HomeMy WebLinkAbout937320
Form Approved by t
and Effective January 6, 1998
STATE
OIL AND
VI.: WYOMING
GAS LEASE
Lease # 08-0011
Parcel # 140
Fund Code: CS
00ð436
This indenture of lease entered into by and between the State of Wyoming, acting by
and through its Board of Land Commission7rs as LESSOR, and the following as LESSEE:
Fitzsimmons, LLC
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:
1'-1
Lot 38 (formerly All Sec 36) Resurvey Township: 24 North Range: 115 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 expr~ssly 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, February, 2008 A.D.
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***Stipulations apply to this lease. The following numbers correspond to the stipulations printed with thè,:~~~J'
Darcels offered with this auction. The stiDulations can also be referenced online at slf-web.state.wv.us.***
ParcellD Stipulation #
140 104
LESSOR, STATE OF WYOMING, Acting by and through its
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Lessee signature:_~ ~-.;7~ _~
Address:_~_~~~ ~~/'/____
City: 6:&~state :(:!Y5'i2!iP: ~ L 7$
Phone :____~Ó7 ~~~r..eæ::
RECEIVED 3/3/2008 at 1 :44 PM
RECEIVING # 937320
BOOK: 688 PAGE: 436
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
OIL AND GAS LEASE TERMS
ûOð437
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bOnd with an approvad corporata surety company authorizad to
transact businass in the State of Wyoming, or such other surety as may be acceptable to the
lessor, in the penal sum as requlrad by the current rules of the State Board of Land
Commissioners, conditioned upon the payment of all rentals and royalties a=uing to the
lassor under the terms hereof, and upon the full compliance of all other terms and conditions
of this lease and the rules and ragulations relating thereto, and also conditioned on the
payment of all damages to the surface and improvemants thereon where the leasa covers
lands the surface of which has been sold or otherwise leased. Such bond or bonds furnished
prior to the development of the lands containad In this leasa may be Increased in such
reasonable amounts as the lessor may decide upon commencement of drilling operations end
after the discovery of 011 or gas.
(b)PAYMENTS. To make all payments eccruing 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
edvance, beginning with the effective date hereof, an annual rental of $1.00 par acre or
fraction thereof.
Mer the discovery of 011 or gas In paying quantities to pay the lessor in advanea beginning
with the first day of the lease year succeading the lease yeer in which actual discovery was
made. an annual rental of $2.00 par ecre or fraction thereof, unless changad by agreement.
Such rental so paid for anyone year shall be credited on the royalty for that year.
Annuel rentels on all leases shall be payable in advance for the first year and each year
thereefter. No notice of rentel due shall be sent to the lessee. If the rental is not paid on or
before the date it becomes due, notiea of default will be sent to the lessee, and a penalty of
$0.50 per ecre for late payment will be assessad.
The lessee Is not legally obligatad to pay either the rental or the panalty, but if the rental and
panelty are not paid within thirty (30) days after the notice of default has been reeaivad, the
lease will terminate autometically by operation of law. Termination of the lease shall not
relieve the lessee of any obligation Incurred under the lease other than the obligation to pay
rental or panally. The lessee shall not be entitled to a credit on royalty due for any penalty
paid for lata payments of rental on an operating lease.
(d)ROYAl TIES. Tha royalties to be paid by lessee ere:
(i) On oil, onEHtighth of thet produced, saved, and sold from seid land, the sama to be
delivared at the wells or to the cradit of lessor into the pipa line to which the wells may be
connectad.
(ii) On ges, including casinghead gas or other hydrocarbon substances, produced from said
land savad and sold or used off the premises or in the manufacture of gasoline or other
products therefrom, the market value at the well of one-elghth of the gas so sold or used,
providad that on gas sold at tha wells, the royalty shall be one-eighth of the amount realized
from such sale.
(iii) On all other hydrocarbons of value and gaseous substances and elements produced or
eJ<tractad, Including propane, butane, sulphur, nitrogen, earbon dioxide, end helium, at such
royalty es shell be mutuelly determlnad to be fair and reasonable.
(Iv) For royalty purposes on gas and natural gasoline the value shall be es approved by the
lessor, and in the determination of the value of natural gasoline the fair cost of extraction shall
be considerad as a deductible item; providad, however, thet the allowance for the cost of
extraction mey exceed two-thirds of the emount or value only on approval of the lessor and In
no event shall the price for gas, or natural gasoline, be less than that reeaived by the United
State of Amerlea for its royalties from the seme field.
