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HomeMy WebLinkAbout927430 OIL AND GAs. L,EASE t"'arcel ~ l~U .,;.,EÞ.U " Fund Code: CS 000491 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: 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: If I¿., All Section: 16 Township: 23 North Range: 118 West of the 6th P.M, County: Lincoln 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 "LE~~f'~v.to become effective on the 2nd day of, February, 2007 A.D. LESSOR, STATE OF WYOMING, Acting by and through its h/¿v'''''~,rlC/H/ ,? Lc! ~ Lessee Signature: ~~ ~¿(~~/. ~7~/- By. .t.Ã- / / Address: u?o/ú/ C¡'Þ"-:7 ¿"{/,,/7 City: ¿:;"ß;P; Phone: /~ , ] Cl 7 .. State: tv/, Zip: ?¿;y~ ¡:(t"',é. ,J/J,¡r RECEIVED 3/8/2007 at 9:21 AM RECEIVING # 927430 BOOK: 650 PAGE: 491 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY Resource issue: Elk crucial winter range and fossils "This lease is issued subject to and conditioned upon lessee's acknowledgement and agn 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 representati~e. 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. ~..,~\!tl..L'~;.!' .I.!..:,:iL; ~J:1QJnEsSEEAGREESÜ~274aü 000492 (a) BOND. To fumish a bond With an approved corporate surety company authorized to !,-ansacl business in Ihe Stale 01 Wyoming, or such other surety as may be acceptable to the lessor, in the penal sum as required by the current rules 01 the State Board 01 Land Commissioners. conditioned upon the payment of all rentals and royallies accruing to the lessor under !toe terms heleof, ana upon the full ~f1lJliance of all other terms and conditions of this lease and Ihe rules and regula lions relallng Ihereto. and also conditioned on the payment 01 all damages 10 the surface and Improvements thereon where the lease covers lands the surface 01 which has been sold or othelWlse leased. Such bond or bonds lurnished prior 10 Ihe development 01 Ine lands contained in Ihis lease may be Increased In such reasonable amounls as the lessor may decide upon commencement 01 drilling operallons and aller the discovery 01 011 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 01 011 or gas in paying quanlilies to pay the ';,'ssor In advance, begInning with the effective date hereof, an annual rental of $1.00 per acre or fraction thereol. Aller the discovery of Oil or gas on paying quanlilies to pay the lessor In advance beginning with the first day 01 the lease year succeeding the lease year In which actual discovery was made, an annual' rental 01 $2.00 per acre or Iracllon thereol, unless changed by agreement. Such rental so paId lor anyone year shall be credited on the royally lor that year. Annual rentals on all leases shall be payable in advance lor the first year and each year therealler. No notice 01 rentat due shall be sent to the lessee. II the rental is not paid on or belore the dale it becomes due, nolice 01 delault will be sent to the lessee, and a penalty 01 $0.50 per ar~e for late payment will be assessed. The 'assee is not legally obligated to pay either the rental or the penalty, but il the rental and penally are not paid within thirty (30) days aller the nollce of default has been received, the lease Wllltermnate automallcally by operaUon 01 law. TermlnaUon 01 Ihe lease shall not relieve the lessee of any obligation incurred under the lease other than the obligation to pay rental or penally. Tne lessee shatl not be entitled to a credit on royalty due lor any penalty paid lor tale paymenls 01 rental on an operaling lease. (d)ROYAL TIES. The royalUes to be paId by lessee are: (i) On oil. om!..sixth 01 Ihat produced, saved, and sold Irom 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 Irom said land saved and sold or used off the premises or in the manulacture 01 gasoline or olher products Iherelrom, the ma,ket value at the well 01 one-sixth 01 the gas so sold or used, provided Ihat on gas sold at the wells, the royally shall be one·sixth 01 the amount realized Irom such sale. (Iii) On all olher 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 lair and reasonable. (IV) For royalty purposes on gas and natural gasoline Ihe value shall be as approved by the lessor. and in the determination 01 the value 01 nalural gasoline the lair cosl 01 extracllon s,1all be considered as a deducllble item; provided. however, that the allowance lor Ihe cost 01 e<lraction may exceed lwo-thirds 01 the amount or value only on approval 01 the lessor and In no event shall the price for gas, or natural gasoline. be less than that received by the United Stale 01 Arr.orlca lor ils royalties Irom the same field. (v) Nalural gas and oil actually used lor operating purposes