HomeMy WebLinkAbout928487
and Effective Janua
STATE -- WYOMING
OIL AND GAS;":t;F;ASE
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Lease # 07-001':'"
Parcel #' 17-1 uud671
Fund Code: CS
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:
Tract 62 (formerly NWSW Sec 25) Resurvey Township: 26 North Range: 115 West of the 6th P.M.
County: Lincoln
Acres: 40.00
$4Q.00
($1.00 per acre or fraètion 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 corporationr 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 W~~~ti~;~ through its
Lessee Slgnature: ~~ By:
Address: SPirT ',:), rO\Ton lÁ)(hl
Citye(eell11oxlV~'State: co ZiP;Ç)Olil-3-'¡IQ
Phone :?1J~' C103- 'i f PJ¡
Resource issue: Elk crucial winter range
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ïhis 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 altemative practic;eslplan of development that will provide similar resource protection and mitigation."
RECEIVED 4/17/2007 at 9:17 AM
RECEIVING # 928487
BOOK: 654 PAGE: 671
JEANNE WAGNER
LINCOLN COUNTY CLERK. KEMMERER WV
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0928487
0006'72
Section 1. THE LESSEE AOREES:
(a) BONO. To lurnlsh a bond wilh an approved corporate surety cOlr4'any authorized to transect
business in the State 01 Wyomng, or such other surety as may be acceptable to the lessor, in the
penal surn as required by the current rules 01 the State Board 01 Land Commissioners,
conditioned upon the payment 01 all rentals and royalties accruing to the lessor under the terms
hereof, anå upon Ihe lull cOfT1)liance 01 all other terms and conditions 01 this lease and Ihe rules
and regulations relating thereto, and also conditioned on the payment of all damages to the
surface and Improvements thereon where the lease covers lands the surface 01 which has been
sold or otherwise leased. Such bond or bondslurnlshed prior to the development of the lands
contained In this lease may be increased in such reasonable amounts as the lessor may decide
upon cOlTYn8ncement 01 drilling operations and aller the discovery of oil or gas,
(b)PAYMENTS. To rowke all payments accruing hereunder to the Office of State Lands and
Investments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600.
(c)RENTALS. Pnor to the discovery of oil or gas In paying quantities to pay the Insor In
advance, beginning with the effective date hereof, an annual renlal of $1.00 per acre or fraction
thereol.
After the discovery of 011 or gas in paying quantities to pay the lessor In advance beginning with
Ihe IIrst day of the lease year succeeding the lease year In which actual discovery was L'5de, an
annual rental 01 $2.00 per acre or fraction thereof, unless changed by agreement. Such 'ental so
paid for anyone year shall be credited on tha royally for Ihat year,
Annual rentals on all leases shall be payable in advance for the first year and each year
thereafter. No notice of rental due shell be sent to the lessee. I! the rental is not pr.ld on or
before the dale It becomes due, notice of default will be sent to the lessee, end a penally of $0.50
per acre for late payment will be assessed.
The lessee IS not legally Obtigated to pay either the rental or the penally, but I! the rental and
penally are not paid within thirty (30) days after Ihe nollce of default has been received, Ihe lease
WIll terminate automatically by operallon of law. Termination of the lease shall not relieve the
lessee of any obtigation ,ncurred under the lease other than the obligation to pey rðntal or
penally. The lessee shall not be entllled to a credit on royalty due for any penally paid for late
payments 01 rental on an operetlng lease.
(d)ROYAL TIES, The royallies to be paid by lessee are:
(i) On oil, one-sixth of that produced, seved, and sold from seld lend, the same to be t'ðllvered
atlhe wells or to the credit of lessor into the pipe line to which the wells may be connected.
(Ii) On gas, Inctudlng 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 products
therefrom, the market value allhe well of one-sixth of the gas so sold or used, provided that on
gas sold at the wells, the royally shall be one-sixth of the amount reatized from such S~I/).
