HomeMy WebLinkAbout935778
and Effective Januar-y'6;"1"998
STATE
OIL AND
(,.. .1YOMING
GAS LEASE
Lease If U l.u"~ II
Parcel # 554
Fund Code: CS
!"o.¡:a Approved by th\
This indenture of lease entered into by and between the state of Wyoming, acting by
and through its Board of Land CommissiQ{15:~rs as LESSOR, and the following as LESSEE:
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Fitzsimmons, LLC
0'00006
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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:
2 L¡
Lot 43 (formerly All Sec 16) Resurvey Township: 24 North Range: 115 West of the 6th P.M.
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hCounty: 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
unde r .
Section 2. TERM OF LEASE. This lease shall become effective on the day and year set
out below and shall remain in effect for a primary term of five (5) years and for so long
thereafter as leased substances may be produced from the lands in paying quantities. This
lease may also be extended beyond its primary term in the absence of production of leased
substances as may be provided by the statutes of the State of Wyoming and the regulations of
the Board of Land Commissioners adopted pursuant thereto. Provided, however, if drilling,
completion, testing or reworking operations are being diligently conducted, either during
the primary term or during any extension thereof, this lease shall continue in full force
and effect so long as such operations are being conducted and so long ,thereafter as oil or
gas may be produced in paying quantities. This lease may be relinquished or terminated at
an earlier date as herein provided.
Section 3. If the LESSOR owns an interest in oil and gas in said land less than the
entire fee simple estate, then the royalties and rentals to be paid LESSOR shall be reduced
proportionately.
Section 4. LESSEE expressly represents that, if an individual, LESSEE is a citizen of
the United States, or has declared an intention to become a citizen, and is over 19 years of
age-and if a corporation, is duly qualified to transact business in Wyoming.
Section 5. This lease is issued under the authority conferred by Title 36, W.S. 1977
as to the State and School Lands, and Title 11, W.S. 1977 as to Farm Loan lands, and shall
be subject to, and operations by LESSEE hereunder shall be conducted in compliance with the
specific lease terms set out on the reverse of this lease, and with all applicable state
statutory requirements and the regulations issued thereunder, including those providing for:
the leasing of State or Farm Loan Lands for oil and gas; the conservation of oil and gas;
and the regulation of security transactions.
Section 6. HEIRS AND SUCCESSORS IN INTEREST. It is covenanted and agreed that each
obligation hereunder shall extend to and be binding upon, and every benefit thereof shall
inure to the heirs, executors, administrators, successors of, or assigns of the respective
parties hereto.
Section 7. SOVEREIGN IMMUNITY. The State of Wyoming and the lessor do not waive
sovereign immunity by entering into this lease, and specifically retain immunity and all
defenses available to them as sovereigns pursuant to Wyoming Statute 1-39-104 (a) and all
other state laws.
IN WITNESS WHEREOF, this lease has been executed by LESSOR and LESSEE to become
effective on the 2nd day of, October, 2007 A.D.
LE.S,.:OR; ~TATE ~F WYO ~~.~. b ~d. through its
Le~Bee S1.gnature· , " ~,~ By:
Address: /.
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City: State: Zip:
Phone :--------- ------ ------
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,.John L. KEmnedy
:22ûl Cabin Court
Gillette, Wy 82718-5~~4'"1-
1-307 -686-3 '1 58
RECEIVED 12/26/2007 at 10:10 AM
RECEIVING # 935778
BOOK: 682 PAGE: 6
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
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OIL AND GAS TERM~'
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish e bond with an approved corporate surety company authorized to transad
business in the State of Wyoming, or such other surety as may be acceptable to the lessor, in the
penal sum as required by the currant rules of the State Board of Land Commissioners,
conditioned upon the peyment of all rentals and royalties accruing to the lessor under the tanns
hereof, and upon the full compliance of ell other tanns and conditions of this lease and the rules
and regulations relating thereto, and also conditioned on the payment of all damages to the
suñace'Jlnd,lmprovam,r¡ts/hareon where the lease covers lands the suñace of which has been
sold or otherWi", le"ls'841· 'gych bond or bonds furnished prior to the development of the lands
contained In this lease may'be increased In such reasonable emounts es the lessor may decide
upon commencement of drilling operations end aftar the discovary of oil or gas.
