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HomeMy WebLinkAbout929459 OIL AND GAS LEASE Parcel # 159 Fund Code: CS \ 000330 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: Hanson & Strahn, Inc. 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: Part of Lot 44 (formerly NWNE:S2NE:NW:S2 Sec 16) Resurvey Township: 21 North Range: 113 West of the 6th P.M. County: Lincoln Acres: 600.00 $600.00 ($1.00 per acre or fraction thereof) Together with the right of ingress and egress and the right to use so much of the surface of said lands as is necessary to construct and maintain thereupon all works, building, plants, waterways, roads, communication lines, pipe lines, reservoirs, tanks, pumping stations, or other facilities necessary to the proper conduct of operations there under. Section 2. TERM OF LEASE. This lease shall become effective on the day and year set out below and shall remain in effect for a primary term of five (5) years and for so long thereafter as leased substances may be produced from the lands in paying quantities. This lease may also be extended beyond its primary term in the absence of production of leased substances as may be provided by the statutes of the State of Wyoming and the regulations of the Board of Land Commissioners adopted pursuant thereto. Provided, however, if drilling, completion, testing or reworking operations are being diligently conducted, either during the primary term or during any extension thereof, this lease shall continue in full force and effect so long as such operations are being conducted and so long thereafter as oil or gas may be produced in paying quantities. This lease may be relinquished or terminated at an earlier date as herein provided. Section 3. If the LESSOR owns an interest in oil and gas in said land less than the entire fee simple estate, then the royalties and rentals to be paid LESSOR shall be reduced proportionately. Section 4. LESSEE expressly represents that, if an individual, LESSEE is a citizen of the United States, or has declared an intention to become a citizen, and is over 19 years of age-and if a corporation, is duly qualified to transact business in Wyoming. Section 5. This lease is issued under the authority conferred by Title 36, W.S. 1977 as to the State and School Lands, and Title 11, W.S. 1977 as to Farm Loan lands, and shall be subject to, and operations by LESSEE hereunder shall be conducted in compliance with the specific lease terms set out on the reverse of this lease, and with all applicable state statutory requirements and the regulations issued thereunder, including those providing for: the leasing of State or Farm Loan Lands for oil and gas; the conservation of oil and gas; and the regulation of security transactions. Section 6. HEI·RS 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. LESSOR, STATE OF Hans,op,;,& Strahn, Inc. 'q,'.¡.:¡'0:' . ,J '. ';;·:;íié.ssee Signature: -''''''-';;;~~f ."-~~~- -' "~'- IN WITNESS WHEREOF, this lease has been executed by LESSOR and· LESSEE to become effective on the 2nd day of, February, 2007 A.D. ........'i!~J..'~'., . ,.". í'~ .'.~~.~,~;' . .. . of Land, c,~iriis M-eoaer8',:' ~;¡ , ·1." p. ~"<.' ,':1 ,',-- ;~ .t·f:; ! , '~'''''''-~::-I¡ through its ,. ., .. . dréss: P.O. Box .....·v., -~ ", 'C'J . :!=-')r ~. . Cheyenne /1onê.: :' -, ; ..< ' ,Resoúrce·issuE!:· Antelope crucial winter range. State: WY 307-632-3944 No Attest Required Zip: 82003 . .~ '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 antelope 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 5/18/2007 at 9:13 AM RECEIVING # 929459 BOOK: 658 PAGE: 330 JEANNE WAGNER L''''I'''/''\I N COUNTY CLERK, KEMMERER, VI'" Qil..iÛ.ill.i&lli '[)<:9 . Secllon1. THE LESSEE AGREES:V~~34!}~J nl\l\ ') "'}01 (a) BOND. To furnish a bond with an approved corpora Ie Sür~ compan~IMtMNM~ business In Ihe State of Wyoming, or such other surely as may be acceplable 10 the lessor. in Ihe penal sum as required by the current rules of Ihe Slale Board Of Land Corrvnlssloners. condllioned upon Ihe payment of all rentals and royallles accruing 10 Ihe lessor under Ihe terms hereOf, anØ upon Ihe full corrpliance 01 all olhef lerms and conditions ollhis lease and Ihe rules and ragulatlons relating Iherelo. and also condilioned on tha paymenl of all damage', to Ihe surface and l"'4>rovemenls thereon where the I..ase covers lands Ihe surface of which 11I"s been sold or olherwose leased. Such bond or bonds furnished prior to the development of tt,e lands conlained In this lease may be Increased in such reasonable amounts as the lessor ma~ decide upon commencemenl of drilling operations and after Ihe discovery of oil or gas. (b)PAYMENTS. To make all payments accruing hereunder 10 the Office of State Len.1s and Inveslments. 