REPORT OF THE COMMISSION

        This cause came on for hearing before the Commission on April 19, 1990 at 1:00 p.m., in Suite 380, Logan Tower Building, 1580 Logan Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified applications of Barrett Resources Corporation for an order amending Order No. 440-11 (Corrected) to establish 160-acre drilling and spacing units for the production of gas from the Mesaverde formation underlying such lands and for a further order modifying Order No. 440-11 (Corrected) to include additional lands for production of gas from the Wasatch and Mesaverde formations underlying such additional lands.

FINDINGS

        The Commission finds as follows:

        1. That Barrett Resources Corporation, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

        2. That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

        3. That 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. That evidence presented at the hearing indicates that the Mesaverde group which includes the Mesaverde which lies above the Cameo formation and the lower portion of the Mesaverde which includes the Cameo, Rollins, Cozette and Corcoran Sands, and the Coalbed Methane horizons, and the shallower Wasatch formation, each constitutes a separate supply of gas and associated hydrocarbons underlying the following described lands in a portion of the Parachute Field, Garfield County, Colorado, to-wit:

Township 7 South, Range 95 West, 6th P.M.

Sections 1 through 11 and 15 through 18

    5. That evidence presented at the hearing did not support the establishment of 160-acre drilling and spacing units for the production of gas from the Mesaverde formation underlying the above listed lands and those lands established by Order No. 440-11 (Corrected) but that the 320-acre drilling and spacing units established by Order No. 440-11 should be maintained and established for those lands included in Finding 4 hereinabove.

    6. 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 prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, additional lands listed in Finding 4 herein above, should be included for production of gas and associated hydrocarbons from the Wasatch formation underlying such lands with 160-acre drilling and spacing units established for the additional lands.

    7. That evidence was presented that would allow a third well to be drilled for production from the Mesaverde formation for each governmental section at the option of the operator of the unit or units contained within the individual section with the well to be located in accordance with Rule 6 listed herein below, except that no additional well should be drilled on the drilling and spacing unit in the Allen Point Area, to-wit:

Township 6 South, Range 95 West, 6th P.M.

Section 7 through 20 and 22 through 24

    8. That in order to prevent the waste of oil and gas, as defined by law, to protect correlative rights of all parties concerned, to prevent the drilling of unnecessary wells, and to insure proper and efficient development and to promote conservation of the oil and gas of the State, an order should be made to establish 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the entire Mesaverde formation as described above underlying the lands herein defined; that said units should be 320-acres, more or less, and consist of the E½ and W½ or the N½ and S½ of each section according to the governmental survey thereof, with the well to be located no closer than 600 feet from the boundaries of said unit and no closer than 1200 feet from any well producing or producible from the same formation.

    9. That there are existing wells producing or producible from the Mesaverde formation that have acreage attributions that are less than that amount required by Finding 8 hereinabove and that after verification of the area approved on the Application to Drill, such drilling and spacing units of the appropriate size should be ordered with the permitted well for each unit upon which it is located.

    10. That the below listed lands should be excluded from the provisions of the orders in Cause No. 139, Rulison Field, for the development of the Mesaverde formation to-wit:

Township 7 South, Range 95 West, 6th P.M.

Sections 1 through 11 and 15 through 18

    11. That there is now being negotiated a Surface Use Agreement between Barrett Resources Corporation and Battlement Mesa Partners and Battlement Mesa Realty Partners for the below listed lands which describe "Battlement Mesa" a Planned Unit Development, as approved by Garfield County, to-wit:

Township 7 South, Range 95 West, 6th P.M

Section 5:       S/½

Section 10:    W/½

Section 6:       SE¼

Section 16:    SW¼

Section 7:       E½

Section 17:    All

Section 8:       All

Section 18:    All

Section 9:       All

Section 19:     N½

Township 7 South, Range 96 West, 6th P.M..

Section 13:    E½

Section 24:    NE½

and that the Commission should be furnished an executed Surface Use Agreement with each Application-to-Drill for any well site within the above described lands.

       12. That Section 3, 4 and 9, Township 7 South, Range 95 West, 6th P.M., should each become 640-acre drilling and spacing units with the option to drill a total of three wells in each section for production from the Mesaverde formation with wells to be located in accordance with Rule 6 listed below.

