HomeMy WebLinkAbout927436
OIL
AND
GA~iì:Œ'ÀS E t-'arcel1f. 1 Its
Fund Code: CS
000509
This indenture of lease entered into by and between the State of Wyoming, acting
and through its Board of Land Commissioners as LESSOR, and the following as LESSEE:
by
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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Lot 15 Section: 19 Resurvey Township: 23 North Range: 117 West of the 6th P.M.
County: Lincoln
Acres: 40.00
$40.00
($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. ~E:SSEE to become
effective on the 2nd day of, February, 2007 A.D. ...
LESSOR, STATE OF WYOMING, Acting by and through its
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Lessee Signature: ~ ¿:¡7 ~~1~ 4ç;..,·:. By
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Address: J.--!c/ "22-£"7 a·./ /
City: ¿{;//fI7ë. State:, .~y Zip: ,Ç¿}/f
Phone: /" Jd 7, 6 7· V/....r,ç-
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.
RECEIVED 3/8/2007 at 9:51 AM
RECEIVING # 927436
BOOK: 650 PAGE: 509
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
J.!.!1..
",...,Z7436
000510
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S~~I". :¡;aiã'~SEË AGREES:
(a'Noó,lIí:ølDmijh a bond with an approved corporate surety company authorized to transact
business In the State of Wyoming, or such other surety as may be acceptable to the lessor, in Ihe
penal sum as reqUIred by Ihe current rules of the State Board of Land Conmissloners,
condItioned upon the payment of all rentals and royallies accruing 10 the lessor under the terms
hereof, and upon lhe full corr¡¡liance of all olher terms and conditions of this lease and II It rules
and regulations relaling thereto. and also condilioned on the payment of all damages to the
surface and Imp,ovements thereon where the lease covers lands the surface of which has been
sold or otherwise leased. Such bond or bonds lumished prior to Ihe development of IhA lands
contained in this lease may be increased In such reasonable amounts as the lessor may decide
upon commencement 01 drilling operations and after the discovery of 011 or gas.
(b)PAYMENTS. To maka all payments accruing hereunder to the Office 01 State Lands and
Investments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600.
(c)RENTALS. pnor to the discovery of oil or gas in paying quanti lies to pay the I~ssor in
advance, beginning with the effective date hereof, an annual rental of $1.00 per acre or fraction
thereof.
After Ihe discovery of oil or gas In paying quanlllies to pay the lessor in advance beginning with
the first day of the lease year succeeding the lease year In which actuat discovery was made, an
annual rental of $2.00 per acre or fraction Ihereof, unless changed by agreement. Such rental so
paId for anyone year shall be credited on Ihe royalty for that year.
Annual rentals on all leases shall be payable in advance for the first year and each year
thereafter. No notice of renlal due shall be sent 10 the lessee. lithe rental is not paid on or
before the date il becomes due. nolice of defaull will be sent to the lessee, and a penall)' of $0.50
per acre for late payment will be assessed.
The lessee Is not legally obligated to pay either Ihe rental or Ihe penally, but II the rental and
penally are not paid within thirty (30) days aller the notice of defaull has been received, the lease
wllltermnale automallcally by operation of law. Termination of the lease shall not relieve the
lessee 01 any obligalion incurred under the lease other Ihan the obllgallon to pay rSf1tal or
penally. The lessee shall not be enlilled to a credit on royally due for any penally paio for late
payments of rental on an operating lease,
(d)ROYAL TIES. The royalties to be paid by lessee are:
(i) On 011, omrSlXlh ollhal produced, saved, and sold from said land, the same to be delivered
at the WC¡¡~ cr I" Ihe credit of lessor into the pipe line 10 which Ihe wells may be connected,
(ii) '.1n gas. including casinghead gas or other hydrocarbon substances, produced from said
land .~ved and sold or used off the premisas or in Ihe manufacture of gasoline or other products
therefrom, the market value at the well of one-siKlh of Ihe gas so sold or used, provided that on
gas sold at the wells, the royally shall be one-slKth of the amount realized from such sale.
