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HomeMy WebLinkAbout928489 This indenture of lease and through its Board of Land Lease #- U7 -UU1 JCU Parcel # ' 200 Fund Code: CS entered into by and between the State of Wyoming, acting Commissioners as LESSOR, and the following as LESSEE: STATE -- WYOMING OIL AND GAS·"!.'EASE 000675 and Effective Janua , by 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: All Section: 36 Township: 20 North Range: 120 West of the 6th P.M, County: Lincoln Acres: 640.00 $640.00, ($1.00 per~cre 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 maintçl.Ìn 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, ~TATE OF WYOMI~C~in~n»~hrOUgh its Lessee S~gnature: ~ ..J~ By' Address: 5591- '3, Fulton \t\JO\{ CitY:GI1~nw~,~'Sta!e:~D , Zip: PJO! ìl ~ 3-:flC) Phone: _t-,., qO~--{"-p)1 return recorded document to: Burnett Oil Company - Land Dept. Burnett Plaza - Suite 1500 SOl Cherry St. - Unit #9 Fort Worth TX 76102-6881 RECEIVED 4/17/2007 at 9:18 AM RECEIVING # 928489 BOOK: 654 PAGE: 675 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY . .o? ...~, II r'1/\ ^f\ Q1J...M.!.o...Q.ö,~ 0928489 000676 , , ,.'v . ~ ¡ Section 1. THE LESSEE AGREES: (a) BOND. To furnish a bond With an approved corporate surely c~ny authorized 10 :ransad business in the State of Wl'Omng, or such other surely as may be acceplable 10 the lessor, in the penal sum as reqUIred by the current rules of the State Board of Land Commissioners, conditioned upon the payment of all rentals and royal lies accruing to Ihe lessor under U,e lerms hereol, anå upon the lull compliance of all other terms and conditions of this lease and ~ne rules and regulations relating thereto. and also conditioned on Ihe payment of all damag~. to the surface and Improvemenls Ihereon where the lease covers lands Ihe surface of which ras been sold or otherwise leased. Such bond or bonds furnished prior to the developmenl of Ihe lands contained In this lease may be Increased in such reasonable amounts as the lessor may decide upon corrvnencement of drilling operallons and after the discovery of 011 or gas. (b)PAYMENTS, To maka all payments accruing hereunder 10 the Office of State Lands and Investments, 122 Wesl 251h Street. Cheyenne, Wyoming 82002-0600. (c)RENTALS. Prior 10 Ihe discovery of oil or gas in paying quantities to pay the iessor in advance, beginning with Ihe effective dale hereof, an annual rental of $1.00 per acre or fraclion Ihereof. After the discovery of 011 or gas in paying quantities to pay the lessor In advance beginning with Ihe first day of Ihe lease year succeeding Ih~ lease year in which adual discovery was made, an 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 royalty for thai year, AM,si ..'~toils on all leases shall be payable In advance for Ihe first year and each year \h"re',:ler. Nu notiroe of renlal riue shall be senl to Ihe lessee. If Ihe rental is not paid on or befor~ ¡he date it becomes due, notice of default will be sent to Ihe lessee, and a penaUy of $0.50 per acre for late payment wil' be assessed. The lessee Is not legally obilgaled to pay either the rental or Ihe penalty, but If the rental and penalty are not peid within thirty (30) days after the notice of defaull has been received, Ihe lease wlllter"'nale automatically by operation of law, Termination of the lease shall not relieve the lessee of any obtigation Incurred under Ihe lease other Ihan the Qbllgation to pay rental or penatiy, The lessee shall nol be entitied to a credit on royalty due for any ptlr,alty paid for lale payments' of rental on an operating lease, (d)ROY AL TIES. The royalties 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 atlhe weUs or 10 the credll of lessor into the pipe line to which the wells may be connected, (il) On gas, includIng cas,nghead gas or other hydrocarbon substances, produced from said land saved and sold or used off the premises or In the manufaclure of gasoline or other products therefrom, the market value at the well of one-sixth of the gas so sold or used, provided Ihat on gas sold atlhe wells, the royalty shaU be one-s,xth of the amount realized from such sale, (ili) On all other hydrocarbons of value and gaseous substances and elements prod J~ed or extracted, Including propane, butane, sulphur, nitrogen, carbon dioxida, and helium, at such royalty as shall be ITlIJtually determined to be fair and reasonable. (i,) For royalty purposes on gas and natural gasoline the ,value shall be as approved ,by the lessor, and in the deterrnnation of Ihe value of natural gasQiine the fair cosl of extrection ~hall be considered as a deductible item: provided, however, that the allowance for the cosl Of e' ,traction may exceed two-thords of the amount or value only on approval of the lessor and In no e''>3I11 