborn, Johnson and Anderson would render a decision after further notice of the amended area was given to all interested parties including mineral interest owners in the original requested area who would be allowed to file a protest if they so chose.

6. A protest was filed by Samedan Oil Corporation and subsequently withdrawn; Petrogulf Corporation filed a protest but did not appear at the August 21, 1989 hearing. Mr. William E. Bledsoe III for the Bledsoe Ranch furnished two letters at the time of the August hearing.

7. The Commission found in Order No. 468-2 that all

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requirements of 34-60-114(4) C.R.S. 1973, as amended, had been met, as well as the requirements of Rule Nos. 326 and 401, and that the plan for unit operations had been approved by those persons required to pay at least eighty percent of the costs of the unit, and by the owners of at least eighty percent of the production proceeds.

8. The Commission should enter an order providing for involuntary unit operations for the Morrow Formation underlying the below listed Unit Area and approve the amended Unit Agreement and Unit Operating Agreement:

Township 12 South, Range 50 West, 6th P.M. Section 30: SW/4 Section 31: NW/4, W/2 NE/4, NW/4 SW/4

Township 13 South, Range 51 West, 6th P.M. Section 1: All Section 12: NW/4

Township 12 South, Range 51 West, 6th P.M. Section 25: E/2 SE/4 Section 36: All - 2 -(468-2)

O R D E R

NOW, THEREFORE, IT IS ORDERED, that:

1. The amended Unit Agreement and Unit Operating Agreement covering lands in the Bledsoe Ranch Unit Area, which agreements are attached to, and made a part of the original order of the Commission on file in the office of the Commission, are approved as being in the public interest for conservation.

2. The Morrow reservoir, common source of supply, underlies the following lands in Cheyenne County, Colorado:

Township 12 South, Range 50 West, 6th P.M. Section 30: SW/4 Section 31: NW/4, W/2 NE/4, NW/4 SW/4

Township 13 South, Range 51 West, 6th P.M. Section 1: All Section 12: NW/4

Township 12 South, Range 51 West, 6th P.M. Section 25: E/2 SE/4 Section 36: All

3. The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to 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 and gas into the Morrow reservoir of said Unit Area as presented by the applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir.

5. Any injection well to be located in the Unit Area shall be approved by the Director in accordance with the rules and regulations of the Commission.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith as all parties agreed to be bound by the oral orders 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 ,

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1989, as of August 21, 1989.

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

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