REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 17, 1995, at 8:30 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Texaco Exploration and Production, Inc. for an order to establish a 640-acre exploratory unit for production of gas and associated hydrocarbons from the Paradox Formation.

FINDINGS

The Commission finds as follows:

1. Texaco Exploration and Production Inc., as applicant herein, is an interested party in the subject matter of the above-referenced matter.

2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. That 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 administrative hearing indicates that the Paradox Formation constitutes a common source of supply of gas and associated hydrocarbons underlying Section 15, Township 34 North, Range 11 West, N.M.P.M.

5. That in order to prevent the waste of oil and gas, as defined by law; to protect the correlative rights of all parties 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 a 640-acre exploratory unit for the production of gas and associated hydrocarbons from the Paradox Formation, a common source of supply underlying the lands described above.

6. That the available geological and engineering data concerning said Paradox Formation indicates that one well will efficiently and economically drain an area of approximately 640-acres, and that drilling units to the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well producing from said Paradox Formation.

7. Based on the facts stated in the application, having received no protests, and having been heard by the Hearing Officer who recommends approval of the application and having been continued from the June 19, 1995 hearing, pending notification to all interested parties of a correction on the original application, the Commission should approve the request and establish a 640-acre exploratory unit for production from the Paradox Formation for Section 15 , Township 34 North, Range 11 West, N.M.P.M.

ORDER

NOW, THEREFORE, IT IS ORDERED, that a 640-acre exploratory unit is hereby established for production from the Paradox Formation for Section 15, Township 34 North, Range 11 West, N.M.P.M.

IT IS FURTHER ORDERED, that the rules and regulations contained herein 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, rules and regulations.

ORDERED this day of , 1995, as of July 17, 1995.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary Dated at Suite 801 1120 Lincoln Street Denver, Colorado 80203 August 9, 1995 ??