122 West 25th Street. Cheyenne, Wyoming 82002-0600. (c)RENTALS. Prior to Ihe discovery of 011 or gas In paying quanlllles 10 pay Ihe lussor in advance, beginning with the effecllve dale hereof, an annual rentat of $ 1.00 per acre or fraclion thereot. After the discovery of 011 or gas in paying quanlltles to pay the lessor In advance beginn:ng with Ihe first day of the lease year sUCCeeding Ihe lease year In which actual discovery was "'ade. an annual rental of $2.00 per acre or fraclion Ihereof. unless changed by agreement. Such rental so paId for anyone year shall be credlled on Ihe royally for thai year. Annual rentals on all leases shall be payable in advance for the first year and eltch year thereafter. No notice of rental due shell be senl 10 Ihe lessee. If Ihe renlal Is not pEoid on or before the date II becomes due, nollce of defaull will be sent 10 the lessee, and a penall) of $0.50 per acre for late paymenl will be assessed. The lessee is nollegally obligated to pay eilher the rental or the penally, but if Ihe rpl1tal and penalty are not paid within Ihirty (30) days after Ihe nollce of default has been received. .he lease willlermnate automatically by opere lion of law. Termination of Ihe lease shall nol re,leve the lessee Of any obligation incurred under the lease olher than Ihe obligation to pay rental or penalty. The lessee shall not be enlitled to a credit on royalty due for any penalty palú for late paymenls of rental on an opp.raling lease. (d)ROYAL TIES. The royaltie~ to be paid uy lessee ar6: (i) On 011, one-sIXth of thai produced, saved, and sold from said land. the same to be dftllvered allha wells or to the credit of lessor into the pipe line to which the wells may be connacted. (ii) On gas. Including casinghead gas or other hydrocarbon subslances. produced from said land saved and sold or used off the premises or In the manufacture of gasotine or other products Ihere¡·orn, :~b "larkel value allhe well of one-sixth of the gas so sold or used, provided thai on gas H,:d at th.. wells, Ihe royally shall be one-sixlh Of Ihe amounl realized from such sale. (ili) On all olher hydrocarbons of value and gaseous substances and elemenls produced or extracted, including propann, bulane, sulphur, nllrogen, carbon dioxida, and helium, at such royally as shall be fT'IJlually delermined 10 be fair and reasonable. (iv) For royally purposes on gas and natural gasoline the value shall be as approved by the lessor, and in Ihe determination of the value of natural gasoline Iha fair cosl of exlraction shall be considered as a deductible lIem: provided, howaver, Ihallhe allowance for the cosl of exlractlon may exceed Iwo-Ihlrds of the amount or value only on approval of the lessor and in no evenl shall the price for gas. or nalural gasoline, be less Ihan Ihal received by Ihe Unlled Stale of America for its royalties from the same field. (v) Natural gas and 011 actually used for operating purposes upon Ihe land and, excepl as 10 the ullimale sale Ihereof. gas or liquid hydrocarbons returned 10 the sand for stimulating the produclion of oil or secondary recovery purposes shall be royalty free. (e) DISPOSITION OF ROYALTY OIL AND GAS. To deliver 10 the lessor. or 10 such individual. firm or corporation as the lessOl may designale. all royalty oil. gas, or olher kindred hydroC!trbons. free of charge on the premises where produced. or, allhe option of Ihe lessor. and in tleu of said royallies In kind. Ihe lessee agrees to pay Ihe lessor Ihe fietd markel price or value of al royalty oil, gas, or olher kindred hydrocarbons produced and saved. When the lessor elects to lake liS royalty 011. gas, or other hydrocarbons In kind such a!l eil, gas, or olher kindred hydrocarbons shall be good merchantable oil. gas, or other kindred hydrocarbons. The lessee shall if necessary fumish slorage for royalty oil free of chargu :or thirty (30) days after the end ollhe calendar month in which the 011 Is produced, upon th/) leased premises. or at the such place as Ihe lessor and Ihe lessee may mulually agree upon. ~fOvlded. Ihat the lessee shall not be held liable lor loss or destruction of royalty 011 so stored fron: causes beyond his control. The free storage of oil, as herein provided. shall apply only as long as Ihe said oil is Ihe property of Ihe lessor. (f) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct lor lempe'''ture all production from said lands in conlormance wilh the rules and regulations adopted by the Board of Land CorrvnIssioners and report said production 10 Ihe lessor in accordance