HomeMy WebLinkAbout929988
ProducefS 88
Rocky Mountain 1989
(Paid-Up Rev 1996)
Hanson & Slrahn, Inc, (2000)
PAID-UP OIL AND GAS LEASE
000507
THIS AGREEMENT, made and entered into the lih day of April, 2007 by and between DOROTHY M.
~ICOLAYSEN, a married woman dealing in her sole and separate property, individually and heir to the Estates of L.
MORRlS SUTTON, deceased, and DOROTHY H. SUTTON, deceased, whose address is 15720 South Gulch Road, Valley
Springs, California 95252, hereinafter called lessor (whether one or more) and HANSON & STRAHN, INC., whose address
is P. O. Box 3020, Cheyenne, Wyoming 82003, hereinafter called lessee.
WITNESSETH:
1. That lessor, for and in consideration of --Ten-- dollars ($ *10.00* ) in hand paid, receipt of which is hereby
acknowledged, and of the agreements of lessee hereinafter set forth, hereby grants, demises, leases and lets exclusively unto
lessee the lands described below for the purpose of investigating, prospecting, exploring (by geophysical and other methods),
drilling, mining, operating for and producing oil or gas, or both (as defined below), together with the right to construct and
maintain pipelines, telephone and electric lines, tanks, ponds, roadways, plants, equipment, and structures thereon to produce,
save and take care of said oil and gas (which right shall include specifically a right-of-way and easement for ingress to and
egress from said lands by lessee, or its assignees, agents or permittees, necessary to or associated with the construction and
maintenance of such pipelines, telephone and electric lines, tanks, ponds, roadways, plants, equipment, and structures on said
lands to produce, save and take care of the oil and gas), and the exclusive right to inject air, gas, water, brine and other
fluids from any source into the subsurface strata, and any and all other rights and privileges necessary, incident to, or
convenient for the economical operation of said land, alone or conjointly with neighboring land, for the production, saving
and taking care of oil and gas and the injection of air, gas, water, brine, and other fluids into the subsurface strata, said
lands being situated in the County of Lincoln, State of Wyoming, described as follows, to-wit:
Township 24 North, Range 118 West. 6th P. M.
Section 26: WY2SEY4, SEY4SEY4
{
In addition to the land described above, lessor hereby grants, leases and lets exclusively unto lessee, to the same extent
as if specifically described, lands which are owned or claimed by lessor by one of the following reasons: (1) all lands and
rights acquired or retained by lessor by avulsion, accretion, reliction or otherwise as the result of a change in the boundaries
or centerline of any river or stream traversing or adjoining the lands described above; (2) all riparian lands and rights which
are or may be incident, appurtenant, related or attributed to lessor in any lake, stream or river traversing or adjoining the lands
described above by virtue of lessor's ownership of the land described above; (3) all lands included in any road, easement or
right-of-way traversing or adjoining the lands described above which are or may be incident, appurtenant, related or
attributed to lessor by virtue of lessor's ownership of the land described above; and (4) all strips or tracts of land adjacent or
contiguous to the lands described above owned or acquired by lessor through adverse possession or other similar statutes of
the state in which the lands are located.
d
\¡:J
For the purpose of calculating payments provided for herein, it shall be deemed that the lands covered by this lease
contain 120.00 acres, whether there actually be more or less.
The term oil as used in this lease shall be interpreted to include any liquid hydrocarbon substances which occur
naturally in the earth, including drip gasoline or other natural condensate recovered from gas without resort to manufacturing
process. The term gas as used in this lease shall be interpreted to include any substance, either combustible or non-
combustible, which is produced in a natural state from the earth and which maintains a gaseous or rarified state at ordinary
temperature and pressure conditions, including but not limited to helium, nitrogen, carbon dioxide, hydrogen sulfide, coal bed
methane gas, casinghead gas and sulphur.
Subject to the other provisions herein contained, this lease shall remain in force for a term of three (3) years from this
date (herein called "primary term") and as long thereafter as oil and gas, or either of them, is produced from the leased
premises or drilling operations are continuously prosecuted. For purposes of this lease, a well completed for the production
of coalbed methane gas shall be deemed to be producing gas under this lease at all times when dewatering of the coal seams
from which the coalbed methane gas will be produced is occurring. For purposes of this lease, "drilling operations" shall
include operations for the drilling of a new well and operations for the reworking, deepening or plugging back of a well or
hole or other operations conducted in an effort to establish, resume or re-establish production of oil and gas; drilling
operations shall be considered to be "continuously prosecuted" if not more than one hundred twenty (120) days shall elapse
between the completion and abandonment of one well or hole and the commencement of drilling operations on another well
or hole; drilling operations shall be deemed to be commenced for a new well at such time as lessee has begun the
construction of the wellsite location or the road which provides access to the wellsite location; and drilling operations shall be
deemed to be commenced with respect to reworking, deepening, plugging back or other operations conducted in an effort to
resume or re-establish production of oil and gas at such times as lessee has the requisite equipment for such operations at the
wellsite.
