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 amended application of Snyder Oil Corporation, for an order amending Order Nos. 496-1 and 407-69 and Order Nos. 496-2 and 407-78 to extend the 80-acre drilling and spacing units for production from the Shannon F ormation underlying the applied for lands and further, to allow the downhole commingling of production from the Shannon Formation with that from the Codell and/or Niobrara Formations.

FINDINGS

The Commission finds as follows:

1. Snyder Oil 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 No. 407-10, the Commission amended Order No. 407-1 to include production from the Niobrara Formation in certain lands and to al low the downhole commingling of production from the Codell and Niobrara Formations.

5. In Order Nos. 496-1 and 407-69 and Order Nos. 496-2 and 407-78, the Commission established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Shannon Formation and authorized the downhole commingling of production from the Shannon and/or Codell and/or Niobrara Formations underlying the below listed lands,to-wit:

Township 4 North, Range 66 West, 6th P.M Section 3: N1/2 Section 4: NE1/4 Section 5: S1/2 NE1/4, N1/2 SE1/4

Township 5 North, Range 66 West, 6th P.M. Section 28: W1/2 NE1/4, W1/2 W1/2, E1/2 SE1/4 Section 33: All Section 34: SW1/4

6. That evidence presented at the time of the administrative hearing indicates that the Shannon Formation underlies the following described lands in Weld County, Colorado, to-wit:

Township 5 North, Range 66 West, 6th P.M. Section 21: SW1/4, S1/2 SE1/4 Section 22: SW1/4 Section 27: W1/2

7. That in order to prevent the waste of oil and gas, as defined by law; to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure the proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made establishing 80-acre drilling and spacing units for the production of oil,gas and associated hydrocarbons from the Shannon For mation, a common source of supply underlying the lands described herein above; that said units should consist of the E1/2 and W1/2 or the N1/2 and S1/2 of each quarter section according to the governmental survey, with the unit designated by the operator of the first well drilled in the quarter section.

8. That the permitted well should be located in accordance with the provisions of Cause No. 407 of the Commission and wells previously drilled, currently drilling, or having an approved location exception for the Shannon Formation should be established as the permitted well location for the 80-acre drilling and spacing unit. Exceptions may be granted by the Director, provided the owners toward whom the well location is proposed to be moved fil e a waiver or consent in writing. Unit designations with equities differing from 80-acres should remain as originally designated.

9. That engineering testimony presented indicated that prudent engineering practices would allow commingled production from the Shannon Formation and the Codell and/or Niobrara Formations, resulting in increased recovery of reserves and no irremediable reservoir damage.

10. That all available geological and engineering data concerning said Shannon Formation indicated that one well will efficiently and economically drain an area of approximately 80-acres and that drilling units of the size and shape herein described are not smaller than the maximum area that can be efficiently and economically drained by one well producing from said formations.

11. Based on the facts stated in the verified amended 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 80-acre drilling and spacing units on the lands described in Finding 6, with permitted well locations to be in accordance with Cause No. 407 of the Colorado Oil and Gas Conservation Commission, and further to allow the downhole commingling of production from the Shannon Formation with production from the Codell and/or Niobrara Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well or wells drilled, completed, or recompleted in the Shannon Formation underlying the lands herein described, in addition to other applicable rules and regulation and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. Eighty (80) acre drilling and spacing units shall be and the same are hereby established for the production of oil and associated hydrocarbons from the Shannon Formation underlying the following described lands in Weld County, Colorado:

Township 4 North, Range 66 West, 6th P.M. Section 3: N1/2 Section 4: NE1/4 Section 5: S1/2 NE1/4, N1/2 SE1/4

Township 5 North, Range 66 West, 6th P.M. Section 21: SW1/4, S1/2 SE1/4 Section 22: SW1/4 Section 27: W1/2 Section 33: SE1/4 Section 34: SW1/4

Rule 2. Said drilling units shall consist of the E1/2 and W1/2 or the N1/2 and the S1/2 of each quarter section according to the governmental survey, with the unit designated by the operator of the first well drilled in the quarter section.

Rule 3. The permitted well shall be located in accordance with the provisions of Cause No. 407 of the Colorado Oil and Gas Conservation Commission and wells previously drilled, currently drilling, or having an approved location exception for the Shannon Formation shall be established as the permitted well location for the 80-acre drilling and spacing unit. Exceptions may be granted by the Director, provided the owners toward whom the well locat ion is proposed to be moved file a waiver or consent in writing. Unit designations with equities differing from 80-acres shall remain as originally designated.

Rule 4. Wells drilled or to be drilled in the lands described herein above, shall be allowed to commingle production from the Shannon Formation and/or the Codell and/or the Niobrara Formations.

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 80202 March 10, 1993 ??