HomeMy WebLinkAbout937322
Form Approved by th,
and Sffective January 6, 1998
STATE 0~ wYOMING
OIL AND GAS LEASE
Lease # 08-0013
Parcel # 159
Fund Code: AG
00\1442
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:
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:
7. '5 Tract 106 (formerly NW Sec 9) Resurvey Township: 25 North Range: 119 West of the 6th P.M.
11
1
County: Lincoln
Acres: 165.58
$166.00
($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 yea~s 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 LES'SEE 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.
LESSOR, STATE OF WYOMING, Acting by and through its
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Lessee Signature:_ i:;;;~Lß~ ~,. B.
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***Stipulations apply to this lease. The following numbers correspond to the stipulations printed with the
Darcels offered with this auction. The stiDulations can also be referenced online at slf-web.state.wv.us. ***
ParcellD Stipulation #
159 5
104
RECEIVED 3/3/2008 at 1 :53 PM
RECEIVING # 937322
BOOK: 688 PAGE: 442
JEANNE WAGNER
LINCOLN COUNTY CLERK. KEMMERER, WY
/
OIL AND GAS TEF
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bond with an approved corporate surely company authorized to transact
business in the State of Wyoming, or such other surely as may be ecœptable to the lessor, in the
penel surn as required by the current rules of the State Board of Land Commissioners,
conditioned upon the payment of all rentals and royalties acauing to the lessor under the terms
hereof, and upon the full compliance of ell other terms and conditions of this lease and the rules
end regulations relating thereto, and also conditioned on the payment of all damages to the
surface and improvements thereon where the leese covers lands the surface of which has been
sold or otherwise leased. Such bond or bonds furnished prior to the development of the lands
rontained in this lease may be increased in such reasonable amounts as the lessor may decide
upon commencement of drilling operations and after the discovery of oil or gas.
(b)PAYMENTS. To make all payments acauing hereunder to the Office of Stete Lends end
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 effective date hereof, an annual rental of $1.00 per acre or fraction
theIeof.
After the discovety of oil or gas in paying quantrties to pay the lessor in advance begiMing with
the first day of the lease year succeeding the lease year in which actual discovery was made, an
annual rental of $2.00 per acre or fraction thereof, unless changed by agreament. Such rental so
paid for anyone year shall be credited on the royalty for that year.
Annual rentals on all leases shall be payable 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 lessea, and a penalty of $0.50
per acre for late payment will be assessed.
The lessee is not legally obligated to pay either the rental or the panalty, but if the rental and
penalty are not paid within thirty (30) days after the notice of default has been received, the leasa
will terminate autometically by operation of law. Termination of the leese shall not relieve the
lessea of any obligation incurred under the lease other than the obligation to pay rental or
penalty. The lessee shall not be entilled to a credit on royelty due for any penally paid for late
payments of rental on an operating lease.
(d)ROYALTIES. 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 delivered
at the wells or to the credit of lessor into the pipe line to which the walls may be connected.
(ii) On gas, including casinghead gas or other hydrocarbon substances, produced from said
land seved 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-sixth of the gas so sold or used, provided that on
gas sold at the walls, the royally shall be one-sixth of the emount realized from such sale.
(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 datermined to be fair and reasonable.
(iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the
lessor, and in the datermination of the value of naturel gasoline the fair cost of extrection shell be
considered 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 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 thereof, gas or liquid hydrocarbons returned to the sand for stimulating the
production of oil or secondary recovery purposes shell be royally free.
(e) DISPOSITION OF ROYAl TV OIL AND GAS. To deliver to the lessor, or to such individual,
firm or COIpOf8tion as the lessor may designate, all royalty oil, gas, or other kindred hydrocarbons,
free of cherge on the premises where produced, or, et the option of the lessor, end in lieu of said
royelties in kind, the lessea agrees to pay the 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 rts royalty oil, gas, or other hydrOClllbons 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 for royalty oil free of charge for thirty
(30) days after the end of the calendar month in which the oil is produced, upon the leased
premises, or at the such place as the lessor end the lessee may mutually agree upon, provided,
that the lessee shell not be held liable for loss or destruction of royalty oil so stored from causas
beyond his control.
The free storege of 011, es herein provided, shall apply only es long as the seid oil is the property
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauge, maasure and correct for tempereture all
production from said lands in conformance with the rules and regulations adopted by the Board of
Land Commissioners and report said production to the lessor in accordance therewith.
