REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 21, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Sensor Oil and Gas, Inc. for an order to extend the drilling and spacing units established in Order No. 344-1 to include additional lands, and to pool all interests in the 160-acre drilling and spacing unit consisting of the NE1/4 of Section 24, Township 2 South, Range 50 West, 6th P.M., for the development and operation of the Niobrara Formation for the production of gas and associated hydrocarbons underlying said unit, pursuant to Colorado Revised Statutes, 34-60-116, 1984.

FINDINGS

The Commission finds as follows:

1. Sensor Oil and Gas, Inc. as applicant herein, is an interested party in the subject matter of the above-referenced hearings.

2. Due notice of the time, place and purpose of the hearings 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. 344-1 issued September 18, 1978 established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation, with the units consisting of a governmental quarter section, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section. Subsequent Order No. 344-2 allowed an additional well to be drilled, at the option of the operator, on each 160-a cre drilling and spacing unit, with said well to be located no closer than 600 feet from the outer boundary of the unit and no closer than 660 feet from any other well producing from the Niobrara Formation.

6. A protest to the application was filed by Stelbar Oil Corporation, Inc. and The Robert J. Gutru Trust.

7. Testimony presented by the applicant at the hearing indicated that the Niobrara Formation is a common source of supply underlying the below-described lands, and that 160-acre drilling and spacing units are not less than the maximum area that can be efficiently and economically drained by one well:

Township 2 South, Range 50 West, 6th P.M. Section 12: S1/2 Section 13: All Section 24: N1/2

8. Testimony presented by the protestant at the hearing indicated that the Niobrara Formation is not a common source of supply underlying the lands described in Finding 7, due in part to the faulting present in the area which separates the productive sources of supply.

9. The Commission found that in order to prevent the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be entered extending the White Eagle Field to include the below-described lands under the provisions of Order Nos. 344-1 and 344-2, for the production of gas and associated hyd rocarbons from the Niobrara Formation for the lands described in Finding 7.

10. Efforts have been made to obtain the voluntary pooling of all interests. A.F.E.'s and proposed operating agreements were furnished to Stelbar Oil Corporation, Inc. underlying the NE1/4 of said Section 24, Township 2 South, Range 50 West, 6th P.M., on or around August 30, 1994, and consent has not been given.

11. After some testimony was presented at the hearing by the applicant and protestant on the applicant's request to pool all interests in the NE1/4 of said Section 24, the Commission continued this portion of the application to the December hearing.

12. Based on the facts stated in the application and on testimony presented by the applicant and the protestant at the hearing, the Commission should approve the request by Sensor Oil and Gas, Inc. to extend the White Eagle Field to include additional lands as described in Finding 7 under the provisions of Order Nos. 344-1 and 344-2. The Commission should continue the pooling portion of the application to the December hearing.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that 160-acre drilling and spacing units are hereby established for the below-described lands, for the production of gas and associated hydrocarbons from the Niobrara Formation, with the units consisting of a governmental quarter section, with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section. Further, an additional well shall be allowed to be drilled, at the option of the operator, on each 160-acre drilling and spacing unit, with said well to be located no closer than 600 feet from the outer boundary of the unit and no closer than 660 feet from any other well producing from the Niobrara Formation.

Township 2 South, Range 50 West, 6th P.M. Section 10: E1/2 Section 11: W1/2 Section 12: S1/2 Section 13: All Section 14: All Section 15: E1/2 Section 22: E1/2 Section 23: All Section 24: N1/2

IT IS FURTHER ORDERED, that the applicant's request to pool all interests in the NE1/4 of Section 24, Township 2 South, Range 50 West, 6th P.M. is hereby continued to the December 19, 1994 hearing.

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 November 21, 1994.

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 December 27, 1994 ??

(344#3)