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 MAM CREEK FIELD, GARFIELD COUNTY, COLORADO	) ) ) )	CAUSE NO.   191 ORDER NO.   191-4

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on February 22, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Timberline Energy, Inc., for an order amending Order No. 191-3 (Corrected) to extend the 640-acre drilling and spacing units for production from the Mesaverde Formation, including, but not limited to, the Cozzette and Corcoran members, for certain lands in Garfield County, Colorado.

FINDINGS

                        The Commission finds as follows:

                        1.  Timberline Energy, Inc., 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.  On July 19, 1982, the Commission issued Order No. 191‑3 (Corrected) which established 640‑acre drilling and spacing units for the below-listed lands for the production of gas and associated hydrocarbons from the Mesaverde Formation, including, but not limited to, the Cozzette and Corcoran members, with the permitted well to be located no closer than 990 feet to the boundaries of the unit; and the Director may grant exceptions, providing the offset operators file a waiver or consent in writing:

Township 6 South, Range 92 West, 6th P.M.

                                                                             Section 22:  All

                                                                             Section 23:  All

                                                                             Section 26:  All

                                                                             Section 27:  All

                        5.  That evidence presented at the time of the administrative hearing indicates that the Mesaverde Formation underlies the following described lands in Garfield County, Colorado, to-wit:

Township 6 South, Range 92 West, 6th P.M.

                                                                      Sections 24 and 25:  All

                                                                      Sections 35 and 36:  All

In addition, testimony  was presented to show that the Cozzette and Corcoran members should be included in the order to maintain consistency with the orders previously issued in Cause No. 191.

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

                        7.  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 the proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made extending 640-acre drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Mesaverde Formation, and in order to maintain consistent with orders previously issued in Cause No. 191, including, but not limited to, the Cozzette and Corcoran members; a common source of supply underlying the lands described in Finding 5 above; that said units should consist of a governmental section, with the permitted well to be located in accordance with the provisions of Order No. 191-3 (Corrected) of the Commission.

                        8.  That the Duane Scott No. 1 Well located 1169 feet FSL and 601 feet FEL in the SE/14 SE1/4 of Section 25, Township 6 South, Range 92 West, 6th P.M. should be designated as the permitted well for the 640-acre drilling and spacing unit consisting of said Section 25.

                        9.  Based on the facts stated in the verified amended application, receiving no protests and having been heard by the Hearing Officers on February 21, 1994 and recommended for approval, the Commission should enter an order establishing 640-acre drilling and spacing units on the lands described in Finding 5, with the permitted well to be located in accordance with Order No. 191-3 (Corrected) of the Colorado Oil and Gas Conservation Commission, for production from the Mesaverde Formation, including, but not limited to, the Cozzette and Corcoran Formations.  In addition, the Commission should designate the Duane Scott No. 1 Well located 1169 feet FSL and 601 feet FEL in the SE/14 SE1/4 as the permitted well for the 640-acre drilling and spacing unit consisting of said Section 25.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well or wells drilled, completed, or recompleted in the Mesaverde Formation, including, but not limited to, the Cozzette and Corcoran members underlying the lands herein described, in addition to other applicable rules and regulation and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1.  Six hundred and forty (640) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Mesaverde Formation, including, but not limited to, the Cozzette and Corcoran members underlying the following described lands in Garfield County, Colorado:

Township 6 South, Range 92 West, 6th P.M.

                                                                   Sections 22 through 27:  All

                                                                      Sections 35 and 36:  All

Rule 2.  Said drilling units shall consist of a governmental section and the permitted well shall be located in accordance with the provisions of Order No. 191-3 (Corrected) which established 640‑acre drilling and spacing units for the above-described lands for the production of gas and associated hydrocarbons from the Mesaverde Formation, including, but not limited to, the Cozzette and Corcoran members, with the permitted well to be located no closer than 990 feet to the boundaries of the unit; and the Director may grant exceptions, providing the offset operators file a waiver or consent in writing.

Rule 3.  The Duane Scott No. 1 Well located 1169 feet FSL and 601 feet FEL in the SE/14 SE1/4 of Section 25, Township 6 South, Range 92 West, 6th P.M. shall be designated as the permitted well for the 640-acre drilling and spacing unit consisting of said Section 25.

                        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  day of , 1994, as of February 22, 1994.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                           OF THE STATE OF COLORADO

                                                                        By

                                                                                       Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado 80202

February 25, 1994