REPORT OF THE COMMISSION

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

This cause came on for hearing before the Commission on January 21, 1993 at 8:30 a.m., in the Silver Room, Radisson Hotel, 1550 Court Place, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Meridian Oil Inc. for an order to establish an exploratory unit for production from the Middle Lewis Formation for a 640-acre drilling and spacing unit in Moffat County, for production of oil, gas and associated hydrocarbons f rom the Middle Lewis Formation underlying said unit.

FINDINGS

The Commission finds as follows:

1. Meridian Oil 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. Order No. 334-1, among other things, established 320-acre drilling and spacing units for production from the Middle Lewis Formation for certain lands in Township 9 North, Range 93 West, 6th P.M., including Section 4. The units shall consist of the E1/2 and W1/2 or the N1/2 and S1/2 of the section, with the permitted well located no closer than 600 feet from the boundaries of the quarter section and no closer than 1320 feet from another producing or producible gas well.

5. The Weaver No. 1 Well located in the NE1/4 SW1/4 for the 320-acre drilling and spacing unit consisting of the W1/2 and the Bruder No. 1 Well located in the NE1/4 NE1/4 for the 320-acre drilling and spacing unit consisting of the E1/2, both in Section 4, Township 9 North, Range 93 West, 6th P.M., were drilled for production from the Middle Lewis Formation. The Weaver No. 1 Well has been plugged and abandoned and the Bruder No. 1 Well has been shut-in since 1985.

6. C.R.S. 34-60-116.(2), among other things, authorized the Commission, when unable to determine the existence of a pool and the appropriate acreage to be embraced with a drilling unit, to establish the existence of a pool and the appropriate size and shape of the drilling unit to be applied.

7. Meridian Oil Inc. proposes to drill a horizontal well at a location in the NE1/4 NE1/4 of Section 4, Township 9 North, Range 93 West, 6th P.M., with the bottom hole location to be in the W1/2 of said Section 4 and therefore wishes to establish the below-listed lands as an exploratory unit for production of oil, gas and associated hydrocarbons from the Middle Lewis Formation:

Township 9 North, Range 93 West, 6th P.M. Section 4: All

8. Based on the facts stated in the verified application, having received no protests, and having been heard by the Director as Hearing Officer on January 19, 1993, the Hearing Officer recommends that the Commission should enter an order rescinding Order No. 334-1 for Section 4, Township 9 North, Range 93 West, 6th P.M., Moffat County, Colorado and establishing an exploratory unit for the above-described lands for production from the Middle Lewis Format ion underlying said unit. The Hearing Officer further recommends that the Bruder No. 1 Well located in the NE1/4 NE1/4 of Section 4 should be plugged and abandoned concurrently with the commencement of horizontal well operations by Meridian Oil Inc.

O R D E R

NOW, THEREFORE IT IS ORDERED, that, 1. Order No. 334-1 shall be rescinded for the below-listed lands and pursuant to the provisions of 34-60-116, C.R.S., 1991, as amended, of the Oil and Gas Conservation Act of the State of Colorado, an order to establish an exploratory unit for production from the Middle Lewis Formation for the below-listed lands is hereby granted.

Township 9 North, Range 93 West, 6th P.M. Section 4: All

IT IS FURTHER ORDERED, that the Bruder No. 1 Well located in the NE1/4 NE1/4 of Section 4 shall be plugged and abandoned concurrently to the commencement of horizontal well operations by Meridian Oil Inc.

IT IS FURTHER ORDERED, that Meridian Oil Inc. is hereby designated as operator of the exploratory unit.

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 February, 1993, as of January 21, 1993.

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 March 1, 1993 ??