REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 21, 1991 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 application of C & F Energy, Inc. for an order recommending the Niobrara Formation, underlying certain lands in Weld County, Colorado as a "Tight Formation", pursuant to Section 107 (b) of the Natural Gas Policy Act of 197 8 (15 U.S.C. 3317) and the regulations thereunder. The Applicant, having appeared in support of the application, and no one having appeared in opposition, and the Commission having heard the testimony and evidence presented;

The Commission finds as follows:

1. C & F Energy, Inc., 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 is the jurisdictional agency pursuant to the interim rules in Docket No. RM 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of application.

4. The area is located in the western portion of the Denver-Julesberg Basin approximately five (5) miles north and east of the town of Kersey, Colorado and approximately sixty (60) miles northeast of Denver, Colorado. The area is an extension of the area in which the Niobrara Formation was recommended a "Tight Formation" by Order No. NG-44-1 and approved by FERC Order No. 411 on January 18, 1985. No federal lands are included in the area.

The additional lands are located contiguous to the previously approved areas.

5. Geological testimony presented at the hearing indicates that the Niobrara Formation, in the additional area is of the same characteristics as those in the previously approved areas as described in Order No. NG-44-1.

6. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability is not expected to exceed .1 millidarcy for the formations.

b. The stabilized production rate, against atmospheric pressure of wells completed from said Niobrara Formation, at the producing depths, without stimulation, is not expected to exceed a maximum allowable production rate defined by depth in Section 271.705 (b) (ii) for any completion location in said Niobrara Formation.

c. Hydrocarbons usually do not exist as liquid in said Niobrara Formation reservoirs, and no well is expected to produce more than five (5) barrels of crude oil per day.

7. Typical casing design of wells drilled in the area protects fresh water aquifers in the area as required by the rules and regulations of the Oil and Gas Conservation Commission of the State of Colorado.

8. In view of the above findings, all the criteria required by the Federal Energy Regulatory Commission pursuant to the rules in Docket No. 79-76 have been met; therefore, a recommendation should be made that the Niobrara formation, underlying the area below described should be designated a "tight formation".

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Colorado oil and Gas Conservation Commission recommends that the Niobrara Formation, underlying the following described lands in Weld County, Colorado, be designated a "Tight Formation" and incorporated in the list of "Tight Formations" as described pursuant to Rule 271.706 of the Federal Energy Regulatory Commission:

Township 5 North, Range 61 West, 6th P.M. Sections 4 through 9: All Sections 16 through 18: All

Township 5 North, Range 62 West, 6th P.M. Sections 1 through 36: All

Township 5 North, Range 63 West, 6th P.M. Sections 19 through 36: All

Township 6 North, Range 61 West, 6th P.M. Sections 19 through 21: All Sections 28 through 33: All

Township 6 North, Range 62 West, 6th P.M. Sections 1 through 36: All

Township 6 North, Range 63 West, 6th P.M. Sections 1 through 18: All

Township 7 North, Range 63 West, 6th P.M. Sections 1 through 36: All

ENTERED this 6th day of October, 1992, as of September 21, 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 October 1, 1992