(b)PAYMENTS. To make all peyments accruing hereunder to the Office of State Lands and
Investments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600.
(c)RENTALS. Prior to the discovery of oil or gas in paying quantities to pay the lessor in
advance, beginning with the effecllve date hereof, an annual rental of $1.00 per acre or fraction
thereof.
After the discovery of 011 or gas In peylng quantities to pay the lessor in edvance beginning with
the first day of the lease year succeeding the lease year in which actual discovary was made, an
annual rental of $2.00 per aera or fraction thereof, unless changed by agreement. Such rental so
paid for anyone year shall be credited on the royalty for that year.
Annual rentals on all leases shall be peyable in advance for the first year and each year
thereafter. No notice of rental due shall be sent to the lessee. If the rental is not paid on or
before the date It becomes due, notice of default will be sent to the lessee, and a penalty of $0,50
per aera for late payment will be assessed.
The lessee Is not lagalty obligated to pay either the rental or the penalty, but if tha rental and
penalty are not paid within thirty (30) days after the notice of dafault has been received, the lease
will tenninate automaticelly by oparatlon of law. T ennination of the leasa shall not relieve the
lessee of any obligation incurred under the lease other than the obligation to pay rental or
panalty. The lessee shall not be entnled to a credit on royalty due tor any penalty paid for late
payments of rental on an operating lease.
(d)ROYAL TIES. The royalties to be paid by lessee are:
(I) On oil, one-sixth of that produced, saved, and sold from said land, the same to be dellvared
at the wells or to the credit of lassor into the plpa line to which the wells may be connected.
(Ii) On gas, Inctuding cesinghead gas or other hydrocarbon substances, produced from said
land saved and sold or used off the premises or In the manufacture of gasoline or other products
therefrom, tha mar1<et value at the well of on.....ixth of the gas so sold or used, provided thet on
gas sold at the wells, the royalty shall be ona-sixth of the amount realized from such sale.
(iii) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, including propane, butane, sulphur, nitrogen, cerbon dioxide, and helium, at such
royalty as shall be mutually detannined to be fair and reasonable.
(iv) For royalty purposes on gas and natural gasoline tha value shall be as approved by the
lessor, and In the detenninatlon of the value of natural gasoline the fair cost of extraction shell be
considerad as a deductible item; provided, however, that the allowance for the cost of extraction
may exceed two-thirds of the amount or value only on approval of the lessor and in no avant shall
the price for gas, or natural gasoline, be less than that received by the United State of America for
its royaltias from the same field.
(v) Natural gas and 011 actually used for operating purposes upon the land and, except as to the
ultimate sale thereof, 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 1Y OIL AND GAS. To deliver to the lessor, or to such individual,
finn or corporation as the lassor may designate, all royally oil, gas, or other kindred hydrocarbons,
free of charge on the premises where produced, or, at the option of the lessor, and in lieu of said
royeltles in kind, the lessee agrees to pay the lessor the field msr1<et price or value of all royalty
oil, gas, or other kindred hydrocarbons produced and saved.
When the lessor elacts to take its royalty oil, gas, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantable oil, gas, or other kindred
hydrocarbons. The lessee shall if necessary furnish storage tor royalty oil free of charge for thirty
(30) days after the end of the celandar 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 lessee shall not be held liable tor loss or destruction of royalty oil so stored from ceuses
beyond 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, measure and correct for temperature all
production from said lands in conformance with the rules and ragulations edopted by the Board of
Land Commissioners and report said production to the lessor in accordance therewith.
To keep books, records, and reports pertaining to the production from the lend herein leased as
well as those partaining to the production from offset wells oparatad by the lessee, his oparator,
or sub-lessee on other lands, which shall be opened at all times for the inspection of any duly
authorized agent of the lessor.
To furnish the lessor with origlnel plpa line reports showing the dey, month, year, amount,
gravities, and temparatures of all 011 run and with monthly reports showing the month, year,
amount, and price of all gas and natural gas gasoline and other products produced and sold from
the land herein leased, and the amount of gas returned to the sand. '
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is oth8lWisa
extended by the Office of State Lands and Invastments to maka paymant on or before the
twentieth (20th) day of the celendar month succeeding the month of production and removal and
sale of 011 and gas from said land, and to furnish sworn monthly statements therewith showing in
detail the quantity and quality of the production (par well if required where practical) from the land
hereby leased, and the quantity and quality of the production (par well where practical) from offset
wells upon cornering or contiguous land operated by the lessee, his oparator or sub-lessee and
such other Infonnation as may be called for in the tonn or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill end operate effectively all wells necessary to reasonably
offset wells upon and production from adjoining lands.