therewllh. To keep books, racords. and raports pertaining to Ihe production from Ihe land herein leased as well as Ihose pertaining 10 the production from offsal wells operaled by the lessee, his operalor, or sUb-lessee on other lands. which shall be opened al all times for the Inspection ot 1iny duly authorized ag..nl ollhe lessor. To turnish Ihe lessor wilh original Pipe line reports showing Ihe day, monlh. year. umount. gravities. and lefT1)8ratures of all 011 run and wilh monlhly reports showing Ihe monlh, year, amount, and price of all gas and natural gas gasoline and olher products produced and !iOld from Ihe land herein leased. and the amount of gas returned 10 the sand. (g) MONTHLY PAYMENTS AND STATEMENTS. Unless Ihe time of paymenl is otherwise extended by the Office of Stale Lands and Investmenls to make paymenl on or bel"re Ihe twantielh (20Ih) day ollhe calendar month succeeding the monlh of production and removal and sale of oti and gas from said land, and 10 turnlsh sworn monthly stalements therewith showing In delaillhe quantity and quality of the production (per well if required where practical) from the land hereh, 1":¡S3~. '~d the quanlity and qualily of the production (per well where practical) from offset well. ,oon t.<:rnenng or contiguous land operaled by Ihe lessee, his opera lor or sub-lessee and such ~Iher Informal",n as may ue called lor In Ihe form or report prescribed by lessor. (h) WELLS TO BE DRILLED. To drill and operale effectively all wells necessary 10 reasonably offsel wells upon and produ~¡¡on from adjoining lands. To drill such additional wells al such times or places as are necessary and essential to the proper development and commercial production of the oil and gas contenl of said land. (i)LOG OF WELLS AND REPORTS. To keep a log. In Ihe form approved by Ihe lessor, Of each well drilled by the lessee on the lands herein leased, showing the slrala and character of Ihe formations. water sands and moneral depostis penelrated by Ihe drill, amounl of casing, size and where sel. and such olher information as Ihe lessor may require which log or copy thereof shall be furnished 10 the lessor. To file progrftss reports, in Ihe form prescribed by Ihe lessor, atlhe end of each thirty (30) day period while each well Is being drilled. To f,le annually. or alouch times as Ihe lessor may require. maps showing Ihe development Of Ihe slruclure and Ihe location Of ati wells, pipe tines and olher works used in connection wilh Ihe operations 01 the lessee upon said land. To make such other reports pertaining 10 Ihe production and operations by Ihe lesse6 :¡n said land. and report such other information as may be possessed by the lessee on It.e wells, production or operatiOt'I£ of others on lands on the same geologic struclure Ihal m¡IY be of i"'4>ortance In effecting proper developmenl and operation of the lands herein laased. as may be called for by the lessor. Atllogs, maps, and reports shall be submitted In duplicale and 'J'e Office of Stale Lands and Inveslments may waive such raports as condlllons may warrant. U>PRODUCTlON. "'0 operale Ihe wells upon Ihe land herein leased In a compelenl and efficlenl manner in an endellvor 10 re<:'-Over alllhe 011 and gas econOmically possible from said la"d and 10 preventlhe under draina"e of the oil and gas Ihereunder by wells opera led by Ihe lossee or others on cornr.ring 0" co.'~iguous lands 10 those leased herein. All plans or merhoc.·; Inr the purpose 01 stifT'IJlating or Increasing production on lands herein leased olher Ihan those in cOITVl'lon use shall first be presenlftd to the lessor for approval before being put Inlo aclual operation. No production agreements limiting, reslricllng, prorallng, or olherwise affettlng Ihe naturalproduction Ironl $,'¡id land shall be entered into by Ihe lessee. nor shall the lessee tlmil, reslric!. or prorale the natural production from said land In any way or In any evenl, except wilh the consenl in writing of Ihe lessor firsl had an obtained. (k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by Inls lease obtain production of oil, gas. or olher hydrocarbons In paying quanlllies and if Ihe lessee Is unable to eslablish a satislactory markel for the 011, gas or hydrocarbons produced from ¡,aid well, the lessee may apply for and Ihe lessor may grant permission for the suspension of production operations until such times as a salisfactory markel for Ihe product from said weil can be developed. During Ihe time any such suspension of opera lions Is In effecl, the lessee shall continue to pay Ihe annual renlat of $2.00 per acre or fracllon thereof provided by (c) ab,'\ e. and Ihis lease