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HomeMy WebLinkAbout928483 and Ett'ecti ve JanuaJ STATE -- WYOMING OIL AND GAS",LEASE . '. " I. ~ ,. " " Lease # 07-001 f" Parc~1 # 161..., Fund Code: FL 000663 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: 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: SWSW Section: 12 Resurvey Township: 25 North Range: 115 West of the 6th P.M. County: Uncoln 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 LESSEE to become effective on the 2nd day of, February, 2007 A,D. LESSOR, STATE OF Lessee Signature: rough its Address: _.- qi- C FL)' tDn J\ ,Via. City ~1rff:t1UXrx::'1.J State: ~O Zip: Phone: ·?->O~ - c70~ - c , t:Ji Resource issue: Elk crucial winter range "This lease is issued subject to and conditioned upon lessee's acknowledgement and agreement that any exploration and development activities undertaken shall: q " PDt, ì - 3-:¡ \ý return recorded document to: Burnett Oil Com pany - 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 con!'!ider alternative practices/plan of development that will provide similar resource protection and mitigation.· RECEIVED 4/17/2007 at 9:13 AM RECEIVING # 928483 BOOK: 654 PAGE: 663 JEANNE WAGNER LINCOLN COUNTY CLERK. KEMMERER. WY 1If'l4 , 1\ ..... LI' )) AI) ~,DGA~TEK~ O~2848~ Seclion 1. THE LESSEE AGREES: 000664 (a) BOND. To furnish a bond wilh an approved cQ( lOrale surely c~ny aulhorized to tnlnsaCl bus,ness in Ihe Slale of Wyoming, or such olher surely as may be acceplable to Ihe lessor in the penal sum as required by Ihe currenl rules of the Stale Board of Land COmmifs,oneNl, conditioned upon Ihe paymenl of all rentals and royalties accruing to Ihe lessor under th,! terms hereof, and upon the full COfT'4)lìanCe of all other terms and conditions of this lease and the rules and regulations relating Ihereto, and also condilloned on the paymenl of all damages 10 the surface end 'mprovements thereon where the lease coveNllands the surface of which t ns been sold or olherwlse leased. Such bond or bonds furnished prior 10 the developmenl of the lands contained in this lease may be increased in such reasonable amounts as the lessor may decide upon corrmencemenl of drilling opera lions and after the discovery of oil or gas, (b)PAYMENTS, To make all payments accruing hereunder to the Office of Slate La"ds and Inveslmenls, 122 West 251h Streel, Cheyenne, Wyoming 82002.()600, (c)RENTALS. Prior 10 Ihe discovery of 011 or' gas In paying quantilles 10 pey the lessor In advance, beginning with the effective dale hereof, an annual renlal of $1.00 per acre or fraction Ihereof. After the discovery of 011 or gas In paytng quantities to pay the lessor in advance beginl,ing with the firsl day of Ihe lease year succeeding Ihe lease year In which actual discovery was r,dde, an annual rental of $2.00 per acre or fracllon thereof, unless changed by agreement. Such rental so paid for anyone year shall be crediled on the royally for Ihat year, Annual renlals on all leases shall be payable In advance for the fiNlI year and each year Ihereafter. No nolice of rental due shall be sent 10 the lessee, If the renlalls not pó'd on or before the date il becomes due, notice of default will be sent 10 the lessee, and a penalty "i$O,50 per acre for lale paymenl will be assessed. The lessee,s nollegally obligated to pay either the renlal or Ihe penalty, but if the rental and penally are nOI paid wilhin thirty (30) days after Ihe notice of default has been received, the lease willle/;r;'1Bts ei!\omatlcally by operation of law. Termination of Ihe lease shall nol relieve Ihe lesst' of bn, obligation ,ncurred under Ihe lease other than the obligation to pay rental or pena"\,. The lesse" shall not be enlllled 10 a credit on royally due for any penalty paid for lale paymenls of renlal on en operating lease, (d)ROYAL TIES, The royaltlos to be paid by lessee are: (i) On oil, one-sixlh of Ihal produced, saved, and sold from said land, Ihe same to be delivered allhe wells 0( to the credit of lessor into Ihe pipe line to which Ihe wells may be connecled. (ii) On gas, Including casinghead gas or other hydrocarbon substances, produced from said land saved and sold or used off the premises or In the manufaclure of gasoline or other producls therefrom, Ihe markel value allhe well of ona-slxth of the gas so sold or used, provided thai on gas sold al the wells, the royalty shall be one-sixth of the amounl realized from 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 orotually determined to be fair and reasonable, (iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the lessor, and in Ihe determinallon of Ihe value of natural gasoline Ihe fair cost of extraclion shall be considered as a deductible item: provided, however, that the allowance for the COSI of e)lractlon may exceed two-thirds of Ihe amount or value only on approval of the lessor and in no ev~nl shall the price for gas, or natural gasoline, be less Ihan Ihal received by Ihe Unlled State of Arr",'¡ca for Hs royallies from Ihe same field. (v) Nalural gas and oil actually used for operating purposes