Lessee has the option to extend this lease for an additional primary term of three (3) years commencing on the date that
the lease would have expired but for the extension by tendering to Lessor a prepaid payment equal to $125.00 per net mineral
acre prior to the expiration of the primary term as set forth herein. The primary term of this lease will be considered to be
continuous, commencing on the date of the lease and continuing from that date to the end of the extended primary term.
2. The lessee shall deliver to the credit of the lessor as royalty, free of cost, in the pipeline to which lessee may connect
its wells the equal one sixth (1/6) part of all oil produced and saved from the leased premises, or lessee may from time to time
at its option purchase any royalty oil in its possession, paying the market price thereof prevailing for oil of like grade and
gravity in the field where produced on the date of purchase.
RECEIVED 6/4/2007 at 3:47 PM
RECEIVING # 929988
BOOK: 660 PAGE: 507
JEANNE WAGNER
I INCOLN COUNTY CLERK, KEMMERER. WY
)929988
000508
The lessee shall pay lessor, as royalty, on gas, including casinghead gas or other gaseous substances, produced from the
leased premises and sold or used off the premises or used in the manufacture of gasoline or other products, the market value
at the well of one sixth (116) of the gas sold or used, provided that on gas sold the royalty shall be one sixth (1/6) of the
amount realized from such sale. The amount realized from the sale of gas shall be the price established by the gas sales
contract entered into in good faith by lessee and a gas purchaser for such term and under such conditions as are customary in
the industry. "Price" shall mean the net amount received by lessee after giving effect to applicable regulatory orders and after
application of any applicable price adjustments specified in such contract or regulatory orders. In the event lessee
compresses, treats, purifies or dehydrates such gas (whether on or off the leased premises) or transports gas off the leased
premises, lessee in computing royalty hereunder may deduct from such price a reasonable charge for each of such functions
performed.
3. This is a paid-up lease and all cash consideration first recited above and annual rentals have been paid to lessor in
advance to keep this lease in full force and effect throughout the primary term. In consideration of the payment of such cash
consideration and advance of annual rentals, lessor agrees that lessee shall not be obligated, except as otherwise provided
herein, to commence or continue any operations during the primary term. Lessee may at any time or times during or after the
primary term surrender this lease as to all or any portion of the land described above, and as to any strata or stratum, by
delivering to lessor or by filing of record a release or releases, and be relieved of all obligations thereafter accruing to the
acreage surrendered.
4. Any payments required to be made to lessors pursuant to this lease, other than the payment of royalties, may be paid
by lessee to the lessor or to lessor's credit in the Direct to Lessor Bank, at (or its successor
or successors, or any bank with which it may be merged or consolidated, or which succeeds to its business assets or any part
thereof, by purchase or otherwise) which shall continue as the depository regardless of changes in the ownership of said land
:INITIAL or the oil and gas. All such payments may be made by cash, check eHIfaft, mailed or delivered on or before the due date for
~/ that payment. Any payments, so made shall be binding on the heirs, devisees, executors, administrators, and personal
r ..J, epresentatives of lessor and on lessor's successors in interest or on lessor's assigns.
5. If, at the expiration of the primary term of this lease, oil or gas is not being produced from the leased premises but
/HERE lessee is then engaged in drilling operations, this lease shall continue in force so long as drilling operations are continuously
. prosecuted; and if production of oil or gas results from any such drilling operations, this lease shall continue in force so long
as oil or gas shall be produced from the leased premises. If, after the expiration of the primary term of this lease, production
on the leased premises should cease for any cause, this lease shall not terminate if lessee is then engaged in drilling
operations, or within one hundred twenty (120) days after each such cessation of production commences or resumes drilling
operations, and this lease shall remain in force so long as drilling operations are continuously prosecuted, and if production
results therefrom, then as long thereafter as oil or gas is produced from the leased premises.
