IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CODELL-NIOBRARA SPACED AREA AND THE WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NOS. 407 and 493

ORDER NOS. 407-158 and 493-33

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 18, 1994, in Room 610, State Services Building, 1525 Sherman Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of Snyder Oil Corporation, for an order to amend Cause Nos. 407 and 493 to allow a well to be located at an exception location for commingled production from the Codell, Niobrara, and Sussex Formations.

FINDINGS

The Commission finds as follows:

1. Snyder Oil 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. 407-1, the Commission established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation. Wells shall be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction. In Order Nos. 407-10 and 407-13, the Commission amended Order No. 407-1 to include production from the Niobrara Formation in certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations, including Section 24, Township 3 North, Range 65 West, 6th P.M.

5. Order No. 493-2 established 80-acre drilling and spacing units for production from the Sussex Formation, with the permitted wells to be located in accordance with those locations established in Cause No. 407 and allowing the downhole commingling of production from the Codell, Niobrara, and Sussex Formations, including Section 24, Township 3 North, Range 65 West, 6th P.M.

6. This matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing that an exception to the permitted well location is necessary to avoid multiple wellhead facilities by allowing an existing well to be recompleted for production from shallower zones.

7. An order of the Commission should be entered allowing the Russell Gurtler No. 1 Well to be recompleted at an exception location 990 feet FSL and 1410 feet FWL in the SE1/4 SW1/4 of Section 24, Township 3 North, Range 65 West, 6th P.M., for commingled production from the Codell, Niobrara, and Sussex Formations, for the 80-acre drilling and spacing unit consisting of the E1/2 SW1/4 of Section 24.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 407-1, 407-10, and 493-2 are hereby amended to allow the Russell Gurtler No. 1 Well to be recompleted at an exception location 990 feet FSL and 1410 feet FWL in the SE1/4 SW1/4 of Section 24, Township 3 North, Range 65 West, 6th P.M., for commingled production from the Codell, Niobrara, and Sussex Formations, for the 80-acre drilling and spacing unit consisting of the E1/2 SW1/4 of Section 24.

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 1st day of August, 1994, as of July 18, 1994.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado 80203

July 28, 1994