upon the tand and, excepl as to the ullimale sale thereol, gas or liquid hydrocarbons retumed to the sand lor slimulating the production of oil or secondary recovery purposes shall be royalty Iree. (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 hydrcærbons, free of charge on the premses where produced, or. at the option of the lessor, and in lieu 01 said royalties In kind, the lessee agrees to pay the lessor the field market price or value 01 all royalty oii. gas. or other kindred hydrocarbons produced and saved. When the lessor elects to take its royalty oil, gas. or olher hydrocarbons in kind such a;; oil, gas, or other kindred hydrocarbons shall be good merchantable oil, gas, or olher kindred hydrocarbons. The lessee shall il necessary lurnlsh storage lor royalty oillree 01 charge lor thirly (30) days aller the end 01 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 mulually agree upon, provided, Ihat the lessee shall not be held liable lor loss or destruction 01 royalty oil so stored Irom causes beyond his control. The Iree storage 01 oil. as herein provided. shall apply only as long as the said oil is th~ property of Ihe lessor. (f) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct lor tempel"'lure all produclion Irom said lands in conlormance with the rules and regulations adopted by Ihe Goard 01 Land Corrmissioners and report said production to the lessor In accordance therewith. To keep books, records. and reports pertaining to the producllon Irom the land herein leased as well as those pertaining to the production Irom offset wells operated by the lessee, his operator, or sllh·ie¡;see Co! other lands, which shall be opened at all times lor the inspection of any duly authn,ìzed agent of the lessor. To furnish tne lessor with original pipe line reports showing the day, month, year, amount, gravilies, and temperatures 01 all oil run and with monthly reports showing the month. year, amount, and prtce 01 all gas and natural gas gasoline and other products produced and sold lrom the land herein leased, and the amounl of gas retumed to the sand. (g) MONTHLY PAYMENTS AND STATEMENTS. Unless Ihe time 01 payment Is otherwise extended by Ihe Office 01 State Lands and Investments 10 make payment on or belore the twenlieth (20th) day 01 the calendar month succeeding the month 01 produclion and removal and sale of oil and gas Irom saId land, and to lurnish sworn monthly statements therewith showing In detail the quantity and quality of the production (per well il required where practical) Irom the land hereby leased. and the quanlily and quality 01 the production (per well where pracllcal) lrom offset welis upon comerong 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 effectively all wells necessary to reasonably offset wells upon and production Irom adjoining lands. To drill such addItional wells at such times or places as are necessary and essenlial to the proper development and commercial production 01 the oil and gas content 01 said land (ì)LOG OF WELLS AND REPORTS. To keep a log, In the lormapproved by the lessor, of each well drilled by Ihe lessee on the lands herein leased, showing the strata and character ollhe lormations, water sands and n1neral deposits penetrated by the drill, amount 01 casing, size and where set, and such other inlormalion as the lessor may require which log or copy ther',ol shall be lurnished 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 develcpment 01 the structure and Ihe location 01 all wetls, pipe tines and other works used in conneclion with the operahons of the lessee upon said land. To make such other reports pertaining to the production and operations by the lesse(~ on said land, and report such other information as may be possessed by the lessee on the wells, production or operations of olhers on lands on the same geologic structure that may be 01 importance In effecting proper development and operation 01 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. mPRODUCTlON. To operate the wells upon the land herein leased in a competent an J efficient manner in an endeavor to recover all the oil and gas economically possible Irom said land and to prevent the ur.der drainage 01 the oil and gas thereunder by wells operated by the lessee or others on cornering or contiguous tands to those leased herein. All plens or methods lor the purpose 01 slirrulating or increasing production on lands herein leased other than those In COrTYllOn use shall lirst be presentod to the lessor lor approval belore being pul Into actual operation. No production agreements limiting, restricling, prorating, or otherwise affecting the naturalproduchon Irom 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 con!