6. Ifat any time, either before or after the expiration of the primary term of this lease, there is a well capable of
producing oil or gas on the lands covered by this lease, or on other lands with which lands covered by this lease are pooled or
unitized, but the well is shut-in, whether before or after production therefrom, and this lease is not being maintained
otherwise as provided herein, this lease shall not terminate (unless released by lessee) and it shall nevertheless be considered
that oil or gas is being produced from lands covered by this lease during all times while the well is so shut-in. Lessee shall
use reasonable diligence to market the oil or gas capable of being produced from such shut-in well, but shall be under no
obligation to market the oil or gas under terms, conditions or circumstances which, in lessee's judgment exercised in good
faith, are unsatisfactory. When the lease is continued in force in this manner, lessee shall payor tender to the lessor or
lessor's successors or assigns, an amount equal to $10.00 per year per net mineral acre covered by the lease. Such payments
shall be made on or before the shut-in royalty payment date, as defined below, next occurring after the expiration of one
hundred twenty (120) days from the date the well was shut-in, unless prior to such date oil or gas from the well is sold or
used or the lease is otherwise maintained as provided herein. In like manner, on or before each succeeding shut-in royalty
payment date while such well remains shut-in, lessee shall make payment of shut-in royalty in the same amount and manner.
The term "shut-in royalty payment date" shall mean the anniversary date of this lease. Any shut-in royalty payment may be
made by cash, åfaft or check, mailed or tendered on or before the shut-in royalty date. Lessee's failure to payor tender, or
properly payor tender, any such sum shall render lessee liable for the amount due but it shall not operate to terminate the
lease. Any failure on the part of lessee to make such payments in a timely manner shall be subject to the default provisions
of Section 15 herein.
It is expressly understood and agreed that notwithstanding anything to the contrary contained herein, that after the
fNmAL expiration of the primary term, this lease may not be maintained in force by the payment of shut-in royalty for a period in
~excess of three (3) consecutive years for oil and five (5) consecutive years for gas.
:_~, 7, If lessor owns a lesser interest in the above described hmd other th", the enti" ",d undivided fee simple estate
SJIII' ·./therein, then the royalties, including shut-in royalty, herein provided shall be paid to lessor only in the proportion which
'~., lessor's interest bears to the whole and undivided fee. Af!)' if!terest if! 3roålletiof! from tHe IEtflås åeseribeå Hereif! to wHieH the
HEAF if!terest of lessor ma)' be sllbjeet sHall be dedlleted from the royalty Hereia reserved.
8. Lessee shall have the right to use, free of cost, gas, oil and water produced on said land for its operation thereon,
except water from wells and reservoirs of lessor. Lessee shall have the right at any time to remove all machinery and fixtures
placed on said premises, including the right to draw and remove casing.
9. Lessee shall pay to lessor reasonable amounts for damages caused by its operations to growing crops on said land.
When requested by lessor, lessee shall bury its pipelines which traverse cultivated lands below plow depth. No well shall be
drilled nearer than two hundred (200) feet to a house or barn now on said premises, without written consent of lessor. Lessee
shall have the right at any time (but not the obligation), to remove all improvements, machinery, and fixtures placed or
erected by lessee on said premises, including the right to pull and remove casings.
O~29988
000509
~- \ ." . ,': , 1'" ¡i·
10. Lessee is here\j~ gî~en the right and power at any time and from time to time as a recurring right, either before or
after production, as to all or any part of the land described above and as to anyone or more of the formations hereunder, to
pool or unitize the leasehold estate and the mineral estate covered by this lease with other land, lease or leases in the
immediate vicinity for the production of oil and gas, or separately for the production of either, when in lessee's judgment it is
necessary or advisable to do so, and irrespective of whether authority similar to this exists with respect to such other land,
lease or leases. Likewise, units previously formed to include formations not producing oil or gas may be reformed to exclude
such non-producing formations. The forming or reforming of any unit shall be accomplished by lessee executing and filing of
record a declaration of such unitization or reformation, which declaration shall describe the unit. Any unit may include land
upon which a well has heretofore been completed or upon which drilling operations have been commenced. Production,
drilling or reworking operations or a well shut-in for any reason anywhere on a unit which includes all or a part of this lease
shall be treated as if it were production, drilling or reworking operations or a well shut-in under this lease. In lieu of the
royalties elsewhere herein specified, lessor shall receive on production from the unit so pooled royalties only on the portion
of such production allocated to this lease; such allocation shall be that proportion of the unit production that the total number
of surface acres covered by this lease and included in the unit bears to the total number of surface acres in such unit.