shall remain in effect as Ihough 011 or gas was being produced from said lands. (I)DILlGENCE-PREVENTION OF WASl t:. To exercise reasonable diligence In drilling. producing. and operating of wells on Ihe land covered hereby. unless consent to suspend operalions le"'4>orarily Is granted by Iha lessor; 10 carry on all operations hereunder in a good and worIcl ......:·"8 ".mner In accordance with approved methods and pracllce, having due regard for the p.wenllOlI of waste of 011 and gas, or the entrance of water to the 011 or gas bearing sands or strala 10 Ihe deslructlon or injury Of such deposits. Ihe preservallon and conservallon of Ihe property for future productlvtJ operations and to Ihe health and safety of wort<men and en-ployees: to plUg securely In an approved manner any well before abandoning II. and nol to abandon any well wilhout permosSlon of the lessor, nolto drill any well within two hundred (200) feet or any of Ihe ouler boundaries of the land covered hereby. unless l ,. . _ _. -8~lnsl draInage by wells drilled on lands adjoining less than 200 feet Irom the property lines thereof: to conducl all opera lions subject to Ihe Inspecllon of the lessor: 10 carry oul at the lessee's expense all reasonable orders and requlremenls of the lessor relative to the prevention of waste and preservation of the property and the heallh and safely of worIcmen including Ihe replanting and reseeding of drilling sites and olher areas dislurbed by drilling operallons and on failure Of the lessee so to do the lessor shall have Ihe righi, togelher wilh other recourse herein provided. to enter on the property 10 repair damage or prevent waste atlhe lessee's expense: 10 abide by and conlorm 10 valid applicablê rêoulAtion~ ørê~Mbêd 10 rêimburêê Ihe OWMr ollhe curle~e. :r other Ihan the lessor, or lessee of grazing rights thereof for aclual damages Iherelo and injury 10 Improvemenls Ihereon, provided, that Ihe lessee shall not ba held responsible for acts of providence or acllons beyond his control. (m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due alllexes lawlully assessed and levied under Ihe laws of the Stale of Wyoming upon Improvements. 011 and gas produced from the land hereunder. or other righls, property or assels of the lessee, to accord all workmen and employees cO"'4>lele freedom 01 purchase, and to pay all wages due workmen and e"'4>loyees In conformance with the laws of Ihe State of Wyoming. (n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not 10 assign this lease or any Interest therein, nor sublel any portipn of Ihe leased premises, except with the consent in writing of Ihe lessor first had and obtained. All overriding royallies to be valid, musl have the approvat of the Board or by Ihe Office Of Slale Lands and Inveslments when authority 10 do so has been delegaled by Ihe Board and will be recorded wllh Ihe lease. The Board reserves the right of disapproval of such overriding royallles when In its opinion they become excessive and hence are detrimental 10 tha proper development of the leased lands. (o)DELlVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premisas, v.ith all permanentlmprovemenls Ihereon. In good order and condition In case of forfeiture of Ihls lease. but this shall nol be construed to prevent the removal, allerallon or renewal of equipment and improvemenls In Ihe ordinary course 01 operations. Section 2. THE LESSOR EXPRESSLY RESERVES: (a) The right to lease sell, or otherwise dispose of Ihe surface of the land embraced within this lease under existing laws or lAws hereafter enacted, and in accordance with Ihe rules Of the Board of Land CorM~sslons Insofar as the surface is nol necessary for the use of Ihe lessee In Ihe conducl of operations hereunder. (b)The right to lease, sell, or olherwise dispose of olher mineral or subsurface resources not covered by Ihe lease. In accordance with Ihe applicable laws and the rules of the Board of Land Commissioners. (c)From the operallon 01 this lease. Ihe surface lands heretofore granled for rights-of-way and easements and reserves the right 10 granl such olher rights-of-way and easemenls as provided by Ihe statutes of Ihe Stale Of Wyoming. as long as such rlghls-of-way and easements do not connict with Ihe operations for 011 and gas on Ihe land herein leased. (d)The rlghlto reluse 10 corrvnlt Ihe leased lands 10 a unit plan of developmenl if the Board finds such action would impair the lessor's reserved rlghllo take lis royally gas in kind and 10 purchase all other gas allocaled 10 Ihe leased lands a provided in Section 3(e)below. (e)The rlghl to aller or modify Ihe quantity and rale of production 10 the end thai