ORDER

        NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or re-completed in the Wasatch and entire Mesaverde formations underlying those portions of the Parachute Field, Garfield County, Colorado, separately described herein below, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Wasatch Formation

Township 6 South, Range 95 West, 6th P.M.

Sections 7 through 24: All 320-acre units

Sections 25 through 28, and 31 through 36: All 160-acre units  

Township 7 South, Range 95 West, 6th, P.M.

Sections 1 through 11 and 15 through 18: All 160-acre units

    Rule 1. One hundred sixty (160) acre drilling and spacing units or three hundred twenty (320) acre drilling and spacing units as listed above are hereby established for the production of gas and associated hydrocarbons from the Wasatch formation underlying that portion of the Parachute Field hereinabove described.

    Rule 2. Said 160-acre drilling units for the Wasatch formation shall consist of 160-acres, more or less, and each shall consist of a quarter section, according to the governmental survey thereof, with the permitted well located no closer than 600 feet to the boundaries of the unit and no closer than 1200 feet from another producing or producible well in the same formation.

    Rule 3. Said 320-acre drilling units for the Wasatch formation shall consist of 320-acres more or less, and shall consist of the E½ and W½ or the N½ and S½ of a section, according to the governmental survey thereof with the operator of the first well permitted in a section to designate the drilling unit with the permitted well to be located on the established unit no closer than 600 feet from the boundaries of said unit and no closer than 1200 feet from any well producing or producible from the same formation with the location of the well subject to the prior approval of the Office of Naval Petroleum and Oil Shale Reserves, U.S. Department of Energy for any section of land in which there is a Department of Energy interest.

Mesaverde Formation

Township 6 South, Range 95 West, 6th, P.M.

Sections 7 through 20, 22 through 28, 31 through 36

Township 7 South, Range 95 West, 6th, P.M.

Sections 1 through 11 and 15 through 18

    Rule 4. Three hundred twenty (320) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Mesaverde formation as defined in Rule 5 herein below underlying that portion of the Parachute Field hereinabove described.

    Rule 5. The entire Mesaverde formation is described as including the Mesaverde which lies above the Cameo formation and the lower portion of the Mesaverde which includes the Cameo, Rollins, Cozzette and Corcoran Sands, and the Coalbed Methane horizons.

    Rule 6. Said drilling units for the Mesaverde formation shall consist of 320-acres, more or less, and shall consist of the E½ and W½ or the N½ and S½ of a section, according to the governmental survey thereof with the operator of, the first well permitted in a section to designate the drilling unit with the permitted well to be located on the established unit no closer than 600 feet from the boundaries of said unit and no closer than 1200 feet from any well producing or producible from the same formation and that an additional well may be drilled for production from the Mesaverde formation for each governmental section at the option of the operator of the unit or units contained within the individual section with the option well to be located in accordance with this rule, except that no additional well may be drilled on any 320--acre drilling and spacing units in the Allen Point Area established in Order 440-11 (Corrected) and listed below: Township 6 South, Range 95 West, 6th P.M. Section 7 through 20 and 22 through 24.

    Rule 7. Exceptions to any of the location rules for either the Wasatch or Mesaverde formations may be granted by the Director for topographic reasons upon an adequate showing of inaccessibility without further hearing.

    Rule 8. All Applications-to-Drill submitted to the Commission for wells located in the Battlement Mesa Planned Unit Development as described in Finding 11 hereinabove shall be accompanied by an executed Surface Use Agreement between the operator of the proposed well and Battlement Mesa Partners and Battlement Mesa Realty Partners.

    Rule 9. Wells presently producing or producible, or permitted within the proposed area should be designated the permitted well for the unit upon which they are located, as listed below:

Township 6 South, Range 95 West, 6th P.M.

Wasatch Formation

Mesaverde

The NW¼ and the SW¼ of Section 33 are hereby established as 160-acre drilling and spacing units.

Township 7 South, Range 95 West, 6th P.M.

Sections 3, 4 and 9 are each hereby established as a 640-acre drilling and spacing unit with the option to drill a total of three wells in each unit for production from the Mesaverde formation with wells to be located in accordance with Rule 6 listed herein above.

        IT IS FURTHER ORDERED, that the rules and regulations contained herein shall become effective upon the date the written order is mailed as indicated by the entry date below.

        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 18th day of May 1990, as of April 20, 1990.

        THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

 Dated at Suite 380

1580 Logan Street Denver,

Colorado 80203