REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 19, 1990 at 1:00 p.m., in Suite 380, Logan Tower Building, 1580 Logan Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified applications of Barrett Resources Corporation for an order amending Order No. 479-1 (Corrected) to establish 160-acre drilling and spacing units for the production of gas from the Mesaverde formation underlying such lands and for a fu rther order modifying Order No. 479-1 (Corrected) to include additional lands for production of gas from the Wasatch and Mesaverde formations underlying such additional lands.

FINDINGS

The Commission finds as follows:

1. That Barrett Resources Corporation, 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 presented at the hearing indicates that the Wasatch formation and the entire Mesaverde formation which includes the Mesaverde which lies above the Cameo formation, and the lower portion of the Mesaverde which includes the Cameo, Rollins, Cozzette and Corcoran Sands, and the Coalbed Methane horizons each constitutes a supply of gas and associated hydrocarbons underlying the following described lands in a portion of the Grand Valley Field, Garfield County, Colorado, to-wit:

Township 6 South, Range 96 West, 6th P.M. Sections 1, 12, 23, 24, 25, 26, 27, 34, 35 and 36

Township 7 South, Range 96 West, 6th P.M. Sections 1, 12 and 13

5. That evidence presented at the hearing did not support the establishment of 160-acre drilling and spacing units for the production of gas from the Mesaverde formation underlying the lands herein defined, but that a third well on each governmental section could be drilled at the option of the operators with any such well to be located in accord with Rule 6 herein contained, except that no additional well should be drilled in the drilling and spacing uni ts in the Allen Point Area, to-wit:

Township 6 South, Range 96 West, 6th P.M. Section 1, 12 and 23 through 26.

6. That the below listed lands be rescinded from those lands established by Order No. 139-7 for production from the Mesaverde formation in Rulison Field, to-wit:

Township 7 South, Range 96 West, 6th P.M. Sections 1, 12 and 13

7. That in order to prevent the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned, to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made to: (1) Establish 160-acre drilling and spacing units in part of the area and 320-acre drilling and spacing units in the remainder of the area fo r the production of gas and associated hydrocarbons from the Wasatch formation underlying the lands herein defined; that said 160-acre units should consist of a quarter section according to the governmental survey thereof, and that said 320-acre drilling units should consist of the E1/2 and W1/2 or N1/2 and S1/2 of a section, according to the governmental survey thereof with the operator of the first well permitted in a section to designate the drilling u nit with the permitted well for either size unit to be located on the established unit no closer than 600 feet from the boundaries of said unit and no closer than 1200 feet from any well producing or producible from the same formation with the location of the well subject to the prior approval of the Office of Naval Petroleum and Oil Shale Reserves, U.S. Department of Energy for those 320-acre drilling and spacing units in which there is a Department of E nergy interest; and (2) establish 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the entire Mesaverde formation, and that said 320-acre drilling units should consist of the E1/2 and W1/2 or the N1/2 and S1/2 of a section, according to the governmental survey thereof with the operator of the first well permitted in a section to designate the drilling unit with the permitted well to be located on the establish ed unit no closer than 600 feet from the boundaries of said unit and no closer than 1200 feet from any well producing or producible from the same formation.

8. All available geological and engineering data concerning said Wasatch and Mesaverde formations indicates that one well will efficiently and economically drain an area of approximately 160-acres for the Wasatch formation except Sections 1, 12, 23 through 26 of Township 6 South, Range 96 West, which will be efficiently and economically drained by one well in a 320-acre drilling and spacing unit for certain areas with rough terrain, and approximately 320-acres for the Mesaverde formation, and that drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently and economically drained by one well producing from each said formation.

9. That there are existing wells producing or producible from the Mesaverde formation that have acreage attributions that are less than that amount required by Finding 5 hereinabove and that after verification of the area approved on the Application to Drill, such drilling and spacing units of the appropriate size should be ordered with the designated well for each unit upon which it is located.

10. That there is now being negotiated a Surface Use Agreement between Barrett Resources Corporation and Battlement Mesa Partners and Battlement Mesa Realty Partners for the below listed lands which describe "Battlement Mesa" a Planned Unit Development, as approved by Garfield County, to-wit:

Township 7 South, Range 95 West, 6th P.M. Section 5: S1/2 Section 10: W1/2 Section 6: SE1/4 Section 16: SW1/4 Section 7: E1/2 Section 17: All Section 8: All Section 18: All Section 9: All Section 19: N1/2

Township 7 South, Range 96 West, 6th P.M. Section 13: E1/2 Section 24: NE1/4

and that the Commission should be furnished an executed Surface Use Agreement with each Application-to-Drill for any wellsite within the above described lands.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to the wells drilled, completed, or re-completed in the Wasatch and entire Mesaverde formations underlying the described portions of the Grand Valley Field, Garfield County, Colorado, described herein below, in addition to other applicable ruled and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Township 6 South, Range 96 West, 6th P.M. Sections 1, 12, 23, 24, 25, 26, 27, 34, 35 and 36

