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HomeMy WebLinkAbout923843 Form Approved by the Board and Effective January 6, 1998 STATE OF WYOMING Lease # 06-00722 OIL AND GAS LEASE Parcel# 599 ' 000531. 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: Tourmaline Exploration Company, LLC Section 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 ~rant 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, ¿~arbon dioxide and helium, which may be produced from the following described land, to wit: \) NESE Section: 15 Township: 20 North Range: 119 West of the 6th P.M. ,;.I County: Lincoln Acres: 40.00 $40.00 ($1.00 per acre or fraction 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) year~ and for so long thereafter as leased substances may be produced from the lands in paying quantities. This lease may also be extended beyond its 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 1s 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, October, 2006 A.D. LESSOR, STATE OF WYOMING, Acting by and through its Board of Land B . i!:~ , ,,_,~~ .*.... . \;"'~" .. .':fiJ;·..··. ":r .. '" ~.., ........... "1 \. ';¡;".. "".. ***Stipulation applies to this lease às~ :10>, applied from October 2006 Parcel List*** Les'ee Siqnature'~ ~ Address: J-9"3ti.-Jo_c..-ð- City:~,~L. State:4J Zip:.Po/~ Phone t .563- ;7/7- 6//-<- :::~:::::::?-:¡;::::;;: I,:;"':~~;J:~~~~:~: RECEIVED 1 0/30/2006 at 11 :52 AM RECEIVING # 923843 BOOK: 638 PAGE: 531 JEANNE WAGNER LINCOLN COUNTY CLERK, 1G:~:;¡:¡~;;:~:m¡:;¡¡¡¡~ER. WY . ~.~~J.!~.!.J. OIL AND GAS TERMS O~~384:J. Section 1. THE LESSEE AGREES: (a) BOND. To furnish a bond with an approvlld cxxporaIe IUI'8ty axnpany authorized to\rwuCI business in the Stale œ Wyoming, or such other surely as may be acceptable to the lessor, in the penal sum as required by the wrrenl rules œ the Stale Board œ land Corrvniasionars, conditioned upon the paymønI œ all ranIaIs and royalties accruing to the lessor I.I1dør the tønna hereof, and upon the full a>rnpüance œ all other terms and conditiona œ this lease and the rules and regulations relaling 1hereIo, and also condiIíoned on the paymant œ all damagaa to the surface and improvemønla _eon where the lease cov"'" lands the surface of which haII--. sold or otherwise leased. Such bond or bonds Iumiahed prior to Ihe devekJpmeot 0I1he lands contained in this lease may be increased in such reasonable amounts as the lessor may decide upon commancement 01 drilling operaüons and after the diacoV8f)l 01 oil or gas. (b)PAYMENTS. To make all paymanta accruing hereunder to the Office 01 Stale lands and Inv8lilmenla, 122 Weal 25th Street, Cheyenna, Wyoming 82002-œoo. (c)RENTAlS. Prior to Ihe dillCOV8f)I 01 oil or gas in paying quanütiIIa to pay the lessor in advance, begiming with the eflectjve date hereof, an annual rental œ $1.00 per acre or fraction _eof. After the discovery 01 oil or gas in paying ~ to pay the lessor in advance beginning with Ihe firal day of the lease y..... sua:eeding the lease year in which actual discovery was made, an annual ranIaI of $2.00 per &all or fraction lhareof, unIeu changad by agr.....m. Such reruI so paid for any 0118 year shall be aedited on the royalty for that year. Annual rentals on all leases shall be payable in advance for the first year and eech year thereafter. No notice œ rental due shall be sent to the Ieaaee. If the rental is not paid on or before the date it becomes due, notice of defeuU will be sent to the Ieaaee, and a penalty 01 $0.50 par acra for late paymant will be ......-. The Ieaaee ia not legally obIigaIad to pay aiIher the rental or the panaIty, but if the rental and penalty are not paid within 1hirty (30) days after the notice œ default has --. received, the Ieasa will tørminatø automatícaIly by operation 01 law. T ~ 01 the lease shall not r8Ü8Ye the Ieaaee of any obligation ir1QJITed I.I1dør Iha 1_ other than Iha obtigation to pay ranlal or penalty. The lea..... shall not be entitled to a aedil on royalty due for any penalty paid for late payments of rental on an operating lease. (d)ROYAlTIES. The royalties to be paid by Ieaaee are: (i) On oil, one-sixlh 01 that produced, aavlld, and sold from said land, the SM'I8 to be deliverlld at Iha _lis or to the aedit of lessor into the pipe Ii"" to which Iha wells may be connactad. (ii) On gas, including casinghead gas or other hydrocarbon aubatanC8a, produced