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HomeMy WebLinkAbout928482 I,· '. . ~ .' Lease ~ U {-UU1 o~ Parcel.# 1 q6 Fund Code: SR 000661 and Effective JahuaC} STATE r- -naMING OIL AND GAS LEASE This indenture of lease entered into by a¿d b~t~een the State of Wyoming, acting by and through its Board of Land Commissioners as LESSOR, and the following as LESSEE: Craig Settle 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: SENE:NWNW Section: 11 Resurvey Township: 25 North Range: 115 West of the 6th P.M. County: Lincoln Acres: 80.00 $80.00 ($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 LESSEE to become effective on the 2nd day of, February, 2007 A.D. LESSOR, STATE OF WY~NG Acti~~d through its Lessee Signature, )".'(?r;; ~ Address: 5891 ~. h)\\-(Y(~ ".Jav City: (,ceenWCút1 v'~State: CO Zip: t~\II- 31FI Phone: '~O~·- 903-CHcr)\ Resource issue: Elk crucial winter range ,1.<.:.;. 1, ~\~:' ',. "This lease is issued subject to and conditioned upon lessee's acknowledgement and agreement that any exploration and development activities undertaken shall: , .,:. return recorded document to: Burnett Oil Company - Land Dept. Burnett Plaza - Suite 1500 801 Cherry St. - Unit #9 Fort Worth TX 76102-6881 1) avoid human activity in elk crucial winter range from November 15 to April 30; or 2) 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.' RECEIVED 4/17/2007 at 9:12 AM RECEIVING # 928482 BOOK: 654 PAGE: 661 JEANNE WAGNER I INr.()( N COUNTY CLERK. KEMMERER, WY ^,,"'2 -')~ ",J.J I ~ QJ1 AND GAS TE 0928482 Section 1. THE lliS6EE AGREES: nn~ (a) BOND. To lurnish a bOnd WIth an approved corporale surety c~ I business ,n the Stale 01 Wyomng, or such olher surety as may be acceptable to the lessor, In e penal sum as required by the curranl rules 01 the Slale Board 01 Land Commissioners, condllioned upon Ihe peymenl of all rentals and royallles accruing to Ihe lessor under the terms hereof, and upon the full COfI1)liance of all olher terms and conditions of this lease and II' r rules and regulations relating therelo, and also conditioned on the peyment 01 all damage~ 10 Ihe surface and J~ovements Ihereon where Ihe lease covers lands the surface 01 which hos been sold or otherwise leased. Such bond or bonds fumlshed prior 10 the developmenl ollne lands contained in this lease may be increased In such reasonable amounls as the lessor mal' decide upon coomencement of drilling operallons and aller the discovery of ollar gas, (b)PAYMENTS. To make all peyments accruing hereunder to the Office of Slale Lands and Investmenls, 122 Wesl 25th Street. Cheyenne, Wyomng 82002.0600. (c)RENTALS. Prior to the discovery of oil or gas in paying quanlllles to pay Ihe II-ssor In advance, beginning with the effective dale hereof, an annual rental of $1.00 per acre or fraction thereof. After the discovery of 011 or gas In paying quanlllies to pay the lessor In advance beginning with the flrsl day of the lease year succeeding Ihe lease year In which actual discovery was made, an annual rental 01 $2.00 per acre or fraction thereol, unless changed by agreement. Such rental so paid for anyone year shall be credited on the royalty lor that year. Annual rentals on all leases shall be payable in advance for the first year and each year therealler. No notice of rental due shall be sent to the lessee. lIthe rental is not p.,ld on or belore the date it becomes due, notice of delaull will be sent to the lessee, and a penall} of $0.50 per acre for lale payment will be assessed. The lessee Is nollegally obtigated 10 pey eilher the rental or the penally, but lIthe rental and penalty are nol paid within Ihirty (30) days after Ihe notice of delault has been received, the lease will termnate aulomaticallyby operallon of law. Termnatlon of Ihe lease shall nol rel:eve the lessee 01 eny obligation incurred under the lease other Ihan the obligation to pay rental or penalty. The lessee shall not be entitled to a credit on royally due lor any penally pak~ ior lale paymenls of rental on an operating lease. (d)ROYAL TIES. The royalties to be peld by lessee are: (I) On oil, one-Sixth of lhal produced, saved, and sotd from said land, the same to be delivered at Ihe 'N~!!S or t<:> the credit of lessor Into Ihe pipe line to which the wells may be connected. (il)')n g<!~, Including casinghead gas or olher hydrocarbon substances, produced tram said land ,.