To keep books, records, and raports pertaining to the production from the land herein leased as
well as those pertaining to the production from offset wells operated by the lessee, his oparator,
or sub-lessee on other lends, which shall be opened at all times for the inspaction of any duly
authorized agent of the lessor.
To furnish the lessor with originel pipe line reports showing the day, month, year, amount,
gravrties, and temperatures of ell oil run and with monthly reports showing the month, yeer,
amount, and price of all gas and naturel gas gasoline and other products produced and sold from
the land herein leesed, and the amount of gas returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is otherwise
extanded by the Office of State Lands and Investments to make payment on or before the
-.tieth (20th) day of the calendar month succeeding the month of production and ramoval and
sale of oil and gas from seid lend, end to furnish sworn monthly statements therewith showing in
delail the quantity end quality of the production (per well if required where practical) from the land
heraby leasad, and the quantity and quelily of the production (per well where practical) from ollsat
wells upon cornering or contiguous land operated by the lessee, his operelor or sub-lessee and
such olher infonnation as may be called for in the form or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and operate effectively all wells necessary to reasonably
offset wells upon and production from edjoining lands.
To drill such additional_lis at such times or places as are necessaty and essantial to the
proper development and commercial production of the oil and gao content of said land.
(i)LOG OF WELLS AND REPORTS. To keep a log, in the form epproved by the lessor, of each
well drilled by the lessee on the lands herein leased, showing the strata and character of the
formations, water sands and minerel 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 form prescribed by the lessor, at the end of eech thirty (30) dey
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 and the location of all wells, pipa lines and other works used in connection with the
operations of the lessee upon said land.
To make such other reports perteining to the production end operetions by the lessee on said
land, end report such other information as may be possessed by the lessee on the wells,
production or oparations of others on lands on the same geologic structure that may be of
importance in effecting proper development and operetion of the lands herein leased, as may be
called for by the lessor. All logs, maps, and raports shell be submitted in duplicate and the Office
of State Lands and Investments may waive such reports as conditions may warrant.
OjPRODUCTION. To operate the wells upon the I!lnd herein leased In a competent and ellicient
manner in an andee_ 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 walls opereted by the lessee or
others on cornering or contiguous lands 10 those leesed herein. All plans or mathods for the
purpose of stimulating or increasing production on lands herein leased other than those in
common use shell first be presented to the lessor for approval before being put into actual
operation.
No production agreements limiting, restricting, proreting, or otherwise affecting the
naturelproduction from said land shall be entered into by the lessee, nor shall the lessee limit,
restrict, or prorete the naturel production from seid lend in any way or in any avent, except with
the consent in writing of the lessor first had an obtained.
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands oovered by this lease
obtain production of oil, gas, or other hydrocarbons in paying quantities and if the lessee is
unable to establish a setisfactoty market for the oil, gas or hydrocarbons produced from said well,
the lessee may epply for and the lessor may grant permission for the suspension of production
oparations until such times as a satisfactory market for the product from said wall can be
developed. During the time any such suspension of operetions 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 sheli remein in effect as though oil or gas was being produced from said lands.
(I)DILlGENCE-PREVENTlON OF WASTE. To exercise reasonable diligence in drilling,
productng, 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
worI<rnenlike manner In accordance with approved mathods and practice, having due regard for
the prevention of waste of oil and gas, or the entrance of water to the oil or gas beering sands or
strata to the destruction or injury of such deposits, the presarvetion end consarvatlon of the
property for future productive operations and to the health and safety ofworkmen and employees;
10 plug securely in an approved manner any well before abandoning it, and not to abendon any
well without permission of the lessor, not to drill any well within two hundrad (200) feet of any of
000443
the outer boundaries of the land covered heraby, unless I .inst drainage by walls
drilled on lends adjoining less than 200 feet from the pr""""y III ,,,. thereof; to conduct all
operations subject to the Inspection of the lessor; to carry out at the lessee's expanse all
reasonable orders and requirements of the lessor relative to the prevention of waste and
preservation of the property and the health and safety of workmen including the raplanting end
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, together with other recourse herein provided, to
enter on the property to repair damage or prevent wasta at the lassee's expansa; to ebide by and
conform to valid applicable regulations prescribed to reimburse the owner of the surface, if other
than the lessor, or lessee of grazing rights thereof for actual damages thereto and injury to
Improvements thereon, provided, that the lessee shall not be held responsible for acts of
providence or ections beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when dua ell taxes lawfully
assessed and levied under the laws of the State of Wyoming upon improvaments, oil and gas
produced from the land hereunder, or other rights, property or assets of the lessee, to accord all
worI<rnen and employees complete freedom of purchase, end to pay all wages due workmen and
employees in conformance with the laws of the State of Wyoming.
