HomeMy WebLinkAbout916427
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For. Approved by c~~iie {f~..f1 ,~ ~ ¡ ¡
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and Effective January 6, 1998
STATE OF WYOMING
OIL AND GAS LEASE
Lease # 06-00213
Parcel # 196
Fund Code: CS
"('677
This indenture of lease entered into by and between the State of Wyoming, acting by and
through its Board of Land Commissioners as LESSOR, and the following as LESSEE:
Dolar Energy, lJ-ç,
Section 1. PURPOSE. The LESSOR, in consideration of the. rents and royalties to be
paid and the covehðnts and agreements to be kept and performed by the LESSEE, does hereby
grant and lease to the LESSEE, the exclusive right to drill for, mine, extract, remove, and
dispose of all theoll, gas and associäted hydrocarbon substances and gaseous substances and
elements produced therewith, including sulphur, hydrogen sulfide, sulphur dioxide, nitrogen,
carbon dioxide and helium, which may be produced from the following described land, to wit:
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County: Lincoln
Lot 38 (formerly All Sec 36)
Re-survey Township: 23 North Range 116 West of the 6th P.M.
Acres: 640.00
$640.00
($1.00 per acre or fraction thereof)
Together with the right of ingre~s and egress and the right to use so much of the
surface of said lands as is necessary to construct and maintain thereupon all works,
building, plants, waterways, roads, communication lines, pipe lines, reservoirs, tanks,
pumping stations, or other facilities necessary to the proper conduct of operations there
under.
Section 2. TERM OF LEASE. This lease shall become'effective on the day and year set
out below and shall remain in effect for a primary term of five (5) years and. for so long
thereafter as leased substances may, be produced from the lands in paying quantities. This
lease mãy' alšo be'éxtended beyond its' p:dmary term in the absence of· production of leased
substãnces 'ås may bë provided by theSta,tutes of the State 'of Wyoming and the regulations of
the Board of Land Commissioners adopted pursuant thereto. Provided, however, if drilling,
c9mpletion, testìng'orreworking operätions are being diligently. conducted, either during the
primary term' or"cìuring any' extension' thereoC this' lèäsèshall ,continue in full force and
effect so long ai~u~h operaticin~ are being conducted and'so long theteaf~er as oil or gas
ma'y be produced in paying quantities. Thi,s lease may be relinquished or terminated at an
earlier date as herein provided.
Section 3. If the LESSOR owns an interest in oil and gas in said land less than the
entire fee simple estate, then the royalties and rentals to be paid LESSOR shall be reduced
proportionately.
Section 4. LESSEE exprèSsly represents that, if ah individual, LESSEE. ïs a citizen of.
the United States, 01: has declared an intention to become a citizen, and is over 19 years of
age-and if a corporation, is duly qualified to transact business in Wyøming.
Section 5. This lease is issued under the authority conferred by Title 36, W.S. 1977 as
to the State and School Lands, and Title 11, W.S. 1977 as to Farm Loan lands, and shall be
subject to, and operationè by LESSEE hereunder shall be conducted in compliance with the
specific lease terms set 'out on the reverse of this lease, and with all applicable state
statutory requirements and the regulations issued thereunder, including those providing for:
the teasing of SÜite 'or farm Loan Lands for oil and gas;thecQnservation of oil ,and gas; and
the regulat~onof 'sècuritytrarisactions
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Section 6'. HEIRS AND SUCCESSORS IN INTEREST . It is covenanted and agreed that each
obligation hereÙndÉÚ:shall e1ttend to- and be binding upon, ðnd every benefit thereof shall
inure to the heirs, executors, adIDinistrators, successors of, or assigns of the respective
parties hereto. .
Section 7. SOVEREIGN IMMUNITY. The State of Wyoming and the lessor do not waive
sovereign immunity by entering into this lease, and specifically retain immunity and all
defenses available to them as sovereigns pursuant to Wyoming Statute 1-39-104 (a) and all
other state laws.
