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~EASE l"'arCel1fI::l¿
Fund Code: SR
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:
OIL AND
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 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:
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SW Section: 20 Township: 23 North Range: 118 West of the 6th P.M.
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County: Lincoln
Acres: 160.00
$160.00
($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.
LESSOR, STATE OF WYOMING, Acting by and through its
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Lessee signature: //40,,4 þ~t-'?/""'~ /'ij/:
Address: .,,1.,:t!/ .;1';:'/'.//J /~t/r7
City: ¿;:,//e/k Sta_te: t<.-;Ý Zip: ÇJ¿7/.ý7
Phone: /" JcJ7" 6,s7Þ· J /fÝ
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IN WITNESS WHEREOF, this lease has been executed by LESSOR and
effective on the 2nd day of, February, 2007 A.D.
Resource issue: Moose crucial winter range and fossils
RECEIVED 3/8/2007 at 9:19 AM
RECEIVING # 927428
BOOK: 650 PAGE: 485
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
"This lease is issued subject to and conditioned upon lessee's acknowledgement and agreem
3) avoid human activity in moose crucial range from November 15 to April 30; or
4) in the alternative, exploration and development activities shall be subject to approval by the Director of the Office of State Lands and Investments, subject to the Director's
consultation with the WGFD regarding altemative practices and/or plans of development which 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 land 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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Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bond wilh an approved corporate surety company euthorized 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 end royalties accruing to Ihe lessor under the terms
hereof, anó upon Ihe full compliance of all other terms and coMilions of Ihis lease and the rules
and regulations relating thereto. and also conditioned on the payment of all damages to the
surface and ,rrprovements thereon where the lease covers lands the surface or which has been
sold or othefW1se leased. Such bond or bonds fumished prior to the development of the lands
contained In this lease may be Increased In such reasonable amounts as the lessor may decide
upon corrmencement of drilling operalions and after Ihe discovery of 011 or gas.
(b)PAYMENTS. To make all payments accruing hereunder to the Office of State LallQs and
Investments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600.
(c)RENTALS. Prior to the discovery of oil or gas in paying quanlities to pay the lessor in
advance. beginning with the effective dale hereof, an annual rentat of $1.00 per acre or fraction
Ihereof.
After the discovery of oil or gas in paying quanlitles 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 er.ch 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 penally of $0.50
per acre for late payment will be assessed.
The lessee IS nOllegally obligated 10 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 termnate automatically by operallon of law. Terminetlon of the lease shall not relieve the
lessee of any obligation incurred uhder the lease other than the obllgalion to pay rental or
penalty. The lessee shall not be en /IIed to a credit on royalty due for any penalty paid for late
payments of rental on en operating lease.
(d)ROYAL TIES. The royatties to b~ paid by lessee are:
(i) On oil, one-sixth of that produCl d, saved, and sold from said land, the same to be ~ellvered
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 the gas so sold or used, provided that on
gas sold at the wells, the royally shall be one-sixth of the amount realized from such sale.
(iii) On all other hydrocarbons of value and gaseous substances and elements produced or
extrar!ed, including propane, bulane, sulphur, nitrogen, carbon dioxide, and helium, at such
royal!y 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 ilem; provided, however, that the allowance for the cost of extraclion
may exceed lwo-thirds of the amount or value only on approval of the lessor and In no event shall
the price for gas, or natural gasoline, be less than that received by the United State of America for
ils royallies from the same field.
(v) Natural gas and oil actually used for opera ling purposes upon the land and, except as to the
ullimate sale thereof, gas or liquid hydrocarbons returned to the sand for stimulating the
production of 011 or secondary recovery purposes shall be royally free.
(e) DISPOSITION OF ROYAL TV OIL AND GAS. To deliver to the lessor, or to such individual,
firm or corporation as the lessor may designate, all royalty oil, gas, or other kindred hydrocarbons,
free 01 charge on the premises where produced, or, at the option of the lessor, and in lieu of said
royalties in kind, the lessee agrees to pay Ihe lessor the field market price or value of all royally
oil. gas. or olher kindred hydrocarbons produced and saved.
