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HomeMy WebLinkAbout937327 and Effective January 6, 1998 ~.....n."".L:I V,l.· n ....v...'"...........~ Parcel# 166 OIL AND GAS LEASE Fund Gode: CS OOð457 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. P'lTRPOSE. 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 37 (formerly All See 36) Resurvey Township: 25 North Range: 119 West of the 6th P.M. County: Lincoln Acres: 652.90 $653.00 ($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 :Ij.E(:~isEE ìit.o;)bec~;ne effective on the 2nd day of, February, 2008 A.D. . "" LESSOR, STATE O~ ~YQMING, Acting by and through its '~~-"<.4""'~/ óZoJ-c. ø:r Lessee Signature: '/7Æ/ . ~~. By Address :~cÝ :u-~ ¿'2//7 City:~;~& State:~{.,Y Zip: ß7/:f Phone:_-L-j~- b.P";;- ..?/<£y___ " , . ~;~ \ . . \ ';' ä Ihvestments .\ . , , , ~ . '. " r (I .~. \ ". ···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 # 166 5 104 4 103 RECEIVED 3/3/2008 at 1 :56 PM RECEIVING # 937327 BOOK: 688 PAGE: 457 JEANNE WAGNER LINCOLN COUNTY CLERK. KEMMERER, WY OIL AND GAS TERJ Section 1. THE LESSEE AGREES: (a) BOND. To furnish e bond with en approved corporate suraty company authorized to 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 current rules of the State Board of Land Commissioners, conditioned upon the payment of all rentals and royalties accruing to the lessor under the tenns hereof, and upon the full compliance of all other tenns 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 improvaments therson where the lease covers lands the surface of which has been sold or otherwise leased. Such bond or bonds furnishad prior to the development of the lands containad in this lease may be increased In such reasonable amounts as the lessor may decide upon commencement of drilling operations and after tha discovery of oil or gas. (b)PAYMENTS. To make all payments accruing hereundar to the Office of State lands and Investments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600. (c)RENTAlS, Prior to the discovery of oil or gas in paying quantities to pay the lessor in advance, beginning with the effective date hereof, an annual rental of $1.00 per acre or fraction thereof. 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 succeeding the lease year in which actual discovery was made, an annual rental of $2.00 per acre or fraction thereof, unless changed by agreement. Such rental so paid for anyone year shall be creditad 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 rantal 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, end a penalty of $0.50 per acre for late payment will be assessad. The lessee is not legally obligated to pay either the rental or the penalty, but if the rental and penalty are not paid within thirty (30) days after the notice of default has been received, the lease will tenninate automatically by operation of law. Tennlnation of the lease shall not I1Ilieve the lessee 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 operating lease. (d)ROYAl TIES. The royalties to be paid by lessee al1l: (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 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 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 wells, the royalty shall be one-sixth of the amount l1Ialized 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 determined to be fair and l1Iasonable. (iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the lessor, and in the detennination of the value of natural gasoline the fair cost ofaxtraction shall be considered as a deductible item; provided, however, thet 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 \hen that received by the United State of Americe 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 I1Iturned to the sand for stimulating the production of oil or secondary recovery purposes shall be royalty frae. (e) DISPOSITION OF ROYAlTY OIL AND GAS. To deliver to the lessor, or to such individual, finn or corporation as the lessor may designate, all royalty oil, gas, or other kindred hydrocarbons, free of charge on the premises where produced, or, at the option of the lessor, and in lieu of said 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 hydrocarbons in kind such as oil, gas, or other kindred hydrocarbons shall be good merchantable oil, gas, or other kindred hydrocarbons. The lessee shell if necessary furnish storage for royalty oil frae of charge for 1I1irty (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 and tha lessee may mutually agree upon, provided, thet the lessee shall not be held liable for loss or destruction of royalty oil so stored from causes beyond his control. The free storage of oil; es herein provided, shall apply only as long as the said oil is the property of the lessor. (fj MEASUREMENTS OF PRODUCTION. To gauga, maasure and correct for temperature all production from said lands in confannance with the !\Jles and ragulations adoptad by the Board of land Commissioners and report said production to the lessor in accordance therewith. To keep books, records, and reports pertaining to the production from tha land herein leased as well as those pertaining to the production from offset wells operated by the lessee, his operator, or sub-lessee on othar lands, which shall 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 temparatures of all oil!\Jn and with monthly reports showing the month, year, amount, and price of all gas and natural gas gasoline and other products produced and sold from the land herein leased, and the amount of gas returned to the sand. (g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is otherwise extended by the Office of State lands and Investments to make payment on or before the twentieth (20th) day of the calendar month sucœading the month of production and removal and sale of oil and gas from said land, and to furnish sworn monthly statements therewith showing in datail the quantity and quality of the production (par wali if required where practical) from the land hereby leased, and the quantity and quality of the production (per wall where practical) from offset wells upon cornering or contiguous land operated by the lessee, his operator or sub-lessee and such other infonnation as may be celled for in the fann 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 adjoining lands. To drill such additional walls 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 drilied by the lessee on the lands herein leased, showing the strata and character of the fannations, water sands and mineral deposits penetratad by the drill, amount of casing, size