REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 20, 1995, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Gerrity Oil and Gas Corporation, for an order to amend Cause Nos. 407 and 493 to allow a well to be recompleted at an exception location for commingled production from the Codell, Niobrara, and Sussex Formations. This well w ill be produced as a fifth Niobrara and Codell Formation well in the SW1/4 of Section 16, Township 3 North, Range 65 West, 6th P.M.

FINDINGS

The Commission finds as follows:

1. Gerrity Oil and Gas Corporation as applicant herein, is an interested party 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. In Order No. 407-1, the Commission established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation. Wells shall be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction. In Order Nos. 407-10 and 407-13, the Commission amended Order No. 407-1 to include production from the Niobrara Formation for certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations, including Section 16, Township 3 North, Range 65 West, 6th P.M.

5. Order No. 493-2 established 80-acre drilling and spacing units for production from the Sussex Formation, with the permitted wells to be located in accordance with those locations established in Cause No. 407 and allowing the downhole commingling of production from the Codell, Niobrara, and Sussex Formations.

6. This matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing that the average ultimate drainage area for the existing Codell Formation wells is 30 acres per well and that a fifth well in the SW1/4 of Section 16 is required to effectively drain Codell reserves.

7. At the administrative hearing, Gerrity agreed to obtain an initial reservoir pressure measurement in the State #2 after recompletion. Gerrity agreed to obtain an additional static reservoir pressure measurement from this well at least six (6) months from the date of recompletion. Gerrity agreed to monitor flowing tubing pressure and daily production from the State #2 Well. This information should be submitted to the Commission within thirty (30) d ays from obtaining all information.

8. At the administrative hearing, Gerrity agreed to obtain static reservoir pressures in two (2) of the four (4) offsetting wells in this quarter section immediately before or after the recompletion of the State #2 Well. Gerrity should also monitor and keep records of daily flowing tubing pressures in all four (4) of the offsetting wells. This information should be submitted to the Commission within thirty (30) days from obtaining all information.

9. An order of the Commission should be entered allowing the State No. 2 Well to be recompleted at an exception location 1,320 feet FSL and 1,320 feet FWL in the SW1/4 of Section 16, Township 3 North, Range 65 West, 6th P.M., for production from the Codell, Niobrara and Sussex Formations, for the 160-acre drilling and spacing unit consisting of the SW1/4 of Section 16.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1, 407-10, and 493-2 are hereby amended to allow the State No. 2 Well to be recompleted at an exception location 1,320 feet FSL and 1,320 feet FWL in the SW1/4 of Section 16, Township 3 North, Range 65 West, 6th P.M., for production from the Codell, Niobrara and Sussex Formations, for the 160-acre drilling and spacing unit consisting of the SW1/4 of Section 16.

IT IS FURTHER ORDERED, that Gerrity Oil and Gas Corporation shall obtain initial reservoir pressure measurements on the State No. 2 well after recompletion and additional static reservoir pressure measurements at least six (6) months from the date of recompletion. This information shall be submitted to the Commission within thirty (30) days from obtaining all information.

IT IS FURTHER ORDERED, that Gerrity Oil and Gas Corporation shall obtain static reservoir pressures in two of the four offsetting wells in the SW1/4 of Section 16 immediately before or after the recompletion of the State No. 2 Well. Gerrity Oil and Gas Corporation shall also monitor and keep records of daily flowing tubing pressures in all four of the offsetting wells. This information shall be submitted to the Commission within thirty (30) days form o btaining all information.

IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

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 , 1996, as of December 20, 1995.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 January 15, 1996 ??

(407#206)