REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 21, 1986 at 9:00 A.M., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Sandlin Oil Corp., for an order to amend Order No. 291-1 and allow the option to drill an additional well on each 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the "J" Sand underlying certain lands in the Chieftain Field.

FINDINGS

The Commission finds as follows:

1. Sandlin Oil Corp., 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 May 21, 1974, the Commission authorized Order No. 291-1 to be issued which established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the "J" Sand underlying certain lands in Adams County, Colorado. The units consist of the N/2 and S/2 or the E/2 and S/2 of each section with the permitted well located in the NW/4 and SE/4 of the section, with the permitted well located in the NW/4 and SE/4 quarter of the section and no closer than 990 feet from the boundaries of the quarter section. By subsequent orders in Cause 291, certain lands were added to the spaced area of the Chieftain Field.

5. Based on the facts stated in the verified application and exhibits submitted and receiving no objections, and having been reviewed by the Director as Hearing Officer on February 19, 1986 and recommended for approval, the Commission should enter an order allowing the option to drill an additional well on each 320-acre drilling and spacing unit in the following described lands in the Chieftain Field, Adams County, Colorado. Township 2 South, Range 63 West, 6th P.M. Section 9: All Section 16: All Section 10: All Section 21: All Section 15: All Section 22: All and that said additional well be located in the undrilled quarter section no closer than 990 feet from the boundaries of the quarter section. 6. Evidence presented before the Director as Hearing Officer indicate that the "J" Sand reservoir is continuous, therefore to protect the correlative rights of other operators in the spaced area, the option to drill an additional well on the remaining 320-acre units in the spaced area should be allowed. The Commission should consider this matter on the next-scheduled hearing date.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 291-1 is amended and the following shall apply to wells drilled, completed or recompleted in the "J" Sand underlying the lands described herein, in to other applicable rules and regulations and orders of the heretofore adopted and not in conflict herewith:

Rule 1. The option to drill a second well, in addition to the permitted well as provided for by Order No. 291-1, is hereby authorized to be drilled on each 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the "J" Sand underlying the following described lands in a portion of the Chieftain Field, Adams County, Colorado, to-wit:

Township 2 South, Range 63 West, 6th P.M. Section 9: All Section 16: All Section 10: All Section 21: All Section 15: All Section 22: All

Rule 2. Said additional well shall be located in the undrilled quarter section no closer than 990 feet from the boundaries of the quarter section.

IT IS FURTHER ORDERED, that a hearing shall be held March 17, 1986 at which time the Commission will consider including in this order, the remaining 320-acre drilling and spacing units in the Chieftain Field as established by Order No. 291-1.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

ENTERED this 10th day of March, 1986, as of February 21, 1986.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary (291-14)