HomeMy WebLinkAbout916787
Form Approved by the Bo,u~:m;mm~i~m:~]
. oJ. . :~:~i:,~~\:t:':_': :~;:d;~
and Ettective Janu,ry '~19'.9' ... 0_
~
STATE OF :::::::::::::::'::::~;:MING
,_.,.~..'..:a:.'':''''':'
OIL AND GAS LEASE
,
Lease # 06-00211 !:",~:,¡\,'~'!i,¡';!'
V ~;t~~¡h~~j:f~t1~~;,
Parcel # 194 '"""["'Ün 0 718
Fund Code: CS
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:
Zenergy, Inc.
Seçtion 1. PURPOSE,._ The_ LESSOR, in consideration of the rents and royalties to be
paid and the covenants 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 the oil, gas and associated 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:
7 L{
v
I L(
10,
All Section: 16 Township: 24 North Range: 114 West of the 6th P.M.
County: Lincoln
Acres: 640.00
$640.00
($1.00 per acre or fract10n thereof)
Together with the right of ingress 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 may also be ,~xt,e,nded beyondi ts primary, term in the absence of production of leased
substances as may be provided by the statutes'of the State of Wyoming and the regulations of
the Board of Land Commissioners adopted pursuant thereto. Provided, however, if drilling,
completion, testing or reworking operations are being diligently conducted, either during the
primary term or, during any extension thereof, this lease shall continue in full force and
effect so long as such operations are being conducted and so long thereafter as oil or gas
may be produced in paying quantities. This 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 expressly represents that, if an individual, LESSEE is a citizen of
the United States, or 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 Wyoming.
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 operations 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 leasing of State or Farm Loan Lands for oil and gas; the conservation of oil and gas; and
the regulation of security transactions.
, Section 6. HEIRS AND SUCCESSORS IN INTEREST. It is covenanted and agreed that each
obligation hereunder shall extend to and be binding upon, and every benefit thereof shall
inure to the heirs, executOrs, administrators, 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 of, February, 2006 A.D.
; '>i-
LESSOR, STATE OF WYOMING, Acting by and through its Board of Land Commišsioners.
Address; ",IDO S.
" ""'^"\
City: Jv 15~"
Phone 41 (" \ij' )
,
fcV{V
S+e. nOO
Lessee Signature:
" '
Zip: 7~117b
RECEIVED 3/21/2006 at 10:39 AM
RECEIVING # 916787
BOOK: 614 PAGE: 718
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
, '.
;1;' -, .~ :..~
OIL AND GAS TERMS
0916787
.....-:- -,
Section 1, THE LESSEE AGREES:
(a) BOND, To fumish a bond with an approved corporate surety company authorized to transact
business in the State of Wyoming, or such other surety as may be acceptable to the lessor, in the
penal sum as required by the current rules of the State Board of Land Commissioners,
conditioned upon the payment of all rentals and royalties acauing to the lessor under the terms
hereof, and upon the full compliance of all other terms and conditions of this lease and the rules
and regulations relating therato, and also conditioned on the paymant of all damages to the
surface and improvements thereon where the lease covers lands the suñace of which has been
sold or oth8fWÎsa leased. Such bond or bonds furnished prior to the development of the lands
contained in this lease may be increased in such reasonable amounts as the lessor may decide
upon commencement of drilling operations and after the discovery of 011 or gas. '
(b)PAYMENTS. To make all payments accruing hereunder to the Office of State Lands and
Inveslmants, 122 West 25th Straet, Chayenne, Wyoming 62002-0600.
(c)RENTALS. Prior to the discovery of oil or gas In paying quantities to pay the lessor In
advance, beginning with the effective date hereof, an annual rental of $1,00 per aae or fraction
thereof.
After the discovery of oil or gas In paying quantitias to pay the lessor in advance beginning with
the first day of the lease yeer oucceeding the lease year in which actual discovery was made, an
annual rental of $2,00 per acre or fraction thereof, unless changed by agreement Such rental so
paid for any one year shell be credited on the royalty for that year.
Annual rentals on all leases shall be payable in advance for the first year and each year
thereafter. No notice of rental due shall be sent to the lessee, If the rental is not paid on or
before the date it becomes due. notice of default will be sent to the lessee, and a penalty of $0,50
per acre tor late payment will b8 asS8$sed.
The lessee is not legally obligated to pey either the rentaJ or the penalty, but if the rental and
penalty are not paid within thirty (30) days after the notice of default has been received, the lease
will terminate automatically by operation of law, Termination of the lease shall not relieve the
lessea of any obligation incurrad under the leasll other than the obligation to pay rental or
penalty, Tha lessee shall not be entitled to a O"edit on royalty due for any penalty paid for lata
payments of rental on en operating lease.
