REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 17, 1977, at 9 A.M., in Room 110, State Centennial Building. Denver, Colorado, after giving Notice of Hearing, as required by law, on the application of American Energy Company. Inc. for an order requesting the S/2 of Section 31, Township 34 North, Range 10 West, N.MP.M. be designated a unit with the permitted well for the production of gas from the Mesaverde and Fruitland-Pictured Cliffs formation, located in the NW/4SE/4 of said Section 31 and to pool all interests within the unit.

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 on November 9, 1959 the Commission issued its Order No. 112-6 which established 320-acre drilling and spacing units for the production of gas from the Mesaverde and Fruitland-Pictured Cliffs formations. The units consist of the N/2 and S/2 or the E/2 and W/2 of each full governmental section, with the permitted well to be located in the Nw/4 or SE/4 of each section, and no closer than 990 feet to the boundaries of the quarter section upon which it is located.

4. That the S/2 of Section 31, Township 34 North, Range 10 West, N.MP.M. be designated a drilling unit with the permitted well located in the NW/4SE/4 of said section in accordance with the provisions of Order No. 112-6.

5. That reasonable effort has been made to obtain the voluntary pooling of all interests in said drilling unit for the development and operation thereof, but that it has not been possible to secure the agreement of all owners of interest in said unit for the voluntary pooling thereof.

6. That Applicant is an "interested person" within the meaning of 34-60-116 of the Oil and Gas Conservation Act of the State of Colorado.

7. That in order to insure proper and efficient development; to eliminate the drilling of unnecessary wells; to promote conservation of the gas resources of the State, an order should be made pooling all interests in the 320-acre drilling unit describe herein.

8. That an order of the Commission pooling all interests in said drilling unit is necessary, just, and reasonable in order to afford each owner of interest in said drilling unit the opportunity to recover and receive his just and equitable share of the gas from the common sources of supply underlying said drilling unit.

9. That production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in such tract bears to the total number of acres within said drilling unit.

(over)

ORDER

NOW, THEREFORE, IT IS ORDERED, that the S/2 of Section 31, Township 24 North, Range 10 West, N.MP.M. is hereby designated a drilling and spacing unit with the permitted well to be located in the SE/4 in accordance with the provisions of Order No. 112-6 and that pursuant to the provisions of 34-60-116 CRS 1973, as amended, all interests in said drilling unit are hereby pooled for the development and operation thereof.

IT IS FURTHER ORDERED, that the production obtained from said drilling unit shall be allocated to each tract therein on the basis of the proportion that the number of acres in such tract bears to the total number or acres within said drilling unit, and each owner of interest in said tracts in said drilling unit shall be entitled to receive his share of the production of the well located, or to be located on said drilling unit, applicable to his interest in said drilling unit.

IT IS FURTHER ORDERED, that these orders shall become effective forthwith.

ORDERED this 19th day of October, 1977.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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