REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 21, 1989 at 8:30 a.m. in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of TXO Production Corporation to redesignate the drilling and spacing units in the NW/4, Section 8, Township 14 South, Range 42 West, 6th P.M., Cheyenne County, Colorado which lies within the area established by Order No. 449-6. TXO Production Corporation designated the N/2 and S/2 of the NW/4 as the drilling and spacing units prior to drilling the Steele "C" #1 in the NE/4 of the NW/4 of Section 8 which was completed as a dry hole, plugged and abandoned. TXO Production Corporation requests that the units be redesignated as the E/2 and W/2 of the NW/4 of said Section 8 and that a well be allowed at the designated location in the SW/4 of the NW/4 of Section 8 at approximately 1320 feet FNL and 460 feet FWL.

FINDINGS

The Commission finds as follows:

1. TXO Production 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. On March 21, 1988, the Commission issued Order No. 449-6 establishing 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations underlying certain lands in Cheyenne County, Colorado. It further ordered that said drilling units shall consist of 80-acres, more or less, and shall consist of the E/2 and W/2 or the N/2 and S/2 of a governmental quarter section, with the unit designated by the operator of the first well drilled in the quarter section with the permitted well location to be in the NE/4 and the SW/4 and no closer than 460 feet from the unit tract boundaries.

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5. Based on the facts stated in the verified application, no protests being filed, and having been heard by the Director as Hearing Officer on August 16, 1989 who recommended the exception be granted, the Commission should enter an order granting the redesignation of the drilling and spacing units in the NW/4 of Section 8, Township 14 South, Range 42 West, 6th P.M., Cheyenne County, Colorado to be the E/2 and W/2 of said Section 8 and that a well be allowed at the designated location in the SW/4 of the NW/4 of Section 8 at approximately 1320 feet FNL and 460 feet FWL.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the 80-acre drilling and spacing units in the NW/4 of Section 8, Township 14 South, Range 42 West, 6th P.M., Cheyenne County, Colorado shall be the E/2 and W/2 of the NW/4 of said Section 8, and that a well may be drilled at the designated location in the SW/4 of the NW/4 of said Section 8 at approximately 1320 feet FNL and 460 feet FWL and that such well if completed as a producing well in the Morrow "A" and "B" Sand formations shall be produced in conformance with the orders contained within Cause No. 449.

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IT IS FURTHER ORDER, that the provisions contained in the above order shall become effective forthwith as all parties agreed to be bound by the oral order of the Commission.

IT IS FURTHER ORDERED, that the Commission expressly reserves its rights, after giving notice and hearing, to alter, amend or repeal any and/or all of the above orders.

ENTERED this day of ,

1989, as of August 21, 1989.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary

0856A

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