IN WITNESS WHEREOF, this lease has been executed by LESSOR and LESSEE to become effective
on the '2nd day oC É'ebruary,2006 A. D.
LESSOR, STATE OF WYOMING, Acting by and through its Board of Land
Oòlar Energy, L.L.C.
Mark S. Dolar
Managing Member
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Lessee Signature:
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Addres.s:935 .E.,·soûth, Uníân.Ave~. ,'Ste 0-202
city:Mi dvale . Št'~t'~:~~" ur Zip; 84047-2393'
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Phone i
(801) 561-3121
RECEIVED 3/6/2006 at 11 :03 AM
RECEIVING # 916427
BOOK: 613 PAGE: 677
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
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1091.6427
OIL AND GAS TERMS
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bond with en approved cotpOfate surety company authorized to Iransacl
business in the State of Wyoming. or such other surety as may be acceptable to the les~, in the
penal sum a. requirad by the current rule. of the State Board of Land Commi..ioner.,
conditioned uponthe payment of all rental. and royallie. ecauing to thele..or under the teon.
hereof, and upon the full compliance ,!f all oÌher term. and condition. of thi. lea.e and the rule.
end regulation. r..lating Ih<!reto, end' al50 conditioned oil the payment of all damage. 10 th..
surfece and impróvements ih..reon where the lease covers land. the surface of which has been
sold or otherwise leased. Such bond or bOrìds furnished prior to the development of tha lands
contained in thi. leas, may !:ie increased in such reasoOabla amounts a.the le550r may de¡:ide
upon commencemel)t' of drilling operalión. and aft..r the di.covery of oil or gas.
(b)PAYMENTS. To make all paymerat. acCruing hereuhdar 10 the Office of State Lends and,
Inve.tmenls, 122 We.t 25th Streel, Cheyeme, Wyoming 82002-0600.
(c)RENTALS. Prior 10 the disœvery of oil or gas in paying quantities 10 pay the le.sor in
advance. begiming wilh the effective date hereof, an annual rental of $1.00 per acre or fraction
thereof.
After the di5COvery of oil or gas in paying quantities 10 pay the lessor in advance begiming with
the fir.t day of the lea.e year succeeding thelea.e year in which actual discovery was made, an
annual rental of $2.00 per acre or fraction thereof, unless changed by egreement. Such rental 50
paid for anyone year shall be crediled on the royally for that year.
Annual rentals on all lea.es shall be payable in advahce for the farst year and each year
thereafter. No notice of rental due 5hall be ...nt 10 th.. I..ss..... If the r..ntal il nol paid on or
befor.. the dat.. it becom... due, notice of defaull will be .ent to th..le.se.., and a p..nalty of $0.50
per acre for lete payment will be a.sessed.
The lesse.. is not legally obligated 10 pay ..ither th.. rental or the penally, but if the rental and
. penally ar.. OQIpaiqwithill thirtr (~) day. after the notice of default has been received. the lease.
will t..iniinale·automaticaIlY by oþeralion of law. Termination of the lease .hall not retieve the-
lessee of any obligation incurred under the lease oth..r than the obligation to pay rental or
penally. The le.see shall not be entitled to a credit on royalty due for any penally paid for late
payment. of rental on an operating lease.
(d)ROYAL TIES. The royallies to be paid by lessee are:
(i) On oil, one-sixlll of that produced, saved, and sold from ...id land, the same 10 be delivered
at th.. well. or to the credit of le.sor into the pipe line to which the wells may be connected.
(ii) On gas, including casinghead gas or othar hydrocarbon subltances, produced from said
land .aved and $Old or u.ed off the premise. or in the menufacture of gasoline or other productl
therefrom, the market value at the well of one-sixth of the gas 50 sold or u58d, provided that on
gas sold at the wells, the royalty shall be one·sixth of the amount r..alized from such ...Ie.
