HomeMy WebLinkAbout931745
Form Approved by the Board
Lea5t=.". U, -uu.,.,:r
and Effective Janu6. _
STATE ~
OIL AND
,nOMING Parcel # 362
GAS LEASE Fund Code: CS
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000491
This indenture of lease entered into by and between the State of Wyoming, acting by
and through its Board of Land Commissioners as LESSOR, and the following as LESSEE:
Craig Settle
Section 1. PURPOSE. The LESSOR, in consideration of the rents and royalties to be
paid and the covenants fnd agreements to be kept and performed by the LESSEE, does hereby
grant and lease to the ~ESSEE, 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: 16 Township: 20 North Range: 113 West of the 6th P.M.
County: Lincoln
Acres: 640.00
$640.00
($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 leaset.e~s set out on the reverse of this lease, ·:and wí.th a1.lapplic·able state
statutory requirements ar:d thE! regulations issued thereunder, incll1ding those providing fOr:
the leasing of State or Farm Loan Lands for oil and gas;.,the cons'erv.at-ion.·of"oil,·and gas;
and the regulation of seC1.,1iityt·J::'ansactïons. ' . . "".. ,"'.".
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Se.ction 6. HEtRS'~'sùèCBSSORS J:N J:NTEREST. 'It 1s còvei1aÌ1ted~'a:hd agr.êeçl'thâJ::,èåch
obligatiqn hereunder shallext.end ,to and be bindingupori, 'ànd every' ben~fit ..t'hereof"sh'all
inure toth~ helrs,.executors,adininisb:ators, successors of,' or'assi'gns of "the rE!sp'ective
parties hereto.
Section 7. SOVEREXGN J:MMUNJ:TY. 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) ånd all
other state laws.
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City:6',.UII",OOÐ V1.9p~ate ~ t?ð . Zip; 5-ð/II-??/ ,
Phone: 30t-1or-~
***Stipulationsapp~y ,to this leas~. The ,stipulations can be referenced online at'5lf-web:state.wv.us.*~~.
Stipulation # . . RECEIVED 7/31/2007 at 11: 13 AM
.,' 5. RECEIVING # 931745
BOOK: 667 PAGE: 491
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
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return recorded document to: -, ";'~~;:,~,~,~
Burnett Oil Company - Land Dep~. t'
Burnett Plaza - Suite 1500
801 Cherry St. - Unit #9
no ? -03 -l{,35-cÞ
OIL AND GA" Lt:J-\SE TERMS
000492
Section 1. THE lESSEE AGREES:
(a) BOND. To furnish a bond with an approved corporate surety company authorized to
transact businass in the State of Wyoming, or such othar suraty as may be acceptable to the
lassor, In the penal sum as.raquired by the current rules of the State Board of land
Commissione~, conditioned upon the payment of an rentals and royaKiea accruing to the
lassor under the tenns hereof, and upon the full compliance of all other tenns and conditions
of this lease and the rules and regulationsralating therato, and also conditioned on the
payment of all damages to the surface and improvements thereon where the lease covers
lands the aurface of which has been sold or othelwi8O laased. Such bond or bonds furnished
prior to tha development of the lands contained in this lea80 may be increased in such
reasonable amounts as the lessor may dectde upon commencement of drilling oparations and
after the discovery of oil or gas.
(b)PAYMENTS. To make all payments accruing heraunder to the Office of State lands and
Investments, 122 West 25th Street. Cheyenne. Wyoming 82002-œ00.
(c)RENTAlS. Prior to the discovery of oil or ges in paying quantitias to pay the lessor in
advance, beginning with the effective dete hereof, an annual rantal of $1.00 par acra or
fraction thereof.
After the discovery of 011 or gas In paying quantities to pay the leesor In advance beginning
with the fi~t day of the lease year succeeding the lease year in which actual diacovery was
mede, an annual rantal of $2.00 per acre or fraction thereof, unless changed by agreement.
Such rental so paid for any ona year shell be credited on the royalty for that year.
Annual rantals on all leases shall ba payable in advance for the first year and each year
theraafter. No notice of rental due shall ba sent to tha lessee. If the rental is not paid on or
before the date it becomes due, notice of default will ba sent to the leasee, and a penalty of
$0.50 per acre for lata payment will be assessed.
The lessee is not legally obligated to pay either the rantal or the penalty. but if the rantal and
penalty are not peid within thirty (30) days.after the notice of default has been raceived, the
lea.. will tenninete eutornaticallyby operetion of law. Tennlnetion of the lea.. shall not
relieve the lessee of any obiigation incurred under the lease other than the obligation to pay
rantal or penalty. The les80e shall not be entitled to a credit on royalty due for any penalty
paid for late payments of rental on an operating lease.
