HomeMy WebLinkAbout928484
and Effective Janua
STATE
OIL AND
-- WYOMING Lease# 07-001F"
GAS' . LEASE Parc/31 if, 16"~ "
" '~' Fund Code: SR
000665
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:
NENW Section: 14 Resurvey Township: 25 North Range: 115 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 LESSEE to become
effective on the 2nd day of, February, 2007 A.D.
LESSOR, STATE OF WYOMIN~cti~~thrOUgh its
Lessee Signature: ~~~~ ~ By:
Address: 5'?R l' c?1, F U \-\1\11 \^-Iel Y
City:(Jift"OLl)CodV!5State: Co Zip: eDt\1 - 3ilq
Phone: ?Ð~ .- Q03 .:-qTÇi)i
Resource issue: Elk crucial winter range
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"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 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 consider alternative practices/plan of development that will provide similar resource protection and mitigation."
RECEIVED 4/17/2007 at 9:14 AM
RECEIVING # 928484
BOOK: 654 PAGE: 665
JEANNE WAGNER
LINCOLN COUNTY CLERK. KEMMERER, WY
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OIL AND GAS 11:F....,.
0'9284:84
~ciion'1,THI; LESSEE AGREES: 00,9666
(a) BO ( D. To furnish a bond with an approved corporate surety cOfr4)any authorized to transact
business in the Stata of Wyoming, or such other surety as may be acceptable to the lessor, in the
penal sum as required by the current rules of the Stale Board of Land Convnissionars,
conditioned upon the payment of all rentals and royalties accruing to the lessor under the terms
hereof, and upon Ihe full corrpliance of all other terms and conditions of this lease and the rull!s
and regulations relating thareto, and also conditioned on the paymant of all damages to the
surface and IInprovemants thereon where the lease covers lands the surface of which has been
sold or otherwose leased. Such bond or bonds fumlshed prior to the development of t,'e lands
contained in this leasa may be increased In such reasonable amounts as the lessor ma I decide
upon cOlTVl1encemenl of drilling operalions and after the discovery of 011 or gas,
(b)PAYMENTS. To make all payments accruing hereunder to the Office of State Lands and
Investments, 122 West 25th Slreel. Cheyenne, Wyoming 82002-0600,
(c)RENTALS. Prior to the discovery of Oil or gas in paying quantities to pay the 1"'5or in
advanca, beginning with the effective data hareof, an annual rental of $1,00 per acre or (.action
thereof.
After the discovery of oil or gas in paying quanlllies to pay the lessor in advance beginning with
the first day of the lease year succeading the lease year in which actual discovery was made, an
annul'l re'\~~1 ~f ~2.00 per acre or fraction thereof, unless changed by agreement. Such renlal so
paid '~r any 0,1e year shall be credited on the royally for Ihat year,
Annu~1 rentals on ¡¡II leases shall be payable In advance for the first year and each year
thereafter. No notice of ren,al due shall be sent to the lessee. If the rental is not paid on or
before the date II becomes due, notice of default will be sent to the lessee, end a penalty of $0.50
per acre for late payment will be assessed,
The lessee is not legally obligated to pay either the rental or the penally, but if the rental and
penally are not paid within thirty (30) days eller the notice of defaull has been received, the lease
willterminete automatically by operation of law. Termination of the lease shell not relieve the
lessee of any obligation incurred ,under the lease other than the obligation to pay rental or
penelty. The lessee shall not be entitled to a credit on royally due for any penally paid for late
payments of rental on en operating lease,
(d)ROYAL TIES. The royallies to be paid by lessee are:
(i) On oil, one-sixth of that prOduced, saved, and sold from said land,the same to be delivered
at the wells or 10 Ihe credit of lessor into Ihe pipe line to which Ihe wells may be connected,
(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 manufacture of gasoline or other pr~ducts
therefrom, the market value at the well of one-sixth of the gas so sold or used, providec I~at on
gas sold at the wells, the royally shall be one-sixth of the amount realized, from such sale.
