REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 19, 1994 at 8:30 a.m., in the Room 318, State Centennial Building, 1313 Broadway, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Nassau Resources, Inc. for an order to establish 320-acre drilling and spacing units for production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.

FINDINGS

The Commission finds as follows:

1. Nassau Resources, 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 the stratigraphic equivalent for the Williams Fork Formation of the Mesaverde Group found from 3920 feet to 7268 feet in the Dual Induction log of the Barrett GV No. 53-34 Well, located in the SW1/4 NE1/4 of Section 34, Township 6 South, Range 95 West, 6th P.M.

5. That evidence presented at the hearing indicates that the Williams Fork Formation of the Mesaverde Group, constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Garfield County, Colorado, to-wit:

Township 6 South, Range 91 West, 6th P.M. Section 8: All Section 17: All

6. 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 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, a common source of supply underlying the lands defined herein; that said unit should consist of the N1/2 or the S1/2 of the governmental section.

7. That the available geological and engineering data concerning said Williams Fork Formation of the Mesaverde Group indicates that one well will efficiently and economically drain an area of approximately 320-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 Williams Fork Formation of the Mesaverde Group.

8. That the Jolley No. 1-8 Well located 202 feet FSL and 2304 feet FWL in the SE1/4 SW1/4 of said Section 8, Township 6 South, Range 91 West, 6th P.M. should be the permitted well for the S1/2 of said Section 8; the NewCastle No. 17-7 Well located 2080 feet FNL and 2070 feet FEL in the SW1/4 NE1/4 of said Section 17, Township 6 South, Range 91 West, 6th P.M. should be the permitted well for the N1/2 of said Section 17; and the NewCastle No. 17-14 Well l ocated 610 feet FSL and 1910 feet FWL in the SE1/4 SW1/4 of said Section 17, Township 6 South, Range 91 West, 6th P.M. should be the permitted well for the S1/2 of said Section 17.

9. Based on the facts stated in the verified application, having received no protests, and having been heard by the Hearing Officer who recommended approval of the application, the Commission should approve the request and establish 320-acre drilling and spacing units for production from the Williams Fork Formation of the Mesaverde Group for the above-described lands, and approve the above-described wells as the permitted wells for each unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that 320-acre drilling and spacing units are hereby established for production from the Williams Fork Formation of the Mesaverde Group, for the below-described lands:

Township 6 South, Range 91 West, 6th P.M. Section 8: All Section 17: All

IT IS FURTHER ORDERED, that the Jolley No. 1-8 Well located 202 feet FSL and 2304 feet FWL in the SE1/4 SW1/4 of said Section 8, Township 6 South, Range 91 West, 6th P.M. shall be the permitted well for the S1/2 of said Section 8; the NewCastle No. 17-7 Well located 2080 feet FNL and 2070 feet FEL in the SW1/4 NE1/4 of said Section 17, Township 6 South, Range 91 West, 6th P.M. shall be the permitted well for the N1/2 of said Section 17; and the NewCastle No. 17-14 Well located 610 feet FSL and 1910 feet FWL in the SE1/4 SW1/4 of said Section 17, Township 6 South, Range 91 West, 6th P.M. shall be the permitted well for the S1/2 of said Section 17.

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 26th day of January , 1995, as of December 19, 1994.

CORRECTED this day of , 1995, as of December 19, 1994.

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 February 17, 1995 ??

(513#1)