(d)ROYAl TIES. The royalties to ba peid by lessee ara:
(I) On oil, one-elghth of that produced, 8Oved, and sold from said land. the same to be
deliverad at the wells or to the credit of lessor into the pipe line to which tha wella may be
connected.
(ii) On gas, including ceainghead gas or other hydrocarbon substances. produced from said
land saved and sold or used off the premi80s or in the manufacture of gasoline or other
products therefrom, the market value at the well of one-eighth of the gas so sold or used,
provided that on gas sold at the wells, the royalty shall be one-aighth of the amount realized
from such aale.
(iii) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, Including propane, butane; sulphur, nitrogen, carbon dioxide, and helium, at such
royalty as shall be mutually detennined to ba fair and reaaonable. .
(iv) For royalty purposes on gas and natural gasoline the value shall be aa approved by the
lessor, and in the detennination of the value of natural gasoline the fair cost of extraction shall
ba considered as a deductible item; provided, however, that the allowence for the cost of
extraction may exceed two-thirds of the amount or value only on approval of the lessor and in
no event shall the price for gas, or natural gasoline, be less· than that received by the United
State of America for its royalties from the same field.
(v) Natural gas and oil actually used for operating purposes upon the land and, except as to
the ultimate sale thareof, gas or liquid hydrocarbons returned to the sand for stimulating the
production of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYAL TV OIL AND GAS. To deliver to the lessor, or to such
individual, finn or corporation as the lessor may designate. all royalty oil, gas, or other kindred
hydrocarbons, free of charge on the premi80s where produced, or, at the option of the lessor.
and in liau of said royalties in kind. the lassee agrees to pey tha lessor the field market price
or value of all royalty oil. gas, or other kindred hydrocarbons produced and saved.
When the lessor elects to take its royalty oil, gas, or other hydrocarbons in kind such as oil,
gas, or other kindred hydrocarbons shall ba good merchantable oil, gas, or other kindred
hydrocarbons. The lessee shall if necessary furnish storage for royalty oil frae of charge for
thirty (30) days after the end of the celendar month in which the oil is produced, upon the
leased premises. or at the such place as the lessor and the lessee may mutually agree upon.
provided, that the lessea shall not ba held liable for loss or dastruction of royalty 011 so stored
from cau80a bayond his control.
The free storage of oil. as herein provided,.shall apply only as long as the said oil is the
property of the lessor.
(I) MEASUREMENTS OF PRODUCTION. To gauge, measura and correct for temperature all
production from said lands in confonnance with the rulas and regulationa adopted by the
Board of land Commissione~ and report said production to the lessor in accordance
therewith.
To keep books, records, and reports pertaining to the production from the land herein leased
as well as tho8O pertaining to the production from offset wells operated by the lessee, his
operator, or sutHessee on other lands, which ahall ba opened at all times for the inspection of
any duly authorized agent of the lessor.
To furnish the lessor with original pipe line reports showing the day, month. year, amount,
gravities, and temperatures of all oil run and with monthly reports showing the month, yaar,
amount. and price of all gas and natural gas gasoline and other products produced and sold
from the land haraln leased, and the amount of gas raturned 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 bafore the
twentieth (20th) day of the calendar month succeeding tha month of production and removal
and sale of oil and gas from said land, and to furnish sworn monthly statements therewith
showing in detail the quantity and quality of the production (per well ff requirad whera
practical) from the land hereby leased, and the quantity and quality of the production (per well
where prectical) from offset wells upon cornering or contiguous land operated by the lassee,
his operator or sutHessee and such other information as may be called for in tha form or
raport prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and operate effectively all wells necessary to
reasonably offset wells upon and production from adjoining lands.
To drill such additional wells at such times or places as are necessary and essential to the
proper development and commercial production of the oil and gas content of aaid land.
(i)LOG OF WELLS AND REPORTS. To keep a log. in the fonn approved by the leasor, of
each well drilled by the lessee on the lands herein leased, showing the strata and character of
the fonnationa, water sands and mineral deposits penetrated by the drill, amount of casing.
size and where set. and such other infonnation as the lessor may require which log or copy
thereof ahall be furnished to the lessor.
To file progress reporta. in the form prescribed by the lassor, at the end of each thirty (30)
day period while each well is being drilled.
To file annually, or at such times as the leaaor may require, maps showing the development
of the structure and the location of all wells, pipe lines and other works used in connection
with the operations of the lessee upon said land.
