HomeMy WebLinkAbout937326
Form Approved by t¡"'---'-
and ¡¡;ffective January'''",- .L-~9"-
STATE ~. RYOMING
OIL AND GAS LEASE
Lease # 08-0014'
Parcel # 165
Fund Code: CS 00\)454
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:
Tract 132 (formerly NENE See 8) Resurvey Township: 25 North Range: 119 West of the 6th P.M.
County: Lincoln
Acres: 41.52
$42.00
($1.00 per acre or frac~ion 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 exprèssly 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
effective on the 2nd day of, February,
LESSOR, STATE OF WYOMING, Actin~ by, and
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Lessee Signature~~~~. ~~
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been executed by LESSOR and LESSI¡:;Eì, to become
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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 #
165 5
67
57
RECEIVED 3/3/2008 at 1 :55 PM
RECEIVING # 937326
BOOK: 688 PAGE: 454
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
Oil AND GAS TER
Section 1. THE lESSEE AGREES:
(a) BOND. To furnish a 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 \he
penal sum as required by \he current rules of the Stale Board of land Commissioners,
cond~ioned upon the payment of all rentals and royalties accruing to the lessor under the teons
hereof, and upon the full compliance of all other teons and conditions of this lease and the rules
and regulations relating \hereto, and also cond~ioned on the payment of all damages to the
surface and improvements thereon where the lease covers lands the surface of which has been
sold or otherwise leased. Such bond or bonds furnished prior to the development of the lands
contained in this lease may be inaeased in such reasonable amounts as the lessor may decide
upon commencement of drilling operalions and aIIer the discovery of oil or gas.
(b)PAYMENTS. To make all payments accruing hereunder to the Office of State lands and
Investmants, 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 dete hereof, an annual rental of $1.00 per acre or fraction
\hereof.
After the discovery of oil or gas In paying quantities to pay the lessor in advance beginning with
the first day of the lease year succaeding \he lease year In which actual discovery was made, an
annual rentel of $2.00 per acre or fraction thereof, unlass changed by agreement. Such rental so
paid for anyone year shall be credited on the royalty tor that year.
Annual rentals on all leases shall be payable in advance tor the first yaar and each year
thereafter. No notice of rental due shall be sent to the lessee. If the rentells not paid on or
before the date it becomes dua, notice of default will be sent to the lessee, and a penalty of $0.50
per acre for late payment will be assessed.
The lessea is not legally obligated to pay either the rental or the penalty, but if the rental and
panalty are not paid within thirty (30) days aIIer the notice of default has been received, the lease
willteoninate automatically by operation of law. Teonination of the lease 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 entitled to a credit on royalty due for any penalty paid for late
payments of rental on an oparating 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 delivered
at the wells or to the credit of lessor into the pipe lina to which the wells 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 markat value at the well of one-sixth of the gas so sold or used, provided that on
gas sold at the wells, the royalty shall be one-slxth of the amount realized from such sale.
(III) On all other hydrocarbons of valua and gaseous substances and elements produced or
extracted, including propane, butane, sulphur, nitrogen, carbon dioxide, and helium, at such
royalty as shall be mutually deteonined to be fair and reasonable.
(iv) For royalty putpOses on gas and natural gasoline the valua shell be as approved by the
lessor, and in the determination of the value of natural gasolina tha fair cost of extraction shall be
considared es a deductible Item: provided, however, that tha allowance for the cost of extraction
may exceed two-thirds of the amount or valua only on approval of the lessor and in no event shall
the price for gas, or natural gasoline, be less then thet received by the United SIaIe of America tor
its royalties from the same field.
(v) Natural gas and oil ectually used for operating putpOses upon the land and, except as to the
ultimate sale thereof, gas or liquid hydrocarbons returned to tha sand for stimulating the
production of 011 or secondary recovery purposes shall be royalty trea.
