HomeMy WebLinkAbout928485
and Effective Janua
STATE
OIL AND
WYOMING
GA.S, LEASE
Lease # 07-001F"1
Parcel # 169
Furid Code~ FL
This indenture of lease
and through its Board of Land
000667
entered into by and between the State of Wyoming, acting by
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:
NENE Section: 23 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 bus.iness 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 WYO~, Acting~nd through its
Lessee Signature: ~~ ~ ~~ By'
Address: 58Cr'1 S' Fu \1Dn 'Woy
(' . V ~I'
City ··1(8.?nWCX~ VState: J;¡0 , Zip: eolll-3-~ Iq
Phone :,~_s=- gO?) -II ?Ji
Resource issue: Elk crucial winter range
t>
'*$-:'~., ~. "
.i¡~ (r t ~ '.
"This lease is issued subject to and conditioned upon lessee's acknowledgement and agreement that any exploration and development activities
undertaken shall:
'eturn recorded document to:
8urnett Oil Company - Land Dept.
8urnett Plaza - Suite 1500
~01 Cherry St. - Unit #9
[lort 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 9:16 AM
RECEIVING # 928485
BOOK: 654 PAGE: 667
JEANNE WAGNER
111\Ir.n\ N r.OLJNTY CLERK. KEMMERER, WY
Ar....1.. J,Q, . //11 "'''
OiL AND GA~
. ..' 09284 5 '
Sectioih1>fH~ LESSEE AGREES: 8 Oon~~ C)
. (a),BOND. To furnish a bond with an approvad corporate surety company authOrizJ{ ¥~O
business in the State of Wyoming, or such other surety as may be acceptable to the tessPI', in Ihe
penal sum as required by the current rules of the State Board of Land Coitvnlssloners,
conditioned upon the payment of all rentals and royallles accruing to the lessor under tt>e terms
hereof, and upon the full COIT¥JlianCe of all other terms and conditions of this lease and Ihe rules
and regulations relallng thereto, and also conditioned on the payment of all damagf<: to the
surface and Improvements thereon where the lease covers lands the surface of which has been
sold or otherwose leased. Such bond or bo"ds fumished prior to the development of the lends
contained in this lease may be increased In such reasonable amounts as the lessor may decide
upon convnencement of dnlling operations and after the discovery of 011 or gas.
(b)F','YM~N'r5. To fTVIke all payments accruing hereunder to the Office of State Lends and
Inves!c'l8nts, '22 West 25th StrlJet, Cheyenne, Wyoming 82002.()600,
(c)R ¿ I TALS. Pnor to the discovery of 011 or gas in paying quanlilles to pay the lessor In
advance, beginning WIth the effective date hereof, an annual rentel of $1.00 per acre or fraction
thereof.
After the discovery of 011 or gas in paying quanllties to pay the lessor In advance beginning with
the first day of the lease year succeeding the lease year In which actual discovery was made, en
annual rental of $2.00 per acre or fraction thereof, unless changed by agreement. Such rental so
paid for anyone year shall be credited on the royally for that year.
Annual rentals on all leases shell be payable In advance for the first year and each year
thereafter. No notice of rental due shall be sent to the lessee. If the rental Is not paid on or
before the date it becomes due, notice of defaull will be sent to the lessee, and 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 after the notice of default has been received, the lease
willterninate automatically by operation of law. Tennination of the tease shall not relieve the
lessee of any obligation Incurred under the lease other than the obligallon to pay ~.ntal or
penalty. The lessee shall not be entiUed to e credit on royally due for any penslly paid I ,r late
payments of rental on an operating lease,
(d)ROYAL TIES. The royalties to be paid by lessee are:
(i) On oil, one-sheth of that produced, saved, and sold from said land, the same to be d~lIvered
at the wells or to the credit of lessor into the pipe line to which the wells may be connec,ted.
(Ii) On gas, including casinghead gas or other hydrocarbon substances, produced flom said
land saved and sold or used off the premises or in the manufacture of gasoline or other products
therefrom, the market value at the well of one,slxth of the gas so sold or used, provided that on
gas sold at the wells, the royally shall be one-sixth of the amount realized from such sJle.
