HomeMy WebLinkAbout926216
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RECEIVED 1/22/2007 at 11 :06 AM
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RECEIVING # 926216
BOOK: 646 I PAGE: 725
JEANNE WAGNER
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LINCOLN COUNTY CLERK, KEMMERER, WY
STATEloF
OIL AND ¿AS
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This ind ntureof lease entered into by and letween the State of Wyoming, acting by and thro gh its
Board of Land Commissioners, as lessor, andT
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James D. ack, Jr.
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Se tion 1. PURPOSE. The lessor, in 9onsideration of the rents and royalties to be p id and
the cove ants and agreements to be kept and ~erformed by lessee, does hereby grant and lease to the
lessee, he exclusive right to drill for, m ne, extract, remove, and dispose of all the 0 I, gas
and asso iated hydrocarbon substances and aseous substances and elements produced the ewith,
includin sulphur, hydrogen sulfide, sulphut dioxide, nitrogen, carbon dioxide and helium which
may be p oduced from the following describe1 land, to wit:
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sectifn 5 Resurvey Township 20 North, Range 120 West th P.M.
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Total Acres I
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ether with the right of ingress an~ egress and the right to use so much of the sur ace of
said s as is necessary to construct a~d maintain thereupon all works, buildings, lants,
waterway, roads, communication lines, pipe ¡lines, reservoirs, tanks, pumping stations, 0 other
faciliti s necessary to the proper conduct ~f operations thereunder.
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Se tion 2. TERM OF LEASE. This leasb shall become effective on the day and year et out
below an shall remain in effect for a prima! term of five (5) years and for so long therea ter as
leased s stances may be produced from the lands in paying quantities. This lease may Iso be
extended beyond its primary term in the asence of production of leased substances as ay be
provided by the statutes of the State of: Wyoming and the regulations of the Board 0 Land
Commissi ners adopted pursuant thereto, pro~Vided' if drilling, completion, testing or re orking
operatio s are being diligently conducted, ither during the primary term or during any ex ens ion
thereof, this lease shall continue in full orce and effect so long as such operations ar being
conducte and so long thereafter as oil or das may be produced in paying quantities. Thi lease
may be r linquished or terminated at an ear~ier date as herein provided.
Se tion 3. If the lessor owns an int1rest in oil and gas in said land less than the
fee sim Ie estate, then the royalties 1nd rentals to be paid lessor shall be
proporti nately.
Se tion 4. Lessee expressly represents that, if an individual, lessee is a citizen
United Sates, or has declared an intention ~o become a citizen, and is over 19 years of age
a corpor tion, is duly qualified to transacd business in Wyoming.
Se tion 5. This lease is issued unde~ the authority conferred by Title 36, W.S. 197
the Stat and School Lands, and Title 11, W.~. 1977 as to Farm Loan lands, and shall be sub
and oper tions by lessee hereunder shall be conducted in compliance with the specific leas
set out the reverse of this lease, and wiöh all applicable state statutory requirements
regulati ns issued thereunder, including thtse providing for: the leasing of State or Fa
Lands f~ oil and gas; the conservation 10f oil and gas; and the regulation of s
transact ons.
Se tion 6. HEIRS AND SUCCESSORS IN INTEREST. It is covenanted and agreed tha each
obligati hereunder shall extend to and be ~inding upon, and every benefit thereof shall i ure to
the heir , executors, administrators, succeslsors of, or assigns of the respective parties ereto.
Se tion 7. SOVEREIGN IMMUNITY. The sþate of Wyoming and the lessor do not waive so ereign
immunity by entering into this lease, and specifically retain immunity and all defenses av ilable
to them s sovereigns pursuant to Wyoming stlatute 1-39-104(a) and all other state laws.
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this lease has beeb executed by lessor and lessee to become effec
December : ,20 06 A.D.
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724
PARCEL NO.
FUND
Form Approv d by the Board
and Effecti e January 6, 1998
WYOMING
LEASE FORM
WITNESSE H:
221. 90 A res
Lots l,2:SE
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County
Lincoln
221. 90
Advance Rental $
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LESSEE:
LE SOR, STATE OF WYOMING,
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Address: 033 N.W. 63rd Street, Suite 200
City: o~~ma City State: Oklahoma
(Zip) 7311~
Telephone (405 ) 848-1944
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Section 1. THE LESSEE AGREES:
(a) BOND. To fumlsh 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 accruing 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 thereto, and also conditioned on the
payment of all damages to the surface and Improvements thereon where the lease covers
lands the surface ofwhlch has been sold or otherwise leased. Such bond or bonds fumlshed
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 oil or gas.
(b)PA YMENTS. To make all payments accruing hereunder to the OffIce of State Lands and
Investments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600.
(c)RENTALS. Prior to the discovery of 011 or gas in paying quantities to pay the lessor in
advance, beginning with the effective date hereof, an annual rental of $1.00 per acre or
fraction thereof.