(iti) On all other hydrocarbons of value and gaseous substances and elements prouuced or
extracted, including propane, butane, sulphur, nitrooen, carbon dioxide, and helium, al such
royally as shall be ITtJtually determined to be fair and reasonable,
(iv) For royalty purposes on gas and natural gasoline the value shall be as approve1 by the
lessor, and in the determination of the value of natural gasoline the fair cost of extraction shall be
considered as a deductible item; provided, however, that the allowance for Ihe cost of e,tractlon
may exceed lwo-Ihlrds of the amount or value only on approval of the lessor and in no el'i!nt shall
the price for gas, or naturel gasoline, be less than that received by the United Slate of America for
lis royalties from the same field.
(v) Natural gas and 011 actually used for operating purposes upon the land and, except as to the
ultimate sale thereof, gas or liquid hydrocarbons returned to the sand for stllTtJl"cing Ihe
prOduction of oil or secondary recovery purposes shall be royalty free,
(e) DISPOSITION OF ROYAL TV OIL AND GAS, To deliver to the lessor, or to such Individual,
firm or corporation as the lessor may deslgnete, all royalty oil, gas, or other kindred hydrCJCarbons,
free of charge on the premises where prOduced, or, attha option of the lessor, and in lI£u of said
royallies in kind, the lessee agrees to pay the lessor Ihe field markel price or value of ~II royally
oil, gas, or other kindred hydrocarbons produced and saved.
When the lessor elects to take its royally 011, gas, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantable 011, gas, or olher kindred
hydrocarbons, The lessee shall if necassary furnish storage for royally 011 free of chargf< for thirty
(30) days aller the end of Ihe calendar monlh In which the oli is prOduced, upon the leased
premses, or at the such place as the lessor and the lessee may ITtJtually agree upon, p¡ :.vlded,
that the lessee shall not be held liable for 105S or destruction of royally 011 so stored from causes
beyond his control.
The free storage of oU, as herein provided, shall apply only as long as Ihe said 011 is the property
of the le,~~r.
(f) M:AbliREMENTS OF PRODUCTION. To gauga, measure and correct for lemperature all
prod! 'ction from said lands In cO~lformance with the rules and regulations adopted by the Board of
Land Commissioners and report said production to the lessor in accordance therewith,
To keep books, records, an, reports pertaining to the production 'from the land here,in leased as
well as those pertaining to the prOductlM from offset walls operated by the lessee, his operator, '
or sub~essee on olher lands, which shall be opened at all times for the Inspection of any duly
authorized agent of the lessor.
To fumish the lessor with original plpa line reports showing the day, month, year, amount,
gravllies, and lemperatures of all oil run and wilh monlhly reports showing the month, year,
amount, and price of all gas and natural gas gasoline and other products prOduced and sold from
the land harein leased, and the amounl of gas returned to the sand.
(g) MONTHLY PA VMENTS AND STATEMENTS. Unless the tima of payment Is otharwise
extanded by the Office of State Lands and Inveslments to make payment on or before the
lwentielh (20th) day 01 the calendar month succeeding the month of prOduction and removal and
sale of 011 and gas from said land, and to fumish sworn monthly slatements therewith showing in
detail the quantity and quality of the production (per well if required where practical) from the land
hereby leased, and the quantity and qualily of the prOduction (per well where practical) fm<n offsel
wells upon cornering or contiguous land operated by the lessee, his operator or sub-Ie!.<'e 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 operata effectively all wells necessary to rer,sonably
offset wells upon and production from adjoining lands,
To drill such additional wells at such times or places as are necessary and essenlial to the
proper development and corrmerclal prOduction of the oil and gas conlent of said lano.
(i)LOG OF WELLS AND REPORTS, To keep a 100, In the form approved by Ihe lessor, of each
well drilled by the lessee on the lands here,n leased, showing the strata and character of Ihe
formations, water sands and mineral deposlls penetrated by the drill, amount of casing, size and
where set, and such other In'ormatlon as the lessor may require which 100 or copy therdof shall
be furnished to the lessor.
To file prooress reports, in the form prescribed by Ihe lessor, at the end of each thirty (30) day
periOd whlie each well is being drilled.
To flIe annually, or at such times as the lessor may require, maps showing the development 01
the structure and the location of all wells, pipe lines and other works used In connection with the
operations of the lessee upon said land.
To make such other reports pertaining to the prOduction and operations by the lessee on said
land, end report such other Information as may be possessed by the lessee on "'8 wells,
prOduction or operations of others on lands on the same geologic structure that may be of
ifl1)Ortance In effecting proper developmenl 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 Ihe Office
of Stale Lands and Investments may waive such reports as conditions may warrant.