(d)ROYAL TIES. The royalties to be paid by Jessee ere:
(i) On oil, one·sixth of that produced, saved, and sold from said land, the same to be delivared
at the wells or to the credit of le~ into the pipe line to which the wells may be connected,
(ii) On gas, including casinghead gas or other hydrocarbon substances, produced from said
land saved and sold or used off the premiS8$ or in the manufactura of gasoline or other products
therefrom, the marllet value at the well of one-sixth of the gas so sold or used, provided thet on
gas sold at the walls, the royalty shall be one-sixth of the amount realized from such sale.
(iii) On all other hydrocarbons of value and gaoeous substances and elaments produced or
extrected, including propane, butane. sulphur, nitrogen, cerbon dioxide, and halium, at such
royalty as shall be mutually determinad to be fair and reasonable.
(iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the
lessor, and in the determination of the value of natural gasoline the fair cost of extraction shall be
considered 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 gOi!soline, be less than that received by the United State of America for
its royalties from the same field.
(v) Natural gas and oil actually used for operating purpoS8$ upon the land and, except as to the
ultimata sale th,ereof, gas or liquid hydrocarbons retumed to the sand for stimulating the
production of oil or secondary recovery purposes shllll be roYlllty free.
(e) DISPOSITION OF ROYAL TV OIL AND GAS. To deliver to the lessor, or to such individual,
flffil or corporation liS the lessor may deslgnllte, 1111 rOYlllty oil, gas, or other kindred hydrocarbons,
free of charge on the premiS8$ where produced, or, at the option of the lessor, and In lieu of said
royalties in kind, the lessee egrees to pay the lessor the field marllet price or value of 1111 royalty
oil, gas, or other kindred hydrocarbons produced and saved.
When the lessor elects to take its royalty oil, gas, or other hydrocarbons In kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantable oil. gas, or other kindred
hydrocarbons, The lessee shall if necessary furnish storage for royalty oil free of charge for Ihirty
(30) days after the end of the calendar month in which the oil is produced, upon the leased
premises, or at the such place as the lessor and the lessee may mutually agree upon, provided,
Ihal the leal88 shall not beheldliable-fo<.JÐa&~¡OAo>f·r..yal1yøil80,stored"....u'au...._' --'~_
beyond his control.
TJ"'ffeë stof'ïg.' ot oil, as herëíiï pmvídëd,Sìíalfapplyonly as long as ilia said oil ¡sthe Property
of the lessor.
(I) MEASUREMENTS OF PRODUCTION. To gauge, measure end CO/Tact for temperature all
production from said lands in conformance with the rules and regulations adopted by the Board of
land Commissioners and raport said production 10 the lessor In accordance therewith.
To keep books, records, and reports pertaining to the production from the land herein leased as
well es those partaining to the production from offset wells operated by the lessee, his operator,
or sub-lessee on other lands. which shall be opened at all times tor the inspection of any duly
authorized agant of the lessor.
To furnish the lessor with original pipe line raports showing the day, month, year, amount,
gravities, and temperatures of ell oil run and with monthly reports showing the month, yeer,
amount, and price of all gas and natural gas gasoline and other products produced and sold from
the land herein leased, and the amount of gas returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. 'unless the time of payment is oth8fWÎse
extended by the Office of Slate lands and Investments to make payment on or before the
twentieth (20th) dey of the calendar month succeeding the month of production and removal and
sale of oil and gas from said land, and to fumish sworn monthly statements therewith showing in
detail the quantity and quality of the production (per well if raquired where practical) from the land
hereby leased, and the quantity and quality of the production (per well v.t1era practical) from ofI'set
wells upon cornering or contiguous land operaled by the lessee, 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 operate effectively all wells necessary to reasonably
offset wells upon and production from edjoining 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 foRn approved by the lessor, of each
well drilled by the lessee on the lands herein leased, showing the strllta and character of the
formetions, weter sands and mineral deposits penetrated by the drill, amount of casing, size and
where set, and such other information as the lessor may raquire which log or copy thereof shall
be fumlshed to the lessor.
To file progress reports. in the form prescribed by the lessor, at the end of each thirty (30) day
period while each well is being drilled.