(Iii) On all other hydrocarbons of value and gaseous substances and elements produced or
eKtracled, including propane. bulane, sulphur, nItrogen, carbon dioKide, and helium, at such
royally as shall be mutually determined to be fair and reasonable.
(iv) For royally purposes on gas and natural gasoline the value shall be as approved by the
lessor, and in Ihe delerminalion of the value of natural gasoline the fair cosl of eKlraclion shall be
considered as a deductible item; provided. however, that the allowance for Ihe cost 01 eKtraction
may eKceed two·thlfds of the amount or value only on approval of the lessor and In no event shall
Ihe price for gas. or natural gasoline, be less than Ihat received by Ihe United State of America for
its royalties Irom the same field,
(v) Nalural gas and oil actually used for operating purposes upon the land and, eKcept as to the
ullimate sale thereol, gas or liquid hydrocarbons returned to Ihe sand for stimulaling the
production of oil or secondary recovery purposes shall be royally free.
(e) DISPOSITION OF ROYALTY OIL AND GAS. To deliver to the lessor, or to such InQlvidual,
firm or corporalion as the lessor may designate, all royalty oil, gas, or other kindred hydrocarbons,
free of charge on Ihe premisas where produced. or. at the oplion of Ihe lessor, and in lie" of said
royalties In kind, the lessee agrees 10 pay the lessor Ihe field market price or value of all royally
oil. gas, or other kIndred hydrocarbons produced and saved.
When the lessor elects 10 take ,Is royalty oil, gas, or other hydrocarbons in kind such a~ rnl, gas,
or other kindred hydrocarbons shall be good merchanlable 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 monlh In which Ihe 011 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 destruclion of royalty 011 so stored frorr causes
beyond his control.
The free storage 01 oil, as herein provided, shall apply only as long as the said 011 is the property
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for tempef.1ture all
produclion from said tands in conformance with the rules and regulations adopted by IhEl Board of
Land Commssioners and report said production to the lessor in accordance therewith.
To keep books, records, and reports pertaining 10 the produclion from the land herein leased as
well as those pertaining 10 the production from offset wells operaled by the lessee, his cperator,
or sub-lessee on olher lands, which shall be opened at all limes for the Inspection of any duly
authorized agent of the lessor.
To lurnish the lessor with origInal pipe line reports showing the day, month, year, amount,
gravities. and temperatures of all 011 run and with monthly reports showing the month, year,
amount, and price of all gas and natural gas gasoline and other producls produced and ~~Id from
the land herein leased, and the amount of gas relurned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the lime of payment is otherwise
eKtended by the Office of State Lands and Investments to make payment on or before the
twentip.lh (20th) day of the calendar month succeeding the month of production and removal and
sale l" 011 3;1d gas from said land, and to furnish sworn monthly statements therewith showing in
deta;1 ,ne quaf1lity and quality of the produclion (per well if required where practical) from the land
hereby leased, and the quanlity and quality of the produclion (per well where practical) from offset
wells upon cornenng or conr.iguous 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 effecllvely all wells necessary to reasonably
offset wells upon and production from adjoining lands.
To drill such addilional wells at such limes or places as are necessary and essential to the
proper developmenl and commercial production of the oil and gas content of said land.
(i)LOG OF WELLS AND REPORTS. To keep a log, In the form approved by the lessor, of each
well drilled by the lessee on the lands herein leased, showing the strata and character of the
formations, water sands and mneral deposits penetrated by the drill, amount of casing, size and
where sel, and such olher informalion 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 Ihirly (30) day
period while each well Is being drilled.
To file annually, or at such times as the lessor may require, maps showing the development of
the structure and the location of all wells, pipe lines and other works used in connection" ith 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 Ih~ wetls,
production or operations of others on lands on the same geologic structure that rrny be of
importance in effecting proper development and operation of the lands herein leased, as may be
called for by the lessor. All logs, maps, and reports shall be submitted In duplicate and the Office
of State Lands and Investments may waive such reports as conditions may warrant.
