REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 23, 1991, in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Amoco Production Company to establish 320-acre drilling and spacing units for production from the Dakota Formation underlying the below-listed lands to-wit:

Township 1 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 2 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 3 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 1 North, Range 68 West, 6th P.M. Sections 1 through 36: All

FINDINGS

The Commission finds as follows:

1. Amoco Production Company, 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. 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 ensure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made establishing 320-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Dakota Formation, a common source of supply, underlying the lands herein described with the units to consist of the E/2 and W/2 or the N/2 and the S/2 of each section, according to governmental survey, and said units should be identical to the 320-acre

drilling and spacing units previously established for the "J" Sand Formation required by Cause No. 232, with the permitted well to be located in the NW/4 and the SE/4 of the section and no closer than 990 feet from the boundary of the quarter section, for the below-listed lands to-wit:

Township 1 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 2 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 3 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 1 North, Range 68 West, 6th P.M. Sections 1 through 36: All

5. That the Director should be allowed, without further notice and hearing, to approve exceptions to the permitted well locations due to topography or surface hazards or the recompletion or deepening of existing "J" Sand Formation wells previously authorized at an approved exception location.

6. All available geologic and engineering data concerning said Dakota Formation indicates that one well will economically and efficiently drain an area of approximately 320-acres, and that drilling units the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well producing from said Dakota Formation.

7. Wells previously permitted and/or drilled to the Dakota Formation prior to the hearing, whether or not in accordance with the herein described well locations, should be designated as the permitted well for the unit. Operators of such wells should file with the Commission a designation of unit declaration within 30 days of the issuance of an order.

8. Protests were filed by Union Pacific Resources Company, Byron Oil Industries, Vessels Oil & Gas Company and Basin Exploration, Inc. Union Pacific Resources Company withdrew their protest prior the hearing.

9. Based on the facts stated in the application and the amended application, and having considered the protestants' testimony, the Commission should approve the request and establish 320-acre drilling and spacing units for the lands listed in Finding 4, for the production of oil, gas and associated hydrocarbons from the Dakota Formation.

O R D E R

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 Dakota Formation, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herein:

Rule 1: Three hundred and twenty (320) acre drilling and spacing units shall be and the same are hereby established for the production of oil, gas and associated hydrocarbons from the Dakota Formation underlying the following described lands in Weld County, Colorado, to-wit:

Township 1 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 2 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 3 North, Range 67 West, 6th P.M. Sections 1 through 36: All

Township 1 North, Range 68 West, 6th P.M. Sections 1 through 36: All

Rule 2: Said drilling units shall consist of the E/2 and W/2 or the N/2 and the S/2 of each section, according to governmental survey, and said units shall be identical to the 320-acre drilling and

spacing units previously established for the "J" Sand Formation required by Cause No. 232, with the permitted well to be located in the NW/4 and the SE/4 of the section and no closer than 990 feet from the boundary of the quarter section.

Rule 3: That the Director may, without further notice and hearing, approve exceptions to the permitted well locations due to topography or surface hazards or the recompletion or deepening of existing "J" Sand Formation wells previously authorized at an approved exception location.

Rule 4: Wells previously permitted and/or drilled to the Dakota Formation prior to the hearing, whether or not in accordance with the herein described well locations, are hereby designated as the permitted well for the unit. Operators of such wells shall file with the Commission a designation of unit declaration within 30 days of this order.

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 the provisions contained in the above order shall become effective forthwith.

ENTERED this day of 1991 as of October 23, 1991.

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 November 12,1991 1520I