REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 19, 1990, 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 Mull Drilling Company, Inc. for an order establishing the E/2 and W/2 of the SE/4 of Section 34, Township 13 South, Range 42 West, 6th P.M., Cheyenne County, Colorado as drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations, said Section 34 being within the area spaced by Order No. 449-20 (CORRECTED), and further that an exception location be authorized to drill in the SE/4 SE/4 460 feet FSL and 460 feet FEL in Section 34, with production limited to the amounts established by the latest order in Cause No. 449 for wells at exception locations.

FINDINGS

The Commission finds as follows:

1. Mull Drilling Company, Inc., as applicant herein, is an interested party in the subject matter of the above-entitled 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 September 19, 1988 the Commission authorized Order No. 449-20 (CORRECTED) 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" formations underlying Arapahoe Field in Cheyenne County, Colorado. The units 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. The permitted well location shall be in the center of the NE/4 and the SW/4 of each quarter section with a tolerance of 200 feet in any direction.

5. Order No. 449-20 (CORRECTED) also established production practices and restrictions on wells producing from the Morrow "A" and "B" in Arapahoe Field, and restricted production amounts of

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exception wells to fifty percent (50%) of the amounts for wells at the permitted locations.

6. Based on the facts stated in the verified application and having been heard by the Director as Hearing Officer on November 15, 1990, who recommended approval of the application, and having received no protests, the Commission should enter an order establishing the E/2 and W/2 of the SE/4 of Section 34, Township 13 South, Range 42 West, 6th P.M., Cheyenne County, Colorado as drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations, and further grant an exception for a well to be drilled in the spacing unit consisting of the E/2 SE/4 at a location 460 feet FSL and 460 feet FEL, Section 34, Township 13 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. At the time of administrative hearing the parties agreed to be bound by the verbal order of the Commission in this matter. - 2 -(449-30)

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the E/2 and W/2 of the SE/4 of Section 34, Township 13 South, Range 42 West, 6th P.M., Cheyenne County, Colorado are established as drilling and spacing units for the production of oil and associated hydrocarbons from the Morrow "A" and "B" Sand formations.

IT IS FURTHER ORDERED, that an exception location is authorized to drill in the SE/4 SE/4 of said Section 34 at a location 460 feet FSL and 460 feet FEL, with production limited to the amounts established by the latest order in Cause 449 for wells at exception locations.

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 day of ,

1990, as of November 19, 1990.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 380 1580 Logan Street Denver, Colorado 80203

0799I

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