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HomeMy WebLinkAbout928488 and Effective Janua STATE --WYOMING OIL AND GAS. LEASE , ..."., ¡. Lease.". U7 -UU1 J(H Parcel# 199 ·vv..JG73 Fund Code: SR 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: W2 Section: 9 Township: 20 North Range: 120 West of the 6th P.M. County: Lincoln Acres: 320.00 $320.00 ($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 Iproduced from the lands in paying quantities. This lease may also be extended beyond its ~rimary 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,O. '...., \"'! II 0\ LESSOR, STATE OF WYOMI~cti~ and through its Lessee Signature: ý~ ý~ By' Address: 5ßQ'1 (2:1, Fu \ mn WC\'I , G ~kl., 8 0,., 3-J . ð CÜy:reer>u.x "'Stat~: 9. Zip: GUill-,t-. Phone: _'- .. CiO /) .. __ ~)I .... .···"'t. . Director ' State Lands a~d ~.--:~ . "',1' ..' 'j Resource issue: Mule deer and elk crucial winter range; sage grouse leks and/or suitable nesting, brood-rearing and winter habitat. 'This lease is issued subject to and conditioned upon lessee's acknowledgement and agreement that any exploration and development activities undertaken shall: 1) avoid human activity in mule deer and elk crucial winter range from November 15 to April 30; 2) avoid surface disturbance or occupancy within X-mile of the perimeter of occupied sage grouse leks; 3) avoid human activity between 8:00 PM and 8:00 AM from March 1 thru May 15 within X-mile of the perimeter of occupied sage grouse leks; 4) avoid surface disturbing activities and geophysical surveys in suitable sage grouse nesting and early brood-rearing habitat within 2 miles of an occupied lek or in identified sage grouse nesting from May 15 to July 15; al1ri 5) avoid human activity from November 15 I 6) shall be subject to approval by the Direct Department to consider altemative practices/pi return recorded document to: Burnett Oil Company - Land Dept. Burnett Plaza - Suite 1500 801 Cherry St. - Unit #9 RECEIVED 4117/2007 at 9:18 AM RECEIVING # 928488 BOOK: 654 PAGE: 673 JEANNE WAGNER LINCOLN COUNTY CLERK. KEMMERER. WY ::onsultation with Wyoming Game & Fish . - ...., ^ '? (J .,)0 QJ\..iINll \;iÚTI':!,,,,. , ~~~8488 Secllon 1. ;HE LESSEE AGREES:'OOO~"'A (a) BOND. To furnish a bond Wllh an approved corporale surety c0/!'4)8ny authOriz~ t,fn~ business In the State of Wyomng, or such other surety as may be acceptable to the lessor, in the penal sum as required by the currenl rules of the State Board of Land Commissioners, conditioned upon the peymenl of all renlals end royalties accruing 10 the lessor under the terms heroof, and upon Ihe full co~liance of all other terms and conditions of this lease and Ih~ rules and regulelions relallng Ihereto, and also conditioned on the payment of all damage, '0 Ihe surface end Improvements thereon where the lease covers lands the surface of which hAS been sold or otherWIse leased. Such bond or bonds furnished prior 10 the development of th" lends conlained in Ihis lease may be increased in such reasonable amounls as the lessor may decide upon corrmencemenl of drilling operations and after the discovery of 011 or gas, (b)PAVMENTS. To make all payments accruing hereunder to the Office of State Lailds and Investments, 122 West 25th Street. Cheyenne, Wyoming 82002.0600. (c)RENT ALS. Pnor to the discovery of oil or gas in peying quantities to pay the lessor in advance, beginning with the effective date hereof, an annual rental of 51.00 per acre ortractlon thereof. After the discovery of oil or gas in paying quantities to pay Ihe lessor In advance beginning wilh the first day of the lease year succeeding the lease year in which aclual discovery was roade, an annual renlal of 52.00 per acre or fraction Ihereof, unless changed by agreement. Such rental so paid for anyone year shall be crediled on the royalty for thai year, Annual rentals on ail leases shall be payable In advance for the first year and each year thereafter. No notice of rental due shall be sent 10 the lessee. If Ihe rental Is not paId on or before the date It becomes due, notice of defaull will be sent 10 the lessee, and a penally of 50.50 per acre for late payment will be assessed. The lessee is nollegally obtigated to pay either the rental or the penalty, bul if the rental and penally are not paid within thirty (30) days after the notice of default has been received, Ihelease will termlnete automatically by operation of law. Termnatlon,of the lease shall nol re:ieve the lessee of any obligation, incurred under Ihe lease other than Ihe obligation to pay r~ntal or penally. The lessee shell not b'a entltied to a credit on royalty due for any penalty paid fJr late payments of rental on an operating lease. (d)ROYAL TIES. The royalties 10 be paid by lessee are: (i) On 011, one-sixth of thai produced, saved, and sold from said land, the same to be delivered at the wells or to the credit of lessor Inlo Ihe pipe line to which the wells may be connected. (ii) 0" ~a.. 1~:luding casinghead gas or olher hydrocarbon substances, produced from said tand ! .veo 3"d sold or used off Ihe premises or in the