(iii) On all other hydrocarbons of value and gaseou. substances and ..Iements produced or
extracted, including propane, butane, sulphur, nitrogen, carbon dioxide, and helium, at such
royalty a. shell be mutually deteonined to be fair and reasonable.
(iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the
les.or, and in the determination of the value of netural ga50line the fair cost of extraction 5hall be
consider..d as a deductible item; provided, however, that the allowance for the cost of extraction
may exceed two·thirds of the amount or value only on approval of the lessor and in no event Shall
the price for gas, or natural ga50line, be less than thai received by the United State Of America for
its royallies from the same field.
(v) Natural gas and oil actually u.ed for operaling purposes upon the land and, exœpt 85 10 the
ullimate sale thereof, gas or liquid hydrocarbon. returned 10 the ...nd for .timulating the
production of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYAlTY OIL AND GAS. To delivar to the I...sor, or to such individual,
firm or corporation as thele.sor may designate, all royalty oil, gas, or other kindred hydrocatt>ons,
free of charge on the premise. where produced, or, at the option of the lessor, and in lieu of said
royalli... in kind, the I..ssee agrees to pay the les50l the field market price or value of all royalty
oil, g85, or other kindred hydrocarbons produced and saved. .
When the lessor elacts 10 take its royalty oil, gas, or other hydrocarbons in kind such as oil, gas,
or oth.... kindred hydrocarbons shall be good merchantable oil. gas, or other kindred
hydrocarbons. The lessee shell if necessary furni5h storage for royalty oil free of charge for thirty
(30) days after the end of the celendar month in which the oil is produced, upon the leased
premises, or at the .uch place as the lessor and the less.... may mutually agree upon, provided,
that the lessee 5hall not be held liable for loss 9r c!estruction of royalty 9il 50 stored from causes
beyondñís'êòntror .... ~---~--. . ·_c_ ....--. _.
Th.. fr..e storage of oil, a. herein provided, shall åpply only as long es the said oil is the properly
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauge. measure and corract for temperature all
production from ...id lands in conformance with the rules and regulations adopted by the Board '*
Land CO/I1/IÚssioners and report ...id production 10 the lessor in accordance therewith.
To keep books, records. and reports pertaining to the production from the land herein leased 85
well as those pertaining to the production from offset wells operat..d by the I....ee. his operator,
or sub·lessee on other lands, which shall be opened at all times for the inspection of eny duly
authorized agent of the lessor.
To furnish the lessor with original pipe line reports showing the day, month, year, amount,
gravities, and lemperalures of all oil run end with 'monthly reþorts showing the month, year,
amount, and price of all gas and natÙlal gas gasoline and other products produced and sold from
the land herein lea.ed, and the amount of gas returned to the sand.
(g) MONTHt.Y PAYMENTS AND STATEMENTS. Unless thelim,,'ofpaymenl is otherwise
extended by the· Office of Staté Lands andlnvèstments to make payment on or before the
twentieth (20th) day of thè èaleni:lar month sücceeding the month of production and removal and
sale of oil and gas from said land, and 10 furnish sworn monthly statements therewith showing in
detail the quantity and quality of the production (perÍovell if required where practical) from the land
héreb¡i leased, and the quantity and quality of the production (per well where practical) from offset
wells upon cornering or contiguous land operated by theles.ee, his operator or sub·lessee and
such other information as may be called for in the form or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and operat.. effectively all wells neces...ryìo rea.õnably
offset wells upon and production from adjoining lands.
To drill such additional wells at such times or places as are necessary and essential to the
proper development and commercial production of the oil and gas content of said land.
(i)LOG OF WELLS AND REPORTS. To keep a log, in the form approved by the lessor, of each
well drilled by the les.ee on the lands herein leased, 5howing the strata and character of the
formations, water ...nds and mineral deposits penetrated by the drill. amount of cesing, size and
where set, and such other infoonation as th.. lessor may require which log or copy thereof .hall
be furnished 10 the lessor.