(v) Netural gas and 011 ectually usad for operating purposes upon the land and, exeapt as to
the ultimate sale thereof, gas or liquid hydrocarbons returnad to the sand for stimulating tha
production of oil or secondary recovery purposes shall be royslty free.
(e) DISPOSITION OF ROYAL TV OIL AND GAS. To deliver to the lessor, or to such
Individual, finn or corporstion as the lassor may designate, all royalty oil, gas, or other klndrad
hydrocarbons, free of charge on the premises where produced, or, at the option of the lessor,
and in lieu of said royelties in kind, the lessee agrees to pay the lessor the field market price
or value of all royalty oil, gas, or other kindrad hydrocarbons produced and saved.
When the lessor elects to take Its royalty oil, gas, or other hydrocarbons in kind such ss oit,
gas, or other kindrad hydrocarbons shall be good merchantabla oil, gas, or other kindred
hydrocarbons. Tha lassee shall if nacessary furnish storage for royalty oil free of charge for
thirty (30) days after thl! end of tha calendar month in which the oil is produced, upon the
leesad premises, or et the such place as the lessor end the lessee may mutuelly agree upon,
providad, that the lessee shall not be hald liabla for loss or destruction of royalty oil so stored
from causas beyond his control.
The free storage of oil, as herein provldad, shall apply only as long as the said oil is the
proparty of tha lassor.
(f) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for tamperature all
production from said lands in conformanea with the rules and reguletlons adoptad by the
Board of Land Commissioners and report said production to tha lessor in accordanea
therewith.
To keep books, records, and reports partaining to the production from the land herein leased
as well as those partalning to the production from offset wells oparated by the lessee, his
oparator, or sub-lessee on other lands, which shall be openad at all timas for the inspection of
any duly euthorizad agent of the lessor.
To furnish the lessor with original pipa line reports showing the day, month, year, amount,
gravities, and temparatures of all oil run and with monthly reports showing the month, year,
amount, and priea of all gas and natural gas gasolina and other products producad and sold
from the land herein leased, and the amount of gas returnad to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment Is otherwise
eJ<tended by the Office of State Lands and Investments to make payment on or before the
twentieth (20th) dey of the calendar month succeading the month of production and removal
and sala of oil and gas from said land, and to furnish sworn monthly statamants tharewilh
showing in detail the quantity and quality of the production (per well If required where
practical) from the land hereby laased, and tha quantity and quality of tha production (per well
where practical) from offset wells upon cornering or contiguous land operated by the lessee,
his operator or sub-lessae and such other Information as may be ealled for in the form or
report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and operate effectivaly all wells necassary to
raasonably 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 said land.
(I)LOG OF WELLS AND REPORTS. To keep a log, in the form approved by the lessor, of
each well drilled by the lessee on the lands herein leased, showing tha strata and cheracter of
the formations, water sands and mineral deposits penetratad 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 furnishad to the lessor.
To file progress reports, In the form 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 development
of the structure end the location of all wells, pipe lines and other works used in connection
with the operations of the lessee upon seid lend.
To make such other reports pertaining to the production and operations by the lessee on
said land, and report such other information as may be possassad by the lessea on the wells,
production or operations of others on lands on the same geologic structura that may be of
importanea In effecting proper development end operation of the lands herein leased, as may
be called for by the lessor. All logs, meps, and reports shall be submittad in duplicate and the
Offiea of State Lands and Investmants may waive such reports as conditions may warrant.
UjPRODUCTION. To operate tha wells upon the land herein laased in a competent and
efficient manner in an endeavor to recovar 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 cornering or contiguous tands to those leesed herein. AU plans or
methods for the purpose of stimulating or increasing production on lands herein leasad other
than those in common usa shall first be presentad to the lessor for approval bafore being put
Into ectual operation.
No production agreements limiting, restricting, prorating, or otherwise affecting the
neturalproduction from said land shall be enterad into by the lassee, nor shall the lessea 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 drillad upon lands covered by this
lease obtain production of oil, gas, or other hydrocarbons in paying quantities and if the
lessee is uneble to establish e satisfectory market for the oil, gas or hydrocarbons produead
from said well, the lessee may apply for and the lessor may grant permission for the
suspension of production operations until such times as a satisfactory market 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) above, and this lease shall remain in effect as though oil or gas was being
produced from said lands.