manufacture of gasoline or other products Ihere:"-'m, the markl,t value at the well of one-slxlh of the gas so sold or used, provided that on gas sold at the wells, Ihe royalty shall be one-sixth of the amounl realized from such sale. (m) On all other hydrocarÞons of value and gaseous substances and elemenls produced or eXlracted, including propene, butane, sulphur, nitrogen, carbon dioxide, and helium, al such royally liS shall be mutually determned 10 be fair and reasonable, (iv) For royalty purposes on gas and nalural gasoline the value shell be as approved by the lessor, and In the determination of the value of nalural gasoline the fair cost of extraction shail be considered as a deductible item: provided, however, Ihallhe allowance for the cost of extraction may exceed two-thirds of the arrount or value only on approval of the lessor and In no event shall Ihe price for gas, or nalural gasoline, be less Ihan that received by the United State of America for Its royallies from Ihe Same field. (v) Nalural gas and oil actually used for operating purposes upon the land and, excepl as to the ultimate sale Ihereof, gas or liquid hydrocarbons returned to the sand for stimuleting Ihe production of 011 or secondary recovery purposes shall be royally free. (e) DISPOSITtON OF ROYAL TV OIL AND GAS, To deliver to the lessor, or to such Indi'Jidual, firm or corporation as the lessor may designate, all royalty oil, gas, or other kindred hydrOl"3rbons, free of charge on Ihe premises where produced, or, at the option of the lelÌsor, ~nd:l" lie.. "f said royalties In kind, the lossee agrees to pay Ihe lessor the field market price or \låh1e of ~II royalty oil, gas, or other kindred hydrocarbons produced and saved. -" , When the lessor elects to lake ils royalty 011, gas, or other hydrocarbons in kind such a~ ::>II, gas, or other kindred hydrocarbons shall be good merchantable 011,' gas, or ,other kindred hydrocarbons. The lessee shall II necessary furnish slorage for royally oil. free of charg~ for thirty (30) deys efter the end of the calendar month In which the oil Is produced, upon th~ leased' premises, or at the such place as the lessor and the lessee mey mutually agree upon, provided, Ihat the lessee shall not be held liable for loss or destruction of royally oil so stored frorn causes beyond his conlrol. The free slorage of 011, as herein provided, shail apply only as long as the said oil Is the property of Ihe lessor. (f) MEASUREMENTS OF PRODUCTtON, To gauge, measure and correct for temperature all production 'rom said lands in conformance wilh 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, and reports pertaining to the production from the land herein l&ased as well as those perlalrùng to the production from offsel wells operutad by the lessee, his noeralor, or sub-lessee on other lands, which shall be opened et all times for Ihe Inspection of any duly aulhonzed agent of lhe lessor, To furnish the lessor with ortgll1al pipe line reports shOWIng Ihe day, month, year, amount, gravities. and temperatures of all oil run and wilh monlhly reports shOWIng the month, year, emount, and price of all gas and natural gas gasoline and other products produced and wid from the land herein leased, and the amounl of gas returned to the sand. (g) MONTHLY PAVMENTS AND STATEMENTS, Unless the time of payment is othelWise exlended by the Office of Slate Lands an:! Investments to make payment on or before the Iwenlieth (20Ih) day of the calendar month succeeding Ihe month of production and removal and sale of oil and gas from said land, and to furnish sworn monthly stalements therewith showing In deta,¡ Ihe :!~'~r.:,ly and quality ollhe production (per well if required where practical) from the land herel,:'leaser., end the quantity and quality of the production (per well where practical) from offset wells upon cornering or contiguous land operaled by the lessee, his operator or sub-lessee and such olher Information as omy be called for in Ihe form or report prescribed by lessor, (h) WELLS TO BE DRILLED, To drill end operate effectively all wells necessary to reesonably offset weils upon and production from adjOining lands. To drill such addillonal wells el such times or places as are necessary and essential 10 the 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 the form approved by the lessor, of each well drilled by the lessee on the lands herein leesed, showing Ihe strala and character of the formations, waler sands and mineral deposits penelrated by the dnll, amount of casing, size and where sel, and such other Informalion as the lessor may require which log or copy thereof shall be furnished to the lessor. To file progress reports, in the form prescribed by the lessor, at the end of each thirty (30) day penod while each well IS being drilled. To file annually, or at such times as Ihe lessor may require, maps shOWIng Ihe development of Ihe struclure and the location of all wells, pipe ilnes and other works used In conneclion with the operations of tha lessee upon said land. To make such other reports pertaining to Ihe production and