After the discovery of oil or gas In paying quantities to pay the lessor In advance beginning
with the first day of the lease year succeeding 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 anyone year shall 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 for late payment will be assessed.
The lessee Is not legally obligated to pay either the rental 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 lessee of any obligation Incurred under the lease other than the obligation to pay
rental or penalty. The lessee shall not be entitled to a credit on royalty due for any penalty
paid for late payments of rental on an operating lease.
(d)ROYAL TIES, The royalties to be paid by lessee are:
(I) On oil, one-eighth of that produced, saved, and sold from said land, the same to be
delivered at the wellS or to the credit of lessor 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 premises or In the manufacture of gasoline or other
products therefrom, the market value at the well of one-eighth of the gas so sold or used,
provided that on gas sold at the wells, the royalty shall be one-eighth of the amount realized
from such sale.
(ili) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, Including propane, butane, sulphur, nitrogen, carbon dioxide, and helium, at such
royaity as shall be mutually determined 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 shail the price for gas, or natural gasoline, be less than that received by the United
States of America for its royalties from the same field.
(v) In cases where natural gas is produced and the natural gas gasoline extracted therefrom
only one royalty shall be paid, except in the event the residue or dry gas shall be marketed It
shall then constitute a separate corrmodity and a royalty shall be paid thereon as above
provided.
(vi) Natural gas and oil actually used for operating purposes upon the land and, except as to
the ultimate sale thereof, gas or liquid hydrocarbons retumed to the sand for stimulating the
production of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYALTY OIL AND GAS. To deliver to the lessor, or to such
Individual, firm or corporation as the lessor may designate, all royalty 011, gas, or other kindred
hydrocarbons. free of charge on the premises where produced; or, at the option of the lessor.
and In ileu of said royalties in kind, the lessee agrees to pay the lessor the field market price
or value of all 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
hydrocarbohs. The lessee sl,,,1I if neces.iiry furnish storage for royalty 011 free of charge for
thirty (30) days after the end of the calendar month In which the 011 Is produced, upon the
leased premises, or at the such place as the lessor and the lessee may mutually agree upon,
provided, that the lessee shall not be held liable for loss or destruction of royalty 011 so stored
from causes beyond his control.
The free storage of oil, as herein provided, shall apply only as long as the said oil is the
property of the lessor.
(!) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for temperature all
production from said lands in conformance with the rules and regulations adopted by the
Board of Land Commissioners and report said production to the lessor in accordance
therewith.
To keep books, records, and reports pertaining to the production from the land herein leased
as well as those pertaining to the production from offset wells operated by the lessee, his
operator, or sub-lessee on other lands, which shall be open at ail times for the Inspection by
any duly authorized agent of the lessor.
To fumish the lessor with original pipe line reports showing the day, month, year, amount,
gravlUes, and temperatures of all 011 run and with monthly reports showing the month, year,
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 retumed to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is otherwise
extended by the Office of State Lands and Investments, to make payment on or before the
twentieth (20th) day of the calendar month succeeding the month of production and removal
and sale of oil and gas from said land, and to fumish swom monthly statements therewith
showing In detail the quantity and quality of the production (per well If required where
practical) from the land hereby leased, and the quantity and quality of the production (per well
where practical) from offset wells upon comering or contiguous land operated by the lessee.
his operator or sub-lessee and such other information as may be called for In the form of
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 adjoining lands.
To driil such additional weils 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 lessee on the lands herein leased, showing the strata and character of
the formations, water sands and mineral deposits penetrated by the drill. amount of casing,
size and where set, and such other Information as the lessor may require which log or copy
thereof shall be fumished 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 at such times as the lessor may require, 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 operations of others on lands on the same geologic structure that 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 the
OffIce of State Lands and Investments may waive such reports as conditions may warrant.
O)PRODUCTION. To operate the wells upon the land herein leased in a competent and
efficient manner in an endeavor to recover all the oil and gas economically possible from said
land and to prevent the undue drainage oflhe oil and gas thereunder by wells operated by the
lessee or others on comerlng or contiguous lands to those leased herein. All plans or
methods for the purpose of stimulating or Increasing production on lands herein leased other
than those In corrmon use shall first be presented to the lessor for approval before being put
Into actual operation.
No production agreements limiting, restricting, prorating, or otherwise affecting the natural
production from said land shall be entered Into by the lessee, nor shall the lessee ilmlt,
restrict, or prorate the natural production from said land in any way or in any event, except
with the consent in writing of the lessor first had and obtained,
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by this
lease obtain production of oil, gas, or other hydrocarbons In paying quantities and if the
lessee Is unable to establish a satisfactory market for the oil, gas or hydrocarbons produced
from said well, the lessee may apply for and the lessor may grant permission for the
suspension of production operations until such time as a satisfactory market for the product
from said 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 said lands.