To file annually, or al such times as the lessor may raqulre, maps showing the development of
the structure and the location of all wells, pipe lines and other works used 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 said
land, and report such other information as may be possessed by the lessee on the wells,
production or operetions of others on lands on the serne geologic structure thet may be of
importance in effecting proper development and operation of the lands herein leased, as may be
called for by the lessor. All logs, maps, and reports shall be submitted in duplicate and theOf!ice
of Slate laí\î s and In~"'tmeiits' may Welve such repõrts as ëonditions mey warrenl
O!PRODUCTION, To operate the wells upon the tand herein leased in e competent and effICient
manner in an endeavor to reco~,!" alltheQil and gas economically possible from said land and to
prevent the under drainage of,the oil and gas thereunder by WIllis operated by the lessee or
others on corr>eringor contiguous lands to those leased herein. All plans or methods for the
þLìrpose of stimulating"f ~óing production on lands herein leased other than those in
common use shall first be presented to the lessor for approval before being put into actuel
·operation. . .'
No prodÚclion egr!lements Jjt(1iting, restricting. prorating, or oth8fWÎse effecting the
naturalproduction froní said 1an<tSÌ1all be entered into by the lessee, nor shall the lessee limit,
restrict, or prorate the ',;atural ProÌluction from said land in any way or in any event, except with
the consent in writing of thelessor first had an obtained.
(k)SUSPENSIOIiI OF OPERATIONS, Should any WIlli drilled upon lands covered by this lease
obtain production of oR, gas. or other hydrocarbons in paying quantities and if the lessee Ì8
unable to establish a satisfectory market for the oil, gas or hydrocarbons produced from said weU,
the lessee may apply for and the lessor may grant permission for the suspension of production
operations until such times as a satisfactory marllet for the product from said well can be
developed. During tha time any such suspension of operations is in effact, the lessee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof provided by (c) ebove, and
this lease shall remain in effect as though oil or gas was being produced from said lands.
(I)DILlGENCE-PREVENTION OF WASTE. To exercise raasonable diligence in drilling.
producing, and operating of wells on the land covered hereby, unless consent to suspend
operations temporarily is granted by the lessor; to cany on all operations hereunder in a good and
workmanlike manner in accordance with approved methods and practice, having due regard for
[m~~mf:~~im~~~
C:c.t~lg
the prevention of waste of oil and gas, or the entranc\l of water to the oil or gas bearing sands or
strata to the destruction or injury of such deposits, the preservation and conservation of the
property for future productive operations and to the health and safety of WorI<men end employees;
to plug securely in an approved manner any well before abandoning it, and not to abandon any
well without permission of the lessor, not to drill any well within two hundred (200) feet of any of
the outer boundaries of the land covered heraby, unless to protect against drainage by wells
drillad on lands adjoining less than 200 feat from the property lines thereof; to conduct all
operations subject to the inspection of the lessor; to carry out at the lessee's expense all
reasonable orders and requirements of the lessor relative to the prevention of waste and
preservation of the property and the health and safety of workmen including the replanting and
reseeding of drilling sites and other ereas disturbed by drilling operations and on failure of tha
lessee so to do the lessor shall have the right, together with other recourse herein provided. to
anter on the property to repair damage or prevent waste at the lessee's expense; to abide by and
conform to valid applicable regulations prescribed to reimburse the owner of the suñace. if other
than the lessor, or lessee of grazing rights thereof for actual damages thereto and injury to
improvements thereon, provided, that the lessee shall not be held responsible for acts of
providance or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due all taxes lawfully
assessed and levied under the laws of the State of Wyoming upon Improvements, oil and gas
produced from the land hereunder, or other rights, property or assets of the lessee, to accord all
workmen and employees complete fraedom of purchase, and to pay all wages 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 any portion of the leased premises, except with the consent in writing
of the lessor first had and obtained.
All overriding royalties to be valid, must have the approval of the Board or by the Office of State
Landa ~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 disapproval of such overriding royaltias
when in its opinion they become excessive and hence are detrimental to the proper deveJopment
of tile leased lands.
(o)DELIVER PREMISES IN CASE OF FORFEITURE, To deliver up the leased premises, with ell
permanent improvements thereon, in good order end condition in case of foñeiture of this lease,
but this shall not be construed \0
prevent the removal, alteration 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 extsting laws or laws hereafter enacted, and in accordance with the rules of the
Board of Land Commissions insofar as the suñace Is not necessary for the use of the lessee in
the conduct of operations hereunder.
(b)The right to lease, sell, or oth8fWÎse dispose of other mineral or subsurface resources not
covered by the lease, in accordence with the applicable laws and the rules of the Board of Lend
Commissioners.