¡ ved and sold or used off the premises or In the r¡\8nulacture 01 gasoline or olher products therefrom, Ihe market value atlhe well of one-sixth o(thë gal,So sold or used, provided that on gas sotd at the wells, Ihe rO)olly shall be one-Sixth of Ihe amount realized from such sale. (ili) On all olher hydrocarbons of value and gaseous substances and elemenls, produced or extracted, including propane, butane, s~lphur, nitrogen, carbon dioxide, and helium, at such royally as shall be mutually delerminedlo be fair and reasonable. , (IV) For royally purposes on gas and natural gasoline the value shall be as approvèd by Ihe ' lessor, and in the delermnatlon of Ihe value of natural gasoline Ihe fair cost Qf extraction shall be considereclas a deductible item; provided, however, that the allowance for the cost of extraction may exceed tWO-lhirds of the amount or value only on approval 01 the lessor and In no ellenl shall Ihe price lor gas, or netural gasoline, be less than that received by the Unlled State of America for lis royalties from Ihe same field. (v) Natural gas and oil actually used for operating purposes upon Ihe land and, except as to the ultimate sele thereol, gas or liquid hydrocarbons retumed 10 the sand for stimulating the production of oil or secondary recovery purposes shall be royally free, (e) DISPOSITION OF ROYAL TV OIL AND GAS, To deliver to the lessor, or to such ind'vidual, firm or corporation as the lessor may designate, all royally 011, gas, or other kindred hydro..E.rbons, free of charge on Ihe pramlses where produced, or, at Ihe option of the lessor, and hi lieu of said royalties in kind, the lessee agrees to pay Ihe lessor the field market price or value of ail royalty 011, gas, or other kindred hydrocarbons produced and saved, When the lessor elects to take lis royally oil, gas, or other hydrocarbons In kind such a" oil, gas, or other klnd,ad hydrocarbons shall be good merchanlable all, gas, or olher kindred hydrocarbons. The lessee shall il necessary furnish slorage lor royally 011 free of chargE' for thirty (30) days alter the end 01 the calendar rronth in which Ihe 01115 produced, upon Ih.. leased premises, or at the such place as the lessor and the lessee may mutually agree upon, pfovided, thatlhe lessee shell not be held liable for loss or destruction of royally 011 so stored from causes beyond his conlrol. The free storage 01 oil, as herein provided, shall apply only as long as the said ollis Ihe property of the lessor. (I) MEASUREMENTS OF PRODUCTION, To gauge, meesure and correct for temperature all production from said lands In conformance with the rules and regutatlons adopled by the BOIIrd 01 Land Commissioners end report said production 10 the lessor In accordance therewith. To keep books, records, and reports pertaining tn the production from the land her~in lð8sed as well as those pertaining to the production lrom offsel wells operated by the lessee, his o.>perator, or sub-lessee on olher lands, which shall be opened al all limes for Ihe inspection of ¡my duly authorized agenl of the lessor. To furnish Ihe lessor with original pipe line reports showing the day, rronth, year, arrount, gravities, and temperalures of all 011 run and with monthly reports showing the monlh, year, amount. and price of all gas and nalural gas gasoline and other products produced and ~,( Id from the land herein leased, and the amounl of gas retumed to the sand, (g) MONTHLY PAYMENTS AND ST A TEI4ENTS. Unless the time of payment Is otherwise exlended by Ihe Office 01 Slale Lands and Investments 10 make payment on or before the twentieth (20Ih) day 01 the calender rronth succeeding Ihe rronth of production and removal and sale ('I oil ~n~ !:~s Irom said land, and to furnish sworn rronthly statements therewilh showing In ,detai' ;he qua"tlly and quality 01 the production (per well if required where practical) Irom the land hereLy leased, and tne quantity and quality of the production (per well where practical) from offset wells upon comenng or contiguous land operated by the lessee, his operator or sub-lessee and such other inlormallon as m;¡y 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 essential to the proper development and commercial production 01 the oil and gas conlenl 01 said land, (I)LOG OF WELLS AND REPORTS. To keep a log, In the form approved by Ihe lessor, of each well drilled by the lessee on the lands herein leesed, showing Ihe strala and character of the formations, water sands and mlnerat deposlls penetrated by the drill, arrounl 01 casing, size and where set, and such Olher Information as the lessor may require which log or copy thereof shall be fumlshed to the lessor. To me progress reports, In the lorm prescribed by the lessor, al the end 01 each thirty (30) day period while each well is being drilled. To file annually, or al such times as Ihe lessor may require, maps showing the development 01 Ihe struclure and the location 01 all wells, pipe lines and other works used In connection 11th the operations of the lessee u :\OO said land, To make such other reports pertaining to the production and operations by Ihe lesseu on said land, end report such olher Information as may be possessed by the lessee on Ihe wetls, production or operations of others on lands on the same geologic structure thaI rr.f<y be of Importance In effecling proper devetopmenl and operation ollhe lands herein leased, a~ may be called for by Ihe lessor. All togs, maps, and reports shall be sub.,..Ued In duplicate and the Office of State Lands and Investments may waive such reports as conditions may warrant. O)PRODUCTION. To operale Ihe wells upon the land herein leased In a competent ann effident manner in an endeavor to recover all the oil and gas econo""cally possible from said land and to prevent the under drainage 01 the 