HomeMy WebLinkAbout937324
and Effective Janu.rY-6-~ Y9911-
STATE
OIL AND
"'.. NYOMING
GAS LEASE
Lease # 08-0013-
I
Parcel# 163 OOð448
Fund Code: AG
Form Approved by t\
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:
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Tract 125 (formerly SW Sec 4) Resurvey Township: 25 North Range: 119 West of the 6th P.M.
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County: Lincoln
Acres: 166.70
$167.00
($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 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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***Stipulations apply to this lease. The following numbers correspond to the stipulations printed with the
carcels offered with this auction. The sticulations can also be referenced online at slf-web.state.wv.us. ***
ParcellD Stipulation #
163 104 RECEIVED 3/3/2008 at 1 :54 PM
RECEIVING # 937324
BOOK: 688 PAGE: 448
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
OIL AND GAS TER _
Section 1. THE LESSEE AGREES:
(a) BOND. To fumish a bond with an approved corporate surety company authorized 10 transact
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 OJrrant rules of the Stale Board of Land Commissioners,
conditioned upon the payment of all rantals and royalties aœruing to the lessor under the tenns
hereof. and upon the full compliance of all 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
surface and improvements thereon where the lease covers lands the surface of which hes been
sold or otherwise leased. Such bond or bonds furnished prior to the development of the lands
contained in this lease may be Ina-eased in such reasonable amounts as the lessor may decide
upon commencement of drilling operations and alter the discovery of oil or gas.
(b) PAYMENTS. To make all payments aœrulng hereunder to the Office of State Lands and
Investments, 122 West 25th Street, Cheyenne, Wyoming B2002..Q600.
(c)RENTALS. Prior to the discovery of oil or gas in paying quantities to pay the lessor in
advance, begiming with the effective date hereof, an aMual rental of $1.00 per ecre or fraction
thereof.
Alter the discovery of oil or gas In paying quantities to pay the lessor In edvance beginning 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 aa-e or fraction thereof, unless changed by agreament. Such rental so
peid for anyone year shell be credited on the royelty for thet year.
Annual rentals on all leases shell 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 SO.50
per acre for late payment will be assessed.
1he lessee is not legally obligated to pey either the rental or the penalty. but if the rental and
penalty are not peid within thirty (30) days aIIer the notice of default has been received, the lease
will terminate automaticalty by operation of law. Termination of the lease shall not relieve the
lessee of any obligation inOJrrad under the lease other than the obligation to pay rental or
penalty. The lessee shall not be entitled to a credit on royalty due for any penalty paid for late
peyments 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 10 be delivered
at the _lis or to the credit of lessor into the pipe line to which the _lis may be connected.
(ii) On gas, including casinghead gas or other hydrocarbon substances, produced from said
land saved and sold or used off the premises or in the manufecture of gasoline or other products
therefrom, the market value at the _It of one-sixth of the gas so sold or used, provided that on
gas sold at the _lis, the royalty shall be one-sixth of the amount realized from such sale.
(ill) On all other hydrocarbons of value and geseous substances and elements produced or
extracted, including propane, butane, sulphur, nitrogen, carbon dioxide, and helium, al such
royalty as shall be mutually detannined 10 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 detannlnation of the value of naturel gasoline the fair cost of extraction shall be
considered as a deductible item; provided, however, that the allowance for the cost of extraction
may exceed two-thlrds of the amount or value only on approval of the lessor and In no 8V&1I shall
the price tor gas, or natural gasoline, be less than that received by the United State of America tor
its royalties from the same field.
(v) Natural gas and oil actually used tor operating purposes upon the land and, except as to the
ultimate sale thereof, gas or liquid hydrocarbons retumed to the sand for stimulating the
production of oil or secondary recovery purposes shall be royalty free.
(a) DISPOSITION OF ROYAL TV OIL AND GAS. To deliver to the lessor, or to such individual,
firm or corporation as the lessor may designate, all royalty oil, gas, or other kJndred hydrocarbons,
free of charge on the premises where produced, or, at the option of the lessor, and In lieu of said
royalties in kind, the lessee agrees to pey 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 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 fumish storaga for royalty oil free of charge forlhirty
(30) days after the end of the calender month in which the oil is produced, upon the leased
premises, or at the such place as the lessor and the lessee may mutually agrea upon, provided,
that the lessee shall not be held liable tor loss or destruction of royalty oil so stored from causes
beyond his control.
1he 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 tor temperature 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 accordanca therewith.
To keep books, records, and reports pertaining to the production from the land herein leased as
wall as those pertaining to the production from offset _lis operated by the lessee, his operator,
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 fumish 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, 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 retumed 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 before the
_ntieth (20th) day of the calendar month succeeding the month of production and removal and
sale of oil and gas from said land, and to fumish sworn monthly statements therewith showing in
detail the quantity and quality of the production (per wall if required where practical) from the land
hereby leased, and the quantity and quality of the production (per -'I where practical) from offset
_lis upon cornering or contiguous land operated by the lessee, his operator or sub-lessee and
such other Information as may be called tor in the form or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and operate effactively all walls necessary to reasonably
offset _lis upon and production from adjoining lands.
To drill such edditional_lts 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
wall drilled by the lessee on the lands herein leased, showing the strata and character of the
formations, water sands and minerel deposits panetrated by the drill, emount of ceslng, size and
where set, and such other infonnation as the lessor may require which log or copy thereof shall
be fumished to the lessor.