To make such other reports pertaining to the production and operations by the lessee on
seid land, and report such other intonnation aa may be possessed by the lessee on the wells.
production or operations of othe~ on lands on the same geologic structure that may ba of
importance in effecting proper development and operation of the lands herain leased, as may
ba called for by the lessor. All logs, maps. and reports shall ba submitted in duplicata and the
Office of State lands and Investments may waive such reports as conditions may warrant.
ü)PRODUCTION, To operate the wells upon the land herein leased in a competent and
efficient manner in an endeavor to recover all the oil and gas economically possible from said
land and to prevent the under drainage of the oil and gas thereunder by wells operated by the
lessee or others on cornarlng or contiguous lands to those leased herein. All plans or
methods for the purpoae of stimulating or increasing production on lands herein leased other
than those in common use shall fi~t be presented to the lessor for approval befora baing put
into actual operation.
No production agreements limiting. restricting, prorating, or otherwi8o effecting the
naturalproduction from said land shall be entered Into by tha lassee, nor shall the lessee limit.
restrict, or prorata the natural production from said land in any way or in any event, except
with the consent in writing of the lessor first had an obtained.
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by this
lease obtain production of oil, gas, or other hydrocarbons in paying quantities and if the
lessee is unable to establish a satisfactory market for the oil, gas or hydrocarbons produced
from said well, the lessee may apply for and the lessor may grant pennission for the
suspension of production operations until such times as a satisfactory market for the product
from said well can be developed. During tha time any such suspension of operations is in
effect, the lessee shall continue to pay the annual rental of $2.00 per acre or frection thereof
provided by (c) above, and this lease shall remain in effect as though oil or gas waa baing
produced from said lands. .
(I)DllIGENCE-PREVENTION OF WASTE. To exercise reaaonable diligence in drilling,
producing, and operating of wells on the land coverad hereby, unless consent to suspand
operations temporarily is granted by the lessor; to cany on all operations hereundar in a good
and workmanlike manner in accordance with approved methods and practice. having due
regard for the prevention of waste of oil and gas, or the entrance of water to the oil or gas
baaring sands or strata to the destruction or injury of sUch deposits, the praservation and
conservation of the property for future productive operations and to the health and safety of
workmen and employees; to plug securaly in an approved manner any well before abandoning
It, and nollo abandon any well without pennission of the lessor, not to drill any well within two
hundred (200) feet of any of the outer boundaries of the land covered hereby, unless to
protect against drainage by wells drilled on lands edjoining less than 200 feet from the
property lines thereof; to conduct all operations subject to the inspection of the lessor; to cany
out at the lassee's expanse all reasonable orders and requirements of the lessor relative to
the prevention Of wasie and preservation Of the property and the health and safety of workmen
including the replanting and raseeding of drilling sites and other araas disturbed by dril.Ung
operations and on failure of the lessee so to do the lassor shall have the right. together with
other recou~e herein provided, to enter on the property to repair damage or prevent weste at
the lessee's axpense; to abide by and confonn to valid applicable regulations prescribed to
reimbu~e the owner of the surface, if other then the lessor. or les80e of grazing rights thereof
for actual damages thereto and injury to improvaments thereon, provided, that the lessee shaU
not be held reaponsible for acts of providence or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay. when due all taxes lawfully
assessed and leviad under the laws of tha State of Wyoming upon improvements, oil and gas
produced from the land hereunder, or other rights, property or assets of the lessea, to accord
all workmen and employees complete freedom of purchase, and to pay all wages due
workmen and employees in confonnance 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
writing of the lassor first had and obtained.
All overriding royalties to be valid. must 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 ba recorded with the lease. The Board raserves the right of disapproval of such overriding
royalties when in its opinion they become excessive and hence are detrimental to the proper
development of the leased lands.
(o)DElIVER PREMISES IN CASE OF FORFEITURE. To deliver up the lea80d premises,
with all pennanent improvements thereon, in good order and condition in case of fOffeiture of
this lease, but this shall not be construed to prevent the removal, alteration or renewal of
equipment and improvements in the ordinary course of operations.
Section 2. THE lESSOR EXPRESSLY RESERVES:
(a) The right to lease sell. or otherwise dispose of the surface of the land embraced within
this lease under existing laws or laws hareafter enacted, and in accordance with the rules of
the Board of Land Commissions insofar as the surface Is not necessary for the use of the
lessee in the conduct of operations hereunder.
(b)The right to lease, sell, or otherwise dispose of other mineral or subsurface resources not
covered by the lease, in accordance with the applicable laws and tha rules of the Board of
Land Commissioners.
