JAN Q COURT CLERK'S OFFICE-OKC CORPORATION COMMISSIO N

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1 l.). BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOM A APPLICANT : RELIEF SOUGHT : LEGAL DESCRIPTION : APPLICANT : RANKEN ENERGY CORPORATION SPACING W/2 SW/4 OF SECTION 11 & E/2 SE/4 OF SECTION 10, ALL IN TOWNSHIP 2 NORTH, RANGE 2 WEST, GARVIN COUNTY, OKLAHOMA. RANKEN ENERGY CORPORATION CAUSE CD NO ' L JAN Q E D COURT CLERK'S OFFICE-OKC CORPORATION COMMISSIO N OF OKLAHOM A RELIEF SOUGHT : SPACING LEGAL DESCRIPTION : W/2 NW/4 OF SECTION 14 & E/2 NE/4 OF SECTION 15, ALL IN TOWNSHIP 2 NORTH, RANGE 2 WEST, GARVIN COUNTY, OKLAHOMA. CAUSE CD NO REPORT OF THE ADMINISTRATIVE LAW JUDG E This cause first came on for a hearing before David D. Leavitt, Administrative Law Judge for the Corporation Commission of the State of Oklahoma, on the 22 d day of September, 2010, at 9 :00 a.m. in the Commission's Courtroom, Jim Thorpe Building, Oklahoma City, Oklahoma, pursuant to notice given required by law and the rules of the Commission for the purpose of taking testimony and reporting to the Commission. SUMMARY OF THE CAUSE 1. On June 24, 2010, Ranken Energy Corporation ("Ranken") filed an application in Cause CD No requesting that the Commission establish irregular 160-acre drilling and spacing units for the Layton, Checkerboard, lst Deese (Abernathy), 2nd Deese (Pharoah), 3rd Deese (Gibson), 4th Deese (Hart), Unconformity, Sycamore, Woodford, Hunton, Viola and Bromide common sources of supply underlying the W/2 SW/4 of Section 11 & E/2 SE/4 of Section 10, all in Township 2 North, Range 2 West, Garvin County, Oklahoma. 2. On June 24, 2010, Ranken filed an application in Cause CD No requesting that the Commission establish irregular 160-acre drilling and spacing units for the Layton,

2 CDs and Ranken Energy Corporatio n Checkerboard, lst Deese (Abernathy), 2nd Deese (Pharoah), 3rd Deese (Gibson), 4th Deese, (Hart), Unconformity, Sycamore, Woodford, Hunton, Viola and Simpson Group common sources of supply underlying the W/2 NW/4 of Section 14 & E/2 NE/4 of Section 15, all in Township 2 North, Range 2 West, Garvin County, Oklahoma. 3. On July 7, 2010, R.L. Clampitt & Associates, Inc. ("Clampitt") protested both causes, alleging that they owned oil and gas interests affected by the causes. 4. On August 12, 2010, a prehearing conference was held to attempt to resolve the contested issues in both causes. The issues remained unresolved so a hearing was held on September 22, During the hearing, Ranken dismissed all formations other than the Woodford, Hunton and Viola in cause CD and all formations other than the Woodford, Sycamore, Viola and Hunton in cause CD based upon a review of the applications by the Commission's technical staff and by agreement made with Lario Oil and Gas Company ("Lario"). The Commission's technical staff testified that they had no objection to Ranken's applications when so amended to dismiss the shallower Penn formations. 6. After dismissal of the shallow formations, Clampitt admitted that it no longer owned any interests in the remaining common sources of supply subject to the pooling in Sections 10, 11, 14 and Clampitt maintained its protest with respect to Ranken's applications to establish irregular 160 acre drilling and spacing units in the sections, alleging that the establishment of such irregular units would disrupt orderly development. 8. Lario and Merit Energy Company ( "Merit") had no objection to Ranken 's applications in both causes. 9. Evidence was admitted and expert testimony was given whereupon the AU then took the matter under advisement and prepared his recommendations upon receipt of the transcript on October 26, RECOMMENDATIONS After taking into consideration all of the facts, circumstances, evidence and testimony presented in these causes, it is the recommendation of the ALJ that Ranken's applications be granted. After Ranken dismissed the shallower formations in Sections 10, 11, 14 and 15 Clampitt Page 2