When the lessor elects to take its royally 011, gas, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantable 011, gas, or other ','ndred
hydrocarbons. The lessee shall if necessary furnish storage for royalty oil 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 royally oil so stored frol'l' causes
beyond his control.
The free storage of oil, as herem provided, shall apply only as long as the said 011 Is the property
01 the lessor.
(f) MEASUREMENTS OF PRODUCT tON. To gauge, measure and correct for temper"ture all
production Irom said lands In conformance with the rules and regulations adopted by the Board of
Land Conrnissloners 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 produclion from offsel wells operated by Ihe lessee, his operator,
or sub-lessee on other lands, which shall be opened at all times for the Inspeclion of uny duly
authorized agent of the lessor.
To furnish the lessor with orl¡¡mal pipe line reports showing the day, month, year, amount,
gravities, and temperatures of all oil run and wilh monthly reports showing the month, year,
amount. and price of all gas and natural gas gasotine and olher products produced and .old 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 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 produclion and removal and
sale of oil and gas from said land, and to furnish sworn monthly statements therewith showing in
detail the quantity and quallly of the produclion (per well if required where practical) from ;!,e land
hereby leased. and the quanlity and qualily of the production (per well where practical) from offset
wells upon cornenng or contiguous land operated 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 effectivety all wells necessary to reasonably
offset wells upon and production from adjoining lands.
To llrill such additional wells at such limes or places as are necessary and essenlial to Ihe
proper development and commercial producllon of the oil and gas content of said land.
(i)LOG OF WELLS AND RE:PORTS. 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 characler of Ihe
formations, water sands and mneral deposils penetrated by the drill, amount of casing, size and
where set, and such other Information as the lessor may require which tog 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
penod while each well is being drilled.
To file annually, or at such limes as the lessor may require, maps showing the development 01
the structure and the location of all wells, pipe lines and other works used in connection wilh the
opera lions 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 m¡¡y be of
importance in effecting proper developmenl and operation of the lands herein leased, ar. may be
called for by the lessor. All logs, ""'ps, and reports shall be submitled In duplicate and tilt, Office
of State Lands and Inveslments may waive such reports as conditions may warrant.
OJPRODUCTION. To operate the wells upon the land herein leased In a competent and effident
manner in an endeavor to recover all the 011 and gas economically possibte from said lan'.1 and to
prevent the under drainage of the 011 and gas thereunder by wells operated by the lessee or
othelS on cornenng or conliguous lands to those leased herein. All plans or methoos for the
purpose of stirrolallng or Increasing production on lands herein leased other than those In
cOnYnOn use shall first be presented to the lessor for approval before being put IntQ actual
operation,
No production agreements limiting, restiicting, prorating, or otherwise affecllng the
naturalproduclion 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'n writing of Ihe lessor firsl had an obtained,
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by this lease
oblain produclion of 011, gas, or olher hydrocarbons in paying quantities and If the lessee is
unable to establish a satisfactory markel for Ihe oil, gas or hydrocarbons produced from said well,
the lessee may apply for and the lessor may grant permission for the suspension of produclion
opera lions until such limes as a salisfactory market for the product from said we,l can be
developed. During the time any such suspension of operalions Is In effect, the lessee shall
conllnue to pay the annual renlal of $2.00 per acre or fraction thereof provided by (c) above, and
this lease shall remain in effect as though 011 or gas was being produced from said lands.