To drill such additional wells at such times or placas as are necessary and essential to the
proper development and commercial production of the oil and gas content of said land.
(I)LOG OF WELLS AND REPORTS. To keep a log, in the form approved by tha lessor, of each
well drilled by the lessee on the lands herein leased, showing the strata and character of the
formations, water sands and mineral deposits penetrated by the drill, amount of casing, size and
where set, and such other information as the lessor may require which log or copy thereof shall
be furnished to the lessor.
To file progress reports, in the fonn prescribed by the lessor, at the end of each thirty (30) day
period while each well is being drilled.
To file annually, or at such times as the lessor may require, maps showing the devalopment of
the structure and the location of all wells, pipe lines and other wor1<s used in connaction with the
operations of the lessee upon said land.
To make such other reports pertaining to the production and operations by the lessee on said
land, and report such other Intonnation as may be possessed by the lessee on the wells,
production or operations of others on lands on the same geologic structure thet may be of
importanca in effecting proper development and operation of the lands herein leased, as may be
called for by the lessor. All logs, maps, and reports shall be submitted in duplicate and the Office
of Stale Lands and Investments may waive such reports as conditions may warrant.
O)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,theraunder by wells operated by the lessee or
others on cornering or contiguous lands to those leased herein. All plans or methods tor the
purpose of stimulating or increasing production on lands herein leased other than those in
common use shall first be presented to the lessor for approval betore being put Into actual
operation,
No production agreements limiting, restricting, prorating, or otherwise affecting the
naturelproduction from said land shall be entered into by the lessee, nor shall the lessee limit,
restrict, or prorate 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 satisfectory mar1<et for the oil, gas or hydrocarbons produCed from said well,
the lessee may apply tor and the lessor may grant pennission for the suspension of production
operations until such times as a satlsfectory mar1<et for the product from said well can be
developed. During the time any such suspension of operations is in effect, the lessee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof provided by (c) ebove, and
this lease shall remain in effect as though 011 or gas was being produced from said lands.
(I)DILlGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling,
producing, and operating of wells on the land covered hereby, unless consent to suspend
operations temporarily Is granted by the lessor; to carry on all operations hereunder in a good and
wortunanlike manner in accordance with approved methods and practica, having dua regard for
the prevention of waste of 011 and gas, or the entrance of water to the oil or gas bearing sands or
strata to the destruction or Injury of such deposits, the presBlVation and conservation of the
property for future productive operations and 10 the health and safety ofwor1<men and employees;
to plug securely in an approved manner any well before abendoning it, and not to abandon any
well without pennisslon 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 J ¡t drainage by wells
drilled on lands adjoining less than 200 feet from the prop..,., ..,,~~ ".Jreof; to conduct all
operations subject to the inspaction of the lessor; to carry out at the lessee's expense all
reasonabla ordars and requirements of tha lessor relative to the prevention of waste and
preservation of the property and the health and safety of wortunen including the replanting and
reseeding of drilling sites and other areas disturbed by drilling operations and on failure of the
lessee so to do the lessor shall have the right, togethar with other recourse herein provided, to
enter on the property to repair damage or prevent waste at the lessee's axpense; to abide by and
confonn to valid applicable regulations prescribed to reimburse the owner of the suñace, if other
than the lessor, or lessee of grazing rights thereof for actual damagas thereto and injury to
improvements thereon, provided, that the lessee shall not be held responsible for acts of
providence or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due all taxes lawfulty
assessed and levied undar the laws of the State of Wyoming upon improvemants, oil and gas
producad from the land hereunder, or other rights, property or assets of the lessee, to accord all
wor1<men and employees complete freedom of purchase, and to pay all wages due workmen and
employees in conformanca with the laws of the State of Wyoming.
(n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not to assign this lease or eny
interest therein, nor sublet any portion of the leased premises, except with the consent in writing
of the lassor first hed and obtained.
