REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 19, 1996 at 8:30 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Barrett Resources Corporation, for an order to amend Order No. 510-1 to allow the optional drilling of four (4) additional wells for production of gas and associated hydrocarbons from the Williams Fork Formation of the Me saverde Group for certain lands in the Grand Valley Field, with the permitted wells to have a bottomhole location no closer than 400 feet from the bottomhole location for any other Williams Fork Formation well and located no closer than 200 feet from the boundaries of any lease line. Further, the Applicant requests the Director be empowered to grant exceptions administratively for the surface locations of these additional four (4) Williams Fork Formation wells upon adequate showing by the Applicant operator that for topographical or other reasons, the well in question should be drilled directionally.

FINDINGS

The Commission finds as follows:

1. Barrett Resources 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. On May 16, 1994, the Commission issued Order No. 510-1 which amended Rule 316 (now Rule 318) of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission and established new setback rules for production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group for certain sections located in Townships 6 and 7 South, Ranges 96 and 97 West, 6th P.M. in Garfield County, including those described below . The permitted wells should be located no closer than 800 feet from any existing Williams Fork Formation and be located no closer than 400 feet from the boundaries of any lease line.

Township 6 South, Range 96 West, 6th P.M. Section 33: S1/2SE1/4

Township 7 South, Range 96 West, 6th P.M. Section 4: N1/2NE1/4

5. Barrett Resources Corporation presented letters in support the twenty (20) acre pilot project from the U.S. Department of Energy, William F. Clough, Tom Brown, Inc., Snyder Oil Company, and Unocal Corporation. Testimony was given that the Garfield County Board of Commissioners enthusiastically supports the application.

6. That based upon evidence presented at the administrative hearing and based upon extensive field, engineering studies and the intensive geological, geophysical and reservoir modeling work done for a twenty (20) acre pilot project in the application land, the sands within the Williams Fork Formation of the Mesaverde Group are tight and contain extensive natural fractures; such fractures however being vertically and laterally limited in extent and, for the most part, do not extend beyond lithologic boundaries. Evidence presented indicated that there was no pressure communication evident between wells.

7. That based upon exhibits and testimony at the administrative hearing, the proposed spacing rules will allow more efficient drainage, will prevent waste, will not violate correlative rights, and will assure a greater ultimate recovery of gas and associated hydrocarbons.

8. Based on the facts stated in the application and testimony presented at the administrative hearing, having received no protests, and having been heard by the Hearing Officer on November 15, 1996 who recommends approval, the Commission should approve the application as submitted, with the addition of a requirement for the Applicant to provide pressure data and cost information collected during the pilot project to the Commission staff.

ORDER

NOW, THEREFORE IT IS ORDERED, that Order No. 510-1 is hereby amended to allow the optional drilling of four (4) additional wells for production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group for the below-described lands, with each such well to have a bottomhole location no closer than 400 feet from the bottomhole location of any other Williams Fork Formation well and no closer than 200 feet from the boundary o f any lease line.

Township 6 South, Range 96 West, 6th P.M. Section 33: S1/2SE1/4

Township 7 South, Range 96 West, 6th P.M. Section 4: N1/2NE1/4

IT IS FURTHER ORDERED, that the Director shall be empowered by the Commission to grant exceptions administratively for the surface locations of these additional four (4) Williams Form Formation wells upon adequate showing by the Applicant operator that for topographical or other reasons, the well in questions should be drilled directionally.

IT IS FURTHER ORDERED, that the Applicant shall provide to the Commission, by January 1, 2000, pressure data obtained from the pilot project that would show the extent of drainage from existing wells, and the total cost of drilling and completing the project wells.

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 December, 1996, as of November 19, 1996.

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 March 25, 1997 ??

(510#2)