(I)DILlGENCE-PREVENTION OF WASTE. To exercise raasonable 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 cany on all operations heraunder in a good
and workmanlike manner in accordanea with approvad methods and practiea, having due
regard for the prevention of waste of oil and gas, or the entranea of water to the oil or gas
bearing sands or strata to the destruction or injury of such deposits, the preservation and
conservation of the property for future productive operations and 10 the health and safaty of
workmen and employaes; to plug securely in an approved manner any well befora abandoning
it, and not to abandon any well without permission of the lessor, not to drill any well wilhin two
hundrad (200) feet of any of tha outer boundaries of the land coverad hareby, unless to
protect against dreinage by wells drlllad on lands adjoining less than 200 feet from the
property lines thereof; to conduct all operations subject to the inspection of the lessor; to cany
out at tha lessee's axpanse all raasonabla orders and requirements of the lessor relative to
the prevention of wasta and praservation of the property and the health and sefety of workmen
including the replanting and reseading of drilling sites and other areas disturbed by drilling
operations and on failure of the lassee so to do the lessor shall hava the right, together with
other recourse herein providad, to enter on the property to repair damage or prevent waste at
the lessee's expense; to abide by and conform to valid applicable regulations prescribad to
relmbursa tha owner of the surface, if other than the lessor, or lessee of grazing rights thereof
for actual damages thereto and injury to improvements thereon, providad, that the lessee shall
not be held responsible for acts of providence or actions beyond his control.
(m)T AXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due all taxes lawfully
assessad and levied under tha laws of the Stata of Wyoming upon improvements, oil and gas
produced from tha land hereunder, or other rights, property or assets of the lessee, to accord
all workmen and employees complete freedom of purchase, and to pay all wages due
workmen and employees in conformanea with the laws of the Stata of Wyoming.
(n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not to assign this laase or
any interest therein, nor sublat any portion of the leasad premises, except with tha consent in
writing of the lessor first had and obtained.
All overriding royalties to be valid, must have the approval of the Board or by the Offiea of
State Lands and Investments when authority to do so has been delegatad by the Board and
will be racordad with tha laasa. Tha Board resarves the right of disapproval of such overriding
royaltias when in its opinion they become exeassive and henea are detrimental to the proper
davelopmant of the laased lands. .
(o)DELlVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises,
with alt permanent improvements thereon, in good order and condition in case of forfaiture of
this lease, but this shall not be construad to prevent the removal, alteration or renewal of
equipment and improvamants in the ordinary coursa of operations.
Saction 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise dispose of the surfaea of the land embraead within
this lease under existing laws or laws hereafter anactad, and in accordance with the rules of
the Board of Land Commissions insofar as the surface Is not nacessary for the use of the
lessaa in tha conduct of operations hereunder.
(b)The right to lease, sell, or otherwisa dlsposa of other mineral or subsurface rasources not
covered by the lease, in accordanea with the applicable laws and the rules of the Board of
Land Commissioners.
(c)From the operation of this lease, the sur/aea lands heretofore grantad for rights-of-way
and easements and raserves the right to grant such other rights-of-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 lee sed lands to a unit plan of devalopment if the Board
finds such action would impair the lasso(s raserved right to take its royalty gas in kind and to
purchasa all othar gas allocated to the leasad lands a provldad 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 elimineted or that production may conform to the lessee's fair share of allowabla production
undar any system of State or National curtailmant and proration authorized by law.
(f)ln addition to its right to take its royalty gas in kind, the lessor reservas the right and option
to purchase all other gas produead for sale or use off the leasad lands. This option shall be
exercised only if the Board finds that tha lessee has reeaived and is willing to accept a bona
fide offer from a purchaser who intends to sell or transport the gas into interstate commerea
and that one or more intrastate purchasers (I.e., purchasers who will use, consume, or sell the
gas for use or consumption entirely within the State of Wyoming) are willing and able to
purchase the gas upon terms 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
permit en interstate sale if it finds thet no intrastate purchaser is willing and able to purchase
the gas upon tanns which ara reasonably comparable to and at least as favorable to the
lessee. As a condition to such waiver, a sallsfectory agreement may be antered into by which
the production of its royalty gas may be deferred until it can be produced and sotd 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 Tille 36, es to State and State School Lands, and Tille 11, as to State Loan and
Investmants Board Lands, W.S. 1977, to remove any improvements owned by lessee within a
reasonable tIma after tha tarmlnation of this leasa, Lessee egraes thet any such
improvements not removad within a reasoneble time after tennination of this lease shell be
disposed of pursuant to the abOve statutes.