(m) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, including propane, butene, sulphur, nitrogen, carbon dioxide, and helium, -al such
royally as shall be mutually determined to be fair and reasonable,
(iv) err myaltv purposes on gas and natural gasoline the value shall be as approved by the
lesso anJ O;~ Ine determination of the value of natural gasollna the fair cost of extraction shall be
consl.'; )fed as a det\lJctible item; provided, however, that the allowance for the cost of extraction
may exceed two-thirds of the amount or value only on approval of the lessor and In no event shall
the price lor gas, or natural Q.~soline, be less than that received by the United State of America for
its royalties from the same lIeld.
(v) Natural gas and oil actually used for operallng purposes upon the land and, except as to the
ultimate sale thereof, gas or liquid hydrocarbons returned 10 the sand for stimulating the
production of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYAL TV OIL AND GAS, To deliver to the lassor, or to such individual,
firm or corporation as the lessor may designate, all royalty oit, gas, or other kindred hydrocarbons,
free of charge on the premises where produced, or, at the option of the lessor, and in tieu of said
royaltias in kind, the lassee agrees to pay the lessor the field mar1<et prtce or v,alue of all royalty
oil, gas, or other kindred hydrocarbons produced and saved,
When the lessor elects to take its royalty oil, gas, or other hydrocarbons in kind such as oil, gas,
or olher kindred hydrocarbons shall be good merchantable oit, g~s, or .,other" kindre,Q,
hydrocarbons. The lessee shall if necessary furnish storage lor royally q¡rfreei''?t:charge for thirty- ..
(30) days aller the and of the calendar month in which Ihe 011 Is pro(lo:u:ed, uppn the' leased'
premises, or at the such place as the lessor and thp.lessee may rrtJlually agree upon, p, c vlded,
thai the lessee shall not be held tiable for loss or destruction of royally oil so stored fran' causes
beyond his control.
The free storage of oil. as herain provided, shall apply only as long as Ihe said ollis the ,'I/'Operly
of the lessor.
(I) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for temperature all
production from said lands In conlormance with the rules and regulations adopled by the Board of
Land Commissioners and report said production 10 the lessor in accordance therewith.
To keep books, records, and reports pertaining to the production 'from the land herein Iwsed as
well as those pertaining to the production from offset wells operaled by the leSsee, h!s nperator,
or sub-lessee on other lands, which shall be opened at ali times for the Inspection of any duly
authorized agent of the lessor.
To furnish the lessor wilh origInal pipe line reports showing the day, month, year, amount,
gravities, and terrøeratures of ali oil run and with monthly reports showing tha month, year,
amount, and price of all gas and natural gas gasoline and other products produced and wid from
the land herain leasad, and the amount of gas returned to the sand,
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment Is otherwise
extended by the Office of Stale Lands and Investments to make paymenl on or b.!lore Ihe
twentieth (20th) day of Ihe calendar month succeeding the monlh of producllon and rerr"val and
sale of oil and gas Irom,satd land, and to furnish sworn monthly statements therewith showing in
delail the quantity and quatity oflhe production (per weli I! required where pracllcal) frol\1 the land
hereby leased, and the quantity and qualily oflhe production (per well where practical) fromoffsel
welis upon cornerong or contiguous land operated by Ihe lessee, his operator or sub-Ie~sJ¡e and
such olher Informalion as may be called for in the form or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and ,'perate effectively ali wells necessary to reasonably
offset wells upon and production from adjoining lands,
To drill such additional wells alsuch times or places as are necessary and essential to the
prop'" ~",~I:!f,;.18nt and convnercial production of the oil and gas conlent of said land,
(i)V:~, OF' V.'ELLS AND REPORTS. To keep a log, in the form approved by the lessor, of each
well ,-,:lIed by the I"ssee on the lands herein leased, showing the strata and character of the
formations, water sands and mneral deposits penetrated by the drili, amount of casing, size and
whera sel. and such other information as Ihe lassor may require which log or copy thereof shali
be furnished 10 the lessor,
To lIIe progress reports, in the form prescribed by the lessor, at Ihe end of each thirty (30) day
panod while each weli Is being drllied,
To lIIe annualiy, or at such limes as the lessor may require, maps showing the development of
the structure and the location of all welis, 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, and report such other information as may be possessed by Ihe lessee on the wells,
production or operations of others on lands on Ihe same geologic structure that may be of
importance in effecling proper development and operation of the lands herein leased, as may be
called for by the lessor. Altlogs. maps, and reports shall be submitled In duplicate and Ihe Office
of Stata Lands al)d Inveslments may waive such reports as conditions may warrant.