Township 7 South, Range 96 West, 6th P.M. Sections 1, 12 and 13

WASATCH FORMATION

Township 6 South, Range 96 West, 6th P.M. 320-acre units 160-acre units Sections 1, 12, 23, 24, Sections 27, 34, 35 and 36 25 and 26

Township 7 South, Range 96 West, 6th P.M. Sections 11 12 and 13 160-acre units

Rule 1. One hundred sixty (160) acre drilling and spacing units or three hundred twenty (320) acre drilling and spacing units as listed above are hereby established for the production of gas and associated hydrocarbons from the Wasatch formation underlying that portion of the Grand Valley Field hereinabove described.

Rule 2. Said 160-acre drilling units for the Wasatch formation shall consist of 160-acres, more or less, and each shall consist of a quarter section, according to the governmental survey thereof, with the permitted well located no closer than 600 feet to the boundaries of the unit and no closer than 1200 feet from another producing or producible well in the same formation.

Rule 3. Said 320-acre drilling units for the Wasatch formation shall consist of 320-acres more or less.. and shall consist of the E1/2 and W1/2 or the N1/2 and S1/2 of a section, according to the governmental survey thereof with the operator of the first well permitted in a section to designate the drilling unit with the permitted well to be located on the established unit no closer than 600 feet from the boundaries of said unit and no closer than 1200 fe et from any well producing or producible from the same formation with the location' of the well subject to the prior approval of the Office of Naval Petroleum and Oil Shale Reserves, U.S. Department of Energy for any section of land in which there is a Department of Energy interest.

MESAVERDE FORMATION

Township 6 South, Range 96 West, 6th P.M. Sections 1, 12, 23, 24, 25, 26, 27, 34, 35 and 36

Township 7 South, Range 96 West, 6th P.M. Sections 1, 12 and 13

Rule 4. Three hundred twenty (320) acre drilling and

spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Mesaverde formation as defined in Rule 5 herein below underlying that portion of the Grand Valley Field hereinabove described.

Rule 5. The entire Mesaverde formation is described as including the Mesaverde which lies above the Cameo formation and the lower portion of the Mesaverde which includes the Cameo, Rollins, Cozzette and Corcoran Sands, and the Coalbed Methane horizons.

Rule 6. Said drilling units for the Mesaverde formation shall consist of 320 acres, more or less, and shall consist of the E1/2 and W1/2 or the N1/2 and S1/2 of a section, according to the governmental survey thereof with the operator of the first well permitted in a section to designate the drilling unit with the permitted well to be located on the established unit no closer that 600 feet from the boundaries of said unit and no closer that 1200 from any well producing or producible from the same formation and that an additional well may be drilled for production from the Mesaverde formation for each governmental section at the option of the operator of the unit or units contained within the individual section with the option well to be located in accordance with this rule, except that no additional well may be drilled in any 320-acre drilling and spacing units in the Allen Point are established in Order No. 440-11 (Corrected) and listed below:

Township 6 South, Range 96 West, 6th P.M. Sections 1, 12, and 23 through 26.

Rule 7. Exceptions to any of the location rules for either the Wasatch or Mesaverde formations may be granted by the Director for topographic reasons upon an adequate showing of inaccessibility without further hearing.

Rule 8. All Applications-to-Drill submitted to the Commission for wells located in the Battlement Mesa Planned Unit Development as described in Finding 10 hereinabove shall be accompanied by an executed Surface Use Agreement between the operator of the proposed well and Battlement Mesa Partners and Battlement Mesa Realty Partners.

Rule 9. Wells presently producing or producible, or permitted within the proposed area should be the permitted well for the unit upon which they are located, as listed below:

TOWNSHIP 6 SOUTH, RANGE 96 WEST, 6TH P.M.

Section Location Well Name Permit Date Acreage:Unit Qtr/Qtr

23 NW/SW MV-10-23 88-550 6/13/88 320:S1/2 27 NE/NE MV-23-27 87-420 6/29/87 320:N1/2 27 NW/SE MV-29-27 88-726 7/13/88 320:S1/2 34 NE/NW MV-33-34 88-849 8/26/88 320:N1/2 34 NE/SE GV-23-34 90-060 1/23/90 160:SE1/4 34 SW/SW GV-10-34 89-1090 12/04/89 160:SW1/4 35 SE/SE GV-21-35 90-160 2/21/90 320:S1/2 36 NW/SW GV-19-36 89-984 11/06/89 160:SW1/4 36 SW/SE GV-24-36 89-1154 12/19/89 160:SE1/4

The NW1/4 and the NE1/4 of Section 36 are hereby established as 160-acre drilling and spacing units.

IT IS FURTHER ORDERED that the rules and regulations contained herein shall become effective upon the date the written order is mailed as indicated by the entry date below.

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 18th day of May, 1990, as of April 20, 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

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