(e) DISPOSITION OF ROYAl TV OIL AND GAS. To deliver to the lessor, or to such individual,
firm or corporation as the lessor may designate, ell royalty oil, gas, or other kindred hydrocarbons,
frae 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 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 its royalty oil, gas, or other hydrocaIbons in kind Such as oil, gas,
or other kindred hydrocarbons shall be good merchantable oil, gas, or other kindred
hydrocatbons. The lessee shall if necessary furnish storage for royalty oil free of charge torthirty
(30) days aIIer the end of the calendar month in which the oil Is produced, upon the leased
premises, or at the such placa as the lessor and the lessee may mutually agree upon, provided,
thetthe lessea shell not be held liable for loss or destruction of royalty oil so stored from causes
beyond his control.
The free storage of oil, as herein provided, shall apply only as long as the said oil is the properly
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for temperature all
production from said tands in donformance with the rules and regulations adopted by the Board of
land CommlsslonenJ and report said production to the lessor in accordance therewith.
To keep books, records, and reports pertaining to the production from the land herein leased as
well as those pertaining to the production from offsat wells operated by the lessee, his operator,
or sub-lessee on other lands, which shell be opened at all times for the inspection of any duly
authorized agent of the lessor.
To furnish the lessor with original pipe line reports showing the day, month, year, amount,
gravities, and temperatures of all 011 run and with monthly reports showing the month, year,
amount, and prica 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 otherwise
extended by the Offica of State lands and InveslmBnts to make payment on or before the
twentieth (20th) day of the calendar month succeeding the month of production and removal and
sale of oil and gas from said land, and to furnish sworn monthly statements therewith showing in
detail the quantity and quality of the production (per well if required where practlcat) from the land
hereby leased, and the quantity and quality of the production (per well where practical) from offset
wells upon cornering or contiguous land D IIIf8ted 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 effectively all wells necessary to reasonably
offset wells upon and production from edjoining lands.
To drill such additional wells at such tin.s or placas as are necessary and e888ntlalto 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 the strata and character of the
formations, water sands and mineral deposits penetrated by the drill, amount of casing, size and
whera set, and such other information as the lessor may require which log or copy thereof shell
be furnished 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 and the location of all wells, pipe lines and other works used in connection with the
operations of the lessee upon said land.
To make such other reports pertaining to the production and operations by the lessee on said
land, and report such other information as may be possessed by the lessee on the wells,
production or operations of others on lands on the same geologic structure that may be of
importance 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 0Ifica
of State lands and Investmants may waive such reports as conditions may warrant.
ü)PRODUCTION. To operate the wells upon the land herein leased in a compatent and efficient
mamer In an endeavor to recover all the oil snd gas economically possible from said land and to
prevenlthe under drainage of the 011 and gas thereunder by wells operated by the lessee or
others on cornering or contiguous lands to Ihosa leased herein. All plans or methods for the
purpose of stimulating or inaeasing production on lands herein leased other than those in
common use shall first be presented to the lessor tor approval before being put into actual
operation.
No production egreements limiting, restricting, prorating, or otherwise affecting the
naturalproduction from said land shell be entered Into by the lessee, nor shall the lessee limll,
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 eny well drilled upon lends covered by thisleasa
obtain production of oil, gas, or other hydrocarbons in paying quantities and if the lessee Is
unable to establish a satisfaclory market for the oil, gas or hydrocarbons produced from said well,
the lesS88 may apply tor and the lessor may grant pannlssion tor the suspension of production
D IIIf8tions until such times as a satisfaclory 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 shali remain in eftacl as though oil or gas was being produced from said lands.
(I)DllIGENCE-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 cany on all operations herøu1der in a good and
workmanlike manner in accordance with approved methOds and prectice, heving due regard for
the 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
properly for future productive operations and to the health and safety ofworkmen and employees:
to plug securely in an approved manner any well before abandoning It, and not to abandon any
well without permission of the lessor, not to drill any well within two hundred (200) feet of any of
ùOù455
the outer boundaries of the land covered hereby, unless t. nst drainage by wells
drilled on lands edjolning less than 200 feet from the prDfJor"Y "',,'~ ,nareof; to conduct ali
operations subjeclto the inspection of the lessor; to cany 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 including the replanting and
reseeding 01 drilling slles and other arees disturbed by drilling oparations 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 waste at the lessee's expense: to abide by and
conform to valid applicable regulalions 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 ects of
providence or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, 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, properly 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 conformance with the laws of the State of Wyoming.