3 CDs and Ranken Energy Corporation no longer owned any mineral interests in the unit and thus lacked standing to maintain its protest. Ranken then presented substantial evidence in support of their applications. APPEARANCE S Charles L. Helm, attorney, appeared on behalf of the Applicant, Ranken; Charles B. Davis, attorney, appeared on behalf of the Protestant, R.L. Clampitt; John C. Moricoli, Jr., attorney, appeared on behalf of Respondent, Lario ; Karl F. Hirsch, attorney, appeared, on behalf of Respondent, Merit ; and Richard A. Grimes, attorney, appeared on behalf of Respondent, QEP Energy Company. JURISDICTION The Commission has jurisdiction over the subject matter and notice has been given in all respects as required by law and the rules of the Commission. 1 EXHIBITS IN CD NO Exhibit "A" from the application listing the names and addresses of the Respondents. 2. Commission Technical Response Form dated September 15, Ranken's Pinchout Extension Township Map showing Acre Spacing Units. 4. Ranken's Pinchout Extension Map showing well names and operators. 5. Ranken's Pinchout Extension Map showing production in Sections 10, 11, 14 and Ranken's Pinchout Extension Map showing Hunton structure in Sections 10, 11, 14 and Ranken's Pinchout Extension Map showing an Upper Viola Net Porosity Isopach fo r Sections 10, 11, 14 and Summary of Performance and Cumulative Gas-Oil Ratios (GOR's). EXHIBITS IN CD NO Exhibit "A" from the application listing the names and addresses of the Respondents. 2. Commission Technical Response Form dated September 15, Ranken's Pinchout Extension Township Map showing Acre Spacing Units. 4. Ranken's Pinchout Extension Map showing well names and operators. 5. Ranken's Pinchout Extension Map showing production in Sections 10, 11 ; 14 and See 17 O.S. 52. Page 3

4 CDs and Ranken Energy Corporatio n 6. Ranken's Pinchout Extension Map showing Hunton structure in Sections 10, 11, 14 and B. 7. Ranken's Pinchout Extension Map showing an Upper Viola Net Porosity Isopach fo r Sections 10, 11, 14 and Summary of Performance and Cumulative Gas-Oil Ratios (GOR's). SUMMARY OF THE EVIDENCE AND FINDINGS OF FAC T 1. On April , the Commission issued Order No that established 40-acre drilling and spacing units for the Hunton common source of supply in Section 14, Township 2 North, Range 2 West, Garvin County, Oklahoma. 2. On August 16, 1985, the Commission issued Order No that established by extension 84-acre drilling and spacing units for the Woodford, Sycamore, Hunton and Viola common sources of supply underlying, among other lands, all of Section 15, Township 2 North, Range 2 West, Garvin County, Oklahoma. 3. On January 29, 1985, the Commission issued Order Na that established by extension 80-acre drilling and spacing units for the Sycamore and Viola common sources of supply underlying, among other lands, all of Sections 10, 11, and 14, Township 2 North, Range 2 West, Garvin County, Oklahoma; and for the Hunton common source of supply in Sections 1 0 and 11, Township 2 North, Range 2 West, Garvin County, Oklahoma. 4. On June 24, 2010, Ranken filed an application in Cause CD No requesting that the Commission establish irregular 160-acre drilling and spacing units for the Layton, Checkerboard, l st Deese (Abernathy), 2nd Deese (Pharoah), 3rd Deese (Gibson), 4th Deese (Hart), Unconformity, Sycamore, Woodford, Hunton, Viola and Bromide common sources of supply underlying the W/2 SW/4 of Section 11 & E/2 SE/4 of Section 10, all in Township 2 North, Range 2 West, Garvin County, Oklahoma. 5. On June 24, 2010, Ranken filed an application in Cause CD No requesting that the Commission establish irregular 160-acre drilling and spacing units for the Layton, Checkerboard, lst Deese (Abernathy), 2nd Deese (Pharoah), 3rd Deese (Gibson), 4th Deese, (Hart), Unconformity, Sycamore, Woodford, Hunton, Viola and Simpson Group common sources of supply underlying the W/2 NW/4 of Section 14 & E/2 NE/4 of Section 15, all in Township 2 North, Range 2 West, Garvin County, Oklahoma. 6. On July 7, 2010, Clampitt protested both causes, alleging that they owned oil and gas interests affected by the causes. Page 4