011 and gas thereunder by wells operated by the I..ssee or olhers on cornering or contiguous lands to.lhose leased herein. All plans or methoos for the purpose of stimulating 'or increasing production on lands herein leased other than Ihose In common use shatl first be presenlad to Ihe lessor lor approval before being pul Into aclual operation, No production agreements tI.,..tlng, restricting, prorating, or otherwise affecting the naluralproduction from said land shall be enlered Into by the lessee, nor shall the lessee limit, reslrict, or prorate the natural production lrom said land in any way or In any evenl, e.:,ept with the consenl,n writing of lhe lessor flrsl had an obtained. {k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by. Ì1IS'lease oblaln production of aU, gas, or other hydrocarbons In paying quanlitles and If the Iltssee 'is unable 10 eslablish a salisfaclory market for the all, gas or hydrocarbons produced from !;Sid well, the lessee may apply for and Ihe lessor may gran I permission for the suspension or production operations unlil such times as a satisfactory markel lor the producl Irom said well J;an be developed. During Ihe lime any such sur pension of operations Is in effect, Ihe lessee shall continue to pey the annual renlal of $2.00 per acre or fraction thereof provided by (c) above, and this lease shall remain in øffeel as though oil or gas was being produced from said lands. (I)DILI/1ENCE-PREVENTlON OF WASTE. To exercise reasonable diligence In drilling, prod" :ing, ar¡d operating of wells on the land covered hereby, unless consent to suspend ope",' 'ons t~rUy is granteJ by the lessor; to carry on all operations hereunder in a good end workmanlike manner in accordance with approved melhods and practice, having due regard for the prevention 01 waste of 01, and gas, or the enlrance of waler 10 Ihe 011 or gas bearing sands or strata to the destruction or Injury of súch deposlls, Ihe preseMlion and conservalion of the property lor fulure productive operations and to the heellh and safely of workmen and errployees; 10 plug securely In an epproved manner any well before abandoning it, and not to abandon any well wilhout permsslon 01 the lessor, not to drill any well wilhln two hundred (200) feet of any 01 '.", ,'--" the outer boundaries of Ihe land covered hereby, unless, ~alnsl drainage by wells drilled on lands adjoining less Ihan 200 feet from the property lines thereof; 10 conducl all opera lions sUbJecl to the Inspeelion of the lessor; to carry out et the lessee's expense all reasonable orders and requirements of the lessor relative to Ihe prevention of waite and preservation of Ihe property and the heallh and safety of workmen indudlng Ihe replanting and reseeding of drilling sites and other areas disturbed by drilling operations and on faliure of the lessee so 10 do Ihe lessor shall have Ihe righI, 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 aþþlicablê rêOulalioM ørêteribêd 10 rê¡mburlê the OWfIer o/Ihe sur/aee, ¡r olher Ihan the lessor, or lessee of grazing rights thereof for actual damages thereto and Injury 10 Improvements thereon, provided, Ihat Ihe lessee shall not be held responsible for acls 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 SlIIte of Wyomng upon improvements, oli and gas produced Irom the land hereunder, or other righls, property or assels of Ihe lessee, to accord all workmen and employees complele freedom of purchase, and to pey all wages due workmen and employees In conformance with the laws of the State of Wyoming. (n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Nolto assign this lease or any Interest therein, nor sublet any portion of the leased premises, excepl with the consent In wrfting of the lessor first had and oblalned. All overriding royalties 10 be valid, must have the epproval of the Board or by the Office of Stale Lands and Inveslments when authority to do so has been delegated by the Board and will be recorded wllh the lease. The Board reserves the right of disapproval of such overriding royalties when in Its opinion they become excessive and hence are delrimentallo the proper development 01 the leased lands, (o)DELlVER PREMISES IN CASE OF FORFEITURE, To deliver up \he leased premises, with all permanenllmprovements thereon, In good order and condition In case of forfellure of this lease, but this shall not be construed to prevenl the rerroval, alleration or renewal of equipment and improvements in the ordinary course of operations, Section 2, THE LESSOR EXPRESSLY RESERVES: (a) The rlghllo lea$8 sell, or olherwise dispose of the surface ollhe land embraced within this lease under existing laws or laws hereafter enacled, and in accordance with the rules of the Board of Land Commissions Insofar as the surface Is not necessary for Ihe use of the lessee In the conduct 01 operations hereunder, (b)The righllo lease, sell, or otherwise dispose of other minerai or subsurface resources not covered by the lease, in accordance with Ihe appticable laws and the rules of Ihe Board of Land Commissioners, (c)From the operalion of this