(c)From the operation of this lease, the surface lands heretofora granted' for rights4-way
and easements and reserves the right to grant such other rights-of-way and _menta as
provided by the statutes of the State of Wyoming, as long as such rights-of-way and
easements do not conflict with the operations for oil and gas on the land herilin·leased.
(d)The right to refuse to commit the leased lands to a unit plan of development ff the Board
finds such action would impair the lessor's reserved right to take its royalty gas In kind and to
purchase all other gas allocated to the leased lands a provided in Section 3(e)below.
(e)The right to alter or modify the quantity and rate of production to the and that waate may
be eliminatad or that production may contonn to the lessee's fair share of allowable production
under any system of State or National curtailment and proration authorized by law.
(I) In addition to its right to take its royalty gas in kind, the lessor reserves the right and option
to purchase all other gas produced for sale or use off the leased lands. This option shall be
exarcised only ff the Board finds that the lessee has received and is willing to acœpt a bona
fide offer from a purchaser who intends to sell or transport the gas into Inte~tate commerce
and that one or more intrastate purchase~ (i.e., purchaaars who will usa. consuma. or sell the
gas for use or consumption entirely within the State of Wyoming) are willing and able to
purcha80 the gas upon tenns reasonably comparable to and at least as favorable to the
lessee as those offered by the interstate purchaser. The Board shall waive this option and
pennit an inte~tate sale if it finds that no intrastate purchasar la willing and able to purchase
the gas upon tenns which are reasonably compareble to and at leaat es favorable to the
lessee. As a condition tl) such waivar..a.satisfaetory agreement may be antered Into by which
the production of its royalty gaa may be deferred until it can be produced and sold for
consumption and use entirely within the State of Wyoming.
Section 3. APPRAISAL OF IMPROVEMENTS. The leasee shall have the right subject to the
provisions of Title 36, as to Stata and State SchoOl Lands, and Title 11, as to State Loan and
Investments Board Lands, W.S. 1977, to remove any improvements owned by lessee within a
reasonable time after the tennination of this lease. lessee agrees that any such
improvements not removed within a reasonable time after tennination of this lease shall ba
disposed of pu~uant to the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shall heve the power end authority to cancel
leases procured by fraud. deceit, or misrapresentations, or for the use of the lands for
unlawful or illegal purposes, or for tha violation of the covenants of the lease. upon proper
proof thereof, in the avent that tha lessee shall default in the perfonnance or observance of
any of the tenns, covenants, and stipulations hereof, or of the genaral regulations
promulgated by the Board of land Commissione~ and in· force on the date hereof, tha lessor
shall serve notice of such failure or default either by personal service or by certified or
registered mail upon the lessee, and if such failura or default continues for a period of thirty
(30) days aftar the service of such notice, then and in that event the lessor may, at its option,
declare a forfeiture and cancel this lease, whereupon all rights and privilegas, obtained by the
lessee hereunder shall tenninate and ceasa and tha lessor may re-entar and take posaession
of said premises or any part thereof. These provisions shall not ba construed to prevent the
exercise by lessor any legal or equitable remedy which the leasor might otherwise heve. A
waiver of any particular cause or forfeiture shall not prevent the cancellation and foñeiture of
this lease by any other ceuse of forfeiture, or for the sama cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may ba relinquished and
surrendered to lessor as to all or any legal subdivision of said lands as follows:
(a) If no operations have been conducted under the lease on the land to ba relinquished, the
lessee shall file with the State land Board and State Loan and Investment Board, a written
relinquishment or surrender, duly signed and acknowtedged and stating therein that no
operations have baen conducted on the land. The relinquishment so filed ahall become
effective on the dete and hour of receipt thereof in tha office of the Director or at some latar
date, if such be so specified by the lessee therein. If the said relinquishment fails to state that
no operations hava been conducted, the effective date of relinquishment shall ba the date the
relinquishment Is approved by the Board.
(b) If operations have been conducted undar the lease on land propoaed to ba relinquished,
the lessee shall give sixty (60) days notice and shall file with the Director a written
relinquishment or surrender duly acknowledged and stating therein that operations have been
conducted on the land. The relinquishment shall not become effective until the land and the
wells thereon shall have been placed in condition acceptable to lessor and shall hava been
approved by the State Oil end Gas Supervisor.
All rentals becoming due prior to a surrender or relinquishment becoming effective, shall ba
payable by lessee unless payment thereof shall ba waived by lessor. A relinquiahment having
bacome effective there shall be no racou~e by lessee and the lease as to the ralinquished
lands may not be reinstated.
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