5 CDs and Ranken Energy Corporatio n 7. On August 12, 2010, a preheazing conference was held to attempt to resolve the contested issues in both causes. The issues remained unresolved so a hearing was held on September 22, Direct Examination of Rick Gibbon by Charles Helm. Mr. Helm presented Rick Gibbon as his first witness. Mr. Gibbon is a landman employed by Ranken. His qualifications as a landman were accepted without objection. He stated that Ranken applied to create two 1 60 acre irregular units. He stated that the first unit applied for under CD No covered the W/2 SW/4 of Section 11 & E/2 SE/4 of Section 10. He stated that the second unit applied for under CD covered the W/2 NW/4 of Section 14 & E/2 NE/4 of Section He requested that the Commission dismiss all formations other than the Woodford, Hunton and Viola in cause CD and all formations other than the Woodford, Sycamore, Viola and Hunton in cause CD based upon a review of the applications by the Commission's technical staff and by agreement with Lario. Lario dropped its protest after the above common sources of supply were dismissed. The Commission's technical staff had no objection to the applications after the dismissal, and the ALJ recommended the dismissal without objection. 10. He stated that Clampitt no longer owned any interests in the remaining common sources of supply that are to be spaced in the proposed irregular 160 acre units in Sections 10, 11, 14 and 15 after dismissal of the shallower formations. 11. Gibbon stated that Ranken had the right to drill in Sections 10, 11, 14 and 15. He said that he made a thorough search of Garvin County records, the Oklahoma Secretary of State's website, white pages and other public sources of information as well as utilizing Pangaea and related internet search engines including anywho.com in an attempt to provide notice to all of the parties that have an interest land affected by Ranken's applications. He stated that many people haven't shown up in the land and title records since the 1960's, 1970's and 1980's because many of the shallower formations in the sections are held by production, and many of the related wells haven't been productive in years. He also stated that he had discussions with family members related to the parties having unknown addresses and the family members have lost track of the parties that they are or were related to. The ALJ deemed that notice was in compliance with the rules of the Commission. 12. At the request of Mr. Grimes, he asked that Questar, now known as QEP, or Universal, in care of Questar Exploration, be dismissed from the list of Respondents because they don't appear to be in the title record, and the ALJ recommended the dismissal without objection. Page 5

6 CDs and Ranken Energy Corporation 13. Cross Examination of Rick Gibbons by Charles Davis. Upon inquiry of counsel, Gibbon said that Clampitt no longer owned any interest in the common sources of supply in the two 160 acre irregular units in the sections that are to be spaced by the applications. He admitted that Clampitt did own interests in the shallower zones that were dismissed. He stated that Ranken owns 10 acres in the proposed 160 acre irregular unit in Sections 10 and 11 in the Sycamore, Hunton, Woodford and Viola common sources of supply and 5 acres in the proposed irregula r unit in Sections 14 and 15 in the Woodford, Hunton and Viola common sources of supply. 14. Direct Examination of Clark Turney by Charles Helm. Mr. Helm presented Clark Turney as his next witness. Mr. Turney is a geological consultant employed by Ranken. His qualifications as a geologist were accepted without objection. He stated that he met with the Commission's technical staff and at their request, dismissed some Penn formations from Ranken's applications, upon which the technical staff had no objections to the applications being approved by the Commission. The Technical Response Form showing no objection from the technical staff was admitted by the ALJ without objection as Exhibit He stated that he prepared Exhibit 3, a township map showing existing 160 acre drilling and spacing units and also showing wells in the W/2 SW/4 of Section 11 & E/2 SE/4 of Section 10 and in the W/2 NW/4 of Section 14 & E/2 NEf4 of Section 15. His map showed that 160 acre units have been granted in these sections to various parties including Clampitt. He stated that the map was true and correct to the best of his knowledge. Exhibit 3 was admitted by the ALJ without objection. 16. Cross Examination of Clark Turney by Charles Davis. Upon inquiry of counsel, Turney testified that Triad established some 32 0 acre drilling and spacing units in Section 33 which is in proximity to the proposed irregularly spaced 160 acre units. He further admitted that Ranken's proposed irregular units will be the only irregular units in the entire township. 17. Re-direct Examination of Clark Turney by Charles Helm. The witness stated that it was his opinion and Ranken's position that the creation of any irregular spaced units in Sections 10, 11, 14 and 15 would not have any precedential effect on spacing in any of the offset or extensions, and that every land would stand on its own. 18. Direct Examination of Clair Bingham by Charles Helm. Mr. Helm presented Clair Bingham as his next witness. Mr. Bingham is a petroleum geological consultant employed by Ranken. His qualifications as a geologist were accepted without objection. He identified Exhibit 4 as a map showing the proposed irregular 160 acre units in the land to be spaced. The map shows plugged wells in the area and also shallow wells, including the Carter Oil Combs-Riddel l Page 6

