BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND    ESTABLISHMENT OF FIELD RULES TO GOVERN   OPERATIONS IN THE IGNACIO‑BLANCO FIELD,  LA PLATA, COUNTY, COLORADO	) ) ) )	CAUSE NO.   112 ORDER NO.   112-99 AMENDED

REPORT OF THE COMMISSION

                                  This cause came on for hearing before the Commission on August 17, 1992 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Conoco Inc., for an order pooling all interests in the drilling and spacing unit consisting of Section 33, Township 33 North, Range 8 West, N.M.P.M., La Plata County, Colorado, for the development and operation of the Dakota-Morrison Formations for the production of gas underlying said unit, pursuant to Colorado Revised Statutes, 34‑60‑116, 1984.

FINDINGS

                                  The Commission finds as follows:

                                  1.  Conoco Inc. 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.  By Order No. 112-46, issued July 16, 1979, the Commission established 640-acre drilling and spacing units and allowed four wells to be drilled on each unit, including Section 33, Township 33 North, Range 8 West, N.M.P.M.

                                  5.  Efforts have been made to obtain the voluntary pooling of all interests.  An A.F.E. was furnished to Meridian Oil Inc., a non-consenting interest on or around August 7, 1992, and consent has not been given.

                                  6.  A protest was filed by the Board of County Commissioners of La Plata County and was withdrawn prior to the hearing.

                                  7.  Based on the facts stated in the verified application, and having been heard by the Hearing Officer, the Commission should enter an order pooling all interests in the 640‑acre drilling and spacing unit herein described in order to insure proper and efficient development of the oil and gas from the Dakota-Morrison Formations underlying said unit.

                                  8.  An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying said drilling unit.

                                  9.  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 each tract bears to the total number of acres within said drilling unit.

                                  10.  Conoco Inc. should be approved as the operator for the 640-acre drilling and spacing unit consisting of Section 33, Township 33 North, Range 8 West, N.M.P.M., La Plata County, Colorado, for the development and operation of the Dakota-Morrison Formations.

O R D E R

                                  NOW, THEREFORE IT IS ORDERED, that, 1.  Pursuant to the provisions of 34‑60‑116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing unit consisting of Section 33, Township 33 North, Range 8 West, N.M.P.M., La Plata County, Colorado, are hereby pooled for the development of gas from the Dakota-Morrison Formations underlying said unit.

                                  2.  The production obtained from said drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of each well located on said drilling unit applicable to his interest in said drilling unit.

                                  3.  The owner of the non-consenting tracts should be afforded the opportunity to elect whether to participate in the drilling and operation of each well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of acres in each non-consenting tract to the total number of acres within said drilling unit.

                                  4.  Within thirty (30) days from the date of receipt of said AFE by the owner of said tract, such owner shall indicate whether he consents to the cost of the drilling of each well and agrees to participate in such costs.  Such election shall be made in writing either by executing the AFE or similar document.  In the event a written election to participate is not made by said owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non‑consenting as to the each and be subject to the penalties as provided for by 34‑60‑116 (7).

                                  5.  Any non‑consenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his or her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non‑consenting owner's proportionate 87.5% share of production, the costs specified in C.R.S. 34‑60‑116 (7)(b), as amended.  After recovery of such costs, the non‑consenting mineral owner shall then own his proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with each well as if he had originally agreed to the drilling.

                                  6.  The operator of any well drilled on the above described unit shall furnish all non‑consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.

                                  7.  Conoco Inc. is hereby approved as the operator for the 640-acre drilling and spacing unit consisting of Section 33, Township 33 North, Range 8 West, N.M.P.M., La Plata County, Colorado, for the development and operation of the Dakota-Morrison Formations.

                                  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 , 1992, as of August 17, 1992.

                                  AMENDED this __________ day of ______________________, 1992, as of August 17, 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

September 11, 1992