232-38

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 WATTENBERG GAS SPACED AREA [sic] ADAMS COUNTY, COLORADO

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CAUSE NO. 232

ORDER NO. 232-38

REPORT OF THE COMMISSION

TO ALL INTERESTED PERSONS AND TO WHOM IT MAY CONCERN:

This cause came on for hearing before the Commission on July 20, 1987 at 9:00 a.m. in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, on the application of Robert B. Mussack for an order pooling his interest in the 320 acre drilling and spacing unit consisting of the W1/2 Section 32, Township 1 North, Range 68 West, 6th P.M. for the operation and development of the unit for the production of gas and associated hydrocarbons from the "J" Sand underlying said unit pursuant to 34-60-116 C.R.S., as amended.

FINDINGS

The Commission finds as follows:

1. Robert B. Mussack, 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. On November 17, 1970, the Commission issued Order No. 232-1 by which 320-acre drilling and spacing units were established for the production of gas and associated hydrocarbons from the ‘J' [sic] Sand underlying lands in the Wattenberg Gas Spaced Area. Subsequent Orders extended the area and by Order No. 232-23, an additional well was allowed to be drilled on each 320-acre unit. The W1/2 Section 32, Township a North, Range 68 West, 6th P.M. has been designated a Unit. A well has been drilled in the NW1/4 of said Section 32, producing from the "J" Sand and operated by Martin Exploration Management Company.

5. The Commission should enter an order pooling the interest of Robert B. Mussack, in the 320-acre drilling and spacing unit, herein described, in order to insure proper and efficient development of the gas and associated hydrocarbon from the "J" Sand underlying said Unit.

6. An order of the Commission pooling all interest in said drilling unit is necessary in order to afford Robert B. Mussack, as working interest owner of two and one-half (2 1/2) acres in said drilling unit the opportunity to recover and receive his just and equitable share of the gas and associated hydrocarbons from the ‘J’ [sic] Sand underlying said drilling unit.

7. Production obtained from said drilling unit should be allocated on the basis of the proportion that the number of acres of the two and one-half acre tract bears to the total number of acres within the unit.

ORDER

NOW, THEREFORE, IT IS ORDER, [sic] that, 1. [sic] 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 the W1/2 Section 32, Township 1 North, Range 68W, [sic] 6th P.M., Weld County, Colorado, are hereby pooled for the development of gas and associated hydrocarbons from the ‘J' [sic] Sand underlying said Unit.

2. The production obtained from said drilling unit shall be allocated to Robert B. Mussack as owner of a 2 1/2 acre unleased tract 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; such owner of interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.

3. The owner of the unleased tract should be afforded the opportunity to elect whether to participate in the drilling and operating of said well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of net mineral acres owned by said unleased tract mineral owner by the total number of mineral acres in the unit.

4. The operator responsible for drilling the well on the said unit shall prepare an Authorization for Expenditure ("AFE"), which shall be submitted to the unleased owner in the unit.

5. 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 the 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 well and be subject to the penalties as provided for by 34-60-116 (7).

6. The designated operator of the well for the unit, Well No. 1032 Hippin, SE1/4 NW1/4 Section 32, Township 1 North, Range 68 West, 6th P.M. for the purpose of this pooling order shall be Martin Exploration Management Company.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall be effective forthwith retroactive to the date that costs were incurred in the drilling of the well.

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 16th Day of September 1987, as of August 17, 1987.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary