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STATE WYOMING Lease 1f UI-UUlt<"
OIL AND -~O'I:íEASE Parcel# 191 0004-8
Fund Code: CS Q
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:
and EffectJ..ve Januar
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:
73
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NE Section: 29 Township: 23 North Range: 118 West of the 6th P.M.
SE Section: 20 Township: 23 North Range: 118 West of the 6th P.M.
County: Lincoln
Acres: 320.00
$320.00
($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 stat~ons, 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 LESSEE to become
effective on the 2nd day of, February, 2007 A.D.
LESSOR, STATE
Lessee Signature:
OF WYOMING, Acting by and through its
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Address: .,t"t,:¡/ ð~'r7
City: ¡(.://e7(; State: Ú/Y' Zip:
Phone: / -, ?ð7 - bi'£·· Y/J~S'
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RECEIVED 3/8/2007 at 9:20 AM
RECEIVING # 927429
BOOK: 650 PAGE: 488
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
Resource issue: Elk and moose crucial winter range and fossils
This lease is issued sUbject to and conditioned upon lessee's acknowledgement and agrE
1) avoid human activity in elk and moose crucial range from November 15 to April 30;
2) in the alternative, exploration and development activities shall be sUbject to approv¡
consultation with the WGFD regarding alternative practices and/or plans of development which provide similar resource protection and mitigation.
.tor's
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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SJa"'ÑES~EE AG,Q~27429
(a) BONO. To furnish a bond With an approved corporate suraty COIT'f)IIny authorized tolransact
business In the State of Wyoming, or sUCh other surety as may be acceptable to Ihe lesso<, in the
penal sum as required by the current rules of the Slate Board of Land Commiuioners,
condilioned upon the payment of all rentels and royalties eccrulng to the lessor under t~ J terms
hereof, am1 upon the full cOrr()liance of all other terms and conditionS.of this lease and the rules
and regulations relating thereto. ànd also conditioned on the payment of atl damagea 10 the
surface and Improvements thereon where Ihelease covers lands the surface of which h~s been
sold or otherwise leased. Such bond or bonds furnished prior to the development of tne lands
contained in this lease may be increased in such reasonable amounts as the lessor mal decide
upon commencement of drilling operations and after the discovery of oil or gas.
(b)PAYMENTS. To make atl payments accruing hereunder to the Office of State Laods and
Investments, 122 West 25th Street. Cheyenne, Wyoming 82002-0600.
(c)RENT ALS. Prior to the discovery of oil or gas in paying quantities to pay the lassor In
advance. beginning with Ihe effeclive date hereof, an annusl rental of 51.00 per acre or fraction
thereof.
Aller 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 Ihe lease year in which aclual discovery was made, an
annual rental of 52.00 par acre or fraction thereof, unless changed by agreement. Such rental so
paid for anyone year shatl be credlled on the royally for that year.
AMual rentals on all leases shall be payable in advance for the first year and e¡,ch year
thereafter. No notice of rental due shall be sent 10 the lessee. If the rental is not p.ud on or
before the date it becomes due, notice of default will be sent to the lessee, and a penal.., ·Jf $0.50
per acre for lale payment will be assessed.
The lessee is notlegatly obligated to pay either the rental or the penally, but If the rental and
penelly are not paid within Ihirty (30) deys after Ihe notice of default has been received, the lease
will tern'mate automalicatly by operation of law. Terminetlon of the lease shall not relieve the
lessee of any obtigation Incurred under the lease other than the obligation to pay rcntal or
penalty. The tessee &hatl not be entitled to a credit on royalty due for any panalty paid for lale
payments of rental on an operaling lease.
(d)ROYAL TIES. The royalties to be paid by lessee are:
(I) On oil, one ·$ixth of that produced, saved. and sold from said land, the same to be delivered
at th.. 'Neils or to the credit of lessor Into the pipe line to which the wells may be connected.
(ii) (in 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 althe welt of one-sixth of the gas so sold or used, provided that on
gas sotd at the wetls. the royally shall be one-sixth 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 hetium, at such
royalty as shall be rrutualty determined to be fair and reasonabte.
(IV) For royalty purposes on gas and natural gasoline the value shall be as approved by the
lessor, and in the determination of the vatue of natural gasoline the fair cost of extraction shall be
considered as a deductibte item: provided, however, that the allowance for the cosl of extraction
may exceed two-thirds of the amount or value only on approval of the lessor and in no event shall
the price for gas. or natural gasoline, be lesslhan that received by the United State of America for
its royalties 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 slirrulati'1g the
production of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYALTY OtL AND GAS. To deliver to the lessor, or to such Individual,
firm or corporalion as the lessor may designate, all royalty oil, gas, or other kindred hydro~.arbons,
free of charge on the premises where produced, or. at the opllon of the lessor, and in lieu of said
royalties In kind, the lessee agrees to pay the lessor the field market price or value of ail royalty
oil, gas, or other kindred hydrocarbons produced and saved.
When the lessor elects to lake 115 royalty oli, gas, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantable oil, gas, or other kindred
hydrocarbons. The lessee shall if necessary furnish storage for royalty oil free of charge for thirty
(30) days after the end of the calendar month in which the olt Is produced, upon the leased
premises, or at the such place as the lessor and the lessee may mutually agree upon, provided,
that Ihe lessee shall not be held liable for loss or deslruction of royalty oil so stored from causes
beyond his control.
The free storage of oil, as hereon provided, shall apply only as long as the said oli Is the 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 Corrmissioners 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 10 the production from offset wells operated by the lessee, his operator,
or sub-lessee on other lands, which &hall be opened at all limes for the inspection of any duly
authorized agent of the lessor.
To furnish the tessor with origonal pipe line reports showing the day, month, year,amount,
gravities, and temperatures of all oil run and with monthly reports showing the monl~, year,
amount, and price of all gas and natural gas gasoline and other products produced and sold from
Ihe tand herein leased, and the amount of gas returned to the sand.
(g) MONTHL Y PAYMENTS AND STATEMENTS. Unless the time of paymenl 15 otherwise
extended by the Office of State Lands and tnvestments to make payment on or before the
twentieth {20th) day of the calendar month succeeding the month of produclion and removal and
sale oi oil and gas from said land, and to fumish sworn monthty statements 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 welllM1ere practical) from offsel
wells upon comering or conliguous land operated by the lessee, his operator or sub-lessee and
such olher 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 welts upon and production from adjoining lands.
To drill such additional wells at such times or places as are necessary end 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
formalions, water sands and mineral depostts 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 well is being drilled.
To file annually, or al such times as the lessor may require, maps showing the develor-"ent of
the structure and the location of all wells, pipe lines and other works used In conneclion 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 ofthe lands herein leased, a. may be
called for by the lessor . All logs, maps, and reports shall be submitted In duplicate and the Office
of State Lands and tnvestments may waive such reports as conditions may warrant.
OIPRODUCTION. To oparate the wells upon the land herein leased In a competent aM effident
manner In an endeavor to recover all the oil and gas economically possible from said land and to
prevent the under drainage of Ihe oil end gas thereunder by wells operated by the lessee or
others on cornering-or 'contiguous lands to those leased herein. All plans or methods for the
purpose of stirrolaling or Increaslnc production on lands herein leased other than those In
common use shall f,mt be presented to the lessor for approval before being put In'o actual
operation.
No production agreements limiting, restricting, prorating, or otherwise affecHng the
naturalproduclion fr¡¡m said land shall be entered into by the lessee, nor shall the lessee limit,
restrict. or prorate the nalural production from said land in any way or in any event, ex~ept with
Ihe consenlln writing of the tessor first had an obtained.
(k)SUSPENSION OF OPERATIONS. Should any well driUed upon lands covered by 1~lslease
oblain production of oil, gas, or other hydrocarbons in paying quanlilles and if the lessee is
unable to establish a satisfactory market for the oil, gas or hydrocarbons produced from ~id well.
the lessee may apply for and the lessor may grant permission for the suspension of proùuction
operations unlil such times as a satisfactory market for the product from said well can be
developed. During the lime any such suspension of operalions Is In effect, the lessee shall
continue to pay the annual rental of 52.00 per acre or fracllon thereof provided by (c) above, and
Ihis lease shall :'emain In effecl as though 011 or gas was being produced from said lands.
(I)DUGENCE-PREVENTION OF WASTE. To exercise reasonable diligence In drilling,
prodecing, and operaling of wells on the land covered hereby, unless consent to suspand
oparations te/!1lOrarily 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 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, the preservation and conservallon of the
proparty for fulure productive operations and to the health and safety of workmen and erJ1]loyees:
to plug securely In an approved manner any well before abandoning It, and nolto abandon any
well without permiSSion of the lessor, not to drill any weli within two hundred (200) feet of any of
Ihe outer boundaries of the land covered hereby, unles. Blnst drainage by wells
drilled on lands adjoining less than 200 feet from the property lines thereof; to conduct aU
operalions subject to the Inspection of the lessor; to carry out at the lessee's expense all
reasonable orders and requirements of the lessor relalive to the prevenlion of waste and
preservallon of the proparty and the health and safety of workmen including the replanling and
reseeding of drilling sites and other areas disturbed by drilling oparations and on failure of the
lessee 50 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 althe lessee's expense; to abide by and
conform 10 valid applicable feQulalioM prêteribêð to r.imburu Ih. own.r of Ihe sur/ece.:f olher
than the lessor, or lessee of grazing rights thereof for actual damages thereto and injury to
improvements thereon, provided, that the lessee shalt 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 Stata of Wyoming upon improvements, oil and gas
produced from the land hereunder, or other rights, proparty or assets of Ihelessee, 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 sublet any portion of the leased premises, except with the consent in wriling
of the lessor first had and obtained.
AU 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 the Board and will be
recorded with the lease. The Board reserves the right of disapproval of such overriding royalties
when in its opinion they become excessive and henca are detrimental to the proper devetopment
of Ihe leased lands.
(o)DELlVER PREMISES IN CASE OF FORFEITURE. To deUver up the leased premses, with aU
permanent Improvements thereon, in good order and condilion in case of forfeiture of this lease,
but this shall not be construed to
prevent the remowal, alteration or renewal of equipment and improvements in the ordinary
course of operaUons.
Section 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise dispose of the surface of the land embraced within this
lease under existing laws or laws hereafter enacted, and in accordance with the rules of the
Board of Land Corrmlssions 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 špplicable laws and the 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 and easements as provided by
the statutes of the State of Wyomng, as long as such rights-of-way and easements do not connlct
with the operations for oiì and gas on the land herein leased.
(d)The right to refuse to commit the leased lands to a unit plan of development if the Board finds
such action would impair thelesso~s reserved right to take lis royalty 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 quantity and rate of production to the end that waste may be
eliminated or that production may conform to the lessee's fair share of allowabte production under
any system of State or National curtailment and proration authorized by law.
(f)ln addition to its right to take Its royally gas in kind, the lessor reserves the right and option to
purchase all other gas produced for saie or use off the leased lands. This option shall be
exercised only If the Board finds that the lessee has received and Is willing to 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 offered by
the interstate purchaser. The Board shall waive this option and parmlt an interstate sale if II finds
that no Intrastate purchaser is willing and able to purchase the gas upon terms which are
reasonably comparable to and atleasl as favorable to the lessee. As a condition 10 such waiver,
a satisfactory agreement may be entered into by which the production of 115 royally 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 Tille 11, as to State Loan and
Investments Board Lands, W.S. 1977, to remove any Improvements owned by lessee within a
reasonable lime after the termination of this lease. Lessee agrees that any such Improvements
not removed within a reasonable time after termination of this lease shall be disposed of pursuant
10 the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel
leases procured 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 performence or observance of any of the terms,
covenents, and stipulations hereof, or of the general regulations prorrulgated by the Board of
Land Commissioners and In force on the date hereof, the lessor shall serve notice of such failure
or default either by personal service or by certlfled or registered mall 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 the lessor may, at 115 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 legal or equitable remedy
which the lessor mght otherwise have. A waiver of any particular cause or forfeiture shall not
prevent the cancellation and forfellure of this lease by any other cause of forfeiture, or for Ihe
same cause occurring at any other lime.
Seclion 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and
surrendered to lessor as 10 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 Slate Loan and Investment Board, a writlen
relinquishment or surrender, duly signed and acknowledged and staling therein that no operations
have been conducted on the land. The relinquishment 50 flied shall become effective on the date
end hour of receipt thereof In the office of the Director or at some later date, If such be 50
spedfied by the lessee therein. If the said relinquishment falls to state that no operations have
been conducted, the effective date of relinquishment shall be the dale the relinquishment is
approved by the Board.
(b) If operations have been conducted under the lease on land proposed to be rellnquished,the
lessee shall give sixty (60) days nolice and shall file with the Director a written relinquishment or
surrender duly acknowledged and stating therein that operalions 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 relinquishment becoming effective. shell be
payable by lessee unless payment thereof shall 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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STATE OF WYOMING ) O~:)Z7429
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COUNTY OF CAMPBELL )
000490
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Before me on the 2nd day of Februarv ,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 ftee and voluntary act and deed,
and as the ftee and voluntary act of the corporation, for the uses, purposes and
consideration therein set forth. Witness my hand and official seal:
tk~J~~~_Q~
Notary Public
My commission expires: ð I Z~ lL I D 9