IN THE MATTER OF THE PROMULGATION AND CAUSE NOS

IN THE MATTER OF THE PROMULGATION AND          CAUSE NOS. 499 and 232
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE WATTENBERG FIELD AND          ORDER NOS. 499-65
THE WATTENBERG GAS SPACED AREA,                                         and 232-221
WELD COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on March 31, 1998, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Patina Oil & Gas Corporation for an order to allow two (2) wells to be drilled at exception locations for production of gas and associated hydrocarbons from the Dakota Formation and as third wells for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing units described. Said wells shall be located in the center of the 40-acre tract or quarter-quarter with a tolerance of 200 feet in any direction. The Applicant also seeks an order to allow the Putnam W 29-9Ji Well to be drilled as the third well in the center of the NE¼ SE¼ of Section 29, Township 2 North, Range 66 West, 6th P.M., with a tolerance of 200 feet in any direction, for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing unit consisting of the S½ of said Section 29.

FINDINGS

The Commission finds as follows:

1. Patina Oil & Gas 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. In Order No. 499-1, the Commission established 320-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Dakota Formation in certain lands, with the 320-acre drilling and spacing units to be identical to those previously established for the "J" Sand Formation under Cause No. 232, with the permitted wells to be located in the NW¼ and the SE¼ of the section and no closer than 990 feet from the boundaries of the quarter section. In Order Nos. 499-15, 232-89, 407-125, 493-22 and 496-3, the Commission established 320-acre drilling and spacing units for certain lands previously not spaced in the lands covered by Cause No. 232, for production from the Dakota Formation to allow the recompletion and downhole commingling of production from the Dakota, "J" Sand, Codell, Niobrara, Sussex and Shannon Formations.

5. In Cause No. 232, the Commission established 320-acre drilling and spacing units for the production of gas from the “J” Sand Formation in the Wattenberg Field with one well allowed for each unit to be located in the NE¼ and the SW¼ and no closer than 990 feet to the boundaries of the quarter section. Additional orders allowed the drilling of a second well on each 320-acre drilling unit.

6. The Applicant requests approval for the below-listed wells be drilled at exception locations for production of gas and associated hydrocarbons from the Dakota Formation and as third wells for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing units described. Said wells shall be located in the center of the 40-acre tract or quarter-quarter with a tolerance of 200 feet in any direction.

Proposed Well Location 320-acre unit
Shivers W 29-6Ji SE¼ NW¼ Sec 29-2N-66W N½
Cavey U 24-4Ji NW¼ NW¼ Sec 24-2N-68W N½

7. The Applicant also requests approval for the Putnam W 29-9Ji Well to be drilled as the third well in the center of the NE¼ SE¼ of Section 29, Township 2 North, Range 66 West, 6th P.M., with a tolerance of 200 feet in any direction, for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing unit consisting of the S½ of said Section 29.

8. Evidence submitted by the Applicant and reviewed by the Hearing Officer shows that the original gas in place ranges from 2.8 BCF to 3.1 BCF and that the estimated ultimate recovery from the two existing “J” Sand Formation wells in each specified 320-acre drilling and spacing unit ranges from 0.5 BCF to 0.86 BCF, which equates to recovery factors ranging from 22.1% to 34.5%.

9. The applicant agrees to request Commission approval not before six (6) months from the date production is obtained from the “J” Sand Formation to recomplete the well to the Dakota Formation at an exception location and to the Codell, Niobrara, Sussex or Shannon Formations and commingle production from these formations with production from the “J” Sand Formation. A bottomhole pressure test of the "J" Sand Formation will not be obtained.

10. That in order to prevent waste and protect the correlative rights, an additional well is necessary to recover remaining "J" Sand Formation reserves.

11. The Applicant agreed to be bound by oral order of the Commission.

12. Based on the facts stated in the application, having received no protests and having been heard by the Hearing Officer who recommends approval of the application, an order of the Commission should be entered amending Order Nos. 499-1 and 232-89, allowing the wells described in Finding #6, to be drilled at exception locations for production of gas and associated hydrocarbons from the Dakota Formation and as third wells for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing units described. Said wells shall be located in the center of the 40-acre tract or quarter-quarter with a tolerance of 200 feet in any direction. The Applicant also seeks an order to allow the Putnam W 29-9Ji Well to be drilled as the third well in the center of the NE¼ SE¼ of Section 29, Township 2 North, Range 66 West, 6th P.M., with a tolerance of 200 feet in any direction, for production of gas and associated hydrocarbons from the "J" Sand Formation, for the 320-acre drilling and spacing unit consisting of the S½ of said Section 29

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 499-1 and 232-89 are hereby amended, to allow the below-listed wells to be drilled at exception locations for production of gas and associated hydrocarbons from the Dakota Formation and as third wells for production of gas and associated hydrocarbons from the "J" Sand Formation for the 320-acre drilling and spacing units described. Said wells shall be located in the center of the 40-acre tract or quarter-quarter with a tolerance of 200 feet in any direction.

Proposed Well Location 320-acre unit
Shivers W 29-6Ji SE¼ NW¼ Sec 29-2N-66W N½
Cavey U 24-4Ji NW¼ NW¼ Sec 24-2N-68W N½

IT IS FURTHER ORDERED, that the Putnam W 29-9Ji Well shall be allowed to be drilled as the third well in the center of the NE¼ SE¼ of Section 29, Township 2 North, Range 66 West, 6th P.M., with a tolerance of 200 feet in any direction, for production of gas and associated hydrocarbons from the "J" Sand Formation, for the 320-acre drilling and spacing unit consisting of the S½ of said Section 29

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 13th day of April, 1998, as of March 31, 1998.

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 April 13, 1998

(232-221)