REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 21, 1988 at 8:30 A.M. in Room 101, Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Medallion Petroleum, Inc. for an order granting an exception to the permitted Well location as provided for by Order No. 449-1 for a well to be drilled in the spacing unit consisting of the N/2 SW/4 of Section 22 at a location in the center of the NW/4 SW/4 of Section 22 with a tolerance of 200 feet in any direction, after drilling the Medallion #22-12 in the NE/4 SW/4 of Section 22 as a non-commercial gas well which is currently shut-in, said Section 22 in Township 14 South, Range 42 West, 6th P.M. Cheyenne County, Colorado.

FINDINGS

The Commission finds as follows:

1. Medallion Petroleum, Inc. as applicant herein, is an interested party in the subject matter of the above-referenced matter.

2. Due notice of 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 the parties interested therein, and jurisdiction to promulgate the hereinafter order.

4. On May 18, 1987 the Commission authorized Order No. 449-1 to be issued which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow A' and B' Sand formations underlying Arapahoe Field in Cheyenne County, Colorado. The units shall consist of the E/2 and W/2 or N/2 and S/2 of a governmental quarter sections, with the unit designated by the operator of the first well drilled in the quarter section.

5. On August 16, 1900, the Commission authorized Order No. 449-14 to be issued which established production practices and restrictions on wells producing from the Morrow A"and B' in Arapahoe Field, and restricted production amounts of exception wells to fifty percent (50%) of the amounts for wells in the permitted location.

6. Based on the facts stated in the verified application, no protest being filed, and having been heard by the Deputy Director as Hearing Officer on November 18, 1988 who recommended the exception be granted, the Commission should enter an order granting an exception for a well to be drilled in the spacing unit consisting of the N/2 SW/4 at a location in the center of the NW/4 SW/4 with a tolerance of 200 feet in any direction, Section 22, Township, 14 South, Range 42 West, 6th P.M., Arapahoe Field, Cheyenne County, Colorado for the production of oil and associated hydrocarbons from the Morrow A' and B' Sand formation.

7. Should a commercial well be completed at the above exception location, production from said well should be restricted to fifty percent (50%) that allowed at a well producing at a permitted location.

8. The well Medallion #22-12 in the NE/4 SW/4 of Section 22 should remain shut-in until the Commission approves a change in status for the well.

ORDER

NOW, THEREFORE, IT IS ORDERED, that an exception to the permitted well location as provided for in Order No. 449-1 is. hereby granted for a well to be drilled in the spacing unit consisting of the N/2 SW/4 Section 22 at a location in the center of the NW/4 SW/4 with a tolerance of 200 feet in any direction, Section 22, Township 14 South, Range 42 West, 6th P.M. Arapahoe Field, Cheyenne County, Colorado for the production of oil and associated hydrocarbons from the Morrow A' and B' Sand formations and that production shall be restricted to fifty percent (50%) of the volumes allowed for a ;,'ell at the permitted location.

IT IS FURTHER ORDERED, that the well Medallion #22-12 located in the NE/4 SW/4 of Section 22 shall remain shut-in until a change of status has been approved by the Commission.

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 rights, after notice and hearing, to alter, amend, or repeal any and/or all of the above orders.

ENTERED this 25th day of November 1988, as of November 21, 1988

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

(449-21)