7 CDs and Ranken Energy Corporatio n No. 1 well, that produces from a shallow formation (possibly the Deese). He stated that the only production in the lands to be spaced is from shallow zones and not from the common sources of supply subject to Ranken's applications. 19. He stated that the formations generally involved in the spacing applications are stand-up 80 acre units established before the 1980's and that a change in conditions has occurred since then that supports the creation of 16 0 acre drilling and spacing units for the deeper formations. The change of condition is that the old shallow wells drilled under 80 acre and 40 acre spacing produced predominantly oil while the newer wells in the surrounding area drilled to the deeper formations produce predominantly gas. 20. He stated that all of the formations to be spaced underlay all or substantially all of the land to be spaced as described in the respective applications. With respect to Sections 14 and 15, the top of the Woodford is 6580 feet; the top of the Hunton is 6680 feet ; and the top of the Viola is 7200 feet. With respect to Sections 10 and 11, top of the Sycamore is approximately 6400 feet ; the top of the Woodford is 6580 feet ; the top of the Hunton is 6680 feet ; and the top of the Viola is 7200 feet. He stated that the map was true and correct to the best of his knowledge. Exhibit 4 was admitted by the ALJ without objection. 21. He then identified Exhibit 5 as a production plat map showing both oil and gas production for wells in the lands to be spaced and surrounding lands. He stated that wells shown on the map have been drilled and completed in the Viola, which is the deepest formation to be spaced. He further stated that the plat depicts wells that produce from the Viola, the Hunton or its equivalent, the Bois'd Arc, the Woodford and the Sycamore. He also stated that Ranken's primary targets in the proposed units are the Hunton and Viola, and that you have to drill through the Sycamore and the Woodford to penetrate the targeted formations. He stated that the plat was true and correct to the best of his knowledge. Exhibit 5 was admitted by the ALJ without objection. 22. He then identified Exhibit 6 as a Hunton structure map showing that the Hunton underlay the whole area on the map. He stated that the map was true and correct to the best of his knowledge. Exhibit 6 was admitted by the ALJ without objection. 23. He then identified Exhibit 7 as an Upper Viola net porosity isopach prepared using porosity greater than 5%. He stated that the wells on the map outline the most productive area with respect to the Viola, and that this area is represented as a net 15 foot thick pay "fairway" for both the Viola and Hunton predominately located in the proposed 1 60 acre irregular units. He further stated that the proposed 160 acre irregular units are best suited for the area because the more recent wells drilled in the surrounding area in the Viola and Hunton produce d Page 7

8 CDs and Ranken Energy Corporation predominately gas and drained more than 80 acres. He stated that the map was true and correct to the best of his knowledge. Exhibit 7 was admitted by the ALJ without objection. 24. Cross Examination of Clair Turney by Charles Davis. Upon inquiry of counsel, Turney said the proposed location of any wells in the units would be at the legal location. He then testified that doesn't really have any actual information about the reservoir underlying the proposed units because no wells have been drilled in the units in the relevant common sources of supply. When asked by counsel whether Ranken could establish regular 160 acre units instead of irregular spaced units, the witness replied that a well could be drilled and completed in the Viola but not in the thickest part of the Viola, and that such a well might have a fair chance but not a good chance even though there would not be any structural differences between an so-called normal unit and an irregular units. 25. Re-direct Examination of Clair Turnev by Charles Helm. Upon inquiry of counsel, Turney stated that he based his opinions with respect to the location of the "fairway" upon a reasonable amount of data from 10 wells in the area. He stated that as a geologist, he is not trying to drill wells in the thinner pay but in the thickest pay so that Ranken can have the best chance of producing a good well. 26. Direct Examination of James Huling by Charles Helm. Mr. Helm presented James Huling as his next witness. Mr. Huling is a consulting petroleum engineer employed by Ranken. His qualifications as a petroleum engineer were accepted without objection. He stated his opinion that the proposed irregular 160 acre drilling and spacing units are appropriate for the establishing new spacing based upon his examination of well performance data over time and with respect to drainage. 27. He stated that Exhibit 8 depicts the cumulative oil and gas ratios (GOR's) for wells in th e Hunton and Viola in Sections 10, 11, 14 and 15. He stated that these wells fall within th e Commission parameters for gas wells, with ratios over 33,000. He pointed out one well that is close to the proposed irregular units, the Hammer well, has the most significant gas GOR of an y of the wells in the area, and that the high GOR supports Ranken's position that the irregular 16 0 acre units should be established. 28. He also stated that regular 160 acre units would be right on top of the Hammer well and that irregular units are necessary to avoid the well, and would avoid the risk of having to drill additional wells to access the thick pay if the current 80 acre spacing is maintained. He stated that the irregular units would have considerably greater potential for production and pay in Sections 14 and 15. He also stated that irregular 160 acre unit would avoid the risk of having to Page 8