OJPRODUCTION. To operate the wells upon the land herein leased In a competent and efficient
manner in an endeavor to recover all the oil and gas economically possible from said la,d and to
prevent the under drainage of the 011 and gas thereunder by wells operated by the lessee or
others on cornering or contiguous lands 10 those leased herein. All plans or methods for the
purpose of slomulaling or increasing produclion on lands herein leased other than Ihose In
corrmon use shall first be presented to the lessor for approval before being put into aclual
opera lion.
No production agreements IImlling, restricling. proraling, or otherwise affecting the
naturalproduclion from said land shall be entered Into by the lessee, nor shall the les$ee limit,
restrict, or prorate the natural produclion from said land In any way or In any event, e.cept with
the consenlln writing of the lessor first had an obtained.
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by Ihis lease
obtain production of oli. gas, or other hydrocarbons in paying quantities and if the lessee is
unable 10 establish a salisfactory market for the oil, gas or hydrocarbons produced from :;aid well,
the lessee may apply for and the lessor may grant permission for the suspension of production
operalions until such tImes as a salisfactory market for the product from said well can be
developed. During the lime any such suspension of operations is in effect, the lessee shall
continue to pay the annual rental of $2.00 per acre or fraclion thereof provided by (c) above, and
this lease shall remaIn in affect as though oil or gas was being produced from said lands.
(I)DIUGi:NGE·?REVENTION OF WASTE. To eKercise reasonable diligence in drilling,
prod~cing, and operaling of wells on the land covered hereby, unless consent to suspend
oper¡;tions telT'4XJf8lily is granted by the lessor; to carry on all operallons hereunder in a good and
workmanlike manner In aCCt'rdance with approved methods and praclice, having due regard lor
the prevention of waste of 011 and gas, or the enlrance of weter to the 011 or gas bearing sands or
slrata to Ihe destruction or injury of such deposits, the preservallon and conservation of the
property for future productive operalions and 10 Ihe health and safely of wor1<men and err Jloyees:
10 plug securely In an approved manner any well before abandoning It, and not to abandon any
well without permission of the lessor, not to drill any wetl within two hundred (200) feet of any of
the outer boundaries of the land covered hereby. IlIlless to st drainage by wells
drilled on lands adjoining less than 200 feet from Ihe property lines thereof; 10 conducl all
operations subject to Ihe inspection of the lessor: to carry out at the lessee's eKpense all
reasonable orders and requirements of the lessor relative to the prevenllon 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 drtlling operations and on failure ollhe
lessee so 10 do the lessor shall have the right, togelher with other recourse herein provided, to
enter on the property to repair damage or prevent waste althe lessee's elCpense; to abide by and
conform 10 valid applicable regulations prescribêd 10 reimburse Ihe owner ollhe surface, ;Iolhar
Ihan the lessor, or lessee of grazing rights thereof for aclual damages therelo and Injury to
Improvements thereon, provided, that the lessee shall not be held responsible lor acts of
providence or acllons beyond his control.
(m)TAXES AND WAGES·FREEDOM OF PURCHASE. To pay, when due all taKes lawfully
assessed and levied under the laws of the State 01 Wyoming upon improvements, oil and gas
produced from the land hereunder, or other rights, property or assels of the lessee, to accord all
workmen and employees complete freedom of purchase, and to pay all wages due workmen and
employees In conlormance with the laws 01 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 prerrlses, eKcept with the consent in writing
of the lessor first had and obtained.
All overriding royalties to be valid, must have the approval of the Board or by the Office of State
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded with the lease. The Board reserves the right of disapproval of such overriding royallies
when in Its opinion they become eKcessive and hence are detrimental to 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 01 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 oloperations.
Section 2. THE LESSOR EXPRESSLY RESERVES;
(a) The right to lease sell, or otherwise'ijispose 01 the surface ollhe land embraced within this
lease under eKlsling laws or laws hereafter enacted, and in accordance with the rules ollhe
Board of Land Commissions insofar as the surface Is not necessary for the use 01 the lessee in
the conducl of operalions hereunder.
(b)The right to lease, sell, or otherwise dispose 01 other minerai or subsurface resources not
covered by the lease, In accordance with Ihe appiicable laws and Ihe rules of Ihe Board of Land
Commissioners.
