REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 16, 1996, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of Prima Oil and Gas Company, to amend Order No. 407-1 to either redesignate or segregate the 80-acre drilling and spacing unit consisting of the N1/2 of the NW1/4 of Section 13, Township 4 North, Range 65 West, 6th P.M. into two 40-acre drilling and spacing units consisting of the NW1/4 NW1/4 and NE1/4 NW1/4 of said Section 13, for production from the Codell and Niobrara Formations. In addition, the applicant seeks approval of the proposed Frank No. 13-21 Well to be located in the NE1/4 NW1/4 and the Frank No. 13-1 Well drilled in the NW1/4 NW1/4 of said Section 13 as the permitted wells for such 40-acre drilling and spacing units. FINDINGS

The Commission finds as follows:

1. Prima Oil & Gas Company, as applicant herein, is an interested party in the subject matter of the above-entitled 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. On December 19, 1983, the Commission authorized Order No. 407-1 to be issued which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell Formation. The units consist of the E1/2 and W1/2 or the N1/2 and S1/2 of each governmental quarter-quarter section. The permitted well shall be located in the center of either 40-acre tract within the unit, with a tolerance of 200 feet and the op tion to drill an additional well in the undrilled 40-acre tract. Subsequent Order No. 407-10 included the Niobrara Formation and allowed downhole commingling of production from the Codell and Niobrara Formations. Section 13, Township 4 North, Range 65 West, 6th P.M., Weld County, Colorado lies within the area spaced by these orders.

5. The Frank No. 13-1 Well was drilled for production from the Codell and Niobrara Formations in the NW1/4 NW1/4 of Section 13 in June 1982, prior to the issuance of Order No. 407-1. Payout of the well has always been on a 40-acre basis.

6. Testimony presented at the administrative hearing indicated that 40-acres is not smaller than the maximum area that can be efficiently and economically drained by one well in the Codell and Niobrara Formations.

7. Based on the facts stated in the application, having received no protests, and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order approving the request to amend Order No. 407-1 to segregate the 80-acre drilling and spacing unit consisting of the N1/2 of the NW1/4 of Section 13, Township 4 North, Range 65 West, 6th P.M. into two 40-acre drilling and spacing units consisting of the NW1/4 NW1/4 and NE1 /4 NW1/4 of said Section 13, for production from the Codell and Niobrara Formations. Further, the proposed Frank No. 13-21 Well to be located in the NE1/4 NW1/4 and the Frank No. 13-1 Well drilled in the NW1/4 NW1/4 of said Section 13 should be designated as the permitted wells for such 40-acre drilling and spacing units.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Order No. 407-1 shall be amended to segregate the 80-acre drilling and spacing unit consisting of the N1/2 of the NW1/4 of Section 13, Township 4 North, Range 65 West, 6th P.M. into two 40-acre drilling and spacing units consisting of the NW1/4 NW1/4 and NE1/4 NW1/4 of said Section 13, for production from the Codell and Niobrara Formations.

IT IS FURTHER ORDERED, that the proposed Frank No. 13-21 Well to be located in the NE1/4 NW1/4 and the Frank No. 13-1 Well drilled in the NW1/4 NW1/4 of said Section 13 shall be the permitted wells for such 40-acre drilling and spacing units.

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.

IT IS FURTHER ORDERED, that with the verbal consent of the interested parties at the time of hearing, this order shall become effective forthwith.

ENTERED this day of November 1996, as of October 16, 1996.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 801 1110 Lincoln Street Denver, Colorado 80203 March 25, 1997 ??