9 CDs and Ranken Energy Corporation drill mirror wells in Section 10 and 11 if the current spacing is maintained or regular 160 acre spacing is established. 29. His studies of the area also show that wells in the area drain more than 80 acres. As an example, he described the Victor well drilled in 2007 in the S/2 NW14 of Section l I which had about one half the production of an offset drilled immediately to the east and which experienced lower pressures compared to offset wells. 30. He testified that the proposed 160 acre irregular units would favor the drilling of new wells at a legal location that would prevent waste by maximizing the potential to drill a good well and protect correlative rights by minimizing exposure to drain from existing wells. He then stated that the exhibit was true and correct to the best of his knowledge. Exhibit 8 was admitted by the ALJ without objection. 31. Cross Examination of James Huling by Charles Davis. Upon inquiry of counsel, Huling said that a well located in the proposed irregular unit might drain between 80 and 160 acres, but he doesn't know for sure until a well is drilled. He stated that a regular 160 acre unit established in Section 14 and 15 would access thick pay in the Viola but would be closer to the best producing well in the area. He stated that he would be concerned about drainage if a regular 160 acre unit was established. When asked if he could avoid this problem with respect to establishing a regular 160 acre unit by applying to drill a location exception well, he said that this was possible. 32. Re-direct Examination of James Huling by Charles Helm. Upon inquiry of counsel, Huling agreed that creating regular 160 acre units and then filing applications for location exception wells would not be desirable because a regular unit will have less reserves than the proposed irregular unit based upon the total amount of net pay. He also said that he might not be granted a location exception after establishing a regular unit in the area, and thus would run the risk of having to drill an inferior well. He said that Ranken would have to drill two wells in a regular 160 acre unit to capture the gas that one well would capture in an irregular 160 acre unit, and thus incur over a million dollars in unnecessary costs per unit to access the same reserves. 33. Direct Examination of Robert Camnbell by Charles Davis. Mr. Davis presented Robert Campbell as his next witness. Mr. Campbell is a consulting petroleum engineer employed by Ranken. His qualifications as a petroleum engineer were accepted without objection. He stated that he made a study of the area and concluded that the geology supported the establishment of regular 160 acre drilling and spacing units in the area (Sections 10, 11, 14 and 15). He stated his opinion that the proposed irregular 160 acre drilling and spacing units are unnecessary. He said that the productivity of a well is primarily influenced by the natural fracturing an d Page 9

10 CDs and Ranken Energy Corporation interconnectivity of the Hunton and Viola in this area, and that this interconnectivity would overcome any differences in the thickness of the net pay between a regular unit and the proposed irregular units. 34. He also stated that Ranken's data supporting the establishment of the irregular units is not consistent in that some of the best producing wells shown in Exhibit 5 are on a Hunton thin and do not correlate with the Bois'd Arc thick shown by Ranken on the map. 35. He further opined that the establishment of irregular 16 0 acre units in the area would impede development in the area and contribute to waste. 36. Cross Examination of Robert Campbell by Charles Helm. Upon inquiry by counsel, Campbell said that he understood that Clampitt owns nothing in the proposed irregular units. He also stated that he believes that establishment of the irregular units in the area would only allow two wells to be drilled in the two proposed units in the area where there may be a need to drill four to produce all the gas from the reservoir. He stated that he presented his opinion as a friend of the court in this respect since Clampitt no longer owned any interests affected by the spacing applications, and believed that the establishment of the proposed irregular units would contribute to waste. He then admitted that he hasn't done any studies and doesn't have any reservoir pressure or fluid level data to support his opinion. 37. Re-direct Examination of Robert Campbell by Charles Davis. Upon inquiry of counsel, Campbell stated that Clampitt owns shallow rights in the proposed units and some deeper right s in many leases outside the proposed units, and is concerned with the establishment and spread o f irregular units in the entire area. 38. Re-cross Examination of Robert Campbell by Charles Helm. When asked by Helm what rights Clampitt owned in the area, Campbell stated that Clampitt owned vast areas of the Northeast Elmore Unit but did not know any specific information about those rights or where exactly they were located. He then admitted that it would only take two wells to drain the reservoir in the area of the proposed spacing units regardless of whether the established 160 acre units were regular or irregular. 39. Both parties then rested and the ALJ took the matter under advisement in order to prepare a report. Page 10

