HomeMy WebLinkAbout927426
and Effective January 6, 1998
STATE UJ:"
OIL AND
WYUM..l~lj _....~.. n- -.
Parcel # 197
Gl\S . LEASE Fund Code: CS
This indenture of lease
and through its Board of Land
000479
entered into by and between the State of Wyoming, acting by
Commissioners as LESSOR, and the following as LESSEE:
Fitzsimmons, 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
grant and lease to the LESSEE, the exclùsive 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:
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County: Lincoln
All Section: 36 Township: 23 North Range: 118 West of the 6th P.M.
Acres: 640.00
$640.00
($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) years 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 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,' LESpEE to become
effective on the 2nd day of, February, 2007 A.D.
LESSOR, STATE OF WYOMING, Acting by and
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Lessee Signature:r.~ ¥-#n~ 4íß/.
Address: ..:7.70/ (?~Þ~.I ¿'/:'e/I /
City: ff',,&/"k State: t¡/Y Zip: ,f'1-7/,?'
Phone: / - JcJ 7 - t£' F~' .- ..7/ J-'fi'
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Resource issue: Elk crucial winter range and fossils
RECEIVED 3/8/2007 at 9:17 AM
RECEIVING # 927426
BOOK: 650 PAGE: 479
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
"This lease is issued subject to and conditioned upon lessee's acknowledgement and agreel
3) avoid human activity in elk crucial winter range from November 15 to April 30; or
4) shall be subject to approval by the Director of the Office of State Lands & Investments, Director approval will be sUbject to consultation with Wyoming Game & Fish
Department to consider alternative practices/plan of development that will provide similar resource protection and mitigation."
Before any road, building, drilling pad construction, building construction or other earth moving activities commence, plans for such activities (including maps) must be submitted for
prior approval by the Office of State Lands & Investments or his designated representative.
The collection of fossils from this land is prohibited. Any fossils found on this iand must be safeguarded by the finder and given to the Office of State Lands & Investments or his
designated representative as soon as practicable after their discovery,
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:Seclion'h THE'IJ:SSEEAð,~i:~:~' ~Iootb 000480
(a) BOND. To fu.nish a bond WIth an approved corporate surety cOl11>8ny authorized to transact
business m the State of Wyomng, or such other surety as may be acceptable 10 the less-x, in Ihe
penal sum as reqUIred by the current rules of the State Board of Land COmmisRl,oners,
conditioned upon the payment 01 all rentals and royallies accruing 10 the lessor under II,~ terms
hereof, on~ upon Ihe full COl1' )liance of all O!her lerms and conditions of Ihis lease and Ihe rules
and regulalions relating thereto, and also conditioned on the payment of all damages to the
surface and Improvements thereon where the lease covers lands the surface of which has been
sold :, othe"~se leased. Such bond or bonds furnished prior to the development of the lands
contalO'ed In ttllS lease may be increased In such reasonable amounts as the lessor may decide
upon ~,)mmencemenl of drilling operallons and aller the discovery of oil or gas.
(b)PAYMENTS. 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 oil or gas in paying quantities to pay the lessor in
advance, begmning 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 10 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
annuat renlal of $2.00 per acre or fracllon thereof, unless changed by agreement. Such rentat so
paid for anyone year shall be credited on the royally for that year.
Annual renlals on all leases shall be payable In advance for the first year and each year
thereafter. No notice of rentat due shall be sent to the lessee. If the rental is not paid on or
before the date it becomes due, notice of defaull will be sent to the lessee, and a penally of $0.50
per acre for late payment will be assessed.
The lessee is not legally obligated to pay either the rental or the penally, but If the renlal and
penally are not paid within thirty (30) days after the notice of defaull has been received, II (' lease
will terminate automatically by operation of law. Terminalion of the lease shati not relieve the
lessee of any obligalion incurred under the lease other than Ihe obligation to pay rental or
penally. The lessee shall not be entilled to a credit on royally due for any penalty paid for late
payments of rental on an operating lease.
(d)ROY AL TIES. The royallies to be paid by lessee are:
(i) On 011, one-sixth of that produced, saved, and sotdfrom 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-sixth Of Ihe gas so sold or used, provided that on
gas sold at the wells, the royalty shall be one-sixth Of Ihe amount realized from such sale.
(ill) 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
royalty as shall be mutually determined to be fair and reasonable.
(iv) For royalty purposes on gas and natural gasoline Ihe 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, thai the allowance for the cost of e,!ractlon
may exceed two-thirds of the amount or value only on approval of the lessor and In no e"ant shall
the price for gas, or natural gasoline, be less than that received by the United Slate Of America for
its royallles from the same field.