To file progress reports, in the form prescribåd by the lessor, at the end of each thirty (30) day
period while each well is being drilled.
To file amually, or at such times as the lessor may require, maps showing the development of
the structure and thè location of all wells, pipe lines and other wor1<s u58d in connection with the
operations of the lessee upon said land.
To make such other reports pertaining to the production and operations by the lessee on ...id
land, and report such other information as may be possessed by the lessee on the wells,
production or operations of others on lands on the same geologic suUcture that may be of
importance in effecting proper development and operation of the lands herein leaseq, as may be
called for by thelesSQ(. All logs, maps, and reports shall be submitted in duplicate and the OffICe
of State Lands end Investments may waive such reports as conditions may warrant.
(j)PRODUCTION. To operate the wells upon the land herein lea.ed in a competent and effocienl
I118IVJIIr in an ~"¡or to r9CÕver all the oil and gas economically possibl.. from ...id land and 10
prevent the. under ø..ainage '* the oil and ges ther9Ulld\lr by wells operated by the les.ee or
others ón èornerinÎI or contigUous lands 10 those leased 'herein: Ali plans or methods for the
purpose of stimulating or i~asing production on lands her!!in leased other than those in
oomrnon use shall first be presented to the lessor for approval before b..ing put Into actual
operation.' ", ,. .,' . ". """ :.'
No . prOduction ägt.f8ments limiting, restricting, prorating; 'Ór otherwis.. _ aÌtacting 'the
naturalprodùctiÓl\ from said land shall be' entered into by the lessee, nor shall the lessee limit,
restrict. or prorate the nalura! production from said 'Iand in anyway or· in any ..ven~ except with
1hecorisent in Writing of the lèssor first had an obtained. . . "c!", .
(k)SUSPENSION OF. OPERATIONS. ShOUld anI' well drilled upon lanc;lscovered by this lease
obtain production of bil;' gas,' or ·other hydrocarbons' in paying' quantities and if the less.... is
unable 10 aslabti5h a satiSfactory market for the oil, gas or hydrocarbons prodJœd from saidwell,
the lessee may apply'for and the lessor may grant permission for the suspension of production
operations until such times as a satisfactory mar1<et for the product from ...id well can be
developed. During the time any such suspension of operations is in effect. the lessee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof provided by (c) above, and
this lease shall remain in effect as though oil or gas was being produced from ...id lands.
(I)DlLlGENCE·PREVENTION OF WASTE. To exercise reasonable diligence in drilling,
producing, and operating of wells on the land covered hereby, unless consent to suspend
operations temporarily is granied by the lessor; to carry on all operations hereunder in a good and
workmenlike manner in accordance with approved method. and practice, having due regard for
(,00678
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the prevention of wasle of oil and gas, or the entrance of watar to the oil or ga. bearing sands or
strata to the destruction or i~ury of such deposits, the preservation and conservation of tha
property for future productive operations and to the health and safety of wor1<men and employees;
to plug securely in an approved manner eny well before abandoning it, and not to abandon any
well without permission of the lassor, not to drill any well within two hundred (200) feet of any of
the outer boundaries of the lan!I covered heraby, unless to protect against drainage by wells
drilled on lands adjoining less than 200 f....t from the property lines thereof; to conduct all
oparations subject to the iOspec\ion of the lessor; to carry out at the lessee's expense all
reasonable orders and. requirements of the I..ssor relative to the pravention of waste and
preservatiOn.of \he ~roPertY and. \h8 health and ...fely of workmen including the replanting and
reseeding of dr)Uing .sites and othei areas distwbed by drilling ,!p~ratioÌ1s' and on failure of the
lessee SQ 10 do the lessOr shan have the right, t<>gèther with. other recourse herein provided, to
enter on the property tei lIipair damage or prevent W¡¡sté at the lessee's axpense; to abide by and
conform.lo v\llid applicable rágulations prescri~ 10 reimburse the owner of the surface, if othar
than the lessor, or lessee of ¡¡raZing rights thereof for actual damages lhereto and injury to
improvements thereon, Provided, thel th..lessee 5hall not be held responsible for acts of
providence 'or actions beyond his control.
