IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CODELL-NIOBRARA SPACED AREA, WELD COUNTY, COLORADO Cause No. 493, 407 Order No. 407-96, 493-3

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 20, 1992, in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing, as required by law on the amended application of Snyder Oil Corporation, to allow the 80-acre drilling and spacing unit consisting of the S1/2 SW1/4 of Section 21, Township 5 North, Range 65 West, 6th P.M. to be segregated into two 40-acre drilling and spacing units for productio n from the Codell, Niobrara and Sussex Formations underlying the undrilled 80-acre unit.

FINDINGS

The Commission finds as follows:

1. Snyder Oil 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 feet and the op tion 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 SW1/4 of Section 21, Township 5 North, Range 65 West, 6th P.M., Weld County, Colorado lies within the area spaced by these orders.

5. On May 20, 1991, the Commission authorized Order No. 493-2 to be issued which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Sussex 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 feet and the option to drill an additional well in the undrilled 40-acre tract. The order also allowed the downhole commingling of production from the Codell, Niobrara and Sussex Formations. The SW1/4 of Section 21, Township 5 North, Range 65 West, 6th P.M., Weld County, Colorado lies within the area spaced by these orders.

6. Wells have been drilled in the NW1/4 SW1/4 and in the NE1/4 SW1/4 of said Section 21 to establish production from the Codell, Niobrara and Sussex Formations.

7. A protest was filed by Gerrity Oil and Gas Corporation.

8. Based on the facts stated in the amended application and testimony presented at the hearing, the Commission should approve the request and amend Order Nos. 407-1, 407-10 and 493-2 and segregate the 80-acre drilling and spacing unit consisting of the S1/2 SW1/4 and establish two 40-acre units consisting of the SW1/4 SW1/4 and SE1/4 SW1/4 of said Section 21 for the commingled production of oil, gas and associated hydrocarbons from the Codell, Niobrara and Sussex Formations and that Snyder Oil Corporation be designated the operator for the well to be drilled in the SW1/4 SW1/4 of said Section 21, for the commingled production of oil, gas and associated hydrocarbons from the Codell, Niobrara and Sussex Formations underlying these lands.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the 80-acre drilling and spacing unit consisting of the S1/2 of the SW1/4 of Section 21, Township 5 North, Range 65 West, 6th P.M., Weld County, Colorado be segregated into two 40-acre drilling and spacing units consisting of the SW1/4 SW1/4 and the SE1/4 SW1/4 and that Snyder Oil Corporation be designated the operator for the well to be drilled in the SW1/4 SW1/4 of said Section 21, for the commingled production of oi l, gas and associated hydrocarbons from the Codell, Niobrara and Sussex Formations underlying these lands.

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.

IT IS FURTHER ORDERED, that with the verbal consent of the interested parties at the time of hearing, this order shall become effective forthwith.

ENTERED this day of 1992, as of April 20, 1992.

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 14, 1992 ??

407-96