(c)From the operation of this lease, the suñace lands heretofore granted for rights-of-way and
easements and reservas the right to grant such other rights-of-way and easements as provided by
the statutes of the State of Wyoming, es long as such rights-of-way and easements dó not conflict
with the operations for oil and gas on the land herein leased.
(d)The right to ratuse 10 commit the leased lands to a unit plan of developmenl if the Board finds
such action would impair the tessor's reserved right to take its royalty gas in kind and to purchase
all other gas ellocated to the leased lands a provided in Section 3(e)below.
(e)The right to alter or modify the quantity and rate of production to the end that waste may be
eliminated or that production may conform 10 the lessee's faIr share of allowable production under
any system of State or National curtailment and proration authorized by law.
(1)1n addition to its right to take its royalty gas in kind, the lassor reserves the right and option to
purchase all other gas produced for sale or use off the leased lands. This option shall be
exercised only if the Board finds that the lessee has received and is willing to eccept a bona fide
offer trom a purchaser who intends to sell or transport the gas into interstate commerce and thet
one or more intrastate purcha..... (I,e., purchasers who will use, consume, or sell the gas for use
or consumption entirety within the State of Wyoming) are willing and able to purchase the ges
upon terms raasonably comparable to and at least as favorable to the lessee as those offered by
the interstate purchaser. The Board shall waive iIIis option and permit an interstate sale if it finds
that no intrastate purchaser is willing and able to purchase the ges upon terms which are
,--t)4>Olllp8r.a~laasta8-favorabla.Jo 1ha,lassee.~Aoa condition 10 such waiver._
a s~tisfactO/)' egreement may be entered into by which the production of its royelty gas may be
deferred until it can be produced and sold tor consumption and use entirely within th... State of .
Wyoming. ,
Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subjact to the
provisions of Tillll 36, as to State and State School Lands, and Title 11, as to State Loan and
Investments Board Lands, W.S. 1977, to remove any Improvements øwned by lessee within a
reasonable time after the termination of this lease. Lessee egrees that any such improvements
not removed within a reasonable time after termination of this lease shall be disposed of pursuant
to the above statutes.
Section 4, FORFEITURE CLAUSE. The Board shall heve the power and authority to cancel
leases procured by fraud, decei~ or misrepresentetions, or for the use of the lands for unlawful 0(
illegal purposes, or for the violation of the covenants of the lease, upon proper proof thereof, In
the event that the lessee shall default in the peñormance or observance of any of the terms,
covenants, and stipulations hereof, or of the general regulations promulgated by the Board of
Land Commissioners end in force on the date hereof, the lessor shall serve notice of such faim
or default either by personal service 0( 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, then
end in thet event the lessor may, at its option, declare a foñeiture and cancel this leese.
whereupon all rights and privileges, obtained by the lessee hereunder shall terminate and cease
and the lessor may re-enter and take possession of said premises or any part thereof. These
provisions shall not be construed to prevenlthe exercise by lessor any legal or aquitable remedy
which the lessor might olhelwise heve. A waiver of any particular cause or foñeiture shall not
prevent the cancellation and foñeiture of this Jease by eny other cause of foñeiture, or for the
same ceuse occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and
surrendered to lessor as to ell or any legal subdivision of said lands as follows:
(a) If no operations have been conducted under the lease on the land to be relinquished, the
lessee shall file with the State land Board and Stete Loan and Inv!!stment Board, a written
relinquishment or surrender, duly signed and acknowledged and steling therein that no operations
heve been conducted on the land, The relinquishment so filed shall become effective on the date
and hour of receipt thereof In the office of the Diractor or at some later date, if such be so
specified by the lessee therein. If the said relinquishment fails to state thet no operetions have
been conducted, the effactlve date of ralinquishment shall be the date the relinquishment is
approved by the àoard.
(b) If operations heve been conducted under the lease on land proposed to be relinquished, the
Ie~ shall give sixty (60) d~ys notiCe and shall file with the DirectOr a written relinquishment or
surrender duly acknowledged and staling therein that operations have been conducted on the
land, The relinquishment shall not become effactive until the land and the wells thereon shall
have besn placed in conciition acceptable to lessor and shall have been approved by the State Oil
and Gas Supervisor.
AjLr~!!ils_becoming due prior to a surrender or relinquishment becoming effective, shall be
peyable by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become effective there shall be no recourse by Jessee and the lease as to the relinquished lands
may nol be reinsteted.
gt)~'"[ LJH
2
HUG) 9D62
'.
SlN3~US3^NI
ONV Gtfifl 31V1S
~~-_._--..._-----~_-.:...-~