REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 17, 1982 at 9:00 A.M. in Room 110, State Centennial Building, Denver, Colo-rado, after giving Notice of Hearing as required by law, on the application of Davis Oil Company, for an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Ismay formation underlying certain lands in La Plata County, Colorado.

FINDINGS

The Commission finds as follows:

1. Davis Oil Company, 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 juris-diction to promulgate the hereinafter prescribed order.

4. Evidence presented at the hearing indicates that the Ismay formation constitutes a common source of supply of gas and associated hydro-carbons underlying the following described lands in La Plata County, Colorado, to-wit:

Township 33 North, Range 13 West. N.MP.M. Section 1: All Section 10: All Section 2: All Section 11: All Section 3: All Section 12: All

Township 34 North, Range 13 West, N.MP.M. Sections 34 thru 36: All

5. In order to prevent waste of oil and gas, as defined by law; to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient deve-lopment and promote conservation of the oil and gas resources, an order should be made establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Ismay formation, a common source supply underlying the lands defined herein; that said units should be 160-acres and consist of a quarter section, according to the governmental survey, and the permitted well for each unit should be located no closer than 200 feet from the boundaries of the unit and Well No. 1 West Alkali Gulch, NE/4SW/4 Section 2, Township 33 North, Range 13 West, N.MP.M. should be the permitted well for the unit upon which it is located.

6. All geological and engineering data concerning the Ismay formation indicate that one well will efficiently and economically drain an area of approximately 160-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently drained by one well producing from said Ismay formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or

(over) recompleted in the Ismay formation underlying the Alkali Gulch-West Field, herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. One hundred-sixty (160) acre drilling and spacing units shall be and the same is hereby established for the production of gas and associated hydrocarbons from the Ismay formation underlying the follow/ described lands in the Alkali Gulch-West Field, La Plata County, Colorado, to-wit:

Township 33 North, Range 13 West, N.MP.M. Section 1: All Section 10: All Section 2: All Section 11: All Section 3: All Section 12: All Township 34 North, Range 13 West, N.MP.M. Sections 34 thru 36: All Rule 2. Said drilling units shall consist of 160-acres and consist of a quarter section, according to the governmental survey. The permitted well shall be located no closer than 200 feet to the boundaries of the unit and Well No. 1 West Alkali Gulch, located in the NE/4SW/4 Section 2, Township 33 North, Range 13 West, N.MP.M. shall be considered the per-mitted well for the unit upon which it is located.

IT IS FURTHER ORDERED, that the provisions contained in the above order and rules and regulations 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 17th day 1982, as of May 17, 1982.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 2 --(#383-1)