·"nt in ""filing 01 the lessor first had an obtained. (k)S .JSPtNSION OF OPERATIONS. Should any well drilled upon lands covered by this lease obta,-, production Uf oil. gas, or other hydrocarbons in paying quantities and il the lessee is unable to establish a satislactory market lor Ihe oil, gas or hydrocarbons produced lromsaid well, Ihe lessee may apply lor an\! the lessor may grant permission lor the suspension 01 production operations until such times as a satislactory markel lor the product from said well can be developed. During the time any such suspension 01 operations is in effect, the lessee shall conlinue to pay Ihe annual renlal 01 $2.00 per acre or Iraction thereof provided by (c) above, and this lease shall remain in effect as though oil or gas was being produced Irom said lands. (I)DILlGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling, producing, and operating 01 wells on the land covered hereby, unless consent to suspend operations temporarily is granted by the lessor; to caroy on all operallons hereunder In a good and workmanlike manner In accordance with approved methods and practice, having due regard lor the prevention 01 waste 01 011 and gas, or the entrance 01 water to the 011 or gas bearing sands or Slrata to the destruction or injury 01 such deposits, the preservation and conservation 01 the property for future producllve operations and to the health and salely of workmen and employees: to plug securely In an approved manner any well belore abandoning It, and not to abandon any well without permissIon 01 the lessor, not to drill any well within two hundred (200) leet ~r any 01 the "uler boundaries of the land covered hereby, unless 10 i ;t drainage by wells d,iiI,¡d on lands adjoining less than 200 leetlrorn the property lines thereol; to conduct all opera lions subject to the inspection 01 the lessor; to caroy out at Ihe lessee's expense all reasonable orders and requiremenls 01 the lessor reletlve to the prevention of waste and preservation 01 the property and the health and salety of workmen including Ihe replanting and reseeding 01 drilling sites and other areas dislurbed by drilling operations and on lallure 01 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 to valid applicabl9 r9gulalion~ ør9~eribêd 10 rêimburAo tho ownor ollhe sur/ace. "other than the lessor, or tessee 01 grazing righls Ihereol lor actual damages thereto and Injury to Improvements thereon, provided, Ihal the lessee shall not be held responsible lor acls 01 providence or aclions beyond his control. (m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due all taxes lalVlully assessed and levied under the laws 01 the State 01 Wyoming upon Improvements, oil and gas produced Irom the land hereunder, or other rights, property or assets ollhe lessee, to accord alt workmen and employees complete Ireedom 01 purchase, and to pay all wages due workmen and employees In conlormance with the laws 01 Ihe State 01 Wyoming. (n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not to assign this lease or any Interest therein, nor sublet any portion 01 the leased premises. except with the consent In writing 01 the lessor first had and obtained. All overriding royalties to be valid, must have the approval 01 the Board or by the Office 01 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 01 disapproval 01 such overriding royalties when in ils opinion they become excessive and hence are detrimental to the proper development 01 the leased lands. (o)DELIVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all permanent Improvements thereon, in good order and condition in case 01 lorfeiture 01 this lease. but this shall not be construed to prevent the removal, alteration or renewal of equipment and improvements in the ordinary course 01 operations. Section 2. THE LESSOR EXPRESSLY RESERVES: (a) The right to lease sell, or otherwise dispose 01 the suñace 01 Ihe land embraced wilhin this lease under existing laws or laws hereafter enacted, and In accordance with the rules 01 the Board 01 Land Commissions Insolar as the suñace Is not necessary lor the use or the lessee in the conduct 01 operations hereunder. (b)The right 10 lease, sell, or otherwise dispose 01 other minerai or subsuñace resources not covered by the lease, In accordance with ¡he applicable laws and the rules ollhe Board 01 Land Commissioners. ' (c)From the operalion 01 this lease, the suñace lands heretolore granled lor rights·ol-way and easements and reserves the right to grant such other rights-of-way and easements as provided by the statutes 01 the State 01 Wyoming. as long