OJPRODUCTION. Tn operate the wells upon the land herein leased In a corrøetent aM rffidenl
rownner in an enoaavor to recover IIlIlhe oil and gas economicaliy possible from said lanå and to
preventthll under d,ra.nage of the oil and gas thereunder by walis operated by the lassee or
others on cornerina or contiguous lands to those leased herein, All plans or methoos for the
purpose of stimulating or increilsing production on lands herein leased other than 'nosa In
conYT1On use shall IIrst be presented to tha lessor for approval before being' put In',) actual
operation.
No prod'Jction agreements limiting, restricting, prorating, or olhelW1se affecling the
naturalproduction lrem said land shali be entered Into by tha lessee, nor shall the les;ee limit,
restrict, or prorate the natural production from said land in any way or in any event, excepl with
the consent in wIlling of the lessor first had an oblalned.
(k)SUSPENSION OF OPERATIONS. Should any well drilied upon lands covered by this lease
obla'n production 01 oil, gas, or other hydrocarbons In paying quantities and If the lessee Is
unable to astablish a satisfactory mar1<et for Ihe oil, 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 mar1<et for the product from said weli can be
developed. Dunng the time any such suspension of operations Is In effect, the les~ee shall
continue to pay the annual rental of $2.00 per acra or fracllon thereof provided by (c) a~pve, and
this laase shall remain in effect as though oil or gas was being produced from said lap\1s.
(I)DILlGENCE-PREVENTION OF WASTE, To exerdse reasonable diligence in drilling,
produdng, and operating of welis on the land covered hereby, unless consent to suspend
operations te~rily Is granted by the lessor; to carry on ali openItlons hereunder in a good and
workmanlike manner in accordance with approved methods and practice, having due regard for
the prevention of waste of oil and gas, or Ihe entrance of wa,ter to the 011 or gas bearing >hnds or
strata to the destruction or injury of such deposita, the preservation and conservation of the
property for future productive operations and to Ihe heallh and safety of workmen and elr4'loyees;
10 plug securely In an approved manner any well before abandoning It, and nolto abandon any
well v.~\~,:-UI pe"'lÌsslon of Ihe lessor, nol to drill any well within two hundred (200) feet of any of
the outer boundartes of the land covered hereby, unless tl , ._.,nst drainage by wells
drilled on lands adjoining less than 200 feet from the property lines Ihereof; to conduct all
operations subject 10 Ihe inspection of the lessor; to carry out at the lassee's expense all
reasonable orders and requirements of the lessor reJallve to the prevenllon of waste and
preservallon of the property and the health and safety of workmen including the replanting and
reseeding of drilling sites and other areas disturbed by drilling operallons and on failure of the
lessee so to do the lessor shall hava the right. together with other recourse harein provided, to
enter on the property 10 repair damage or prevent waste althe lessee's expense; 10 abide by and
conform 10 valid aøølicabla laoulaliont þtMeribað 10 I.imbu,.elhe OIMIe, o/Ihe sur/ace," other
than the lessor, or lessee of grazing rights thereof for actual damages thereto and Injury to
improvemenls thereon, provided, thai Ihe lessee shall not be held responsible for acts of
providence or acllons 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, 011 and gas
produced from the land hereunder, or other rtghts, property or assets of the,lessee, to accord all
wor1<men and employees cOlr4'lete freedom of purchase, and to pay all wages due workmen and
employees In conformance with the laws of the State of Wyoming,
(n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Nol to assign this lease or any
interest therein, nor sublet any portion of the leased prenises, except with the consent in writing
of the lessor first had and obtained,
All overrtding royalties to be valid, must have the approval of the Board or by the Office of State
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded wilh Ihe lease. The Board reserves the right of disapproval of such overriding royalllas
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 the 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, alterallon or renewal of equipment and Improvements In tha ordinary
course of operations,
Section 2, THE LESSOR EXPRESSLY RESERVES: .... " " .' . ,.