(m)TAXES AND WAGES.fREEDOM OF PURCHASE. To pay, when due all taxes lawfully
assessed end levied undar the laws '* the Stete of Wyoming upon improvements, oil and gas
produced from the land hereunder, or other rights, property or assets of theles.ee, 10 accord all
wor1<men and employees complete freedom of purchase, and to pay all weges due workmen and
employees in conformance with the laws of the State of Wyoming.
(n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not to assign this lease or any
interest therein, nor sublet eny portion of the leased premises, except with the consent in Writing
of the I..ssor first had and oblained. .
All overriding royalti..s to be valid, must have the approval of the Board or by the Office of State
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded with the lease. The Board reserves the right of di...pproval of such overriding royalties
when in it. opjp\on J;1!I~, become, ~~cessiy~ and hence are detrill)"l1l,al to the proper development
of·theleased-Iands. '" ",-. . ..... ., . ... . .'. .. .... '.'
(o)DELlVER PREMISES IN CASE OF FORFEITURE. To deliver up thelea58d premises, with all
permanent improvements thareon, in good ordar and condition in cas.. of forfeitur.. of thi.lease,
but this shall not be construed 10
prevent the removel, altaration or renewal of equipment and improvements in the ordinary
course of operations.
Saction 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise dispose of the surface of the land embraced within this
lease under existing laws or laws hereafter enacted, and in accordance with the rules of the
Board of Land Conunissions insofar as the surface is not necessary for the use of the lessea in
the conduct of operations hereunder,
(b)The right to lease, sell, or otherwise dispose of other min..ral or subsurface resources nol
covered by the lease, in accordance with the applicable laws and the rules of the Board of Land
Conunissionars.
(c)From the operation of this lease, the surface lands heretofore granted for rights-of·way and
..asements and reserves the right to grant such other righls-of-way and easements as provided by
the statutes of the State of Wyoming, as long as such rights-of-way and easements do not conflict
with th!! operations for oil and gas on the lend herein leased.
(d)The right 10 refuse to commil the lea58d lands to a unit plan of development if the Board finds
such action would impair the lessor's reserved right 10 take its royalty gas in kind and to purchase
alt other gas allocated 10 the lea58d lands a provided in Section 3(e)below.
(e)The right to aller or modify the quantity and rate of production to the end that waste may be
eliminated or that production may conform to the lessee's fair share of allowable production undar
any system of Stat.. or National curtailmenl and proration authorized by law.
(f)ln addition 10 its right 10 take its royally gas in kind, the lessor reserves the right and option to
purchase all other gas produced for sale or use off the leased lands. This option .hall be
exercised only if the Board fonds that the lessee has received and is willing to accept a bona fide
offer from a purchaser who inlands 10 sell or transport the gas into interstate commerce and thai
one or more intrastate purchasers (i.e., purchasers who will use, consume, or sell the gas for use
or consumption entirely within the State of Wyoming) are willing and able to purchase the gas
upon terms reasonably comparable to and at I....st as favorable to the lessee as those offered by
the interstate purcha.er. The Board shall waive this option @nd peonit an interstate sale if it finds
that no intrastate purchaser is willing and able to purch.à~. the gas upon teons which are
reasonably comparable to and at least as favorable to the 11 ~I ¡¡o".As a condition to such waiver,
a ...tisfactory agreement may be'entered into'bywhlch th8'productiCÌÎ'lof its royally gas-may lJe'-
d..ferred until it can be produced and sold for consumption and use entirely within the State of
Wyoming.