To file progress reports, In the form prescribed by the lessor. at the end of eech thirty (30) day
period while each _II 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 walls, 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 said
land, and report such other information as may be possessed by the lessee on the _lis,
production or operetlons of others on lands on the same geologic structure that may be of
importance in elfacting 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 State Lands and Investments may waive such reports as conditions may warrant.
(j)PRODUCTION. To operate the _lis 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 10
prevent the under drainage of the oil and gas \hereunder by walls operated by the lessee or
others on cornering or contiguous lands to those leased herein. All plans or methods for the
purpose of stimulating or increasing production on lands herein leased other than those in
common use shall first be presented to the lassor for approval before 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 prorrlle 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 _II 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 market tor the oil, gas or hydrocarbons produced from said wall,
the lessee may apply for and the lessor may grant pennisslon for the suspension of production
operations until such times as a satisfactory market for the product from said wall can be
developed. During the time any such suspansion of operations is in affect, the lessee shall
continue to pay the amual rental of $2.00 per aa-e or fraction thereof provided by (c) above, and
this lease shall remain in eIfact as though oil or gas was being produced from said lands.
(I)DILlGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling,
producing, and operating of _lis on the land covered hereby, unless consent to suspend
operations temporarily is granted by the lessor; to carTY on all operations hereunder In a good and
workmanlike manner in accordance with approved methods and prectice, having due regard for
Ihe prevention of waste of oil 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 preservation and conservation of the
property for future productive operations and to the health and safety of wortunen and employees;
to plug securely in an approved manner any _II before abendoning it, and not to abandon any
_II without pennisslon of the lessor, not to drill any _II within two hundred (200) feet of any of
OO\i"\449
the outer boundaries of the land covered hereby, unless It nst drainege by _lis
drilled on lands edjolning less than 200 feet from the prto""'-'I""g~ .Mreof; to conduct all
operations subject to the inspaction of the lessor; to carTY out at the lessee's expense 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 inctuding 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 righ~ together with other recourse herein provided, to
enter on the property to repair damage or prevent waste at the lessee's expense; to abide by and
conform to valid appliceble 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 actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pey, when due all taxes lawfully
assessed and levied under the laws of the State of Wyoming upon Improvements, oil and gas
produced from the land hereunder, or other rights, property or assets of the lessee, to accord all
workmen and employees complete freadom of purchase, and to pay all wages due workmen and
employeas in conformance with thè laws of tha 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 be
recorded with the lease. The Board reserves the right of disapproval of such ovemding royalties
when in its opinion they become excessive and hence are detrimental to the proper davelopment
of the leased lands.
(o)DELlVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all
permanent improvements thereon, in good order 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 ordinary
course of operations.
Saction 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise disposa of the surface of the land embraced 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 tessee in
the conduct of operations hereunder.
(b)The right to lease, sell, or otherwise dispose of other minerai or subsurface 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 laase, the surface lands heretofore granted tor rights-of-way and
easements and reserves the right to grant such other righl8-«-W&Y and ea-..ents as provided by
the statutes of the State of Wyoming, as long as such rlghts..of-way and easements do not conftict
with the operations for oil and gas on the land harein leased.
(d)1he 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 that
ona or more intrastate purchasers (I.e., purchasers who will use, consuma, or sell the gas tor use
or consumption entirely within the State of Wyoming) are willing and able to purchase the gas
upon tanns raasonably comparable to and at least as favorable to the lessee as those offared 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 abla to purchase the gas upon terms which are
reasonably compareble to and at least as favorable to the lessee. M a condition to such waiver,
a satisfactory agreement may be entered Into by which the production of its royalty gas may be
daferrad 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 Title 11, as to State Loan and
Investments Board Lands, W.S. 1977, to remove any improvements owned by lessee within a
reasonable time aIIar the tannination of this lease. Lessee agrees that any such improvements
not removed within a reasonable time after termination of this lease shall 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, deceit, or misrepresentations, or for the use of the lands for unlawful or
iIIeg,,1 purposes, or for the violation of the covenants of the leasa, upon proper proof thereof, in
the event that the lessee shall default in the performance or observance of any of the terms,
covenants, and stipulations hereof, or of the general regulations promulgated by the Board of
Land Commissioners and in force on the data hereof, the laSSO( shall serve notice of such fail1X8
or dafault either by personal service or by certified or registared mail upon the lessee, and if such
failure or default continues for a period of thirty (30) days aIIer the service of such notica, then
and in that event the lessor may, at its option, declare a forfeiture and canœlthis lease,
whereupon all rights and privileges, obtained by the lessee hereunder shall terminate and cease
and the lessor may r~ter and take possession of said premises or any part thereof. These
provisions shall not be construed 10 prevent the exercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any partiOJlar cause or forfeiture shalt 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 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 be reltnqulshed, the
lessee shall file with the State Land Board and State Loan and Investment Board, a written
relinquishmant or surrander, duly signed and acknowtadged and stating therein that no operations
have been conducted on the land. The relinquislvnent so filed shall become affective on the date
and 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 affective 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 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 aIIective until the land and the _lis 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 due prior to a sUlT8nder or relinquishment becoming effactive, shall be
payable by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become affactive there shall be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated.
00ð450
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:
~~~
Notary Public
My commission expires:
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