upon the land àn'ð¡ exceprao to the ultimate sale thereof, gas or liquid hydrocarbons relumed to Ihe sand fø,r~'sli",ul!'l,"ng Ihe production of oil or secondary recovery purposes shall be royally free, ··':le" , (e) DISPOSITION OF ROYAL TV OIL AND GAS, To deliver to the les,sor,pr,to such innl~ldual, firm or corporation as Ihe lessor may designale, all royelty oil, gas,9"o\l'ler'~~dre,diiýdroCar!Jons;;, free of charge on the premises where produced, or, al the oplion oflhe leùór, and in lieu o!sàkf' royallies ,n kind, Ihe lessee agrees to pay Ihe lessor the field market price or value of alìroyaltÿ· oil, gas, or other kindred hydrocarbons produced and saved. When the lessor elects 10 take its royally oil, gas, or other hydrocarbons in kind such as oil, gas, or other kindred hydrocarbons shall be good merchantabie oil, gas, or other kindred hydrocarbons. The lessee shall if necessary furnish storage for royalty oil free of charg£J for Ihirty (30) days after Ihe end of the calendar month in which the 011 is produced, upon the leased premises, or al the such place as the lessor and Ihe lessee may orolually agree upon, rrovided, that Ihe lessee shall nol be held liable for loss or destruction of royalty oil so stored frorr. causes beyond his control. The free storage of oil, as herein provided, shall apply only as long as Ihe said ollis thE< property of Ihe lesSQr. (I) MEASUREMENTS OF PRODUCTION, To gauge, measure and correcl for temperature all production from said lands In conformance with the rules and regulations adopted by the Board of Land CommissioneNl and report said production 10 the lessor in accordance Iherewith. To keep books, records, and reports pertaining to the production from the land herein I,!",scd as well as those pl3rtainlng to Ihe production 'froin offset ~lIs operaled by Ihe lessee, his' oµerator, or sub-lessee on other lands, which shall ~~ opened at all times for the Inspection of any duly authorized agenl of Ihe lessor. To furnish Ihe lessor with original pipe line reports showing the day, month, year, amounl, gravitl!s, ;:~, talT' )8ratures of all oil run and with monlhly reports showing Ihe monlh, year, amm', ;1, and ~rlce of all gas and natural gas gasoline and other products produced and sold from the la¡~d herein leulld, and the amounl of gas returned 10 the sand, (g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of paymenl is otherwise exlended by the Office of State Lands and Inveslments to make payment on or before the twentielh (20th) day of the calendar monlh succeeding Ihe month of produclion and removal and sale or oil and gas from said land, and 10 furnish sworn monthly slatemenls Iherewith showing in delail the quantily and quality of Ihe production (per well if required where pracllcal) from Ihe land hereby leased, and the quanlity and quality of the produclion (per well where practical) from offset wells upon comering or conliguous land operaled by Ihe lessee, his operalor or sub-lessee and such other Informalion as may be called for in the form or report prescribed by lessor. (h) WELLS TO BE DRILLED. To drill and operate effectivety all wells necessary to reasonably offsel wells upon and production from adjoining lands, To drill such addHional wells al such times or places as are necessary and essential 10 Ihe proper development and corrmercial production of the oil and gas conlent of said land, (i)LOG OF WELLS AND REPORTS. To keep a log, In Ihe form approved by the lessor, of each well drtlled by Ihe lessee on the lands herein leased, showing Ihe strala and charactol of the formelions, water sands and minerai deposits penetraled by the drill, amounl of casing, , I.e and where set, and such olher information as Ihe lessor may require which log or copy Ihereof shall be furnished 10 the tessor. To file progress reports, in the form prescrtbed by the lessor, at Ihe end of each thirty (30) day period while each well IS being drilled, To file annually, or at such times as Ihe lessor may require, maps showing the development of Ihe struclure and Ihe location of all wells, pipe lines and other works used In conneclion wllh the operalions of the lessee upon sa,d land, To make such olher reports pertaining to Ihe production and operalions by the lessel) on seld land, and report such olher informalion as may be possessed by the lessee on the wells, production 0( operallons of olheNl on lands on Ihe same geologic structure that møy be of irnpor1ance in effecting proper development and operatiOn of Ihe lands herein leased, as may be called for by Ihe lessor. All logs, maps, and reports shall be submitted in duplicate and the Office of State Lands and Inveslments may waive such reports as condllions may warrant. mPRODUCTION, To operate Ihe wells upon the land herein leased in a competent and efficient manner in an endeavor 10 recover all the 011 and gas economically possible from said land and 10 prevenllhe under drainage of Ihe oil and gas thereunder by wells operated by Ihe 19ssee or otheNl on cornering or contiguous lands 10 I~ose leased herein, All plans or methor"; for the purpose of slimulallng or increasing produclion on lands herein leased other than ,hose In common use shall fiNlt be presented to Ihe lessor for approval before being put in10 actual operation, No production agreements timlling, reslricting, proraling, or otherwise affec\lng the naturalproduction from said land shall be enlered Into by Ihe lessee, nor shalllhe les~ee limil, restrlcl, or prorale Ihe nalural produclion from said land in any way or in any evenl, exc<"pl with Ihe consenl in WIlling o/Ihe lessor firsl had an oblalned. (k)SUSPENSION OF OPERATIONS, Should any well drilled upon lands covered by this lease oblaln production of oil, gas, or olher hydrocarbons In paying quanlilies and If the lessee Is unablc !'