IN THE MATTER OF THE PROMULGATION AND             CAUSE NO. 407
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE CODELL-NIOBRARA SPACED      ORDER NO. 407-232
AREA, WELD COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on March 17, 1997, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Patina Oil & Gas Corporation, for an order pooling all non-consenting interests in the 80-acre drilling and spacing unit consisting of the S½ NE¼ of Section 6, Township 4 North, Range 65 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations for the production of oil and/or gas, and associated hydrocarbons underlying said unit, pursuant to §34 60 116, C.R.S. 1984.

FINDINGS

The Commission finds as follows:

1. Patina Oil & Gas 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. Patina Oil & Gas Corporation proposes to drill the Curtis G6-7 Well in the SW¼NE¼ and the Curtis G6-8 Well in the SE¼NE¼, both located in Section 6, Township 4 North, Range 65 West, 6th P.M., for production from the Codell and Niobrara Formations.

5. Efforts have been made to obtain the voluntary pooling of all interests in the S½ NE¼ of Section 6, Township 4 North, Range 65 West, 6th P.M. A.F.E.'s were furnished to all working interest owners and a total interest of 19.6% declined to give consent or accept the mailing.

6. Based on the facts stated in the verified application, having received no protests, and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order pooling all interests in the 80 acre drilling and spacing unit herein described, in order to insure proper and efficient development of the oil and gas from the Codell and Niobrara Formations underlying said unit.

7. An order of the Commission pooling all interests in said drilling unit is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying said drilling unit.

8. Production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within said drilling unit.

9. Patina Oil & Gas Corporation should be approved as the operator for the 80-acre drilling and spacing unit consisting of the S½ NE¼ of Section 6, Township 4 North, Range 65 West, 6th P.M., Weld County, Colorado, for the development and operation of the Codell and Niobrara Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of §34 60 116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing unit consisting of the S½ NE¼ of Section 6, Township 4 North, Range 65 West, 6th P.M., Weld County, Colorado, are hereby pooled for the development of gas and associated hydrocarbons from the Codell and Niobrara Formations underlying said unit.

2. The production obtained from said drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the well located on said drilling unit applicable to his interest in said drilling unit.

3. The owner of the leased and unleased tract should be afforded the opportunity to elect whether to participate in the drilling and operation of said well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of acres in each unleased tract to the total number of acres within said drilling unit.

4. Within thirty (30) days from the date of receipt of said AFE by the owner of said tract, such owner shall indicate whether he consents to the cost of the drilling of the well and agrees to participate in such costs. Such election shall be made in writing either by executing the AFE or similar document. In the event a written election to participate is not made by said owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non consenting as to the well and be subject to the penalties as provided for by §34 60 116 (7).

5. Any non consenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his or her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non consenting owner's proportionate 87.5% share of production, the costs specified in §34 60 116 (7)(b), C.R.S. as amended. After recovery of such costs, the non consenting mineral owner shall then own his proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with the well as if he had originally agreed to the drilling.

6. The operator of any well drilled on the above described unit shall furnish all non consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.

7. Patina Oil & Gas Corporation is hereby approved as the operator for the 80-acre drilling and spacing unit consisting of the S½ NE¼ of Section 6, Township 4 North, Range 65 West, 6th P.M., Weld County, Colorado, for the development and operation of the Codell and Niobrara Formations.

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 26th day of March, 1997, as of March 17, 1997.

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 March 24, 1997

(407-232)