(a) The rightt/' lea$e sell, or otherwise dispose 01 the surface of the land embraced within this
lease under exlsllng 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 operallons hereunder,
(b)The right to lease, sell, or otherwisa dispose of other mineral or subsurface resourCBl nol
covered by the lease, in accordance with the applicable laws and the rules of tha Board of Land
Commissioners.
(c)From the operallon of this lease, the surface lands heretofore granted for rlghls-of-way and
easements and reserves the right to grant such other rights-of-way and easen-ents as provided by
the statutes of the State of Wyoming, as long as such rights-of-way and easements do not connict
with the oparallons for oil and gas on the land herein teased.
(d)The right to refuse to commit the leased lands to a unit plan of developmenl if the Board finds
such aclion would impair the lesso(s reserved right 10 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 alter or modify the quanllty and rate of production to the end that waste may be
elimlnaled or that producllon may conform to thalessee's fair share of allowabte production under
any system of State or Nallonal curtailment and prorallon authorized by law,
(f)ln addition to its right to taka lis royally gas In kind, the lessor raserves the right and opllon to
purchase all olher gas produced for sale or use off the leased lands, This option shall be
exercised only If the Board finds thai the lessee has received and is willing to accept a bona fide
offer from a purchaser who Intends to sell or transport the gas Into interstate corrmerce and that
one or more Intrastate purchasers (I,e" purchasers who will use, consume, or selllhe gas for use
or consumpllon enllrely within the State of Wyoming) are willing and able to purchase the gas
upon terms reasonably comparable to and at least as favorable to the lessee as those offered by
the inlerstate purchaser. The Board shall waive Ihis option and permit an interstate .ele If II finds
that no Intrastate purchaser Is willing and able to purchase the gas upon terms which are
reasonabty comparable to and at least as favorable to the lessee. As a condition to such waiver,
a sallsfactory agreemenl may be entered into by which the production of its royalty 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 subjecllo the
provisions of TItle 36, as \0 State and State School Lands, and Title 11, as to State Loan and
Investments Board Lands, W,S, 1977, to remove any Improvements owned by IBlsee within a
reasonable time aller the larm/nation of Ihis lease, Lessee agrees that any such Improvements
not removed within a reasonabla lime after terminallon of this lease shall be disposed of pursuant
to the above statutes,
Secllon 4, FORFEITURE CLAUSE, The Board shall have the power and authority to cancel
, ,leases procured by fraud, deceit, or misreprasentallons, or for the use of the lands for unlawful or
Illegal purposes: or for the violation of the covenants of t~e lease, upon proper proof thereof, In
the event that ine lessee shall -default In the performance or observance of any ~f the terms,
covenants, and stipulallons hereof, or of the general regulallons promulgated by the Board of
Land Commissioners and in force on the dale hereof, the lessor shall s&tVe nollce of such failure
or default either by personal service or by certified or registered mall upon the lessee, and I! such
failure or default continues for a period of thirty (30) days after the service of such notice, then
and In Ihal event the lessor may, at lis option, declare a forfeiture and cancel this 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 part thereof, Thesa
provisions shall not be construad to prevent the exercise by tessor any legal or equitable remedy
which the lessor might olherwise have. A waiver of any perticular 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 othar time,
Secllon 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 i.vithlhe State' Land' Board and Stale Loan and Investmenl Board, a wrilten
relinquishment or surrender, duly signed and acknO'oMedged and stating therein thai no operaUons
have bean conducted on the land. The relinquishment so IIled shall become effective on the date
and hour of receipt Ihereof In Ihe offica of the Director or at some tater dale, I! such be so
spedfied by the lessee therein, I! the said relinquishment falls to state that no operations have
been conducted, Ihe effecllve date of relinquishment shall be the date the relinquishment Is
approved by the Board.
(b) I! operations have been conducted under tlie leaSe on land proposed to be relinquished, the
lessee shall give sixty (60) days notice and shall file with Ihe Director a written relinquishment or
surrender duly acknowledged and stating therein that operallons have been conducted on the
land, The relinquishmenl shall nol become effective until the land and the wells thereon shall
have been plaCed in condllion acceptable 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 payment thereof shall be waived by lessor. A relinquishment having
become effecllve thare shall be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated.
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