(c)From the opera lion of Ihis lease, the surf~ce lands heretofore granted lor rights-of-way and
easements and reserves Ihe right to grant such other rights-of-way and easements as provided by
the statutes of Ihe Slate of Wyoming, as long,as such rights-of-way and easements do not conßlct
with the operations for 011 and gas on the land hereIn leased,
(d)The right to refuse to conmitthe leased lands 10 a unit plan of development if Ihe Board finds
such action would impair the lessor's reserved right to take its royalty gas In kind and 10 purchase
all other gas allocated to the leased lands a provided in Section 3(e)below.
(e)The right to alter or modlly the quanllly and rate 01 production 10 the end Ihal wasle may be
eliminated or that production may conform to the lessee's fair share of allowable production under
any system 01 Slate or Nalional 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 10
purchase all other gas produced lor sale or use off the leased lands. This option shall be
eKercised only If Ihe Board finds that Ihe lessee has received and Is willing 10 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 consumplion enlirely within the Slate of Wyoming) are willing and able to purchase the gas
upon terms reasonably comparable to and at least as favorable to Ihe lessee as Ihose offered by
the interstate purchaser. The Board shall waive this option and permit an interslale sale If It finds
Ihat no Inlrastate purchaser Is willing and able to purchase the gas upon lerms which are
reasonably comparable to and at least as favorable to the lessee. As a condllion to such waiver,
a satisfactory agreement may be enlered into by which Ihe production of its royally gas may be
deferred until it can be produced and sold for consu~tion and use entirely within Ihe State of
Wyoming.
Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the righl subject to the
provisions of Tille 36, as to State and Slate School Lands, and Tille 11, as 10 State Loan and
Investments Board Lands, W.S. 1977, to remove any Improvements owned by lessee within a
reasonable time after the lermination of this lease. Lessee agrees that any such i~rovemenls
not removed within a reasonable lime after termination of thIs lease shall be disposed 01 pursuant
to 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 Ihereol, In
the event that the lessee shall default in Ihe performance or observance 01 any 01 the lerms,
covenanls, and stipulations hereof, or 01 the general regulations promulgated by the Board of
Land Conmissioners and in lorce on the date hereol, the lessor shall serve notice 01 such lallure
or default either by personal service or by certified or registered mall upon the lessee, and If such
failure or default conlinues for a period of thirty (30) days after the service of such nolice, then
and in that event the lessor may, al its option, declare a forfeiture and cancel this lease,
whereupon all rights and privileges, obtained by the tessee hereunder shall terminate and cease
and the lessor may reoenter and lake possession of said premises or any part thereof. These
provisions shall not be construed 10 prevent the eKercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any particutar cause or forfeiture shall nol
prevent the cancellation and forfeilure 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 opera lions have been conducted under the lease on Ihe land to be relinquished, the
lessee shall file with Ihe State Land Board and State Loan and Investment Board, a wrilten
rellnquishmenl or surrender, duly signed and acknowledged and stating therein that no operalions
have been conducted on the land, The relinquishment so filed shall become effective on the date
and hour of receipt thereof In the office of the Director or at some later date, If such be so
specified by the lessee therein. If the said relinquishment fails to state that no operations have
been conducted, the effective date 01 relinquishment shall be the date Ihe relinquishment is
approved by the Board.
(b) If operations have been conducted under the lease on land proposed to be relinquished,the
lessee shall give slKty (60) days notice and shall file with the Director a wrillen retinquishmenl or
surrender duly acknowiedged and staling therein that operallons have been conducled on the
land. The relinquishment shall not become effecllve untillhe land and the wells thereon shall
have been placed in condition acceptable to tessor and shall have been approved by the State Oil
and Gas Supervisor.
All rentals becoming due prior to a surrender or relinquishment becoming effeclive, 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 Ihe lease as to the relinquished lands
may not be reinstated.
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STATE OF WYOMING )
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COUNTY OF CAMPBELL )
O~Zt7436
000511
Before me on the 2nd day of February, 2007, John 1. 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 volunu:uy 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:
~k~~~~J
Notary Public·
My commission expires: S /2, V I 0'1_