REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on March 19, 1974, at 9 Kkktt, in the Department of Revenue Hearing Room, State Capitol Annex, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Kern-merer Coal Company, for an order establishing 320-acre drilling and spacing units for the production of gas from the Middle Lewis formation underlying certain lands in Moffat County, Colorado. The application was amended at the hearing concerning designation of units.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

2. That 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.

3. That the Middle Lewis formation is defined as being those geological zones and horizons encountered between the depths below surface of 7536 feet to 7970 feet, in the Well No. 14-1 located in the C NW/4SW/4 Section 14, Township 10 North, Range 94 West, 6th rrrtt, and evidence presented at the hearing indicates that said formation constitutes a common source of supply of gas underlying the following describ-ed lands in Moffat County, Colorado, to-wit:

Township 10 North, Range 93 West, 6th rrrtt Section 6: All Section 19: All Section 7: All Section 30: All Section 18: All Section 31: All Township 10 North, Range 94 West, 6th rrrtt All of Sections 1 through 36

4. That in order to prevent the waste of gas, as defined by law; to pro-tect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the gas resources of the State, an order should be made establishing 320-acre drilling and spacing units for the production of gas from the Middle Lewis formation; that said units should be 320-acres, more or less, consisting of the E/2 and the W/2 or the N/2 and the S/2 of each section according to the governmental survey thereof. Designation of the units may be deferred until after the permitted wells are drilled provided there is

(over) concurrence by all owners within the section and the Director is so advised in writing, prior to drilling. Upon completion of the well designation of the unit may then be made with the concurrence by all owners without further hearing. Should there not be such concurrence by the owners within the section prior to drilling, then the drilling unit should be designated at the time of filing for the permit to drill.

5. That the permitted well for each unit should be located no closer than 600 feet from the boundaries of the drilling unit and no closer than 1320 feet from another producing or producible well; and the: E/2 and W/2 should be the designated units in Sections 14, 15 and 20, Township 10 North, Range 94 West, 6th rrrtt, and the wells located therein should be considered the permitted wells for the units upon which they are located. 6. That Well No. 10-1, SW/4SW/4 Section 10 Well No C-1 State NE/4NE/4 Section 16, and Well No. 21-1, NE/4NE/4 Section 21, Township 10 North, Range 94 West, 6th rrrtt, should be considered suspended and not be required to De plugged and abandoned until further testing and drilling within the units, either by drilling of new wells or the re-entry of the existing wells herein described.

7. That all available geological and engineering data concerning said Middle Lewis formation indicate that one well will efficiently-and economically drain an area of approximately- 320-acres, and that drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently and economi-cally drained by one well producing from said Middle Lewis formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regla-tions shall apply hereafter to wells drilled, completed, or recompleted in the Middle Lewis formation underlying the Big Hole Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. Three Hundred Twenty (320) acre drilling and spacing units shall be and the same are hereby established for the production of gas from the Middle Lewis formation herein defined, underlying the following described lands in the Big Hole Field, Moffat County, Colorado, to-wit:

Township 10 North, Range 93 West, 6th rrrtt Section 6: All Section 19: All Section 7: All Section 30: All Section 18: All Section 31: All Township 10 North, Range 94 West, 6th rrrtt All of Sections 1 through 36

Rule 2. Said drilling units shall consist of three hundred twenty (320) acres, more or less, and each such unit shall consist of the E/2 and the W/2 or the N/2 and the S/2 of each section according to the governmental survey thereof. Designation of the units may be deferred until after the permitted wells are drilled provided there is concurrence by all owners within the section and the Director is so advised, in writ ing, prior to drilling. Upon completion of the well designation of the unit may then be made with the concurrence by all owners without further hearing. Should there not be such concurrence by the owners within the section, prior to drilling, then the drilling

-- 2 --(#290-1) unit shall be designated at the time of filing for the permit to drill.

Rule 3. The permitted well for each unit shall be located no closer than 600 feet from the boundaries of the drilling unit and no closer than 1320 feet from another producing or producible well.

IT IS FURTHER ORDERED., that the E/2 and the W/2 in Sections 14, 15 and 20, Township 10 North, Range 94 West, 6th rrrtt, shall be the designated units and the wells located therein shall be considered the permitted wells for the units upon which they are located.

IT IS FURTHER ORDERED, that Well No. 10-1, SW/4SW/4 Section 10, Well No. C-1 State, NE/4NE/4 Section 16, and Well No. 21-1, NE/4NE/4 Section 21, Township 10 North, Range 94 West, 6th rrrtt, shall be considered suspended and not be required to be plugged and abandoned until further drilling and testing within the unit can be com-pleted by the drilling of new wells or re-entry into the existing wells herein described.

IT IS FURTHER ORDERED, that the provisions contained in the above orders 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, rules and regulations.

ORDERED this 19th day of March 1974.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORA DO

By Frank J. Piro, Secretary

3 --(290-1)

BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION ) AND ESTABLISHMENT OF FIELD RULES TO ) CAUSE NO. 290 GOVERN OPERA TIONS IN THE BIG HOLE ) FIELD, MOFFAT COUNTY. COLORADO ) ORDER NO. 290-1

CORRECTION OF ORDER

TO ALL INTERESTED PERSONS AND TO WHOM IT MAY CONCERN:

On March 19, 1974, the. Commission issued its Order No. 290-1, which among other things, established 320-acre drilling and spacing units in the Big Hole Field, Moffat County, Colorado.

It has come to our attention that certain corrections should be made as follows: In Finding 5, reference to designated units in Section 20 should be corrected to Section 22 and the order should be corrected to read as follows: "IT IS FURTHER ORDERED, that the E/2 and the W/2 in Sections 14, 15 and 22, Township 10 North, Range 94 West, 6th rrrtt, shall be the designated units and the wells located therein shall be considered the permitted wells for the units upon which they are located."

In Finding 6, reference to Well No. 21-1 NE/4NE/4 Section 2 should be deleted. This deletion should also be made in the order.

DATED this 9th day of April, 1974.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary