IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE PLUM BUSH CREEK FIELD, WASHINGTON COUNTY, COLORADO

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CAUSE NO. 57

ORDER NO. 57-11

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 18, 1985 at 9:00 a.m., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Bert A. Lear for an order pooling all interests in the 40-acre drilling and spacing units consisting of the (1) NE1/4 NW1/4, (2) NW1/4 NW1/4 and (3) SW1/4 NW1/4 Section 25, Township 2 South, Range 56 West, 6th P.M. for the development and operation of the "J" Sand underlying said units for the production of oil, gas and associated hydrocarbons, pursuant to 34-60-116 C.R.S., as amended.

FINDINGS

The Commission finds as follows:

1. Bert A. Lear, 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.

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. The NE1/4 NW1/4, the NW1/4 NW1/4 and the SW1/4 NW1/4 Section 25, Township 2 South, Range 56 West, 6th P.M. have each been designated a 40-acre drilling and spacing unit by the Commission by Order No. 57-9 on January 21, 1985.

5. Effort has been made to obtain the voluntary pooling of all interests in said drilling units for the development and operation thereof, but that it has not been possible to secure the agreement of all owners of interest in said units for the voluntary pooling thereof.

6. Applicant is an "interested person" within the meaning of 34-60-116 (6), C.R.S., as amended, of the Oil and Gas Conservation Commission Act of the State of Colorado.

7. In order to insure proper and efficient development of each drilling unit, and to promote conservation of the oil and gas resources of the State, an order should be made pooling all interests in each 40-acre drilling unit described herein.

8. An order of the Commission pooling all interests in said drilling units is necessary in order to afford each owner of interest in each said drilling units the opportunity to recover and receive his just and equitable share of the gas from the common source of supply underlying said drilling units.

9. Production obtained from each drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within each drilling unit.

ORDER

NOW, THEREFORE, IT IS ORDERED, that, [sic] 1. Pursuant to the provisions of 34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing units consisting of (1) the NE1/4 NW1/4, (2) NW1/4 NW1/4 and (3) SW1/4 NW1/4 Section 25, Township 2 South, Range 56 West, 6th P.M., Washington County, Colorado, are hereby pooled for the operation and development of oil, gas and associated hydrocarbons from the "J" Sand underlying said units.

2. The production obtained from each drilling unit shall" be allocated to each owner therein in the unit on the basis of the proportion that the number of acres in each tract bears to the total number of mineral acres within each said drilling unit; each owner of an interest in each said drilling unit shall be entitled to receive his share of the production from the well located on the drilling unit applicable to his interest in said drilling unit, subject to the charges, deductions and provisions for reimbursement to consenting owners as provided in 34-60-116(7) C.R.S., as amended.

3. The non-consenting owner should be afforded the opportunity to consent to the drilling of the proposed well on each unit and to elect whether to participate in the drilling and operating of said well, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of net mineral acres leased by said non-consenting owner by the total number of mineral acres in the unit.

4. The operator responsible for drilling a well on each said unit shall prepare an Authorization for Expenditure ("AFE"), which shall be submitted to the non-consenting owner in the unit.

5. Within thirty (30) days from the date of receipt of an Authorization for Expenditure ("AFE") by the non-consenting owner, such owner shall indicate whether he consents to the drilling of the well and agrees to participate in the cost thereof. Such election shall be made in writing, either by executing the AFE or similar document. In the event a written election to participate is not made by a non-consenting owner within such time period, said owner shall be deemed to have elected not to participate and shall therefore be deemed to be non-consenting as to the well.

IT IS FURTHER ORDERED, that the provisions contained in the above order 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.

ENTERED this 11th day of March 1985, as of February 18, 1985.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary