REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 16, 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 for an order granting an exception to the permitted well location as provided for in Order No. 463-1 for a well to be drilled in the spacing unit consisting of the N/2 SW/4 Section 24 at a location in the NW/4 NW/4 Section 24, Township 16 South, Range 42 West, 6th P.M., Cheyenne County, Colorado.

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 September 19, 1988 the Commission authorized Order No. 463-1 to be issued which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons underlying Second Wind 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 with the permitted well to be located within the NE/4 or SW/4 of a quarter section and no closer than 460 feet from the boundaries of the unit tract.

5. All wells drilled and completed as producing wells at exception locations shall have a monthly production allowable of fifty percent (50%) of that allowed wells completed at designated locations.

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6. Based on the facts stated in the verified application, no protests being filed, and having been heard by the Acting Director as Hearing Officer on October 12, 1989 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 Section 24 at a location in the NW/4 SW/4 Section 24, Township 16 South, Range 42 West, 6th P.M., Second Wind Field, Cheyenne County, Colorado for the production of oil and associated hydrocarbons from the Morrow Sandstone formations.

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 applicant agreed to be bound by the verbal order of the Commission.

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O R D E R

NOW, THEREFORE, IT IS ORDERED, that an exception to the permitted well location as provided for in Order No. 463-1 is hereby granted for a well to be drilled in the spacing unit consisting of the N/2 SW/4 Section 24 at a location in the NW/4 SW/4 of Section 24, Township 16 South, Range 42 West, 6th P.M., Second Wind Field, Cheyenne County, Colorado for the production of oil and associated hydrocarbons from the Morrow Sandstone formations and that production shall be restricted to fifty percent (50%) of the volumes allowed for a well at the permitted location.

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 ,

1989, as of October 16, 1989.

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

0935A

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