REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 16, 1991 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax Avenue, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Martin Exploration Management Company and Petrogulf Corporation, for an order to establish 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the "J" Sandstone formation, with the option to drill an infill well in the undrilled 160-acre tract, underlying certain lands in Adams County, Colorado.

FINDINGS

The Commission finds as follows:

1. Martin Exploration Management Company and Petrogulf Corporation, as applicants herein, are interested parties 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. That evidence presented at the hearing indicates that the "J" Sandstone formation constitutes a common source of supply of the following described lands in Adams County, Colorado to-wit:

Township 1 South, Range 68 West, 6th P.M. Section 1: All Section 2: E/2 and NW/4 Sections 3 through 13: All Section 14: W/2 and NE/4 Sections 16 through 23: All Section 24: E/2 and SW/4 Sections 25 through 36: All

5. The Commission takes note of previous geologic and engineering evidence presented which established 320-acre drilling and

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spacing units for the "J" Sandstone formation with the allowance of an infill well. Testimony was presented at the hearing that one well will economically and efficiently drain an area of approximately 160-acres, and that drilling units the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well producing from said "J" Sandstone formation.

6. That in order to prevent the waste of oil and gas as defined by law, to protect the correlative rights of all 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 160-acre drilling and spacing units with the designated well to be located 600 feet from the boundaries of the unit, except where the lands are adjacent to those lands in Cause No. 232, in which wells should be located 990 feet from the boundaries of the Cause No. 232 lands.

7. That certain units should be designated for wells with existing equities in place, as defined in Rule 3.

8. That protests to the application were filed on behalf of Vessels Oil and Gas Company, Basin Exploration Inc., Byron Oil Industries, Inc. and Amoco Production Company. - 2 -(467-6)

O R D E R

NOW, THEREFORE, IT IS ORDERED, that

Rule 1. One Hundred Sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of "J" Sandstone formation underlying the following described lands in the Wattenberg Field, Adams County, Colorado, to-wit:

Township 1 South, Range 68 West, 6th P.M. Section 1: All Section 2: E/2 and NW/4 Sections 3 through 13: All Section 14: W/2 and NE/4 Sections 16 through 23: All Section 24: E/2 and SW/4 Sections 25 through 36: All

Rule 2. Said drilling units shall consist of one hundred sixty (160) acres, and each such drilling unit shall consist of a governmental quarter section. The permitted well shall be located no closer than 600 feet from the boundaries of the unit, except in those sections which are adjacent to the lands in Cause No. 232, in which the permitted well shall be located no closer than 990 feet from the boundaries of the Cause No. 232 lands.

Rule 3. The following units are hereby designated for the below-listed lands; based on information pertaining to existing agreements and wells capable of production submitted by Martin Exploration Management Company, Vessels Oil and Gas Company, and Basin Operating Company, Inc. An additional well shall be allowed on the undrilled 160-acre tract in each 320-acre drilling and spacing unit.

Township 1 South, Range 68 West, 6th P.M.

Section 1: SE/4 and SW/4 160 acres Section 2: NE/4, SE/4 and SW/4 160 acres Section 4: S/2 320 acres Section 6: W/2 320 acres Section 8: E/2 320 acres Section 9: N/2 and S/2 320 acres Section 10: N/2 and S/2 320 acres Section 11: W/2 320 acres Section 11: NE/4 and SE/4 160 acres Section 12: NW/4 and SW/4 160 acres Section 13: NE/4, SE/4 and SW/4 160 acres Section 14: W/2 320 acres Section 14: NE/4 and SE/4 160 acres Section 16: N/2 and S/2 320 acres Section 17: E/2 320 acres

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Section 21: NE/4 and NW/4 160 acres Section 22: E/2 320 acres Section 23: W/2 320 acres

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith as all parties present at the hearing agreed to accept the verbal order of the Commission.

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 , 1991, as of July 16, 1991.

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 July 25, 1991 1337I

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