Section 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel
leases procured by fraud, daceit, or misrepresentations, or for the use of the lends for
unlawful or illegal purposes, or for the violation of the covenants of the lease, upon proper
proof thereof, in the event that the lessee shall default In the performanea or observanea of
any of the terms, covenants, and stipulations hereof, or of the generat reguletions
promulgated by the Board of Land Commissioners and in forea on the date hereof, tha lessor
shall serva notice of such failura or dafault elthar by personal service or by certifiad or
registered mail upon the lessee, and If such failure or default continues for a period of thirty
(30) days after the service of such notiea, then and in that event the lessor may, at its option,
declare a forfeiture and cancel this laase, whereupon all rights and prlvilegas, obtainad by the
lessee hereunder shall terminate and eaase and the lessor may re-enter and take possession
of said premises or any part thereòf. Thase provisions shell not be construed to pravent tha
exercise by lessor any legal or equitable ramedy which tha lassor might otherwise have. A
waiver of any particular cause or forfeiture shall not prevent the caneallation and forfeiture of
this lease by any other cause of forfeiture, or for the same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This leasa may be relinquishad and
surrendered to lessor as to all or any legal subdivision of said lands as follOloVS:
(a) If no operations have been conducted under the lease on the lend to be relinquishad, the
lessee shall file with the State Land Board and State Loan and Investment Board, a written
relinquishment or surrender, duly signed and acknowledgad and stating therein thet no
operations have been conductad on the land. The ralinquishment so filad shall become
effective on tha date and hour of receipt thereof in the office of the Director or at soma latar
date, if such be so specified by the lessee therein. If the said relinquishment fails to state that
no operetlons have been conducted, the effective date of relinquishment shall be the date the
relinquishment is approvad by the Board.
(b) If operations have been conducted under the lease on land proposed to be relinquished,
the lessee shall give siJ<ty (60) days notice and shall file with the Director a written
relinqulshmant or surrender duly acknowledgad and stating therein that operations have been
conductad on the land. The relinquishment shall not become effective until the land and the
wells thereon shall have been plaead in condition acceptable to lessor and shall have been
approved by the State 011 and Gas Supervisor.
All rentals becoming due prior to a surrender or relinquishment becoming effective, shall be
payable by lessee unless payment thereof shall be welvad by lessor. A relinquishment having
become effactive there shall be no recourse by lessea and the teasa as to the relinquished
lands may not be relnstatad.
STANDARD CULTURAL RESOURCES
Thl. parcel Is known to contain certain prehl.toriclhlstoric/culturallNatlve Amertcan or
plonee,famlly resource. and Is subject to W.S. 36-1-114 through 116 end the Rul... of the
Bo.rd of land Comml..loners, Chapter 18 Section 3(h) and a. euch, 1..._/oparator
should conflnn tha location of such resourcas with the Wyoming Stata Historic
Preservation OffIca (SHPO) prior to any surface dl.turblng actIvltle.. Development pl.ns
on thl. parcel may be re.trtcted or prohibited unl.... the leaaee and/or operator and the
OffIce of State land. and Inve.tmenta, In con.ultatlon with the SHPO, agree upon an
acceptabla plan for the mitigation of po.slble Impacts to the known re.ources pursuant to
the protection of tho.e resource values. Compliance failure with this stipulation will result
In loaa of lease and potantlal action at law.
STATE OF WYOMING
)
) §
)
00->438
COUNTY OF CAMPBELL
Before me on the 28th day of February, 2008, John L. Kennedy, Manager of
Fitzsimmons, LLC personally appeared in his capacity as known to me to be the identical
person whose name is subscribed to the foregoing instrwnent, and acknowledged to me
that he executed the same as free and voluntary act and deed, and as the free and
voluntary act of the corporation, for the uses, purposes and consideration therein set forth.
Witness hand and official seal:
Cj~ -tú-fuwr--L
Notary Public
My commission expires:
S 12-~ J oq
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