REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 22, 1993 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 Lyco Energy Corporation to establish the E1/2 NW1/4 of Section 16, Township 5 North, Range 65 West, 6th P.M. as an 80-acre drilling and spacing unit and further to segregate said 80-acre unit in to two 40-acre drilling and spacing units for production from the Codell, Niobrara and Sussex Formations underlying the undrilled 80-acre unit.

FINDINGS

The Commission finds as follows:

1. Lyco Energy Corporation, 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 December 19, 1983, the Commission authorized Order No. 407-1 to be issued which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell Formation. The units consist of the E1/2 and W1/2 or the N1/2 and S1/2 of each governmental quarter-quarter section. The permitted well shall be located in the center of either 40-acre tract within the unit, with a tolerance of 200 fe et in any direction and the option to drill an additional well in the undrilled 40-acre tract. Subsequent Order No. 407-10 included the Niobrara Formation and allowed downhole commingling of production from the Codell and Niobrara Formations. The NW1/4 of Section 16, Township 5 North, Range 65 West, 6th P.M., Weld County, Colorado lies within the area spaced by these orders.

5. In Order No. 493-1, the Commission established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Sussex Formation. Wells shall be located as ordered in Cause No. 407 described in Finding 4 herein above with the downhole commingling of production from the Sussex, Codell and Niobrara Formations allowed. Section 16, Township 5 North, Range 65 West, 6th P.M. was included in this order.

6. Based on the facts stated in the verified application, receiving no protests, and having been heard by the Hearing Officer on February 18, 1993 and recommended for approval, the Commission should enter an order establishing an 80-acre drilling and spacing unit consisting of the E1/2 NW1/4 of said Section 16 and further segregating the 80-acre unit into two 40-acre units consisting of the NE1/4 NW1/4 and the SE1/4 NW1/4 of said Section 16 for the production from the Sussex, Codell and Niobrara Formation underlying said units.

7. At the time of the Commission hearing, the City of Greeley reviewed with the Commission the current surface development of the NW1/4 of said Section 16, the current statutes concerning oil and gas development within the city limits, and future plans for changes. The Commission has taken note of the concerns of the City of Greeley and urges that all necessary requirements be met in conjunction with any well to be drilled and completed in the above described units.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the E1/2 NW1/4 of Section 16, Township 5 North, Range 65 West, 6th P.M. is hereby established as an 80-acre drilling and spacing unit in conformance with the orders in Cause No. 407, and further that the 80-acre unit is segregated into two 40-acre drilling and spacing units consisting of the NE1/4 NW1/4 and the SE1/4 NW1/4 of said Section 16 for the commingled production of oil, gas and associated hydroc arbons from the Sussex, Codell and Niobrara Formations underlying these lands.

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 , 1993 as of February 22, 1993.

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 March 10, 1993 ??