(v) Natural gas and oil actually used for operating purposes upon the land and, except as to the
ultimate sale Ihereof, gas or liquid hydrocarbons returned to the sand for stimulaling the
produclion of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYAL TV OIL AND GAS. To deliver to the lessor, or to such Individual,
firm or corporation as Ihe lessor may designate, ati royalty oil, gas, or other kindred hydrocarbons,
free of charge on the premises where produced. or, althe option of the lessor, and In lieu of said
royalti~~ ,~ kind. the lessee agrees to pay the lessor the field market price or value of all royally
oil, gas, or u:ner kmdred hydrocarbons produced and saved.
Wh.'n Ihe lessor elects to take its royally oil, gas, or other hydrocarbons In kind such as oil, gas,
or other kindred hydrocarbons shall be good merchanlable oil, gas, or other kindred
hydrocarbons. The lessee shall if necessary furnish storage for royally oil free of charge for thirty
(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,
that the lessee shall not be held liable for loss or destruction of royalty oil so slored from causes
beyond his control.
The free storage of oil, as herem proyjded, shall apply only as long as Ihe said oil Is Ihe property
of the lessor.
(f) 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 Ihose pertaining to the production from offset wetis operated by the lessee, his operator,
or sub-lessee on other lands, which shall be opened at all limes for the Inspection of any duly
authorized agent of the lessor.
To furnish the tessor with onglnal pipe line reports showing the day, month, year, dlnount,
gravllies, and temperatures of all oil run and with monlhly reports showing the month. year,
amount, and price of all gas and natural gas gasoline and other products produced and sold from
Ihe land herein leased, and the amount of gas returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the lime of payment is otherwise
extended by the Office of State Lands and Investments to make payment on or before the
twenlieth (20th) day of the calendar month succeeding the month of production and removal and
sale of 011 and gas from said land, and to furnish sworn monthly stalements therewith showing in
detail the quantity and quality of the production (per well if required where praclical) from the land
hereby leased, and the quantity and quality of the produclion (per well where praclical) fwm offset
wells upon cornenng or contiguous land operated by the lessee, his operator or sub~essee 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 produclion from adjoining lands.
To drill such addilionsl wells at such limes or places as are necessary and essential to the
proper development and commercial production of the 011 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 slrata and character Of the
formations, water sands and mmeral deposlls 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 furnished 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 _II is being drilled.
To flIe annually, or al such times as the lessor may require. maps showing the development of
Ihe 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 10 the production and operations by the lessee on said
land. anc 'e¡J'.:.-t such other Informalion as may be possessed by the lessee on the wetis,
production 01 opera lions of olhers on lands on the same geologic structure that may be of
impol :ance 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 submllled In duplicate and the Office
of Stale Lands an<llm'8stments may waive such reports as conditions may warrant.
OIPRODUCTlON. To operate the wells upon the land herein leased In a competent and efficient
manner in an endeavor to recover all Ihe oil and gas economically possible from said land and 10
prevent the under drainage of the oil and gas thereunder by wells operated by the lessee or
others on cornering or conliguous lands to those leased herein. All plens or methods for the
purpose of stimulating or Increasing production on lands herein leased other than those In
CO/M'\On use shall first be presented to the lessor for approval before being put into actual
operalion.
No production agreements limiting, restricting. proraling, or otherwise affecting the
naturalproductlon from saId land shall be entered into by the lessee, nor shall the lessee limit,
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 an obtained.
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by Ihl. lease
obtain production of oil, gas, or other hydrocarbons in paying quantities and If the In see is
unable to establish a satisfaclory 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 times as a satisfactory market for the product from said well can be
developed. During the lime any such suspension of operations is in effect, the les$ee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof provided by (c) abJve, and
this lease shatl remain in effect as though oit or gas was being produced from said lands.
(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 terrporarlly 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 rt,gard for
the prevention of waste of oil and gas, or the entrance of water to the 011 or gas bearing sands or
strata to the destruclion or injury of such deposits, the preservation and conservation of the
property for future produclive operations and to the health and safety Of workmen and employees:
to piug securely in an approved manner any well before abandoning It, and nolto abandon any
well without permission of the lessor. not to drill any weti within two hundred (200) feet of any of
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drilled on lands adjoining less than· 200 feel from the property lines thereof; to conduct ell
operations subject to Ihe inspection of Ihe lessor; to carry out at the lessee's expense all
reasonable orders and requirements of the lessor relalive 10 Ihe 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 Ihe
lessee so to do the lessor shati 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 10 valid app icgblê lêculalioM ølM~ribêd 10 rêimbur&ê the owner o/the surlaca, :1 other
than the lessor, or lessee of grazing rights thereof for actual damages thereto and injury to
Improvements thereon, provided, Ihat 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 improvemenls, oil 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 Slate 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 consenl in writing
of the lessor first had and obtained.