lease, the surface lands herelofore granled for rights-ol-way and easements and reserves the right to grant such other rights-of-way and easements as provided by Ihe stalutes 01 the State of Wyoming, as long as such rights-of-way and easements do not conflict with the operations for 011 and gas on the tand herein leased. (d)The right 10 refuse to commllthe leased lands to a unll plan or development if the Board finds such action would Impair the lesso(s reserved right to lake lis royally gas In kind and to purchase all other gas allocated to the leased lands a provided in Section 3(e)below. (e)The right to aller or modify the quantity end rate of production to Ihe end thai waste may be eliminated or that production may conlorm to the lessee's fair share of allowable production under any system 01 State or National curtailment and proration euthortzed by law, (1)1n addition 10 Its right to take lis royally gas In kjnd, the lessor reserves the rtght and option to purchase all olher gas produced for sale or use off the leased lands, This 'option shall be exerdsed only lIthe Board finds thaI the leslee has received and Is willing to accept a bona fide offer from a purchaser who Intends to sell or tranlport the gas into interstate convnerce and that one or rrore inlraslate purchasers (I.e., purchasers who will usa, consume, or sell the gas for use or consumption entirely wilhin Ihe State 01 Wyomng) are willing and able to purchase the gas upon terms reasonably comparable 10 and at least as favorable 10 the lessee aslhose offered by the Interstate purchaser. The BOIIrd shali waive this option and permit 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 alleast as lavorable to Ihe lessee. A5 a condition to luch waiver, a satislactory agreemenl may be entered inlo by which the production of lis royally gas may be deferred until it can be produced and sold for consumplion and use entirely wilhln the Slate of Wyoming, Seclion 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subjeclto the provisions of Tille 36, as to Slate and SlIIte School Lands, and Tille 11, es to SlIIte Loan and Investments Board Lands, W.S, 1977, to rerrove any Improvements owned by lessee within a reasonable time after Ihe termination of this lease. Lessee agrees thai any such Improvements not rerroved within a reasonable time after termnation of this lease shall be disposed of pursuant to the above statutes, Section 4, FORFEITURE CLAUSE, The BOIIrd shall have the power and authority to cancel leases procured by fraud, decell, or misrepresentations, or for the use of Ihe lands for unlawful or illegal 'purposes, or for the violation ollhe covenanls of the lease, upon proper proof thereof, In the evenl Ihat the lessee shall default in the performance or observance 01 any 01 the terms, covenents, and slipulalions hereof, or of the general regulations promulgated by the BOIIrd of Land Commissioners and In force on the date hereof, the lessor shall serve notice of such lallure or delaull either by personal service or by certified or registered mail upon the lessee, and If such failure or defaull continues for a period of thirty (30) days after the service 01 such nollce, then and In that event the lessor may, at its option, declare a forfeiture and cancel Ihls 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 pert thereol, These provisions shall nol be construed 10 prevenlthe exercise by lessor any legal or equilllble remedy which the lessor ""ght olherwise have, A waiver of any partlcuiar cause or forfeiture shall not prevent the cancellallon and forfellure of Ihis lease by eny other cause 01 forfeiture, or for 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 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 Slate Land Board end SlIIte Loan and Inveslment Board, a wrilten rellnquishmentor surrender, duly signed and acknowiedged and stating therein thaI no operations have been conducted on Ihe land, The relinquishment so filed shall become effective on the date and hour 01 receipt thereolln the office of the Director or at some later date, If such be so specified by the lessee Iherein, If Ihe said relinqulshmenl falls to state that no operations have been conducted, Ihe effective date of rellnqulshmenl 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 retinqulshed, the lessee shall give sixty (60) days notice and shall file with Ihe Dlreclor a wrftten relinqulshmenl or surrender duly acknowledged and stating therein Ihat operations have been conducted on the land, The relinquishment shall not become effecllve unlil the lend and the wells thereon shall have been placed in condition acceplable to lessor and shall have been approved by Ihe State Oil and Gas Supervisor. All rentals becoming due prior to a surrender or rellnqulshmenl becoming effecllve, shall be peyable by lessee unless payment thereof shall be waived by lessor. A relinquishment having become effective there shall be no recourse by lessee end the lease as to Ihe relinquished lends may not be reinslllted, h 1 IT U8 22 9 jj LooZ ('. ¡{T,::. S :Hd~ I /-; . .:.·,T::: '~, I . \.;.'