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HomeMy WebLinkAbout929991 , "~, r'·~~:~ ,.:' .. Producers 88 Rocky Mountain 1989 (Paid-Up Rev 1996) Hanson & Strahn, Inc, (2000) PAID-UP OIL AND GAS LEASE 000519 THIS AGREEMENT, made and entered into the 11 th day of April, 2007 by and between KENNETH B. SUTTON and DEANN L. SUTTON, husband and wife, whose address is P. O. Box 1158, Thayne, Wyoming 83127, hereinafter called lessor (whether one or more) and HANSON & STRAHN, INC., whose address is P. O. Box 3020, Cheyenne, Wyoming 82003, hereinafter called lessee. WITNESSETII: 1. That lessor, for and in consideration of - - Ten-- doIlars ($ * 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, equipÏl1ent; and structures thereon to produce, save and take care of said oil and gas (which right shaIl include specificaIly 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 foIlows, to-wit: -,\1 ',' Township 24 North, Range 118 West. 6th P. M. Section 25: SWY4SWY4 In addition to the land described above, lessor hereby grants, leases and lets exclusively unto lessee, to the same extent as if specificaIly described, lands which are owned or claimed by lessor by one of the foIlowing 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 ofland 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. For the purpose of calculating payments provided for herein, it shaIl be deemed that the lands covered by this lease contain 40.00 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 naturaIly 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 shaIl 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 shaIl 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 weIl completed for the production of coalbed methane gas shaIl 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" shaIl include operations for the drilling of a new weIl 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 shaIl elapse between the completion and abandonment of one weIl or hole and the commencement of driIling operations on another well or hole; drilling operations shall be deemed to be commenced for a new weIl at such time as lessee has begun the construction of the weIlsite location or the road which provides access to the weIlsite 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 shaIl 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 3:48 PM RECEIVING # 929991 BOOK: 660 PAGE: 519 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY O~~9991. 000520 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 ~NITIAl thereof, by purchase or otherwise) which shall continue as the depository regardless of changes in the ownership of said land ff[;jr the oil and gas. All such payments may be made by cash, check ef-èfaft, mailed or delivered on or before the due date for , .~ 8 f that payment. Any payments so made shall be binding on the heirs, devisees, executors, administrators, and personal I epresentatives of lessor and on lessor's successors in interest or on lessor's assigns. \, L " 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, th is 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. If at 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 trom 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, èfaft 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. INITIAl. It is expressly understood and agreed that notwithstanding anything to the contr::!.ry contained herein, that after the C'\, . - expiration of the primary term, this lease may not be maintained in force by the payment of shut-in royalty fora period in 1 <!:.5,_ ;excess of three (3) consecutive years for oil and five (5) consecutive years for gas. ~l 7. If lessor owns a lesser interest in the above described land other than the entire and undivided fee simple estate HERE 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. f.fI)' iflterest iR proåuetiofl frem the laRds åeseribeå HereiR to "'HieH the interest ef lessor may be s\:Ibjeet sHall be åedHeteå frem tHe royalty HereiR 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::J29~~1 ..,1 000521. 10. Lessee is hereby given 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. INITIAl. 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, 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. If lessor, al:lfing the primar;, term of this lease, reeeives a Bona fiae eff-er from a third part)' to pl:lreflaSe from lessor a lease eovering an)' or all of the sl:lbstanees e8yered by this lease aRa eovering all or a portioR of the land deseribed herein, with sHeR lease to besome e[feetive I:IrOR eJípiration of this lease, whisR lessor is williRg to a66ept from tRe Off~~:~ :;rz" lessor hereby agrees to notifY lessee in ',vritiRg of said offer immediately, iRelHdiHg iR the Hotiee the Rame Iifld ad t e offeror, the priee offered aRd all otRer pertiReRt terms and eonditioRs of the off.er. Lessee, f-or a period of fifteeR (15) days after the reeeipt sf tfle Rotiee, sRall ka-ve th,e prior aRd 9ref-orrea right ana optisn to 9HreRase the lease or part thereof or interest thereiH 6s·..ered BY the offeràttlre þriee aRd sn the terms aRd eOFlditicms speeified iH the offer. }.1I offers made Hp to aFld iHell:lding thê last dåfofth~ prifam->' term ofthis lease shall Be sl:lbjeet ta the terms and 60nòitioHs of this paragraph 14. Shoulèllessee'èleet to'l"i':lf6RBSe tRe leâs:e131:lrsuaRt to the terms hereof, it shall so notify lessor in writing by mail, telefaJ(, or telegram prior ta enpiration af saia fifteen (15) aay period. Lessee sRall promptly thereafter furnish to lessor the new lease f-or eJ(e6utioH by lessor along with lessee's sight draft payable to lessar in payment of the speeified amount a5 eORsideration for tRe Rew lease, sl:lek araft being sl:lBjeet to a 3pro\'al of title aeearding to the terms thereof. UpOfl reeeipt thereaf, lessor sRall premptly eneeute said lease and retl:lrn same aloflg with tRe araft thrsugh lessor's Bliflk af reeord for paymeflt. 15. In the event lessor considers that lessee has not complied with all its obligations hereunder, either express or implied, lessor shall notifY lessee in writing, setting out specifically in what respects lessee has breached this lease. Lessee shall then have sixty (60) days after receipt of said notice within which to meet or commence to meet all or any part of the breaches alleged by lessor. The service of said notice shall be precedent to the bringing of any action by lessor on said lease 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. O'~299,91.. 000522 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 @PrimarytermOfthiSlease. l)' /}; '5 17. Lessor hereby warraRts aREI agrees to àef-eRd the title to the laRds deserieed above, aRd 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 against the above described lands in the event of default of payment by lessor and be subrogated to the rights of the holder HeRE 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 L~ssee or Lessor, the parties hereto shall execute a memorandum or short recording counterpart of this Agreement, which cou~terpart shall be in a form sufficient to constitute notice of this Agreement to third parties under the laws of Wyoming, but which counterpart shall not contain the amounts or rates of payment hereunder, or other terms of this Agreement which Lessee or Lessor may elect not to disclose of record. The execution and recording of the above recording counterpart shall not limit, decrease or increase, or in any manner affect, any of the terms 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. ~~ ETH B. SUTTON ~JJ {iQ I2Jí)iÙ ~ STATEOF~ G COUNTY OF ~ \JLYti4 } } ss. } INDIVIDUAL BEFORE ME, the undersigned authority, on this day personally appeared, KENNETH B. SUTTON and DEANN L. SUTTON, to me known to be the persons described in, and who executed the foregoing instrument, and who acknowledged to me that they executed the same as their free act and deed, including the release and waiver of the right of homestead. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS N~d!fftmb¿'~N~ My Commission Expires: /0,· it· .;l. {J' ZJ QIVD day of NIHI· ,2007. OFFICIAL SEAL ANN MACKIN O.IIIA '1 Ilia . IIUat ...., Nile.............. YUU COIIIW c-................ ...