operations by the lessee on said land, and report such other information as may be possessed by the lessee on the wells, production or operations of others on lands on the same geologic structure that R\1Y be of IInportance in effecting proper developmenl and operation of the lands herein leased, as may be called for by the lessor. All togs, maps, and reports shall be submitted in dupticate and I;,e Office of State Lends and Investments may welve such reports as conditions may warrant. OIPRODUCTION. To operate Ihe wells upon Ihe lend herein leased In a competent and efficient manner In an en~eavor to recover alllhe 011 and gas economlcaily possible from seid la,1d and to prevenlthe under drainage of the oil and gas Ihereunder by wells operated by the lessee or others on cornenng or contiguous lands to Ihose leased herein, All plens or methods for the purpose of stimulallng or Increasing production on,lands herein leased other than those In common use shail hrst be presenled to the lessor for approval before being put Into actual operalion. No producllon agreements limiting, restricling, prorating, or othelWise affecling the naluratproduction from said land shall be entered Inlo by the lessee, nor shall the les$ee limit, reslrict. or prorate Ihe nalural production from seld lend In any way or in any event, except with the consent In writing of the lessor first had an oblalned. (k)SUSPENSION OF OPERATIONS, Should any well drilled upon lands covered by Ihls lease oblain producllon of 011, gas, or other hydrocarbons in paying quantities and if the 'essee Is unable to establish a satisfectory market for the oil, gas or hydrocarbons produced from said well, Ihe lessee may apply for and the lessor may grant permssion for the suspension of production operations until such times as a satisfactory market for Ihe product from said well can be developed. Dunng the lime any such suspension of operations Is In effect, the le5';"e shall continue to pay the annual rental of 52,00 per acre or fraction Ihereof provided by (c) above, and Ihis lease shell remain In effect as though oil or gas was being produced from said lands. (I)DllIGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling, prod:J~¡;'':¡ 8"C operating of wells on the land covered hereby, unless consent to suspend ope" ,Ions tt11"4Jorarily is granted by the lessor; to carry on all operations hereunder In a good and work,. .anlike mann.:: In accordance with approved melhods and pracllce, having due regard for Ihe prevention of waste of 011 and gas, or Ihe entrence of water to Ihe oil or ges beanng sands or slrata to the destruction or injury of such deposits, Ihe preservation and conservation of the property for future productive operations and to the heallh and safety of workmen and e~loyees; to plug securely,n an approved manner any well before abandoning It, and not to ebandon eny well withoul permissIon 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 driiled on lands adjoining less than 200 feel from the property lines thereof; to conduct all operations subject to Ihe Inspection of the lessor; to carry out al the lessee's expense all reasonable orders and requirements of the lessor relative to Ihe prevention of waste and preservation of the property and the health and safety of workmen Including the replanting and reseeding of drilling sites and other areas dislurbed by drilling operations and on failure of the lessee so to do the lessor shall have the right, together with other recourse herein provided, to enter on the propeny to repair demage or prevenl weste at the lessee's expense; to abide by and conform 10 valid aøølicablê têOulalion~ øtMeribêd 10 ,.imbun.lhe own., ollha sur/see, ilolher than Ihe lessor, or lessee of grazing rights thereof for actual damages thereto and Injury to Improvements thereon, provided, that Ihe lessee shall nol be held responsible for acts of providence or actions beyond his control. (m)TAXES AND WAGES-FREEDOM OF PURCHASE, To pay, when due alllaxes lawfully assessed and levied under the laws of the Slate of Wyoming upon Improvements, 011 and gas produced from the land hereunder, or other rights, property or assets of the lessee, to accord all workmen and employees co~lele 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. Not to assign this lease or any Interest therein, nor sublet eny portion of the leased premises, except with the consent in writing of Ihe lessor first had and obtained, All overriding royalties to be valid, musl have the approval of the Board or by the Office of Slale 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 right of disapproval of such overriding royalties when In Its opinion they become excessive and hence are detrimenlallo the proper developmenl of the leased lands, (o)DELlVER PREMISES IN CASE OF FORFEITURE, To deliver up the leased premises, with all permanenl Improvements thereon. In good order and condition in case of forfeiture of this lease, bullhis shall nol 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) The right io léase sell, or othelWise dispose of the surface of ïhe