11. Lessee shall have the right to unitize, pool, or combine all or any part of the land described above as to one or more
of the formations thereunder with other lands in the same general area by entering into a cooperative or unit plan of
development or operation approved by any governmental authority and, from time to time, with like approval, to modify,
change or terminate any such plan or agreement and, in such event, the terms, conditions, and provisions of this lease shall be
deemed modified to conform to the terms, conditions, and provisions of such approved cooperative or unit plan of
development or operation and particularly, all drilling and development requirements of this lease, express or implied, shall
be satisfied by compliance with the drilling and development requirements of such plan or agreement, and this lease shall not
terminate or expire during the life of such plan or agreement. In the event that the land described above or any part thereof
shall hereafter be operated under any such cooperative or unit plan of development or operation whereby the production
therefrom is allocated to different portions of the land covered by said plan, then the production allocated to any particular
tract of land shall, for the purpose of computing the royalties to be paid hereunder to lessor, be regarded as having been
produced from the particular tract of land to which it is allocated and not to any other tract of land; and the royalty payments
to be made hereunder to lessor shall be based upon production only as so allocated.
12. If the estate of either party hereto is assigned or sublet, and the privilege of assigning or subletting in whole or in part
is expressly allowed, the' express and implied covenants hereof shall extend to the sub lessees, successors and assigns of the
parties; and in the event of an assignment or subletting by lessee, lessee shall notify lessor, in writing of all assignments or
sublettings, and lessee shall be relieved and discharged as to the leasehold rights so assigned or sublet from any liability to
lessor thereafter accruing upon any of the covenants or conditions of this lease, either express or implied. No change in
ownership of the land, royalties, or other payments, however accomplished, shall operate to enlarge the obligations or
diminish the rights of lessee or require separate measuring or installation of separate tanks by lessee. Notwithstanding any
actual or constructive knowledge of or notice to lessee, no change in ownership of said land or of the right to receive royalties
or other payments hereunder, or of any interest therein, whether by reason of death, conveyance or any other matter, shall be
binding on lessee (except at lessee's option in any particular case) until one hundred twenty (120) days after lessee has been
furnished written notice thereof, and the supporting information hereinafter referred to, by the party claiming as a result of
such change in ownership or interest. Such notice shall be supported by original and certified copies of all documents and
other instruments or proceedings necessary in lessee's opinion to establish the ownership of the claiming party.
13. In the interest of conservation, the protection of reservoir pressures and recovery of the greatest ultimate yield of oil
and/or gas, lessee shall have the right to combine the leased premises with other premises in the same general area for the
purpose of operating and maintaining repressuring and recycling facilities, and for such purpose may locate such facilities,
INITIAL including input wells, upon leased premises, and no royalties shall be payable hereunder upon any gas used for repressuring
@)and recycling operations benefiting the leased premises.
~ 14. Inessor, 8HriAg the flriæary teræ of this lease, reaeives a BOAa fide offer frøæ a third !3arty to flHrehase froæ lessor a
, lease eoveriAg aAY Ðr all of the sHBstaAees eovered BY this lease 8Rd eoveriAg all ar a flortioR of the laad descriBed herein,
HERE with sHeh lease to Beeoæe effeetive H!30n e}(!3iratioA of this lease, whieh lessln is williRg to aeee!3t froæ the affering party,
lessor hereBY agrees to Aotify lessee in VlritiAg af said afrer iææediatel)', inelHdiAg iA the Rotiee the Raæe aRd address of t. :¡e
offeror, the 19riee offered aAd all ather pertiReRt teræs aRd eaRditioAS of the offer. Lessee, for a !3eriod of fifteeR (I5) days
after the reeei19t af the Rotiee, shall have the 19rior aRd preferred right aRd o19tioR to 19l:lføhase the leaße or 19art thereof or
iRterest thereiR eoyered BY the offer at the !3riee aad on the teræs and øORditioRs s1geeified iR the offer. 1.11 affers æade Hp to
aad iRelHdiRg the last day af the 19riæary teræ of this lease shall Be sHbjeat t8 the teræs and eORditiaRs of this !3aragraph 14.
8hoHld lessee eleet ta f)Hrehase the lease 19Hnmant to the teræs hereof, it shall so Rotify lessor iR writiRg BY æail, telefa)(, or
telegraæ !3rior to e)(19iratioA of said fifteeR (15) day period. Lessee sHall praæptIy tHereafter fHrRisH to lessor tHe Rew leaße for
e}(eeHtioR by lessor aloRg with lessee's sight draft payable to lessor iR !3ayæeRt of the s1geeified aæÐl:mt as eORsideratioR for
the Aew lease, fnlefl draft BeiRg s1:l&jeet to af)¡3ro','al of title aeeordiAg to the terms tHereof. U¡30R reeeif)t thereof, lessor shall
f)rom¡3tIy e)(eeHte said lease aAd retHrR saæe aloAg witH tHe draft throHgh lessor's ean}, efreeord fQr !3Jtyæe~t.,..