O)PRODUCnON. To operale the wells upon the land herein leased In a competent and E,fflcient
manner in an endeavor 10 recover all the 011 and gas economcally possible from said lanJ and to
prevent the under drainage of Ihe 011 and ~s thereundar by wells operated by the lessee or
others on comering or contiguous lands to those leased herein. All plans or methods for the
purpose 01 stirrolatlng or increasing production on lands herein leased othf« than those In
COITIYOO.' '.51: shali first be plesen'iNf to the lessor for approval before being pul into actual
oper;i.i::)f't.
No ;:rOduction al/reemants IImtlng, restricting, prorating, or otherwise affecling the
natural prOduction from said land shall be entered Into by the lessee, nor shalllhe lessee limit,
restrict, or prorate the natural prOduction from said land in any way or In any event, except with
the consent," writing of Ihe lessor first had an obtained.
(k)SUSPENSION OF OPERA nONS. Should any well drilled upon lands covered by this lease
obtain prOduction of oil, gas, or other hydrocarbons in paying quantities and if the lessee is
unable to establish a satisfact'ory market for the 011, gas or hydrocarbons prOduced from said well,
the lessee may apply for and the lessor may grant permission for the suspension of production
operations until such times as a satisfactory market for the product from said well can be
developed. During the tlma any such suspension of operetions is In affect, the lessee shall
continue to pay the annual rental of 52.00 per acre or fraction thereof provided by (c) above, and
this lease shall remain in effect as though 011 or gas was being produced from said lands,
(I)DtLtGENCE-PREVENTION OF WASTE, To exercise reasonable, diligence In drilling,
prOducing, and operating of wells on Ihe land covered hereby, unless consent to suspend
operations temporarily is granted by tha lessor; 10 carry on all operations hereunder in a good and
workmanlike manner in accordance with approved melhOds and practice, having due rf lard for
the prevention of waste of 011 and gas, or the entrance of water 10 the 011 or gas bearing Gbnds or
strata to the dastructlon or injury of such deposits, the preservation and conservation of tha
property for future prOductive operations and to the heallh and safety of workmen and ef11)<oyees:
to plug securely In an approved manner any well before abandoning it, and not to aba,'10n any
well without permsslon of the lessor, not to drill any well within two hundred (200) feet ,)f any of
the outer boundaries of the land covered hereby, unless t, nsl drainage by welts
drilled on lands adjoining less than 200 feet from the property lines thereof; to conduct all
operations subject to the inspection of the lessor; 10 carry out al the lessee's expense all
reasonable orders and requlremenls of the lessor relative to the prevention of waste and
preservation of the property and the heallh and safety of workman Indudlng the replenting and
raseeding of drilling siles and other areas disturbed by drilling operations and on failure of the
lessee so 10 do the lessor shall have the right, logelher with other recourse herein provided, to
enter on the property to repair damage or prevent waste atlhe lessee's expense; to abide by and
conform to valid aÞÞlicablê 'êgulaliont lI'èteribêð to ,êlmbu'AI thl ownl' ollhe sur/ece, II other
than the lessor, or lessee of grazing rights thereof for actual damages thereto and injury to
lfr4)rOvements thereon, provided, that the lessee shall not be held responsibla for acts of
providence or actions beyond his control.
(m)TAXES AND WAGES·FREEDOM OF PURCHASE, To pay, when due all taxes lawfully
assessed and levied under the laws ofthe'Stala of Wyoming upon Improvements, oil and gas
prOduced from Ihe land hereunder, or other rights, property or assets of the lessee, to accord all
workmen and efr4)loyees complele freedom of purchase. and to pay all wages due workmen and
efr4)loyees in conformance with the laws of the State of Wyoming,
(n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not to assign this lease or any
interest therein, nor sublel any portion of the leased premises, except with the consent In writing
of the lessor first had and obtained,
All overriding royalties to be valid, ITtJst have the approval of the Board or by the Office of Slate
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded with Ihe lease. The Board reserves the righl of disapproval of such overriding royalties
when In Its opinion Ihey become excessive and hence are detrimental to the proper development
of the leased lands.
