REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 17, 1990 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 G.L.G. Energy, L.P., for an order to establish 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde formation, consisting of the E/2 and W/2 or the N/2 and S/2 of each section according to the governmental survey, to be determined by the operator of the first well drilled in the section, and with the permitted well to be located in the NW/4 and SE/4 of each section and no closer than 460 feet from the boundaries of the unit for the below listed lands, to-wit:

Township 8 North, Range 91 West Sections 2 through 4: All Sections 9 through 11: All

Township 9 North, Range 91 West Sections 33 and 34: All

and also to designate the Mesaverde formation including the Almond Sand as a source of supply found at a depth of 6094 feet to 7598 feet in the G.L.G. Energy, L.P. Well No. 3-1 Blue Gravel in the NE/4 NW/4 of Section 3, Township 8 North, Range 91 West, Moffat County. The applicant wishes to establish the W/2 of Section 3, Township 8 North, Range 91 West as the 320-acre drilling and spacing unit for this well, and to establish the E/2 of Section 33, Township 9 North, Range 91 West as the 320-acre drilling and spacing unit for the well to be drilled in the SE/4 of said Section 33.

FINDINGS

The Commission finds as follows:

1. G.L.G. Energy, L.P., 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.

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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 to the Hearing Officer indicates that the Mesaverde formation constitutes a common source of supply on the following described lands in Moffat County, Colorado to-wit:

Township 8 North, Range 91 West Sections 2 through 4: All Sections 9 through 11: All

Township 9 North, Range 91 West Sections 33 and 34: All

5. That all available geologic and engineering data concerning said Almond Sand in the Mesaverde formation indicates that one well will economically and efficiently drain an area of approximately 320-acres, and that drilling units the size and shape hereinabove described are not smaller that the maximum area that can be efficiently drained by one well producing from said Almond Sand.

6. That the W/2 of Section 3, Township 8 North, Range 91 West should be established as the 320-acre drilling and spacing unit for the No. 3 -1 Blue Gravel Well, and the E/2 of Section 33, Township 9

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North, Range 91 West should be established as the 320-acre drilling and spacing unit for the well to be drilled in the SE/4 of said Section 33.

7. That the Blue Gravel field name used when the application was submitted be changed to Fortification Creek.

8. That the Cause Number 244 originally assigned to the application should be changed to Cause Number 491 to correspond to the new field name.

9. That no protests to the application were received and the Hearing Officer recommends that the application be approved.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed or recompleted in the Mesaverde formation including the Almond Sand, underlying the Fortification Creek Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herein.

Rule 1. Three Hundred Twenty (320) acre drilling and spacing units shall be and the same are hereby established for the production from the Mesaverde formation underlying the following described lands in the Fortification Creek Field, Moffat, Colorado, to-wit:

Township 8 North, Range 91 West Sections 2 through 4: All Sections 9 through 11: All

Township 9 North, Range 91 West Sections 33 and 34: All

Rule 2. Said drilling units shall consist of three hundred twenty (320) acres, and each such drilling unit shall consist of a governmental half section, to be determined by the operator of the first well drilled in the section, and with the permitted well to be located in the NW/4 and SE/4 of each section and the permitted well for each such drilling unit shall be located no closer than 460 feet from the outer boundary of such a unit.

Rule 3. The Mesaverde Formation, found at a depth of 6094 feet to 7598 feet in the G.L.G. Energy, L.P. No. 3-1 Blue Gravel Well in the NE/4 NW/4 of Section 3, Township 8 North, Range 91 West, 6th P.M., Moffat County, is designated as a source of supply.

Rule 4. The W/2 of Section 3, Township 8 North, Range 91 West is established as the 320-acre drilling and spacing unit for the No.

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3 -1 Blue Gravel Well, and the E/2 of Section 33, Township 9 North, Range 91 West is established as the 320-acre drilling and spacing unit for the well to be drilled in the SE/4 of said Section 33.

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 , 1990, as of December 17, 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 December 26, 1990 0850I

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