.~ eflac"sh a salisfaclory markel for Ihe 011, gas or hydrocarbons produced from said well, Ihe I~ .:;ee n'..y apply for and the lessor may granl permission for Ihe suspension of produclion ope"'¡ ons until such times es a salis/aclory markel for Ihe product from said well can be developed. During the time any such suspension of operations is in effect, the lessee shall continue to pay the annual runlal of $2,00 per acre or fraclion Ihereof provided by (c) above, and this lease shall remain ,n effecl as though oil or gas was being produced from said lands. (I)DILIGENCE-PREVENTlON OF WASTE. To exercise reasonable diligence In drilling, producing, and operating of wells on Ihe land covered hereby, unless consent 10 suspend operations temporarily is granled by the lessor; to carry on all operallons hereunder In a good and workmanlike manner In accordance wilh approved methods and practice, having due regard for Ihe prevenlion of waste of 011 and gas, or the entrance 0/ water 10 Ihe 011 or gas bearing sands or slrata to the deslrucllon or Injury of such deposlls, the preservation and conservation of Ihe property for future productive operallons and 10 the health and safely of workmen and errployees: 10 plug securely In an approved manner any well before abandoning II, and not 10 abandon any well WIthout permission of the lessor, not 10 drill any well within two hundred (200) feel of any of }-¡,; Ihe outer boundaries of the land covered hereby, unless tl . ,~..nst drainage by walls drilled on lands adjoining less than 200 feel from Ihe property lines thereof; to conduct all operallons subjecl to Ihe Inspection of the lessor; 10 carry oul at Ihe lessee's expense all reasonable ordeNl and requirements of Ihe lessor relative 10 the prevention of waste and preservation of Ihe property and the health and safely of workmen Inctuding the repianllng and reseeding of drtlllng slles and olher areas dislurbed by drilling operallons and on failure of Ihe lessee so to do Ihe lessor shall have the right, logelher with other recouNle herein provided, 10 enter on the property to repair damage or prevent wasle at the lessee's expense; 10 abide by and conform to valid aþþlicabla rê( ulationc ørêCeribað lð roimburco Iho ownor 01 the sutlace, :1 olher Ihan Ihe lessor, or lessee of grazing rights thereof for actual damages thereto and Injury 10 Irrprovements Ihereon, provided, that the 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 State of Wyoming upon Improvements, oil and gas produced from the land hereunder, or other rights, property or assets of Ihe lessee, to accord all workmen and employees complele freedom of purchase, and to pay all wages due workmen and errployees In conformance with the laws of the Stale of Wyoming. (n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Nollo assign this lease or any inleresl therein, nor sublel any portion of the leased premises, except with the consenlln writing of the lessor fiNlt had and obtained, All overriding royalties to be valid, trosl 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 Ihe lease, The Board reserves Ihe right of disapproval of such overriding royalties when in lis opinion they become excessive and hence are detrtmentallo 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 of forfellure of this lease, but Ihis shall not be construed to prevent the removal, alteration or renewal of equipment and Improvements In the ordinary couNle of operations. Section 2., THE LESSOR EXPRESSLY RESERVES: . (a) The rlghllo lease sell, or otherwise dispose of the surface of the 'land' embraced Within this lease under existing laws or laws hereafter enacled, and in accordance wilh the rutes of Ihe Board of Land Commissions insofar as the surface is not necessary for the use of the lessee in the conduct of operations hereunder, (b)The rlghl to lease, sell, or otherwise dispose of olher minerai or subsuñace resources nol covered by the lease, in accordance wilh the applicable laws and Ihe rules of the Board of Land CommlssioneNl, (c)From Ihe operation of this lease, the surface lands heretofore granted for rights-of-way and easemenls and reserves the right to granl such other rights-of-way and easements as provided by the statules of Ihe Slate of Wyoming, as long as such rights-of-way and easements do not conflict wilh Ihe operations for oil and gas on Ihe land herein