lend embraced within 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 Ihe use of Ihe lessee in the conduct of operations hereunder. (b)The right to lease, sell, or olhelWise dispose of other mineral or subsurface resources not covered by the lease, in accordance wilh the applicable laws and the rules of Ihe Board of Lend Commissioners. (c)From the operation of this lease, Ihe surface lands herelofore granted for rights-of-way and easements and reserves the nghl to grant such other nghts-of-way end easements as provided by the statules of the Stale of Wyoming, as long as such rights-of-way and easements do not connict 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 developmenl if the Board finds such action would impair the lesso~s reserved nghtto lake its royalty gas in kind and to purchase all other gas allocated 10 Ihe leased lands a provided in Section 3(e)below. (e)The right to elter or modify the quantity and rate of production to Ihe end thai weste may be eliminated or thet production may conform to the lessee's felr share of allowabte production under any system of State or National curtailment and proration aulhonzed by law, (f)ln eddition to Its right 10 lake Its royalty ges In kind, the lessor reserves the nght and option 10 purchase all other gas produced for' sale or use off Iha leased lands, This option' shall be' exercised only if Ihe Board finds that 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 conmerce and that one or more Intrastate purchasers (i.e., purchasers who will use, consume, or sell ,the gas for use or consumption entirely wilhln the Stale of Wyoming) are willing and able to purchase the gas upon terms reesonably comparable to end alleasl as favorable to the lessee as those offered by the interslale purchaser. The Board shall waive this option and permit an Interstate sale if it finds Ihat' no intra slate purchaser Is willing and able to purchase the gas upon terms which are reasonably comparable 10 lI~d alleast as favorable to the lessee. A5 a condition to such waiver, 11 satisfactory agreement may be entered Into by which the production of its royalty gas may be " . ~i!ferred unllllt can be produced and sold for consumption and use entirely wilhin the State of Wyoming, Section 3, APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subject to the . provisions of Title 36, as to State and Slate School Lends, and Title 11, as 10 State Loan and ".."Investments Board Lends, W.S. 1'977, to remove eny Improvements owned by lessee within a reasonable time after thlltermlnatlon of this lease. Lessee agrees that any such improvements not removed within a reasonable time after termination of Ihls lease shall be disposed of pursuant 10 the above statutes. Section 4, FORFEITURE CLAUSE. The Board shall have the power and euthorlty to cancel leases procure!! by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or lIIega,l purpose~, or for the violation of the covenants of the lease, upon proper proof thereof, In the eventlhat1he lessee shall defauitln the performance or observance of any of the lerms, 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 either by personal service or by certified or reglslered mall upon the lessee, and II 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, dectare a forfeiture and cancel this lease, whereupon all rights and privileges, obtained by the lessee hereunder shallterminale and cease and the lessor may re-enter and take 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 Ihe lessor might othelWise have. A waiver of any particuler cause or forfeiture shall not prevent the cancellation and forfeiture of this lease by any olher cause of forfeiture, or for Ihe same cause occurring at any other lime. 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 opera lions have been conducled under the lease on the land 10 be relinquished, the lessee shall file with the State Lend Board and State Loan and Investment Board, a wrilten relinquishment or surrender, duly signed and acknowtedged and staling therein lhat no operations have been conducted on Ihe land, The relinquishment so filed shall become effective on the dale and hour of receipt Ihereof In the office of the Director or el some later date, If such be so specified by the lessee therein, If Ihe said relinquishment falls to state that no operations have, been conducted, Ihe effective date of relinquishment shall be the dale 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 Ihe Director a written relinquishment or surrender duly acknowiedged and slating therein that operalions have been conducted on the land. The relinquishment shall not become effective untlt the tand and the walls thereon shell have been pieced In condition acceptable to lessor and shall have been approved by the Slate 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 effective Ihere shall be no recourse by lessee and the lease as to the relinquished lands may not be reinslated, t 1 11 ~J8 "22 g j J LQûì '., . ... !,' . ..\..., 1\ ~, \ r f I'; -J: ._:_. ¡) .~1 t \ t'1 .... , \4 I t...... .:l... ; J...) ".~ . ...