as such rights-ol-way and easements do not conßìct with the operations lor oil and gas on the land hereIn leased. (d)The right to reluse to commit the leased lands to a unit plan of development if the Board finds such action would impair the lessor's reserved right to lake its 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 modily the quantlly and rale 01 production to the end thai waste may be eliminated or that produclion may conlorm to the lessee's lair share 01 allowable production under any system 01 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 righl and option to purchase all other gas produced lor sale or use off the leased lands. This option shall be exercised only il the Board finds that the lessee has received and is willing to accepl a bona fide offer Irom 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 lor use or consumption entirely within the State 01 Wyoming) are willing and able to purchase the gas upon terms reasonably comparable to and at least as lavorable to the lessee as those offered by the interstate purchaser. The Board shall waive this option and permit an interstate sale il it finds that no intrastate purchaser Is willing and able to purchase Ihe gas upon terms which are reasonably comparable to and alleast as lavorable to the lessee. As a condition to such waiver, a salislactory agreement may be entered into by which the produclion 01 its royalty gas may be delerred until it can be produced and sold lor consumption and use entirely within the State 01 Wyoming. Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subject to the provisions 01 Title 36, as to State and Stale School Lands, and Title 11, as 10 Stale Loan and Investments Board Lands, W.S. 1977, to remove any Improvements owned by lessee within a reasonable time aller the termination 01 this lease. Lessee agrees that any such Improvements not removed within a reasonable time after termination 01 Ihls lease shall be disposed of pursuant to the above slatutes. Section 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel leases procured by lraud, deceit, or misrepresentations, or lor the use of tha lands for unlalVlul or illegal purposes, or for the violation of the covenants of the lease. upon proper proof thereol, in the event that the lessee shall delault in the performance or observance 01 any 01 the terms, covenants, and stlpulalions hereol, or of the general regulations promulgated by the Board 01 Land Commissioners and In lorce on the date hereol, the lessor shall serve notlca 01 such lallure or default either by personal service or by certified or registered mall upon the lessee, and" such lailure or delault continues lor a period ollhirty (30) days after the service of such notice, then and in that event the lessor may, at its option, declare a loñeiture 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 01 said premises or any part thereol. These provisions shall not be construed to prevent the exercise by lessor any legal or equlteble ,emedy which the lessor mighl otherwise have. A waiver 01 any particular cause or foñeiture shall not prevent the cancellalion and lorfeiture 01 this lease by any other cause o"orfeilure, or lor the same cause occurring at any other lime. Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and surrendered to lessor as to all or any legal subdivision 01 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 wrilten relinquishment or surrender, duly signed and acknowledged and stating therein that no operabons have been conducted on the land. The relinquishment so filed shall become effecUve on the date and hour 01 receipt thereof In the office 01 the Director or at some later date, " such be so specified by the lessee therein. "the said relinquishment lalls to slele that no operations have been conducted, the effecllve date 01 relinquishment shall be the date the relinquishment Is approved by the Board. (b) II operations have been conducted under the lease on land proposed to be relinquished,the lessee shall give sixty (60) days nolice and shall file with the Director a written relinquishment or surrender duly acknowledged and staling therein that operations have been conducted on the land. The relinquishment shall not become effective unlil 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 effective, shall be payable by lessee unless payment thereol 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. I n lTI.J8 92 933 LGGì "._' :.':: ::1;\ N 1 ,:,. \' j. \~~~ STATE OF WYOMING ) ) ss COUNTY OF CAMPBELL ) O~Z74Jû 000493 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~~~(~~Cl~ Notary Public My commission expires: 6/ z~ I (J) c¡ I t