shall Ihe pnce for gas, or natural gasoline, be less than that received by the Unlled Stale of America for lis royalties from the same field. (v) Nalural gas and 001 actually used for operating purposes upon the land and, except.n to Ihe ultimate sale thereof, gas or liquid hydrocarbons relurned to the sand for stimulf,:lng the production of oil or secondary recovery purposes shall be royalty free, (e) DISPOSITION OF ROYAL TV OIL AND GAS, To detiver to the lessor, or to such Inlilvldual, firm or corporahon as the lassor may designate, all royalty oil, gas, or other kindred hydrocarbons, free of charge on the premises where produced, or, allhe option of the lessor, and In lieu of said royalties In kind, the lessee agrees to pay the lessor the field market price or value of all royally 011, gas, or other kindred hydrOCélrbons produced and saved. When the lessor elects to lake ds royalty 011, gas, or other hydrocarbons In kind such a') ail, gas, or olher kindred hydrocarbons shall be good merchantable 011, gas, or other kindred hydrocarbons, The lessee shall if necessary furnish storage for royalty 011 free of charglJ for thirty (30) days after the end of Iha calendar month In which the 011 Is produced, upon the leased premises, or althe such place as the lessor and the lessee may mutually agree upon, provided, thatlhe lessee shall not be held liable for loss or destruction of royalty 011 so stored from causes beyond his control, The free storage of 011, as herain provided, shall appty only as long as the said ollis the property of the lessor. (f) MEASUREMENTS OF PRODUCTION, To gauge, measure and correct for lemparature all product"~,,, f'Of'f' ....id lands in conformance with the rules and regulations adopted by the Board of Land ;o""...~sioners and report said producllon 10 the lessor in accordance therewith. To I· ~,p books, r&t,~rds, and r~ports pertaining tl) the produchon rrom the land here,n lensed as well as those pertaining to the production from offset wells operated by thBlessee, his operator, or sub-Iesse.. on other land:!. which shall be opened at ell tlme& for the Inspectior. of any duly authorized agenl of Ihe lessor. To furnish the lessor With origInal pipe line reports showing the day, month, year, amount, gravities, and tefl'4J8ratures of all oil run and with monthly reports showing Ihe month, year, amount, and pnce of all gas and natural gas gasoline and other products produced and sold from the land hereIn leased, and the amount of gas returnad to the sand, (g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time 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 removal and sale of 001 and gas from saId land, and to furnish sworn monthly statements therewith showing In detail the quantity and quality of Ihe produclion (per well if required where practical) from tha land hereby leased, and the quanhty and quality of Ihe production (per well where practical) from offset wells upon comenng or contoguous land operated by the lessee, his oparator or sub-leSJ'Je and such other Informatoon as may be called for In Ihe form or report prescribed by lessor. (h) WELLS TO BE DRILLED. To dnll and operate effectively all wells nacessary to ref..,mably offset wells upon and production from adjoining lands, To dnll such addilional wells al such times or places as are necessary and essential to the proper development and convnercial production of Ihe oil and gas content of said lan~, (i)LOG OF WEl.LS AND REPORTS. To keep a log, in the form approvad by the lessor, of each well drilled by the lessee on the lands herein leased, showing the strata and characler of the formations, walar sands and mneral deposits penetrated by the drill, amount of casing, ~Ize and wherB set, and such other ,nforlmhon as the lassor may reqUIre which leg or copy themof shall be furnished 10 tha lessor. To fila progress reports, in the form prescribed by the lessor, at the end of each Ihlrty (30) day period while each well 15 being drilled, To file annually, or alsuch times as the lessor may require, maps showing the development of the structure and the location of all wells, pipe lines and other works used In connecllon with the operations of the lessae upon said land. To make such other reports pertaining 10 the production and opera lions by the less /) on said tand, and report such olher information as may be possessed by the lessee on the wells, production or operations of others on lands on the same geologic structure that may be of importance In effechng proper development and operation of the lands herein leased, a~, may be called for by Ihe lessor. All logs, maps, and reports shall be submitted In duplicate and ,l,eOlfice , of Slate Lands and Investments may waive such reports as conditions may warrant. mPRODUCTlON. To operate the wells upon the land herein leased in a cO"1!etent an, efficient manner In an endeavor to recover alllhe oil and gas economically possible from said land and to prevent the under drainage of the 011 and gas thereunder by wells operated by the I!'