(ili) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, including propane, butane, sulphur, nitrogen, carbon dioxide, and helium, al such
royally as shall be rrotually determined to be fair and reasonable.
(Iv) For royally purposes on gas and naturat gasoline the value shall be as approved by the
lessor, and in the detennination of the value of natural gasoline the fair cost of extraclloro shall be
considered as a deductible item; provided, however, that tha allowance for the cost of extraction
may exceed two·thlrds of the amount or value only on approval of the lessor and in no event shall
the price for gas, or natural gasoline, be less than that received by the United Slate of America for
its royalties from the seme field.
(v) Natural gas and oil actually used for oparatlng purposes upon the land and, except os to Ihe
ultimate sale Ihereof, gas or liquid hydrocarbons retumed to the sand for stimul¡l:ing the
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 in,lividual,
firm or corporallon as the lessor may designate, all royally oil, gas, or other Idndred hydrocerbons,
free of charge on the premises where produced, or, at the option oflhe lessor, and In lIe'J of said
royallles In kind, the lessee agrees to pay th~ lessor the field markat price or value of ali royally
oil, gas, or other kindred hydrocarbons produced and saved. :,: ..
When the lessor elects 10 take its royalty oil, gas, or other hydrocarbons in kind such asoli, gas,
or olM, ki~dr~d hydrocarbons shall be good marchantable 011, gas, or other kindred
hydr& ..rbo",>. The lessae shall if necessary furnish storaga for royalty oil free of charge for thirty
(30) l1uys after the and of the .:alendar month in which the 011 is produced, upon the leased
premises, or at the such place as the lessor and the lessee may rrotually agreiru \Õn, þrovided,
that the lessee shall not be held liable for loss or destruction of royalty oil so stored from causes
beyond his control.
The free storage of 011, as herein provldad, shall apply only as long as the said 011 is the property
of the lessor.
(I) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for temperature all
production from said lands in conformance with the rules and regulations adopted by the Board of
Land Corrn1ssloners and report said production to the tessor In accordance therewith,
To keep books, records, and reports pertaining to the production from the land herein laased as
well as those pertaining to the production from ofìset wells operated by the lessee, tlb operator,
or sub-lessee on other lends, which shall be opened at all times for the Inspection of any duly
authorized agent of the lessor.
To fumish Ihe lessor with original pipe tine reports showing the day, month, year, amount,
gravities, and te"1'8ratures of all 011 run and with monthly reports showing the month, year,
amount, and price of all gas and natural gas gasollna and other products produced and wid from
the land herein leased, and the amount of gas retumed to the sand,
(g) MONTHLY PAYMENTS AND STATEMENTS, Unless tha lime of payment is otherwise
extended by the Office of State Lands and Investments to make payment on or before the
twentieth (20th) day of the calendar month succeeding the month of production and refl",wal and
sale of oil and gas from said land, and to furnish sworn monthly statements therewith sMwlng in
delailthe quantity and quality of the production (per well if required where practical) from the land
hereby leased, and the quanlity and quality of the production (per well whare practical) from offset
wells upon cornenng or contiguous land operated by the lessee, his operator or sub-lessee and
such other information as may be called for In the form or report prescribed by lessor,
(h) WELLS TO BE DRILLED, To drill and operate effectively all wells necessary to re¡'sonably
offset wells upon and production from adjoining lands.
To drill such additional wells at such times or places as are necessary and essential to the
proper development and commercial production of the 011 and gas content of said lano.
(i)LOG OF WELLS AND REPORTS, To keep a log, In the form approved by the lessol ,of each
well drilled by the lessee on the lands herein leased, showing the strata and charact/Jr of the
formations, water sands and mneral deposits panetrated by the drill, amount of casing, size and
where set. and such other information as the lessor may require which log or copy thereof shall
be fumished to the lessor.
