BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                                OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                               )                    CAUSE NO. 307

ESTABLISHMENT OF FIELD RULES TO GOVERN                              )

OPERATIONS IN THE LOST CREEK FIELD,                                      )                    ORDER NO. 307-3 

WELD COUNTY, COLORADO                                                            )

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on June 20, 1994, in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Elk Exploration, Inc., for an order to amend Cause No. 307 to allow a well to be drilled at an exception location for production from the "J" Sand Formation.

FINDINGS

                        The Commission finds as follows:

                        1.  Energy Minerals 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. 307-1 issued February 17, 1976, the Commission established 160-acre drilling and spacing units for the production of gas from the "J" Sand Formation, including Section 32, Township 3 North, Range 62 West, 6th P.M.  Said units consist of a quarter section, with the permitted well for each unit located not less than 600 feet from the boundary of each quarter section and no closer than 1850 feet from another gas well producing from the same source of supply.

                        5.  This matter was heard by the Hearing Officers who recommend approval based upon the testimony presented at the administrative hearing that an exception to the permitted well location is necessary to avoid a center pivot irrigation system and minimize interference with agricultural activities.

                        6.  No objections to the application were received and an order of the Commission should be entered allowing the HSR-Hobe State No. 2-32 Well to be drilled at an exception location 660 feet FNL and 2085 feet FEL in the NW1/4 NE1/4 of Section 32, Township 3 North, Range 62 West, 6th P.M., for production from the "J" Sand Formation.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that Order No. 307-1 shall be amended and an exception to Rule 316 of the Rules and Regulations of the Commission shall allow the HSR-Hobe State No. 2-32 Well to be drilled at an exception location 660 feet FNL and 2085 feet FEL in the NW1/4 NE1/4 of Section 32, Township 3 North, Range 62 West, 6th P.M. for production from the "J" Sand Formation.

                        IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

                        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 , 1994, as of June 20, 1994.

                                                                        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

July 8, 1994