15. In the event lessor considers that lessee has not complied with all it¿ obligations hereunder, either expre¡;s or implied,
lessor shall notify lessee in writing, setting out specifically in what respects lessee has breached this leasè: LesSee shall then
have sixty (60) days after receipt of said notice within which to meet or commence to meet all or any. part 'tif thé.)breaches
alleged by lessor. The service of said notice shall be precedent to the bringing of, alJ.Y ,#ti9n ,þy Jess.or,on;,said le!lŠ:e for any
cause, and no such action shall be brought until the lapse of sixty (60) days after service of such notice on lessee. Neither the
service of said notice nor the doing of any acts by lessee aimed to meet all or any of the alleged breaches shall be deemed an
admission or presumption that lessee has failed to perform all its obligations hereunder. This lease shall never be forfeited or
cancelled for failure to perform in whole or in part any of its implied covenants, conditions, or stipulations until a judicial
determination is made that such failure exists and lessee fails within a reasonable time to satisfy any such covenants,
conditions, or stipulations.
0929988
00051.0
16. All express and implied covenants of this lease shall be subject to all federal and state, coUnty or municipal laws,
executive orders, rules and regulations, and lessee's obligations and covenants hereunder, whether express or implied, shall
be suspended at the time or from time to time as compliance with such obligations and covenants is prevented or hindered by
or is in conflict with federal, state, county, or municipal laws, rules, regulations or executive orders asserted as official by or
under public authority claiming jurisdiction, or Act of God, adverse field, weather, or market conditions, inability to obtain
materials in the open market or transportation thereof, wars, strikes, lockouts, riots, or other conditions or circumstances not
wholly controlled by lessee, and this lease shall not be terminated in whole or in part, nor lessee held liable in damages for
failure to comply with any such obligations or covenants if compliance therewith is prevented or hindered by or is in conflict
with any of the foregoing eventualities. The time during which lessee shall be prevented from conducting drilling or
INITIAL reworking operations during the primary term of this lease, under the contingencies above stated, shall be added to the
Sprimary term of this lease.
17. Lessor kereb)' warr8f\ts aRd agrees to defeRd tHe title to tHe laRds åeseribeà ab8ve, aRG agrees that lessee, at its
option, shall have the right at any time to pay for lessor, any mortgage, taxes or other liens existing, levied or assessed on or
HeRE against the above described lands in the event of default of payment by lessor and be subrogated to the rights of the holder
thereof, and lessor hereby agrees that any such payments made by lessee for the lessor may be deducted from any amounts of
money which may become due the lessor under the terms of this lease.
18. This lease and all its terms, conditions, and stipulations shall extend to and be binding on all successors in interest, in
whole or in part, of said lessor or lessee.
19. With respect to and for the purpose of this lease, lessor, and each of them if there be more than one, hereby release
and waive the right of homestead.
20. If requested by Lessee or Lessor, the parties hereto shall execute a memorandum or short recording counterpart of
this Agreement, which counterpart shall be in a form sufficient to constitute notice of this A reement to third parties under
the laws of Wyoming, but which counterpart shall not contain the amounts or rates of payme t hereunder, or other terms of
this Agreement which Lessee or Lessor may elect not to disclose of record. The executi n and recording of the above
recording counterpart shall not limit, decrease or increase, or in any manner affect, any of the t rms of this Agreement, or any
rights, interests or obligations of the parties hereto.
WHEREOF witness our hands as of the day and year first above written.
ICOLA YSEN, individu
heir to the Est t ofL. MORRIS SUITO ,
deceased, and DOROTHY H. SUTTON, deceased
STATE OF CALIFORNIA
COUNTY OF Ccdaoer¿(..s
}
} ss.
}
INDIVIDUAL
BEFORE ME, the undersigned authority, on this day personally appeared, DOROTHY M. NICOLA YSEN, to me
known to be the person described in, and who executed the foregoing instrument, and who acknowledged to me that she
executed the same as her free act and deed, including the release and waiver of the right of homestead.
R MY HAND AND SEAL OF OFFICE THIS
/
day of
tLl ct ~/
,2007.
Notary Public for the State of
My Commission Expires: '3. .;¿ &1 .
Iii - :::sf::.:7:1
. . Notary PublIc . California f
San JoaquIn COUnty -
MvComm. EJCPInN Mar 26. 201