To file progress reports, in the lorm prescribed by the lessor, at the end of each thirty ¡30) day
period while each well is being drilled.
To file annually, or at such times as the lessor may require, maps showing the development of
the structure and the location of all wells, pipa iines and other works used In connection with the
operations of the lessee upon said land,
To make such other reports pertaining to the producllon and operations by the lessee on said
land, and report such other information Eoii may be possassed by the lessee on the wells,
production or operalions of others on lands on the same geologic structure that may be of
il'l'(>Ortance in effecting proper development and operallon of the lands harein leased, as may be
calleL' for ':>{ In" lessor. AU logs, maps, and reports shall be subnitled in duplicate and the Office
of StJtl! Land~ and Investments may waive such reports as conditions may warrant.
O)pnûDUCTION. To operate the wells upon the land herein leased In a competent and efficient
manner in an endeavor to rer;over all the oil and gas economically possible from said land and to
prevent the under drainage' of the oil and. gas thereunder by wells operated by the lassee or
others on cornering or ~.ontiguous lands to those leased herein. All plans or methods for the
purpose of stirrolating or Ir.creasing production on lands herein leased othEr than those In "
conmon use shall 'first be presented to tho'lassor for approval before being put Into actual
operation,
No production agreement, tiniting, restricting, prorallng, or otherwise affecting the
naturalproduction from said land shall be entered into by the lessee, nor shell the lessee limit,
restrict, or prorate the natural production from said land in any way or In any event, except with
the consent In writing of lhe lessor first had an obtained.
(k)SUSPENStON OF OPERA nONS. Should any well drilled upon lands covered by this lease
obtain production of 011, gas, or other hydrocarbons in paying quantities and if the iessee is
unable to establish a satisfactory market for the oil, gas or hydrocarbons produced from &:lid well,
the lessee may appty for and the lessor may grant permission for the suspension of pmduction
operations until such times as a satisfactory market for the product from said well Ian be
developed. During the lime any such suspension of opera lions is In effect, the lessee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof provided by (c) abJ)ve. and
this lease shall remain In effect as though oil or gas was being produced from said lan~s.
(I)DILIGENCE-PREVENTION OF WASTE, To exercise reasonable diligence In drilling,
producing, and operating of wells on the land covered hereby, unless consent to "uspend
operations tel'l'(>Orarily is granted by Ihe lessor: to cany on all operations hereunder In a ¡¡oDd and
workmanlike manner in accordance with approved methods and practice, having due regard for
the prevention of waste of 011 and gas, or the entrance of water to the 011 or gas bearing sands or
strata to the destruction or Injury of such deposits, the preservation and conservaticn of the
property for future productive operations and to the health and safety of workmen and er~oyees:
to plug securely In an approved manner any well before abandoning It, and not to aba\1don any
weti without perniSSlon of the lessor, not to drill any well within two hundred (200) feet of any of
the outer boundaries of the land covered hereby, unless II nst drainage by wells
drilled on lands adjoining less than 200 feet from Ihe property lines thereof; to conduct all
operallons subject to the Inspection of the lessor; to carry out at the lessee's expense all
reasonable orders and requirements of the lessor relalive to the prevenlion of waste and
preservallon of the property and the heallh and safety of workmen including the replanting and
reseeding of drilling slles and other areas disturbed by drilling operations and on failure of tha
lessee so to do the lessor shall have tha right, together with other recourse herein provided, to
enter on the property to repair damage or prevent waste at the lessee's expense: to abide by and
conform 10 valid applicablê rêoulaliont ørMcribêd 10 r.imburll Ihl oWftlr 01 the sur/ace,:! other
than the lessor, or tessee of grazJng rights thereof for actual damages thereto and Injury to
Improvements thereon, provided, that the lessee shall not be held responsible for acts of
providence or actions bayond his conlrol.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE, To pay, when dua alltaxas lawfully
assessed and levied under the laws of Ihe State of Wyoming' upon Improvements, oil and gas
produced from the land hereunder, or other rights, property or assets of the lessee, to accord all
workmen and employees complete freedom of purchase, and to pey all wages due workmen and
e"1'toyees 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 sublet any portion of the leased prenises, except wilh the consent in wrtting
of the lessor first had and oblained,
