BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                             OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                      )                    CAUSE NO. 516

ESTABLISHMENT OF FIELD RULES TO GOVERN                   )

OPERATIONS IN THE MORROW FORMATION                       )                    ORDER NO. 516-1

MAYFIELD FIELD, CHEYENNE COUNTY, COLORADO          )                    AMENDED

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on March 20, 1995, 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 Union Pacific Resources Company for an order to establish 320-acre drilling and spacing units for production of gas and associated hydrocarbons from the Morrow Formation.

FINDINGS

                        The Commission finds as follows:

                        1.  Union Pacific Resources Company, 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 hearing indicates that the Morrow Formation constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Cheyenne County, Colorado, to-wit:

Township 13 South, Range 43 West, 6th P.M.

                                                                            Section 17:  All

                                                                            Section 19:  All

                                                                            Section 20:  All

                        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 320-acre drilling and spacing unit for the production of gas and associated hydrocarbons from the Morrow Formation, a common source of supply underlying the lands defined herein; that said unit should consist of the N½ or the S½ or the W½ and the E½ of the governmental section.

                        6.  That the available geological and engineering data concerning said Morrow Formation 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 Morrow Formation.

                        7.  That the permitted well should be located no closer than 600 feet from the boundaries of the drilling and spacing unit, and no closer than 2000 feet to the nearest well producing gas and associated hydrocarbons from the Morrow Formation.

                        8.  Based on the facts stated in the application, having received no protests, and having been heard by the Hearing Officer who recommended approval of the application and having been continued from the March 20, 1995 hearing, the Commission should approve the request and establish 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Morrow Formation for the above-described lands.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that 320-acre drilling and spacing units are hereby established for production of gas and associated hydrocarbons from the Morrow Formation for the below-described lands and the permitted well shall be located no closer than 600 feet from the boundaries of the drilling and spacing unit, and no closer than 2000 feet to the nearest well producing gas and associated hydrocarbons from the Morrow Formation:

Township 13 South, Range 43 West, 6th P.M.

                                                                            Section 17:  All

                                                                            Section 19:  All

                                                                            Section 20:  All

                        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      25th       day of      April            , 1995, as of March 24, 1995.

                        AMENDED this  day of , 1996, as of March 24, 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

March 7, 1996