wasle may be eliminated or that production may conform 10 the lessee's fair share of allowable producüon under any syslem of State or National curtallmenl and prorellon authorized by law. (f)ln addition 10 its right to take lis royally gas in kind. Ihe lessor reserves the righl and opllon to purchase ati other gas produced for sale or use off the leased lands. This option shall be exercised only If Ihe Board finds Ihatlhe lessee has received and Is willing to accept a bona fide offer from a purchaser who inlends to sell or transport the gas into inlerstate conrnerce and thai one or more intrastale purchasers (I.e., purchasers who will use, consume, or selllhe gas lor use or consu"'4>tion enllrely within the Slale of WYOming) are willing and abte 10 purchase Ihe gas upon terms reasonably comparable to and alleast as favorable to the lessee as Ihose offered by Ihe interstale purchaser. The Board shall waive this option and permil an Interstale sale if it finds that no inlrastale purchaser Is willing and able 10 purchase Ihe gas upon terms which are reasonably comparable 10 and at least as favorable 10 the lessee. As a condition 10 such waiver, a sallsfactory agreement may be entered Inlo by which the production of its royally gas may be deferred unlll il can be produced and sold for consu"'4>tion and use entirely wilhin Ihe Slate of Wyoming. Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the righl subjecllo Ihe provisions of Tille 36. as to State and Stale School Lands, and Tille 11, es 10 Stale Loan and inveslments Board Lands, W.S. 1977, to remove any Improvements owned by lessee within a reasonable time after the lermination of this lease. Lessee agraes Ihal any such l"'4>rovements not removed within a reasonable lime after termination of this lease shall be disposed of pun¡uanl 10 the above slalutes. Section 4. FORFEITURE CLAUSE. The Board shall have the power and authority 10 cancel leases procured by fraud, deceit, or misrepresenlations. or for the use of Ihe lands for unlawlul or Illegal purposes, or lor Ihe violation of Ihe covenants 01 the laase, upon proper proof thereof, in the evenllhat Ihe lessee shall default in Ihe performance or observance Of any of Ihe terms. covenants, and stipulations hereof, or of Ihe general regulallons promulgaled by the Board of Land Commi3sioners and In force on the date hereof, Ihe lessor shall serve nollce of such failure or defaull either by personal service or by certified or reglslered mall upon Ihe lessee, and If such failure or default conllnues for a period of Ihirty (30) days after Ihe service of such nollce, Ihen and In Ihat evenl Ihe lessor may, at its option, dedare a lorfeiture and cancel Ihls lease. whereupon ati rlghls and privileges. obtained by the lessee hereunder shalllerminale and cease and the lessor may re-enler and take possession of said premises or any part thereof. These provisions shall not be construed 10 prevent the exercise by lessor any legal or equllable remedy which Ihe lessor might otherwise have. A waiver of any particular cause or forfeiture shall not prevenlthe cancellation and forfellure of this lease by any other cause ot forfeilure, or for the same cause occurring al any olher 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 operallons have been conducled under Ihe laase on the land to be relinquished. Ihe lessee shall file wilh Ihe Stale Land Board and Slale Loan and Inveslment Board. a wrilten relinquishmenl or surrender. duly signed and acknowledged and stating therein that no operations have been conducted on the land. The rellnqulshmenl so ßled shall become effective on the dale and hour of recelpl thereof in Ihe office of Ihe Direclor or at some later dale. If such be so specified by the lessee therein. If the said relinquishment falls to slate Ihat no operations have been conducted, the effecllve dale of rellnqulshmenl 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 wilh Ihe Direclor a wrillen relinquIshment or surrender duly acknowledged and stating therein thaI operations have been conducted on Ihe land. The relinquishment shall not become effeclive unWlhe land and the wells thereon shall have been placed in condition acceplable to lessor and shall have been approved by the Slale Oil and Gas Supervisor. All rentals becoming due prior 10 a surrender or relinquishment becoming effective, shall be payable by lessee unless paymentlhereof shall be waived by lessor. A relinquishment having become effective Ihere shall be no recourse by lessee and the lease as to Ihe relinquished lands may nol be reinstated. Lh 01 U1j 17 01' 'Or,'i j -.¡ :.,)1.,:(. ... c... UJ..J \,J v 'C' ""1 .::.~ ~" /\ :'-~ ;