All overriding royallles to be vatid, rrust have the approval of the Board or by the Offica of State
Lands and Investments when authodty 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 Ihey become excessiva and hence are detrimental to the proper development
of the leased lands,
(o)DELlVER PREMISES IN CASE OF FORFEITURE, To deliver up the leased prerrises, wIlh all
permanent l"1'rovements 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 i"1'rovements In the ordinary
course of operations,
Secllon 2, THE LESSOR EXPRESSLY RESERVES: ' . , ' '
(a) The'righi to lease sell, or otherwise dispose of the surface of tti"tand embraced wiihin this
lease under existing laws or laws hereafter enacted, and In accordance with the rules of the
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 right to lease, sell, or otherwise dispose of other minerai or subsurface resources not
covered by the lease, in accordance with the applicable laws and the rules of the Board of Land
Commissioners,
(c)From the operation of this lease, the surface lands heretofore granted for rights-of-way and
easements and reserves the right to grant such other rights-of-way and easements as provided by
the statutes of the State of Wyoning, 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 commit the leased lands to a unit plan of 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 alter or modify the quantity and rate of production to the end that waste may be
eliminated or that producllon may conform to Ihe lessee's fair share of allowabte production undar
any system of Slate or National 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 to
purchase all other gas producèd for sale or use off the leased lands. This option shall be
exercised only If the Board finds Ihatthe lessee has received and is willing to accept a bona fide
offer from a purchaser who intends to sell or transport the gas Into Interslate commerce and Ihat
one or more Intrastate purchasers (I.e" purchasers who will use, consume, or sell the gas for use
or consumption entirely within the State of Wyoming) are willing and abla to purchase the gas
upon.terms reasonably comparable to and at least as favorable to the lessee as those offered by
the interstate purchaser. The Board shall waive this option and permit an Interstate sale if it finds
ihat no intrastate purchaser Is willing and able to purchase the gas upon terms which are
reasonably comparable to and at least as favorable to Ihe lessee, As a condition to such waiver,
a satisfactory agreement may ba entered Into by which the production of lis royally gas may be
deferred until it can be produced and sold for consumption and use entirely within the State of
Wyoning,
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 State Loan and
Investments Board Lands, W.S, , 977, to remove any improvements owned by lessee within a
reasonable time after the termination of this leasa. Lessee agrees that any such Improvements
not removed withIn a reasonable lime after termination of this lease shall be disposed of pursuant
to the above statules,
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 purpose~, or for the violation of the covenants of the lease, upon proper proof thereof, In
the event tliat· the lessee shall' defaullln Ihe plirformance 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 faiture
or defaull ellher by personal 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 ils option, decfare a forfellure and cancel this lease,
whereupon all rights and privileges, oblained by the lessee hereunder shalltenninate and cease
and the lessor may're-enter and lake possession of said prenises or any part thereof, These
provisions shall not be construed to prevenlthe exerdse by lessor any legal or equitable remedy
which tha lessor might otherwise have. A waiver of any particular cause or forfeiture shall not
, prevent the cancellation and forfeiture of this lease by any other cause of forfeiture, 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 opera lions have been conducted under the lease on the land to be relinquished, the
lessee shall file with the Stata Land Board and State Loan and Investment Board, a wrtllen
relinquishment or surrender, duly signed and acknowledged and slating Ihereln Ihat no operations
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 falls to state Ihat 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 sixty (60) days notice and shall file with the Director a wrttten relinquishment or
surrender duly acknowledged and stating therein that operations have been conducted on the
land, The relinquishment shall not become effecllve until the land and the wells Ihereon shall
have been placed in condition acceptable to lessor and shall have been approved by Ihe Slate Oil
and Gas Supervisor,
All renlals becoming due prior to a surrender or relinquishment beconing effective, shall be
payable by lessee unless payment 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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