~see or others on corn..ring or c'",tigllous lanos 10 those leased herein. All plans or methods for the purpose of stimulating or tncreasir,g prod:.:ction on lands herein leased olher than those In common US& shall forst be presented to the lessor for approval before belr,g put into aclua! operation. No ~'C:~~I.~::;'I agreements limiting, restricting, prorating, or otherwi~e affecting the 1\~:!J:',,!;>rooullion from said lane! shall be entered Into by tha lessee, nor shall the lessee limit, reslrl,,;, or prorate the natural production from said land in any way or In any event, except wilh the consent In writing of the lessor first had an obtained, (k)SUSPENSION OF OPEi:A TIONS. Should any well drilled upon lands covered by this lease oblain produclion or oil, gas, or olher hydrocarbons In paying quantities and If the lessee is unable toestablish a salls factory markel for the 011, gas or hydrocarbons produced from said well, Ihe lessee may apply for and the lessor may grant permission for the suspension of producUon operations until such times as a saUsfaclory market for the product from said well can be developed. Dunng Ihe time any such suspension of operaUons is in effact, the lessee shall conllnue to pay the annual rental of $2,00 per acre or fraction thereof provided by (c) above, and th,s lease shall remain In effect as though oil or gas was being produced from said lands. (I)DILiGENCE-PREVENTION OF WASTE. To exercise reasonÐble diligence in drilling, producing, and operating of weUs on the land covered hereby, unless consent 10 suspend operaUons te"1!orarily IS granted by the lessor; to carry on all operations hereunder In a good and workmanlike manner In accordance with approved methods and practice, having due re!)ard for the prevention of wasle of oU and gas, or the ontrance of water to the 011 or gas bearing .unds or strata to the destruction or Injury of such deposits, the preservation and conservallc, of the property for future productive operations and to the health and safety of workmen and enµoyees: to plug securely in an approved manner any well before abandoning II, and not to abatldon any well Without permission of the lessor, not to drill any well within two hundred (200) feel 01 any of the outer boundaries of the land covered hereby, unless t ~ ~ inst drainage by wells drilled on lands adjoining less than 200 feel from the property lines thereof; to conduct all operations subJecl to the inspedion of the lessor; to carry oul at the lessee's expense all reasonable orders and requirements of the lessor retative to Ihe prevention of waste and preservation of the property and the health and safety of workmen Including the replanting and reseeding of drilling siles and other areas dislurbed by drilling operations and on failure of the lessee so to do the lessor shall have the right. togelher with other recourse herein provided, 10 enter on the property 10 repair damage or prevent waste at the lessee's expense; to abide by and conform 10 v~lid ~pplicablê rêoul~liont þrêteribêð 10 rêimburtê fhe ðWl\er ollhe sur/ace, :I olher than tha lessor, or lessee of grazing rights thereof for actual demagas thereto and injury 10 improvemenls thereon, provided, thaI the lessee shaU not be held responsible for ads of providence or actions beyond his control, (m)TAXES AND WAGES-FREEDOM OF PURCHASE, To pay, when due aU taxes lawfully assessed and levied under the laws of the Stale of Wyoming upon i"1!l'ovements, 011 and gas produced from the land hereundar, or other rights, property or assets of the lessee, to accord all workmen and employees cOf\l)lete freedom of purchase, and to pay all wages due workmen and elf'9loyees 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 premises, except with the consent in wrlUng of the lessor first had and obtained, All overriding royal lies to be valid, ITlIJst have the approval of the Board or by the Office of State Lands and Investments when authority to do so has been delegated by the Board and will be recorded with the lease, The Board reserves the right of disapproval of such overriding royalties when In Its opinion they become excessive and hence are detrimental to the proper devetopment of the leased lands. (o)DELlVER PREMISES IN CASE DF FORFEITURE, To deliver up the leased premises, with all permanent ilf'9rovaments 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 l"1!I'ovements In the ordinary course of operations. Section 2. THE LESSOR EXPRESSLY RESERVES: (a) Tha ri~htlo lease sell, or olherwise dispose of the surface of the