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(I)DILlGENCE-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 granted by the lessor; to carry on all operations hereunder In a good and
workmanlike manner In accordance with approved methods and practice, having due regard for
the prevention of waste of 011 and gas, or the entrance 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 ofworkmen and errployees;
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 hereby, unless to protect against drainage by wells
drilled on lands adjoining less than 200 feet 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 areas disturbed by drilling operations and on failure of the
lessee so to do the lessor shall have the right, together with other recourse herein provided, to
enter 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 surface, 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
providence 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, 011 and gas
produced from the land hereunder, or other rights, property or assets of the lessee, to accord all
workmen and employees complete freedom 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 su~let any poriion 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 lands and
Investments when authority to do SO has been delegated by \he Board and will be recorded with the lease. The Board
reserves the right of disapproval of such overriding royafties when In Its opinion they become excessive and hence 119
detrimental to the proper development of \he leased lands.
(o)DELlVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all permanent
improvements thereon, In good order and condition in case of forfeiture of this lease, but this shall not be construed to
prevent the removal, alteration or renewal of equipment and improvements In the ordinary course of operations.
Section 2. THE lESSOR EXPRESSLY RESERVES:
(a) The right to lease, sell, or otherwise dispose of the surface of \he land embraced within this lease under existing
laws or laws hereafter enacted, and in accordance with the rules of the Board of Land CorrmIssloners insofar as \he
surface is not necessary for the use of the lessee in the conduct of operations hereunder.
(b)The right to lease, sell, or otherwise dispose of other mineral or subsurface resources not covered by the lease, in
accordance with \he applicable laws and the rules of the Board of Land Commissioners,
(c)From the operation of this lease, \he surface lands heretofore granted for rights-of-way and easements and
reserves the right to grant such other rights-of-way and easements as provided by the stáules oIthe S1aIe oIWyoning,
as long as such rig~f-way and easements do not confiict with the operations for oil and gas on the land herein
leased.
(d)The right to refuse to commit the leased lands to a unij plan of development W \he Board finds such action would
Impair the lesso(s reserved right to lake its royalty gas in kind and to purchase all o\het' gas allocated to the leased
lands as provided in Section 2(ijbelow.
(e)The right to alter or modify the quantity and rate of production to \he end that waste may be eliminated or that
production may conform to the lessee's fair share of allowable production under any system of State or National
curtailment and proration authorized by law.
(ijln addition to its right to take its royalty 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 shall be exercised ònly W the Board finds that \he lessee has
received and Is willing to accept a bona fide offer from a purchaser who Intends to sell or transport the gas into
Interstate commerce and that 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 least as favorable to the lessee as those oIIered by the interstate purchaser. The
Board shall waive this option and permit an Interstate sale W ij finds that no Intrastate purchaser Is willing and able to
purchase the gas upon terms which are reasonably comparable to and at least as favorable to the lessee. As a
condition to such waiver, a satisfactory agreement may be entered into by which the production of its royalty gas may
be deferred until ij can be produced and sold for consumption and use entirely within the State of Wyoming.
Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the righ~ subject to the provisions ofTo1Ie 36, as
to Slate and Slate School Lands, and Tille 11, as to State Loan and Investment BoanJ Lands, W.S. 1977, b remove any
improvements owned by lessee within a reasonable time after the IeImInation of this lease. Lessee agrees that any
such improvements not removed within a reasonable time after termination of this lease shal be disposed ofpursuantto
the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel leases procllad by fraud,
deceit, or misrepresentations, or for the use of the lands for unlawful or 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 performance or
observance of any of the terms, covenants, and stipulations hereof, or of the general regulations promulgated by the
Board of land Convnissloners and in force on the date hereof, the lessor shall serve notica of such failure or defaun
either by personal service or by certified or registered mail upon the lessee, and If such failure ordefaultcontinues fora
period of thirty (30) days after the servlca of such notice, then and In that event the lessor may, at its option, declare a
forfeiture and cancel this lease, 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 prevent the exercise by lessor any legai or equitable remedy which the Iessormightotherwlse
have. A waiver of any par1icular cause or forfeiture shall not prevent the cancellation and forfeiture of this lease by any
other cause of forfeiture, or for the same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and surrendered to lessor as to
all 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 State loan and Investment Board, a written relinquishment or surrender, duly signed and
acknowledged and stating therein that no operations have 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 Director or at some later date, if such
be so specified by the lessee therein. If the said relinquishment fails to state that no operations have been conducted,
the effective date of relinquishment shall be the date \he relinquishment is approved by the Board.
(b) If operations have been conducted under the lease on land proposed to be relinquished, the lessee shall ¡;va sixty
(60) days notice and shall file with the Director, a written relinquishment or surrender duly acknowledged and stating
therein that operations have been conducted on the land. The relinquishment shall not become e!fective until the land
and the wellS thereon shall have been placed in condition acceptable to lessor and shaH have been approved by the
State 011 and Gas Supervisor.
All rentals becoming due prforto a surrender or relinquishment becoming effective, shall be payable by lessee unless
payment thereof shaN be waived by lessor. A relinquishment having become effective there shall be no recourse by
lessee and the lease as to the relinquished lands may not be reinstated.
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