IN THE MATTER OF THE PROMULGATION AND CAUSE NOS

IN THE MATTER OF THE PROMULGATION AND                      CAUSE NOS. 232, 407 and
ESTABLISHMENT OF FIELD RULES TO GOVERN                                              499
OPERATIONS IN THE WATTENBERG GAS SPACED AREA,
THE CODELL-NIOBRARA SPACED AREA, AND THE                ORDER NOS. 232-228,
WATTENBERG FIELD, WELD COUNTY, COLORADO                    407-282 and 499-70

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on April 29, 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 HS Resources, Inc., for an order to allow fourteen (14) wells, originally drilled for production of oil, gas and associated hydrocarbons from the Codell, Niobrara or "J" Sand Formations, to be deepened as additional wells for production from the Dakota Formation for certain 320-acre drilling and spacing units. In the future, the Applicant may recomplete these wells to the Codell, Niobrara or "J" Sand Formations and commingle production with the Dakota Formation.

FINDINGS

The Commission finds as follows:

1. HS Resources, 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. 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 SW¼ and no closer than 990 feet to the boundaries of the quarter section. On August 21, 1979, the Commission issued Order No. 232-20 which allowed a second well to be drilled on each 320-acre unit.

5. In Order No. 407 1, the Commission established 80 acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation. Wells shall be located in the center of the 40 acre tract or quarter quarter section with a tolerance of 200 feet in any direction. In Order Nos. 407 10 and 407 13, the Commission amended Order No. 407 1 to include production from the Niobrara Formation in certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations.

6. In Order Nos. 407-66 and 232-47, the Commission, among other things, allowed recompletion to shallower zones, the downhole commingling of production from the "J" Sand Formation with production from the Codell and Niobrara Formations, and approval of an allocation method for commingled production.

7. 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 allowed the commingling of production from the Dakota, "J" Sand, Codell, Niobrara, Sussex and Shannon Formations.

8. On April 13, 1998, the Applicant withdrew from the application the following six (6) wells: Yoxall Farms C-2, Jacobucci #1, William Peltier Unit #1, Sarchet #2, Pacheco Heirs #1, and Keith Carter G.U. #1. In addition, the Applicant continued to the June hearing the following four (4) wells: King Addie G.U. True 1, Donald Norgren True C-1, Ben Houston G.U. True 1, and the Swank #1.

9. Testimony and evidence presented at the administrative hearing indicates that the remaining four (4) wells have an Estimated Ultimate Recovery ranging from .173 BCF to .597 BCF and will drain an area ranging from 42 aces to 134.4 acres from the specified 320-acre Dakota Formation units.

10. That in order to prevent waste, protect the correlative rights, and prevent the drilling of unnecessary wells, the deepening of existing wells is necessary to recover remaining "J" Sand and Dakota Formation reserves.

11. At the time of the administrative hearing, 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 below-listed wells, originally drilled for production of oil, gas and associated hydrocarbons from shallower formations, to be deepened as additional wells for production from the Dakota Formation for the existing 320-acre drilling and spacing units. In the future, the Applicant may commingle production from the Dakota Formation with production from the "J" Sand, Codell and Niobrara Formations.

Well Name Location 320-acre Unit
Albert Sack No. 1 SE¼ SW¼ Sec 31-1N-67W S½
UPRR 43 Pan Am S-1 E1/2 W1/2 SW¼ Sec 11-1N-68W S½
Champlin 86 Amoco G-1 C SW¼ Sec 17-1N-68W S½
Test-HSR 16-31 SE¼ SE¼ Sec 31-3N-65W E½

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 499-1 and 232-89 are hereby amended, allowing the below-listed wells, originally drilled for production of oil, gas and associated hydrocarbons from shallower formations, to be deepened as additional wells for production from the Dakota Formation for the existing 320-acre drilling and spacing units. In the future, the Applicant may commingle production from the Dakota Formation with production from the "J" Sand, Codell and Niobrara Formations.

Well Name Location 320-acre Unit
Albert Sack No. 1 SE¼ SW¼ Sec 31-1N-67W S½
UPRR 43 Pan Am S-1 E1/2 W1/2 SW¼ Sec 11-1N-68W S½
Champlin 86 Amoco G-1 C SW¼ Sec 17-1N-68W S½
Test-HSR 16-31 SE¼ SE¼ Sec 31-3N-65W E½

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 21st day of May, 1998, as of April 29, 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 May 20, 1998

(232-228)