from said land saved and sold or WI8d off the ~ or in the manufacture œ gasoline or other produc:Ia _efrom, the matkeI value at Iha weIJ of one-aixIh 0I1ha gas so sold or WI8d, provided that on gas sold at the wells, the royalty shall be one-aixIh 01 the amount realized from such sale. (iii) On all other hydrocarbons of value and gaseous aubatances and elements produced or 1IXIracIed, including propane, butane, auIphur, nitrogen, C8Ibon dioxide, and heüum, at such royalty ea shall be mutually datermined to be fair and reasonable. (iv) For royalty purposes on gas and natural gasoline the value shall be as approvlld by Iha lessor, and in the datermination 01 the value 01 natural gasoline the fair coat 01 extraction shall be considered as a deductible item; provided, however, thet the allowance for the coat of extraction may axœed Iw<Hhirda œ the amount or value only on approval œ the lessor and in no _ shall the price for gas, or natural gasoline, be less than that received by the United State 01 America for ita royaltiea from the SM'I8 fiaId. (v) Nallsal gas and oil actually WI8d for operating UpOMS upon Iha land In!, axœpt 811 to the ultimate sale thereof, gas or liquid hydrocarbona returned to the sand for stimulaüng the production 01 oil or aecondaty recovary purposes shall be royalty free. (e) DISPOSITION OF ROYAlTY OIL AND GAS. To cIeü_ to the lessor, or to such individual, firm or corporation as the lessor may deaignate, all royalty oil, gas, or oIher kindred~, free 01 charge on the premises _a produced, or, at the option œ the lessor, and in lieu 01 said royalties in kind, Iha Ies_ agrees to pay the lessor the field marlcet price or value of all royalty oil, gas, or _ kindrlld hydroc:arbona produced and aavlld. When the Iessor..- to take ita royalty oil, gas, or other hydrocarbons in kind such 811 oil, gas, or other kindred hydrocarbona shall be good I1'IIII'chanIab oil, gas, or other kindred hydrocarbons. The lessee shall if necasaary furnish storage for royally oil frIIe 01 chargB for Ihir1¥ (30) days after the and of the calendar month in which Ihe oil is produced, upon the I88&8d premises, or at the such place as the lessor and the Iassee may mutually agree upon, provided, that Iha 1_ shall not be haId liable for loss or deatruction œ royalty oil so storlld from cauSN beyond his control. The free storage 01 oil, as herein provided, shall apply only as long as the said oil is the propeI1y of the lessor. . (f) MEASUREMENTS OF PRODUCTION. To gauge, ............ and correct for temperatura all production from said Iand& in conformance wilh the I\JhM and regulations adopted by the Board 01 land Convnissionera and report said production to the lessor in aa:ordance therewith. To keep booka, recorda, and reports pertaining to the production from the land herein leased 811 -II aa those pertaining to the production from offset wells operated by the Ieaaee, hia operator, or aub-Ie..... on _ lands, which shall be opened at all ümes for Ihe inapeclion of any duly authorized agent 01 the lessor. To furnish the lessor with original pipe line I1IpOCIs showing Iha day, month, year, amount, graviüas, and temperaturas 01 all oil run and with monthly repor1s showing the month, year, amount, and price 01 all gas and natural gas gasoline and other products produced and sold from the land herein leased, and Iha amount œ gas rallmed to the sand. (g) MONTHlY PAYMENTS AND STATEMENTS. Unless the lime œ payment is oIherwisa extended by the Office of State Landa and Inv~ to make payment on or befora Iha -.üeth (20th) day 01 the calendar month succeeding the month 01 production and removal and sale of oil and gas from said land, and to furniah sworn monthly IIIatemenIa _ewith showing in datailthe quantity and quality 01 the production (par well if required where practical) from the land heraby leased, and the quantity and quality of Ihe production (par well where practical) from offset wells upon cornering or contiguous land operated by the Ieaaee, his operator or sub-Ieaaee and such _ informaüon as may be called for in the form or report prescribed by lessor. (h) WEU.S TO BE DRIllED. To drill and operata eIIactivaly all wells.-&8I)' to reasonably offset wells upon and production from adjoining lands. To drill such additional wells at such Iinws or places as are necasaary and -.