(n)ASSIGNMENTS OF lEASE-PRODUCTION AGREEMENTS. Not to assign this lease or any
interast therein, nor sublet any portion of the leased premisas, except with the consent in writing
of the lessor first hed and obteined.
All overriding royeltles to be valid, must have the approval of the Board or by the Office of State
Lands and Investments when authority to do so hes been delegated by the Board and will be
recorded with the lease. The Board reservas the right of disapproval of such ovenidlng royalties
when in its opinion thay become excessive and hence are detrimental to the proper deve/opmenl
of the leased lands,
(o)DElIVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all
permanent improvements thereon, in good order and condition In casa of forfeitur& of this lease,
bulthis shall not be construed to
prevent the removal, alteration or renewal of equipment and improvements in the ordinary
course of operations.
Section 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwisa dispose of the surface of the land embraced within this
lease under existing laws or laws hereafter enacted, and in accordance with the rulas of the
Board of land Commissions insofar as the surface is not necessary for the use of the lessee in
the conduct of operations hereunder.
(b)The right to lease, sell, or otherwise dispose of other minerai or subsurfaca 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 heratofore granted for rights-of-way and
easements and reserves 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-<lf-way and easements do not conflict
with the oparations 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 lessots 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 thet waste may be
eliminated or that production may conform to the lessee's fair share of allowable production undar
any system of State or National curtailment and proration authorized by law.
(f)ln addition to its right to take its royalty gas in kind, the lessor reserves the right and option to
purchase all other gas producad for sale or use off the leased lands. This option shall be
exercised only if the Board finds that the lessee has recaived and is willing to acœpt a bona fide
offer from a purchaser who intends to sell or transport the gas into interstate commerce and \hat
one or more intrastate purchasers (i.e., purchasers who will use, consume, or sell the gas tor use
or consumption entirely within the State of Wyoming) are willing and able to purchase the gas
upon teons reasonably comperable to and atlaast 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
thet no Intrastate purchaser Is willing and able to purchase the gas upon terms which are
reasonably comperable to and at least as favorable to the lessee. As a condition to such waiver,
a satisfactory agreement may be entered into by which the production of its royalty gas may be
deferred until it can be produced and sold for consumption and use sntirely within the State of
Wyoming.
Section 3. APPRAiSAl OF IMPROVEMENTS. The lessee shall have the right subject to the
provisions 01 Title 36, as to State and State SchDollands, and Title 11, as to Stata loan and
Investments Board lands, W.S. 1977, to remove any improvements owned by lessee within a
reasonable time aIIer the termination of this lease. lessee egreas thet 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 cancal
leases procured by fraud, deceit, or misrepresentations, orfor the use of the lands 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 delault In the performance or observance of any of the terms,
covenants, and stipulations hereof, or of the ganeral regulations promulgated by the Board of
land Commissioners and in forca on the date hereof, the lessor shall serve notice of such failure
or default either by parsonal service or by cartilied or registered mail upon the lessee, and if such
failure or default contlnuas for a period of thirty (30) days aIIer the servica of such notice, then
and in that event the lessor may, at Its option, declare a forfeiture and cancal this lease,
whereupon all rights and privileges, obtained by the lessee hereunder shall terminate and cease
and the lessor may re-«rter and take possession of said premisas or any part \hereof. 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 causa or forfeiture shell not
prevent the cancellation and forfellure of this lease by any other causa of forfeiture, or for the
same cause occurring al 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 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 _ing therein \hat 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 office of the Director or at some later date, if such be so
specified by the lessee therein. If the said relinquishment falls to state that no operations heve
been conducted, the effective date of relinquishment shali 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 notica and shali file with the Director a wril\en relinquishment or
surrender duly ecknowledged 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 shell have been approved by \he Stats Oil
and Gas Supervisor.
All rentals becoming due prior to a surrender or relinquishment becoming effective, shall be
payeble by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become effective there shell be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated.
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 /~~~/JL
Notary Public
My commission expires:
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