(I)DILlGENCE-PREVENTlON OF WASTE. To exercise reasonable diligence In drilling,
producing, and operallng 01 wells on the land covered hereby, unless consent to ~uspend
operalions tefT4X)rarily is granted by the lessor; to carry on all operations hereunder In a good and
workmanlike manner In accordance with approved melhods and praclice, having due regard 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 destruction or injury of such deposits, Ihe preservation and conservation of the
propE>ny 10' future produclive operalions and to the heallh and safety of workmen and employees:
to plu(1 securely in an approved manner any well before abandoning II, and not to abandon any
well ,,¡thoul permsslon of Ihe lessor, not to drill any well within Iwo hundred (200) feet of any of
the outer boundaries of Ihe land covered hereby, unless to 5t drainage by wells
drilled on lands adjoining less than 200 feel from Itle 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 wasle and
preservation of the property and the health and safety of workmen indudlng the replanting and
reseeding of drilling siles and other areas disturbed by drilling operalions and on failure of the
lessee so to do the lessor shall have the right, together with other recourse herein provided, 10
enter on the property to repair damage or prevent waste at the lessee's expense; to abide by and
conform 10 valid applicabla raQulalions øraseribêd 10 /AimburAA Ih. own., or Ihe sur/aca. :1 olher
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, oil and gas
produced from the land hereunder, or other rights, property or assets of the lessee, 10 accord all
workmen and employees corrplele 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 10 assign this lease or any
interest therein, nor sublet any portion of the leased premises, except with the consent in wriling
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 Stale
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded with the lease. The Board reserves the righl of disapproval of such overriding royalties
when in its opinion they become excessive and hence are detrimentelto the proper devetopment
of Ihe leased lands.
(o)DELlVER PREMISES IN CASE OF FORFEITURE. To detiver up the leased premises,.,,;th all
permanenllmprovements 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 01 the surface of the land embraced within this
lease under existing laws or laws hereafter enacted, and In accordance with the rules of the
Board of Land Corm1issions Insofar as the 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 the applicable laws and Ihe rules of the Board of Land
Commissioners.
(c)From the operation of this lease, the surface lands heretofore granted for rights-of-way and
easements and reserves the right to grant such other rights-of-way end easements as provided by
the statutes of the State of Wyoming, as long as such rights-of-way and easements do not conflict
with the opera lions for oil and gas on the land herein leased.
(d)The rlghlto refuse to commil the leased lands to a unit plan of developmenl if the Board finds
such action would impair the lesso~s reserved right to take tis 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 quanllly and rate of production to the end that waste may be
eliminated or that production may conform to the lessee's fair share of allowable produclion under
any system of State or National curtailment and proration authorized by law.
(f)ln addition to its right to take lis royalty gas in kind, the lessor reserves the right and oplion 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 recetved 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 10 and at least as favorable to the lessee as those offered by
the interstate purchaser. The Board shall waive this option and permil an interstate sale if it finds
that no intrastate 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 salisfactory agreement may be entered Into by which the production of Its royalty gas may be
deferred until it 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 right subject to the
provisions of Title 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 owned by lessee within a
reasonable time aller the termination of this iease. Lessee agrees that any such irrprovements
not removed within a reasonable time after termination of this lease shall be disposed of pursuant
to the above stalutes.
Section 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel
leases procured by fraud, deceit, or misrepresentalions, 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 slipulatlons hereof, or of the general regulations prorrolgated by the Board of
Land Commissioners and In force on the date hereof, the tessor shall serve notice of such failure
or default either by personal service or by certified or registered mall upon the lessee, and if such
failure or defaull continues for a period of thirty (30) days aller the service of such notice, than
and in that event the lessor may, al lis option, declare a forfeiture and cancel this lease,
whereupon all rights and privileges, obtained by the lessee hereunder shall terminale 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 Ihe exercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any particular 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.
Seclion 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 Stale Land Board and State Loan and Investmenl Board, a wrillen
relinquishment or surrender, duly signed and acknowfedged and staling 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 slate that no operations have
been conducted, the effective date of relinquishment shall be the date the relinquishment Is
approved by tha Board.
(b) If operations have been conducted under Ihe lease on land proposed 10 be relinquished, the
lessee shall give sixty (60) days notice and shall file with the Director a wrilten relinquishment or
surrender duly acknowfedged and stating therein that operations have been conducted on the
land. The relinquishment shall not become effective until the land and the wells thereon shall
have been placed in condition acceptable to lessor and shall have been approved by the State Oil
and Gas Supervisor.
All rentals becoming due prior to a surrender or rellnqulshmenl becoming effeclive, shall be
payable by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become effeclive there shati be no recourse by lessee and the lease as 10 the relinquished lands
may not be reinstated.
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STATE OF WYOMING )
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COUNTY OF CAMPBELL )
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000487
Before me on the 2nd day of FebruarY. 2Q07, 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:
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Notary Public
My commission expires: 5/ Z- 4/ ð.,