üaI to Ihe proper development and COIm1IICCiaI production 01 the oil and gas content œ said land. (i)LOG OF WEU..S AND REPORTS. To keep a Jog, in the form approved by the lessor, of each _II drilled by the Ieaaee on the lands herein 188&8d, showing the strata and character 0I1ha formations, water sands and mineral daposjts penetrated by the drill, amount of casing, aiza and where set, and such other inf<>Imation as the lessor may require which log or copy thereof shall be furnished to Iha lessor. To file progress reports, in the form prescribed by the lessor, at the end 01 each thirty (30) day period while each _II ia being drilled. To file annually, or at such Iimu as Iha lessor may raquinI, maps showing Ihe developmerot œ the atrucIIJre and the location 01 all wells, pipe linea and otherworl<s WI8d in connection with the operations 01 the Iesaee upon said land. To make such other reports pertaining to the production and operations by the Ieaaee on said land, and report such other informaüon as may be poaaassed by Ihe Ieaaee on the _lis, production or operations 01 oIhenI on lands on the same geologic structure that may be 01 irnporIanca in eIIacting proper development and operaüon 01 the lands herein 188&8d, as may be celled for by the lessor. AlIIoga, maps, and reports shall be submitted in dupücate and the 0IIice of State Lands and Inveatmenls may waive such reports as conditiona may warrant. (j)pRODUCTION. To operate the wells upon the land herein leased in a competent and afticient manner in an endeavor to recover all the oil and gas economically possible from said land and to prevent the under drainage of the oil and gas thereunder by welJs operated by the Ieaaee or oIhen; on cornaring or aniguous lands to those leased herein. All plana or methods for the purpose œ atimuIaIing or increasing production on lands herein leased other than those in corrvnon use shall first be pr-ud to the lessor for approval before being put into actual operation. No production ~ limiting, .-;œng, prorating, or oIherwisa affecting the iIaIuraIprodu : from said land shall be anIared into by the Ieaaee, nor shall the Ieaaee limit, reatrièt, or prorate the natural production from said land in any _y or in any 8VWII, exœpt with the consent in writing of Iha lessor first had an obtained. (k SUSPEHSION OF OPERA TtONS. Should any well drilled upon lands COV«ad by this lease obIain production d oil. gas, or other hydrocartxns in paying ~ and if the Ieaaee ia unable to eatabIiIIh ¡, satiáctory marI<at fer Ihe oil, gas or hydrocarDona proc1¡ced from said well, the IesaeIp may apply for and the lessor may grant permiaaion for the suspenaion 01 production operations until such Iimu lIS a satisfactory market for the product from said well can be developed. Dixing Ihe lime any such SüSpIII1Sion 01 oparations ia in eff8ct, the Ieaaee shall continue to pay the ID1U8I rental œ $2.00 par ac:ra or fraction thereof provided by (c) above, and this lease shall remain in eIr.ct ..though oil or gas _ being produced from said lands. (I)DIUGENCE~REVENTION OF WASTE. To -ase ...........- diligence in drilling, producing, and oparatíng œ wells on the land CXMIC8d heraby, unIau consent to auapand operations temporarily is granted by the Iaaaor; to carry on all opeI1IIIions haraInIer in a good and WOItananIike manner in accordanœ with approved mathods and practice, having due regard fer the prevention 01_ 01 oil and gas, or the .....,. of water to the oil or gas bearing sands or strata to the døatrucIion or ir;Jry œ such depoüs, the rx-vation and c:on..vation 01 the property for future producüve oparations and to Ihe IwaIIh and saI8ty 01 woo1<men and~; to plug "'QJCely in an approved manner any well before abandoning it, and not to abandon any well without permission of the lessor, not to drill any _II within two hundred (200) feet of any 01 1~IIj1íl.I.I\'j\hf,¡j;; ~!~1ti~~r.