land embraced within this lease under exlsUng laws or laws hereafter enacted, and in accordance with the rules of the Board of Land Convnissions Insofar as the surface is not necessary for the use of the lessee in the conduct of operations hereunder. (b)Tha right to lease, sell, or otherwise dispose of other minerai or subsurface resources not covered by the lease, in accordance with Ihe 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 Ihe right to grant such other rights-of-way and easements as provided by the statutes of the State of Wyoming, as long as such rights-of-way and easements do not conflid with Ihe operations for oil and gas on the land herein leased. (d)The right to refuse to corm1it the leased lands to a unit plan of development if Ihe Board finds such action would Ilf'9alr the lesso~s reserved right to take Its royalty gas in kind and to purchase aU other gas allocated to the leased lands a provided in Section 3(e)below, (e)The right to alter or modify the quantlly 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 addition to Its right to take Its royalty gas In kind, the lessor reserves the right and option to purchase all olher 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 to accept a bona fide offer from a purchaser who intends to sell or transport the gas Into Interstale corrvnerce and that one or more Intrastate purchasers (I.e., purchasers who will use, consume, or seU the gas for use or consu"1!tion entirely wilhln the State of Wyoming) are willing and able to purchase the gas upon terms reasonably co"1!arable to and at least as favorable 10 the lessee as those offered by the inlerstate purchaser. The Board shall waive this option and permll an interstate sale If It finds Ihat no intrastate purchaser Is willing and abla to purchase the gas upon terms which are reasonably cOf\l)arable to and at least as favorable to the lessee. As a condition to such waiver, a sallsfactory agreement may be entered Into by which the production of Its royalty gas may be deferred unllilt can be produced and sold for consu"1!tion and use entirely within Ihe State of Wyoming. SecUon 3. APPRAISAL OF IMPROVEMENTS, The lessee shaU have the right subject to the provisions of Title 36, as to State and State School Lands, and Title 11, as to State Loan and Investments Board Lands, W,S. 1977, to remove any l"1!I'ovemenls owned by lessee within a reasonable time after the termination of this lease, Lessee agrees that any such Ilf'9rOvements not removed within a reasonable time after termination of this lease shall be disposed of pursuant 10 the above statules. Secllon 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 unlawfut or illegal purposes, or tor the violallon of the covenants of the lease, upon proper proof thereof, In the evant that the lessee shall default In the 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 either by personal service or by certified or registered mall upon the lessee, and If such failure or default conUnues for a period of thirty (30) days after Ihe service of such notice, then and In that e,enl the lessor may, at Its option, declare a forfeiture and cancel this lease, whereupon aU rights and privileges, obtained by the lessee hereunder shall terminate and cease and the lessor may re-enler 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 the tessor might otherwise have. A waiver of any particular cause or forfeiture shall not prevent the cancellallon 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 10 all or any legal subdivision of said lands as follows: (a) If no operations have been conducled under Ihe lease on the land to be relinquished, the lessee shall file wIlh the Stale Land Board and State Loan and Investment Board, a wrllten relinquishment or surrender, duly signed and acknowledged and stating Ihereln that no operations have been conducted on the land. The relinquishment so filed shall become effective on the 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 fails to state that no operations have been conducted, the effective date of relinquishment shall be the dete Ihe relinqulshmenl 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 wrltlen relinquishment or surrender duly acknowledged and stating therein that operations have been conducted on the land, The relinquishment shall not bacome effective until the land and the welts thereon shall have been placed in condition acceptable 10 lessor and shall have been approved by the State Oil and Gas Supervisor. All rantals bacoming due prior to a surrender or relinquishment becoming effective, shall be payable by lessee unless payment thereof shell 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. ~.l 11 lJ 8 22 9 1 j tOOl ('\ ~ \\ Þ-.~' ! . ~ ~;. :.~ ,1\ N , ,} _ :"I.J . , ,'1 '.~.:..~:.L f.~~