leased, (d)The right 10 refuse 10 commit the leased lands to a unit plan of development if Ihe Board finds such action would impair the lesso~s reserved rlghl to take Its royalty gas in kind and to purchase all olher gas allocaled 10 Ihe leased lands a provided in Seclion 3(e)below, (e)The right to alter or modify Ihe quantily and rate of production 10 the end that wasle may be elimlnaled 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. (1)1n addillon 10 lis right to take Its royalty gas in kind, the lessor reserves Ihe righland opllon to purchase all other gas produced for sale or use off the leased lands. this opllon shall be .exercised,only If the Board finds that the lessee has received and is willing 10 accepl a bona fide óffer from a purchaser who Intends to sell or transport the gas Inlo Interstate corrmerce and thai one or more intrastate purchaseNl (I.e" purchaseNl who will use, consume, or sell the gas for use or con~urrption entirely within the State of Wyoming) are willing and able to purchase Ihe gas upon lerms reasonably co.mparable 10 and alleast as favorable to the lessee as those offered by the interstate purchaser. The Board shall waive this opllon and permit an inleNltate sale if II finds Ihat no intrastate purchaser Is willing and able to purchase Ihe gas upon terms which are reasonably comparable to and at least as favorable to the lessee. As a condition to such waiver, a sallsfactory agreement may be entered Into by which the producllon of 115 royalty gas may be deferred until It can be produced and sold for consumption and use entirely within the Slale of Wyoming. Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subject 10 Ihe provisions of Title 36, as to Slate and State School Lands, and Title 11, as to Stale Loan and Investments Board Lands, W,S, 1977, to remove any improvements owned by lessee within a reasonable lime after Ihe termination of this lease. Lassee agrees lhalany such Improvements not removed within a reasonable time after terminallon of this lease shall be disposed of plJf1U8I1t 10 the above statutes, Section 4, FORFEITURE CLAUSE, The Board shall have the power and aulhorlty to cancel leases procured ~y fraud, decell, or mlsrepresenlations, or for the use of the lands for untawful or Illegal purposes, or for the violation of the covenants of the lease, upon proper proof thereof, In the event tliat the lessee shall default In Ihe performance 0( observance of any of the lerms, covenants, and sllpulatlons hereof, or of the general regulations promulgated by the Board of Land CommissioneNl and in force on the date hereof, the lessor shall serve notice of such faltura or default either by peNlonal service or by certified or registered mail upon the lessee, and If such failure or default conllnues for a period of Ihlrty (30) days after the service of such nollce, Ihen and in Ihat event the lessor may, at lis option, declare a forfeiture and cancel this lease, whereupon all rights and privileges, obtained by Ihe lessee hereunder shalllerminale and cease and the lessor may re-enter and lake possession of said premises or any part thereof. These provisions shall not be construed 10 prevent the exercise by lessor any legal or equitable remedy which the lessor might olherwise have. A waiver of any particular cause or forfeilure shall nol . -prevent the cancellation and forfeiture of this lease by any olher cause of forfeiture, or for the same cause occurring at any olher lime, Section 5, RELINQUISHMENT AND SURRENDER. This lease may be relinquished and surrendered 10 lessor as to all or any legal subdivision of said lands as follows: (a) If no operations have been conducled under the lease on the land to be relinquished, the lessee shall file wilh Ihe State Land Board and Slate Loan and Investment Board, a written relinquishment or surrender, duly signed and acknOlMedged and slating therein that no operations have been conducted on the land, The rellnqulshmenl so filed shall become effective on the date and hour of receipt Ihereof in the office of the Director or al some laler date, If such be so specified by Ihe lessee therein. If Ihe said relinquishment faits to state Ihat no operallons have been conducted, the effective date of relinquishment shall be the date Ihe relinquishment is approved by Ihe Board, (b) If operations have been conducted under the lease on tand proposed to be relinquished, the lessee shall give slxly (60) days notice and shall file with the Dlreclor a written rellnquishmenl or surrender duly acknowiedged and stating therein Ihat operations have been conducted on the land. The relinquishment shall not become effecllve unllllhe land and the wells thereon shall have been placed in condition acceplable 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, shall be payeble by lessee unless payment thereof shall be waived by lessor, A relinquishment having become effective there shall be no recouNle by lessee and Ihe lease as 10 the relinquished lands may not be reinstated. r T IT\~8 22 gjJ LûûZ r, ..!~"\ 1,' :..S]l\~'~' , :.1 ( u: = .~_ '/ .L~) .....¡.