(n)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS. Not to assign this leasa or any
interest therein, nor sublet any portion of the leased premises, except with the consent in writing
of the lessor first hed end obtained.
All overriding royalties to be valid, must have the approvel of the Board or by the Office of State
Lands and Investments when euthority 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 royatties
when in Its opinion they becoma excessive and hence are detrimental to the proper davelopment
of the leased lands.
(o)DELNER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premisas, with all
peml8nent improvements thereon, in good order and condition in case of forfeiture of this laase,
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 leese sail, or otherwise dispose of the surface 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 surface is not necessary for the use of the lessee in
the conduct of operetions hereunder.
(b )The right to lease, sell, or otherwise dispose of other minerel or subsurfece 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 surface lands heretofore granted for righllH>f-wey and
easements end reserves the right to grent such other righllH>f-way and easemants as provided by
the statutes of the State of Wyoming, as long as such rights-d-way and easements do not oonI1ict
with the operations for oil and gas on the land herain 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 resarved right to take its royalty ges in kind and to purchase
all other gas allocated to the leesed 'ends 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.
(f)ln addition to its right to take its royally gas in kind, the lessor reserves the right and option to
purchase all other ges produced for sale or use off the leased lends. 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 intands to sell or transport the gas into interstate commerce and that
one or more intrastate purchasers (i.e., purchasers who will use, consuma, or sail the gas (cruse
or consumption entirely within the State of Wyoming) are willing and able 10 purchase the gas
upon terms reasonably comparable to and alleast as favorable to the lessee as those offered by
the interstate purchaser. The Board shall waive this option and permit an interstate sale if it finds
that no intrastate purchaser is willing and able to purchase the gas upon terms which are
raasonably comparable to and at leest es favorable to the lessee. As a condition to such waiver,
a satisfactoty agreement may be entered into by which the production of its royally ges may be
deferred until it can be produced and sold for consumption end use enliraly within the Stata of
Wyoming.
Section 3. APPRAISAl OF IMPROVEMENTS. The lessee shall have the right subject to the
provisions of Title 36, as to State end 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
reesoneble time after the terminetion of this leese. Lessee egreas that any such improvements
not removed within a reasoneble time after terminetion of this lease shall be disposed of pursuant
to the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shall have the power and authorily to cancel
leases procured by fraud, deceit, or misrepresentations, or for the use of the lands for oolawful or
iIIegel 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 parformance or observance of any of the terms,
covenants, and stipulations hereof, or of the ganerel regulations promulgated by the Board of
Land Commissioners and in force on the dete hereof, the lessor shall serve notice of such failLl1t
or default either by personal service or by certified or registered mail upon the leosea, end 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 leasa,
whereupon all rights and privileges, obtained by the lessee hereunder shall terminate and cease
and the lessor may re-enter and take possession of said premises or any part thereof. These
provisions shall not be oonstrued to prevent the exercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any particular cause or forfeiture shall not
prevent the cancellation 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 lease may be relinquished and
surrendered to lessor as 10 ell or any legal subdivision of said lends es 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
relinquishment or surrender, duly signed and acknowledged and stating therein \hat no operations
have been conducted on the land. The relinquishment SO filed shall become elfective on the data
end hour of receipt thereof in the office 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 ralinquishment or
surrender duly acknowiedged end stating therein thet operations have been conducted on the
land. The relinquishment shell not become effective until the land and the wells thereon shell
have been placed In condition acceptable to lessor and shall have been approved by the State Oil
and Ges Supervisor.
All rantals becoming dua prior to a surrender or relinquishment becoming effective, 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 reinsteted.
00\)444
STATE OF WYOMING )
) §
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 instrument, 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:
C/~~'ßwA·\L
Notary Public
My commission expires: 5) Z-l..e. / r:A