~Š:ill 000532 the outer boundaries of the land covered hereby, unless to protect against drainage by wells drilled on lands adjoining less than 200 feet from the property lines _eof: to conduct all operations subject to the inspaction 01 the lessor; to caITy out at Ihe Iasaee's 8XparIIIII all reasonable orders and requirements of the leasor relative to the prevention 01 waste and pruwvation 01 the property and Iha health and safely 01 wor1unen including the replanting and reseeding œ drilling silas and other areas distlJfbed by drilling operations and on failure œ the Ieaaee so to do the lessor shall have the right, 1agether with _ racour... herain provided, to enter on the property to repair damage or prevent waste at the Ieaaee's exparv¡e: to abide by and canform to valid applicable regulations presaibed to r&imbue... the owner 01 the surface, if other than Iha Iesaor, or Ieaaee of grazing rights thereof for actual damages thereto and ir;Jry to improvements thereon, provided, that the lessee shall not be held responaible for acta 01 providence or actions beyond his control. (m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when dull all taxes lawfully as_ and levied I.I1dør the taws 01 the State 01 Wyoming upon improvements, oil and gas produced from the land hereunder, or _ rights, property or assets 01 the lessee, to accord all wor1unen and employees complete freedom of purchase, and to pay all wages due worIunen and employees in conformance with Iha laws 0I1ha State of Wyoming. (n)ASSIGNMENTS OF lEASE-PRODUCTION AGREEMENTS. Not to assign this lease or any ., intereal Ihar&in, nor sublet any portion 01 the leased premius, exœpt with the consent in writing 01 the lessor fnt had and obtained. All overriding royalties to be valid, must heve Ihe approval 01 the Board or by the OffICe 01 State Lands and Inv~ when authority to do so has beerI delegated by the Board and will be . racorded with the leasa. The Board ruwveathe right 01 disapproval 01 such overriding royalties when in ita opinion they become excessive and hence are datri_1 to Iha proper davlllopnW1l of the leased lands. (o)DElIVER PREMISES IN CASE OF FORFEITURE. To daliver up the leased prernisæ, with all permanent imprOVemønlalharllOl1, in good order and condition in case of forf8iture 01 this lease, but this shall not be construed to prevent the removal, alteration or r...-al œ equipment and lmproV«fl8f1ls in Iha ordinary course 01 operations. Section 2 THE LESSOR EXPRESSLY RESERVES: (a) The right to lease sell, or otherwisa dispo... of the surface 01 the land ambracad within this ...... I.I1dør existing laws or laws her_er enacted, and in eccordanaI with Iha rules 0I1ha Board 01 land Commissions insofar as the surface ia not ~ for the use of the Ieaaee in Iha conduct 01 operations hereunder. (b)The right to lease, sell, or otherwise dispose of other mineral or subsurface reaourcas not covered by the lease, in accordance with the appIicabIa laws and the rules 01 the Board œ land Commissioners. (c)From the operation 01 this lease, the surface lands heretofore granted fer righta-<Jf-way and easements and reurvealha right to grant such other rights-of-way IWId __ 811 provided by the statutes 01 the State of Wyoming, as long as such righta-d-way and __ do not ctIf1IIicI with the operations for oil and gas on the land herain leased. (d)The right to rafuse to axnmit the leased lands to a unit plan 01 development if the Board find ¡ such action wwId ~the Iasaor's raserved right to taka ita royalty gas in kind and to ~ all other gas allocated to the leased land. a provided in Section 3(e)below. (e)The right to alter or modify the quantity and rata of production to the and that waste may be eliminated or that production may canform to Iha Iasaee's fair share 01 allowable producüon.... any system œ State or National a.r1ai1ment and proration authorized by law. (f)In addition to its right to take ita royalty gas in kind, the 1essor....."..,.1ha right and option to purchase aU other gas produced for sale or use off the leased lands. This option shall be """,cised oniy if the Board foods that the Ie..... has received and is willing to accept a bona fida offer from a purchaser who intends to sell or transport the gas into interstate COfM18Cce and that one or more intrastete purchasers (i.e., purcha...... who will use, consume, or...lllhagasforuse or COI1SUTlpIion entirely within the State of Wyoming) are willing and able to purchase Ihe gas upon terms reaaonebIy a>mparable to and atleest as favorable to the 1_ as _ ofIared by the interstate purchaser. The Board shall waiva this opüon and permit an interstate sale if it find ¡ that no intrastate purchaser is willing and able to purchase Iha gas upon terms which are reasonably a>mparable to and at least as favorable to the 1_. As a condition to such waiver, a aatiaIactory agra.nenI may be entered into by which the production 01 ita royalty gas may