(o)DELlVER PREMISES IN CASE OF FORFEITURE, To deliver up \he leased premises, with all
permanent Improvements thereon, in good order and condition in case of 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 of operations.
Section 2, ,THE LESSOR EXPRESSLY RESERVES: .'
(a) Therigtit to lease sell, orolhefWise dispose 01 the suñace of ttle larid embraced i.vIthlrrthls
lease under existing laws or laws hereafter enacted, and In accordançe with the rules of the
Board of Land Commissions insofar as Ihe suñace is not necessary for the use of the lessee in
Ihe conduct of operations hereunder.
(b)The right to lease, sell, or otherwise dispose of olher mineral or subsurface resources not
covered by the lease, in accordance with the applicable laws and the rules of the Board of Land
Convnissloners.
(c)From the operation of this lease, Ihe suñace lands heretofore granted for rights-of·way and
easements and raserves Ihe right to granl such other rights-of-way and easemants as provided by
the statutes of the State of Wyoming, as long as such rights-of-way and easements do not conflict
with the operations for oil and gas on the land herein leased,
(d)The right to refuse to commll the leased lands to a unll plan of development If the Board finds
such aclion would impair the lesso~s reserved right to take Its 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 and rate of production to the end that waste may be
eliminated or that production may conform to the lessee's fair share of allowable prOduction under
any system of State or National curtailment and proration authorized by law.
(f)ln edditlon to Its right to take Its royalty gas In kind, the lessor reserves the right and option to
purchase atl other gas produced for sale or use off the leased lands. This option shall be
exercised only If the Board finds that the lessee has received and Is willing 10 eccept a bona fide
offer from a purchaser who Intends to sell or transport the gas Into interstate conmerce and that
one or more Intraslate purchasers {i.e., purchasers who will use, consume, or sell the gas for use
or consumption anti rely wllhin the State of Wyoming) are willing and able to purchase Ihe gas
upon terms reasonably comparable to and alleasl as fevorable to the lessee as those offered by
the interstate purchaser. The Board shall waive Ihis option and permit an Interstate sale if II finds
thet no Intrastate purchaser Is willing and able to purchase the ges upon terms which are
reasonably comparable to and at least as favorable to the lessee. At. a condition to such waiver,
a satisfactory agreement may be entered Into by which the prOduction of Its royally gas may be
deferred until it can be prOduced and sold for consumption and use entirely within the State of
Wyoming,
Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subject to the
provisions of Tille 36, as to State 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 time aller the termination of Ihls lease. Leasee agrees that any such Improvements
not removed within a reasonable tlma after termination of this lease shall be disposed of plnUant
to the above statutes,
Section 4. FORFEITURE CLAUSE, The Board shall have the ~r 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 Ihe violation of the covenents of the lease, upon proper proof thereof, In
the event t~et the tessee shall default In ttie performance or observance of any of the terms,
covenants, and stipulations hereof, or of the general regulations promulgated by the Board of
Land Commissioners and In force on the date hereof, the lessor shall serve notice of such failure
or default ellher by personel service or by certified or registered mail upon the lessee, and If such
failure or default continues for a period of thirty (30) days after the service of such notice, then
and in that event the lessor may, at Its option, dedare a foñelture and cancel this lease,
whereupon all rights and privileges, obtained by the lessee heraunder shalllerminale and cease
and the lessor may re-enler and lake possession of said premises or any part thereof. These
provisions shall not be construed to prevent the exercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any particular cause or forfeiture shall not
prevent the cancellation and foñeiture of this lease by any other cause of foñeiture, or for the
same cause occurring at any other time.
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 flIe'with the Stale Land Board and Slate'Loan and Investment Board, a wrilten
relinquishment or surrender, duly signed end acknowledged and stating therein that no operations
have been conducted on the land, The relinquishment so flied shall become effectiva on \he dale
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 falls to state that no operations have
been conducted, the effective date of relinquishment shall be the date the 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 slxly (60) days notice and shall file with the Director a written relinquishment or
surrender duly acknowledged and stating therein that operations have been conducted on the
land, The relinquishment shall not become effective until the land and the wells thereon shall
have been placed In condition 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
payable by lessee unless paymenl thereof shall be waived by lessor, A relinquishment having
become effective there shall be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated,
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