REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 21, 1986 at 9:00 A.M., in Room 110 State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of BWAB Inc. for an order establishing 320-acre drilling and spacing units (with an average tolerance of 10%) for the production of gas and associated hydrocarbons from the Basal Lance member of the Upper Lewis Shale formation underlying certain lands in Moffat County, Colorado.

FINDINGS

The Commission finds as follows:

1. BWAB, Inc., 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. Based upon the facts stated in the verified application and exhibits submitted, and receiving no objections, and having been reviewed and recommended by the Director as Hearing Officer, the Commission should enter an order establishing 320-acre drilling and spacing units (with an average tolerance of 10%) for the production of gas and associated hydrocarbons from the Basal Lance member of the Upper Lewis Shale formation underlying the following described lands in Moffat County, Colorado:

Township 7 North, Range 90 West, 6th P.M. Sections 7 thru 11, 14 thru 23, 26 thru 30: All

5. 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 promote conservation of the oil and gas resources of the State, an order should be made establishing 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Basal Lance member of the Upper Lewis formation underlying the lands described herein. Each unit should consist of 320 acres (with an average tolerance of 10%) and consist of the N/2 and S/2 or the E/2 and W/2 of a governmental section, to be designated by the operator at the time of filing the permit to drill the first well in the section, or within 60 days after entry of this order as to wells previously drilled. The permitted well for each unit should be at a location no closer than 660 ft. from the unit boundaries and no closer than 2000 feet from any well for which a permit has been issued and which is to be drilled or produced from said Basal Lance member.

6. All available geological and engineering data concerning said Basal Lance member indicate that one well will efficiently and economically drain an area of approximately 320-acres, and that the drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently and economically drained by one well producing from said Basal Lance member.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the Basal Lance member of the Upper Lewis Shale formation underlying certain lands in the Craig-South 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. 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 Basal Lance member of the Upper Lewis Shale formation underlying the following described lands in Moffat County, Colorado, to-wit:

Township 7 North, Range 90 West, 6th P.M. Sections 7 thru 11, 14 thru 23, 26 thru 30: All

Rule 2. Each unit shall consist of 320 acres (with an average tolerance of 10%) and consist of the N/2 and S/2 or the E/2 ~nd W/2 of a governmental section, to be designated by the operator at the time of filing the permit to drill the first well in the section, Dr within 60 days after entry of this order as to wells previously drilled.

Rule 3. The permitted well for each unit shall be at a location no closer than 660 feet from the unit boundaries and no closer than 2000 feet from any well for which a permit has been issued and which is to be drilled or produced from said Basal Lance member.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

IT IS FURTHER ORDERED, that the Commission expressly reserve its right, after notice of hearing, to alter, amend or repeal any part or all of the above order.

ENTERED this day of 1986, as of July 21, 1986.

OF THE STATE OF COLORADO ~rankJ. ~ro, Secretary Corrected this date September 29, 1986

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