All overriding royalties to be valid, must have the approval of the Board or by the Offica of State
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded with the lease. The Board reserves the right of disapproval of such overriding royaltias
when in its opinion they become excessive and henca are datrimentalto the proper davelopment
of the leased lands.
(Q)DELlVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all
permanent improvements thereon, in good ordar and condition in case of forfeiture of this lease,
but this shall not be construed to
prevent the removal, alteration or renewal of equipment and improvements in the ordinery
course of operations.
Section 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise dispose of the suñaca of the land embracad within this
lease under existing laws or laws hereafter enacted, and in accordance with the rules of the
Board of Land Commissions insofar as the suñace 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 minerai or subsuñace resources not
covered by the lease, in accordance with the applicable laws and the rules of the Board of Land
Commissioners.
(c)From the operation of this lease, the suñace lands heretofore granted for rightlHlf-way and
easements and reserves the right to grant such other rightlHlf-way and easements 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 herein leased.
(d)The right to refuse to commit the leased lands to a unit plan of development if the Board finds
such action would impair the lesso~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 end that waste may be
eliminated or that production may conform to the lessee's fair share of allowable production under
any system of State or National curtailment and proration authorized by law.
(1)1n 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
exercised only if the Board finds that the lessee has received and Is willing to accept a bona fide
offer from a purchaser who intends to sell or transport the gas into Interstate commerce and thet
one or more intrastate purchasers (I.e., purchasers who will use, consume, or selllhe gas for use
or consumption entirely within the State of Wyoming) ara willing and able to purchase 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 Intarstate sale if It finds
that no intrastate purchaser is willing and able to purchase the gas upon tenns which are
reasonably comparable to and at laast as favorable to the lessee. As a condition to such waiver,
a satisfactory agraement may be antered into by which the production of its royalty gas 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 lessee shall have the right subject to the
provisions of Title 36, as to State and State School Lands, and Tille 11., as to Stata Loan and
Investments Board Lands, W.S. 1977, to remove eny improvements owned by lessee within a
reasonable time after the tennination of this lease. Lessee agrees thet any such improvements
not removed within a reasonable time after tennination of this lease shall be disposed of pursuant
to the above statutes.
Saction 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel
leases procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or
lIIagal purposes, or for the violation of the covenants of the laase, upon proper proof thereof, in
the event that the lessee shall default in tha peñonnanca or oöservanca of any of the tenns,
covenants, and stipulations hereof, or of the' general regulations promulgated by the Board of
Land Commissioners and in force on the date hereof, the lessor shall serve notica of such failure
or default either by personal service or by certified or ragistered mail upon the lessee, and if such
failure or default continues for a period of thirty (30) days after 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 privilages, obtained by the lessee hereunder shall tanninate and cease
and the lessor may re-enter and take possession of said premises or any part thereof. These
provisions shall not be construed to prevent the exercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any particular cause or foñeiture shall not
prevent the cancellation and foñeiture of this lease by any other cause of foñeiture, or for the
same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and
surrendered to lessor as to all or any lagal subdivision of said lands as follows:
(a) If no operations have been conducted under the lease on the land to be relinquished, the
lessee shall file with the State Land Board and State Loan and Investment Board, a written
reliOquishment or surrender, duly signed and acknowtedged and stating therein that no operations
have been conducted on the land. The relinquishment so filed shall become effective on the date
and hour of receipt thereof in the offica of the Director or at some later date, if such be so
specified by the lessee therein. If the said relinquishment fails to state that no operations have
been conducted, the effective date of relinquishment shall be the 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 shell file with the Director a written relinquishment or
surrender duly acknowledged and stating therein thet 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 have been approved by the State Oil
and Gas Supervisor.
All rentals becoming dua prior to a surrender or relinquishment becoming aftective, shall be
payable by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become effective there shall be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated.
BIG GAME CRUCIAL WINTER RANGE
This lease Is issued subject to. and conditioned upon lessee's acknowledgement and agreement
that any exploration and development activities undartaken shall:
1) , avoid human activity in big game aucial winter range from November 15 to
April 30; or
2) in the alternative, exploration and development actlvitias shall be subject to
approval by the Director of the Offica of State Lands and Investments,
subject to the Directo~s consultation with the Wyoming Game & Fish
Department regarding alternative practicas and/or plans of davelopment
which provide similar resource protection and mitigation.
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