be deIamod until it can be produced and sold for COIl5UII1pÜon and use entirely within the State 01 Wyoming. Section 3. APPRAISAl.. OF IMPROVEMENTS The Ieaaee shall have the right subject to the proviaions œ Tille 36, as to Stale and Steta School landa, and Tille 11, as to State Loan and Investments Board lands, W.S. 1977, to remove any impr_ owned by Ieaaee within a reasonable time after Iha Iermination 01 this lease. lessee agrees that any such improvaments not removed within a reasonable lime after terminaüon of this lease shall be disposed 01 pt.nUIII1t to Iha abova _utes. Section 4. FORFEITURE ClAUSE. The Board shall have the power and authority to cancel Ieasas proand by fraud, deceit, or miarepraser1lalions, or for the use œ the lands for I.ßawfuI or illegal purposes, or for the violation œ the covenants 01 the lease, upon proper proof thereof, in the event that the Ieaaee shall default in the performance or observance of any 01 the terms, covanants, and stipulations hereof, or 01 the general regutations promulgated by the Board 01 land Commisaioners and in forca on the date hereof, Iha lessor shall serve notice 01 such fai,," or datauIt ailhar by personal service or by certified or registered mail upon Ihe Ieaaee, and if such failure or default IXIfIIir..- for a period 01 thirty (30) days after the service 01 such notice, than and in that avant Iha lessor may, at its opüon, declare a forfeiture and cancel this lease, _eupon all rights and privileges, obtained by the Ieaaee hereunder shall terminate and C8IIII8 and the lessor may r........ and taka possession 01 said premises or any part lhareof. These provisions shall not be construed to prevent the """,ciae by lessor any legal or equitable I1IIIIedy which the lessor might otherwise heva. A waiver of any partiw ar cause or forfeitura shall not prevent the cancellation and forfeiture 01 this lease by any other cause œ forfeiture, or for the same cause occurring at any other lime. Section 5. RELINQUISHMENT AND SURRENDER. This '- may be relinquished and IIIn8I1dered to lessor as to all or any legal subdivision œ said lands as fD 1owa: (a) If no operations heve --. conducted under the lease on Iha land to be relinquished, Iha Iassea shall fde with the Stata land Board and Stete loan and Inveatmant Board, a writtan relinquishment or surrender, duly signed and acI<nowIedged and Rating therein thai no operations have beerI canducted on the land. The relinquishment so filed shall become atIecIive on Ihe dale and hour 01 recaipt thereof in the office œ the Diractor or at some later date, if such be so IIp8Cífied by Ihe Iassee therein. If the said relinquishment fails 10 state that no operations have been canducted, the ellacüve date 01 relinquishment shall be the date Iha relinquishment ia approvlld by the Board. (b) If operations heve --. canducted I.I1dør the lea... on land proposed to be relinquished, Iha Iassea shall givasixty (60) days notice and shall file with the Diractor a written relinquishment or surrender duly acknowledged and _ng lharein that operations have --. canducted on the land. The relinquishment shall not become affactive until the land and the _lis thereon shall heve --. placed in condition accaptabIe to lessor and shall have beerI approved by Ihe Stata Oil and Gas ",",*"isor. All rentals becoming due prior to a surendar or relinquishment becoming efIacüve, shall be payable by lessee unless paymant thereof shall be waived by lessor. A relinquishment having become effactive thera shall be no recourse by Ieaaee and the lea... as to Iha relinquished lands may not be reinstated. Oh or LJI:J £2 lao 9002 SJNJ :;J. S3^Nl 011, ,.I., . J.!. 'll S !¡¡1;¡im~;;m~;i¡~;~! .. .·)¡¡\1~!j~~~¡~({ t.,' U~;¿38f\:3 000533 .' STIPULA TIONS APPLY TO PARCEL NOS. 599 ! "This lease is issued subject to and conditioned upon lessee's acknowledgment and agreement that, pursuant to Chapter 18, Section 3.(h) of the Rules and Regulations of the Board of Land Commissioners, any discovery of historical. archeological or paleontological deposits on state lands during the course of development shall be reported to the Office of State Lands and Investments by the lessee prior to further disturbance, and operations my only re-commence as authorized by the Director. The Director shall notify the lessee regarding mitigation within five (5) working days after receiving the report."