11 CDs and Ranken Energy Corporatio n RECOMMENDATIONS AND CONCLUSIONS OF LA W After taking into consideration all of the facts, circumstances, evidence and testimony presented in these causes, it is the recommendation of the ALJ that Ranken's applications be granted. After Ranken dismissed the shallower formations in Sections 10, 11, 14 and 15 Clampitt no longer owned any mineral interests in the unit and thus lacked standing to maintain its protest 2 Ranken then presented substantial evidence in support of their applications, Ranken's geologists presented evidence that a change in conditions has occurred since the land was previously spaced that supports the creation of 160 acre drilling and spacing units for the deeper formations. The change of condition is that the old shallow wells drilled under 80 acre and 40 acre spacing produced predominantly oil while the newer wells in the surrounding area drilled to the deeper formations produce predominantly gas. Ranken also showed that all of the formations to be spaced underlay all or substantially all of the land described in the respective applications, and that gas wells drilled in the units would drain more than 80 acres. Ranken's engineer testified that the establishment of irregular 160 acre units is necessary to access th e 2 See 52 O.S which states "A. Except as provided in subsection B of this section, only those persons, or the duly authorized agent, representative or attorney of those persons, who are mineral owners or owners of the right to drill a well for oil and gas on the lands embraced within the subject area of an application or the owners of correlative rights within the common source of supply or supplies embraced within an application to the extent such owners are directly affected by such application, shall be proper parties to : 1. protest any application to establish, reestablish, or reform a spacing unit, 2. protest any application requesting authority for an additional well or wells within an established spacing unit brought pursuant to the provisions of paragraph (a) or (d) of Section 87.1 of Title 52 of the Oklahoma Statutes, or 3. present testimony or evidence at any hearing arising there under or relating thereto. B. No other person shall be entitled to notice of such proceeding or shall be entitled to appear as a party of recor d therein, except that the Corporation Commission may permit persons other than those specified in subsection A of this section leave to intervene in a proceeding upon a finding, based upon clear and convincing evidence, that suc h person has a substantial right intended to be protected by Section 87.1 of Title 52 of the Oklahoma Statutes which may adversely be affected by the outcome of such proceeding. Any fmding required by this section shall be made by the Corporation Commission, sitting en banc, within ten (10) days of the filing of a motion to intervene by such person and suchproceeding shall be stayed during such ten-day period." Page 11

12 CDs and Ranken Energy Corporation thickest pay in the Hunton and Viola, and minimize encroachment upon existing wells in the Area. Clampitt agreed with Ranken that the land should be re-spaced as 160 acre units. Clampitt opposed the creation of irregular units, alleging that the irregular units would disrupt the orderly development of gas production in the units and in the surrounding area. Although Clampitt lacked standing as a mineral owner in the units, Ranken's geologists and engineer presented evidence that the thick part of the Viola and Hunton underlay the proposed irregular units such that the creation of the units would allow two wells to efficiently drain the reservoirs, thus saving on drilling costs and increasing the chance of the production of successful wells in the units. Ranken also stated that the establishment of the irregular units would not have a precedential effect upon development in that all other applications for spacing in the surrounding areas would stand on their own merits. Establishment of the two 160 acre drilling and spacing units in Sections 10, 11, 14 and 15 thus would prevent waste related to drilling costs, increase the chances of producing successful wells and protect correlative rights by preventing encroachment upon existing wells. RESPECTFULLY SUBMITTED 4th day of January, DAVID LEAVITT ADMINISTRATIVE LAW JUDGE xc: Charles L. Helm Charles B. Davis John C. Moricoli, Jr. Karl F. Hirsch Richard A. Grimes Jim Hamilto n Michael Decker Oil Law Records Commission Files Page 12