Saction 3. APPRAISAl OF IMPROVEMENTS. The lessee shall have the right subjact 10 the
provisions of Title 36, as 10 State and State School Lands, and Tille 11, 85 to Stat.. Loan and
Investments Board Lands, W.S. 1977, 10 remove eny improvements owned by lessee within a
reasonable lime after the lermination of this lease. Lessee agrees thet eny such improvements
not removed within a rea50nable time after teonination of this lease shall be disposed of pursuant
to the above statutes. . .
Section 4. FORFEITURE CLAUSE. The Board 5hall have the power and authority to cancel
lease. procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or
illegal purposes, or for the violation of the covenenls of the r.fase, upon proper proof thereof, in
the event thai the lessee 5hall default in the perfoonâ'rice or observance of any of the teons,
covenants, and stipulations hereof, or of the general regulations promulgated by the Board of
Land Conunissioners and in force on the date her"of, the les50r shall serve notice of such failure
or dafaulteither by personal service or by certified or registered mail upon the lessee, and if such
failure or default continues for a period of thirty (30) days after the service of such notice, 1Þen
and in that event the lessor may, at its option, declare' a forfeiture and cancel this lease,
whereupon all rights and priviteges, obtained by the le55ee hereunder shall terminate and cease
and the lessor may re-enter and take possession of said premises or any part thereof. These
provisions 5hall not be con.trued to prevent the exercise by lessor any legal or equiteble remedy
which the lessor might otherwise have. A waiver of any particular cause or forfeiture 5hall nol
prevent the cancellation and forfeitur.. of this lea... by any other caus.. of forfeitur.., or for the
same ceuse occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER This lease may be relinqui5hed and
surrendered to lessor as 10 all or eny legal subdivision of said lands as follows:
(a) If no operations hav.. been conducted under the lease on th.. land to be relinquished, the
lessee shall file with the State Land Board and Stale Loan and Investment Board, a Written
relinqui5hment or surrender, duly signed end acknowledged and stating therein that no operations
have been conducted on the land. The r..linquishment 50 filed shall become effactive on the date
and hour of receipt thereof in the offlCa of the Diractor or at some later date, if such be so
specified by the les.ee therein. If the ...id relinquishment fails to state thet no operations heve
been conducted, the effective date of relinquishment shall be the date the relinqui5hment is
approved by the Board.
(b) If operations have been conducted under the lease on land pioposed 10 be relinqui5hed; the
lessee 5hall give sixty (60) days notice and shall file with the Director a Written relinquishment or
surrender duly ecknowledged and stating tharein that operations hav.. been conducted on the
land. The relinquishmant shall not become effactive until the land and the welts thereon 5hall
have be"n placed in condition acceptable to les50r and shall have been approved by the State Oil .
and Gas Supervisor.
All rentals becoming due prior to a surrand.... or relinqui5hment becoming effactive, shall be
payable by lessee unless paymenl thereof shall be waived by lessor. A relinquishment having
become effective there shall be no recourse by lessee and the lea.e as to the relinquished lands
may not be reinstated.
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091.6427
00679
CORPORATE NOTARY
STATE OF
UTAH
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)
COlßlTY OF SALT LAKE
BEFORE ME, the undersigned authority, on this day personally appeared Mark S. Dolar
known to me to be the person whose name is subscribed to the foregoing instrument as the Managing
Member of Dolar Energy. L.L.C. , and acknowledged to me that he executed the same
for the purposes and consideration therein expressed, in the capacity stated, and as the act and deed of
said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS ~,...ft- day of 7lt~
.2006.
My commission expires:
Ó 1- OS -O&,
Notary PubUc
KATHLEEN M VAN WART
8174 South 2660 Eaat
Sandy. uT 84093
My COmml8l10n ¡bpi,..
Janully 11, 2008
Stalii 01 ulan
~ 1iJ~ V't4( uI~
Notary Public
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