All overriding royallies to be valid, must have the approval of the Board or by the Office of State
Lands and Investmenls 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 royalties
when In lis opinion they become excessive and hence are detrimenlalto the proper development
of the 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 foñeiture Of this lease,
butlhls shall not be construed to
prevent the removal. allerallon or renewal of equipment and Improvements In the ordinary
course of operallons.
Section 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise dispose of the suñace of Ihe land embraced within this
lease under exlsllng 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 otherwise dispose of other minerat or subsuñace resources nol
covered by the lease, In accordance wilh the applicable laws and the rules of the Board of Land
Commissioners.
(c)From the operallon of this lease, the surface lands heretofore granted for rights-of-way and
easements and reserves the right to granl such olher rights-of-way and easements as provided by
the statules of the State Of Wyoming, as long as such rights-of-way and easements do nol conflict
with the operations for oil and gas on the land herein leased.
(d)The right to refuse to commit the leased lands to a unll plan of development if the Board finds
such action would Impair the lessor's reserved rlghlto lake lis royally gas in kind and to purchase
all other gas allocated to the leased lands a proVIded in Section 3(e)below.
(e)The right to alter or modify the quanlily and rate of production to the end that waste may be
eliminated or that produclion may conform to the lessee's fair share of allowable production under
any system of State or Nallonal curtailment and prorallon authorized by law.
(f)ln addlllon to Its right to take Its royally gas In kind, the lessor reserves the right and opllon to
purchase all other gas produced for sale or use off the leased lands. this oplion shall be
exercised only If the Board finds that the 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 thai
one or more Intrastate purchasers (I.e., purchasers who will use, consume, or sell the gas for use
or consumpllon enllrely 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 Ihose offered by
the inlerslate purchaser. The Board shall waive this oplion and permit an Interstate sale if It finds
that no intrastale purchaser Is willing and able to purchase the gas upon terms which are
reasonably comparable to and alleast as favorable to the lessee. As a condition to such waiver,
a sallsfactory agreement may be entered Into by which the produclion of lis royally gas may be
deferred unlllll can be produced and sold for consumption and use entirely within the Slate of
Wyoming.
Seclion 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subject to the
provisions of Title 36. as to State and Slate School Lands, and Tille 11, as 10 Slate Loan and
Investments Board Lands, W.S. 1977, to remove any Improvements owned by lessee within a
reasonable time after the termination of Ihis lease. Lessee agrees thai any such Improvements
not removed within a reasonable time aller termination of this lease shall be disposed of pursuant
to the above statutes.
Secllon 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel
leases procured by fraud, decell, or misrepresentations, or for the use of the lends 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 slipulatlons hereof, or of the general regulalions promulgated by the Board of
Land Commissioners and in force on the date hereof, the lessor shall serve notice of such failure
or default ellher by personal service or by certifled 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
and In that event Ihe lessor may, at lis option, declare a forfeiture and cancel this lease,
whereupon all rights and privileges, obtained by the lessee hereunder shalllerminate 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 legal or equllable remedy
which the lessor might otherwise have. A waiver of any particular cause or foñeiture shall nol
prevent the cancellation and foñelture of this lease by any other cause of foñelture, or for the
same cause occurring al any other time.
Secllon 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 wrillen
relinquishment or surrender, duly signed and acknowledged and staling therein that no operallons
have been conducted on Ihe land. The relinquishment so filed shall become effeclive on the date
and hour Of receipt thereof In the office of the Director or at some laler date, If such be so
specified by Ihe lessee therein. If the said relinquishment falls to state that no operations have
been conducted, the effecllve date of relinquishment shall be the dale the relinquishment is
approved by the Board.
(b) If opera lions have been conducted under the lease on land proposed to be relinquished, the
lessee shall give sixty (60) days notice and shall file with the Director a written relinquishment or
surrender duly acknowledged and stating therein thai operations have been conducted on the
tand. The relinquishment shall not become effeclive untIl the land and the wells thereon shall
have been placed in condition acceptable to lessor and shall have been approved by the Slate Oil
and Gas Supervisor.
All rentals becoming due prior to a surrender or relinquishment becoming effecllve, shall be
payable by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become effecllve there shall be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated.
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0004S1
STATE OF WYOMING )09274~¿G
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COUNTY OF CAMPBELL )
Before me on the 2nd day of February. 2007, John L. Kennedy, Manager of
Fitzsimmons, LLC personally appeared in his capacity as known to me to be the
identical person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same as free and voluntary act and deed,
and as the free and voluntary act of the corporation, for the uses, purposes and
consideration therein set forth. Witness my hand and official seal:
C L~tLL~Q)'\.JG
Notary Public
My commission expires: ~ I z,u. f 0'1