and where seL 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 1I1a fonn prascribed 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, pipa linas and othar works used in connaction with the operations of the lessee upon said land. To make such other reports pertaining to the production and oparations by the lessee on said land, and report such other infonnation 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 propar development and operation of the lands harein leased, as may be called for by the lessor. All logs, maps, and I1Iports shall be submitted in duplicate and the 0IIiœ of State lands and Investments may waive such reports as conditions may warrant üJPRODUCTION. To operate the wells upon the land herein leased in a competent and efficient manner in an endeavor to recover alltha oil and gas economicelly possible from said land and to prevent the under drainaga of the oil and gas thereunder by wells operated by the lessee or others on cornering or contiguous lands to those leased .herein.AlI plans or methods for the purpose of stimulating or increasing production on lands herein leased other then those in common use shall first be prasented to the lessor for approval before being put into actual operation. No production agreements limiting, restricting, prorating, or otharwise affecting the natural production from said land shall be entered into by the lessee, nor shall the lessee limit, restrict, or prorata the natural production from said land in any way or in any event, axcept with the consent in writing of the lessor first had an obtained. (k)SUSPENSION OF OPERATIONS. Should any wall 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 satisfactory market for the oil, gas or hydrocarbons produced from said well, the lessee may apply for and the lessor may grent pennission for the suspension of production operations until such times as a satisfactory markat 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 acra or fraction thereof provided by (c) above, and this lease shall remain in alfact as though oil or gas _ being produced from said lands. (I)DILlGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling, producing, and operating of walls 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 workmanlika mannar in accordance with approved methods and practice, having due regard for the pravention 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 safaty of workmen and employees; to plug securely in an approved manner any well befol1l 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 the outer boundaries of the land covered hel1lby, unless r - - -;:l~ge by wells drilled on lands adjoining less \hen 200 feet from the property lines thereof; to conduct all operations subject to the inspection of the lessor; to carry out at the lassea's expense all reasonable orders and requirements of the lessor relative to the pravention of waste and praservation of the property and the health and safety of workmen including the replanting and reseeding of drilling sites and other areas disturbed by drilling oparations and on failure of the lessee so to do the lessor shall heve tha righL together with othar recourse harein provided, to enter on the property to repair damage or prevent weste at the lessee's expense; to abide by and confann to valid applicable regulations prescribed to reimburse the owner of the surface, if other \hen the lessor, or lessee of grazing rights thereof for ectual dameges thereto and injury to improvements therson, provided, that the lessee shall not be held responsible for acts of providence or actions beyond his control. (m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when dua 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 freedom of purchase, and to pay all wages due workman 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 interest therein, nor sublet any portion of the leased premises, except with the consent in writing of the lessor first had and obtained. All overriding royalties to be valid, must have the approvel of the Board or by the Office of Stale Lands and Investments when authority to do so has been delegated by tha Board and will be recorded with the lease. The Board reserves the right of disapproval of such overriding royalties when in its opinion they become exceSsive and hence al1l detrimental to the proper developmen! of the laased lands. (o)DElIVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all permanent improvements therson, in good order and condition in case of forfeiture of this lease, but this shall not be const!\Jed 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 otherwise dispose of the surface of the land embraced within this lease under existing laws or laws hereafter enactad, and in accordance with the rules of the Board of Land Commissions insofar as the suñace is not necessary for the use of the lessee in tha conduct of operations hereunder. (b)The right to lease, sell, or otherwise dispose of other mineral 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 lease, the surface lands heretofore granted for rights-<>f-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 oonfIict with the operations for oil and gas on the land herein leased. (d)The right to refuse to commit the leased lands to a unit plan of development if the Board finds such action would impair the lesso~s reserved right to take its royalty gas in kind and to purchase all other gas allocated to the leased lands a provided in Section 3(e)below. (e)The right to alter or modify the quantity and rate of production to the end that waste may be eliminatad or that production may confonn to the lessee's fair share of allowable production under any system of State or National curtailment and proration authorized by law. (fjln addition to its right to take its royalty gas in kind, the lessor I1Iserves the right and option to purchase all other gas produced for liale or use off the leasad lands. This option shall be exercised only if the Board finds that the lessee has received and is willing to accept a bona fide offar from a purchaser who intends to sell or transport the gas into intarstate commerce and thet 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 tenns reasonably comparable to and at least as favorable to the lessee as those offered by the interstate purchaser. The Board shall waive this option and pennit an Interstate sala if II finds that no intrastate purchaser is willing and able to purchase the gas upon tenns which are l1Iasonably comparable to and at least as favorable to the lessee. As a condition to such waivar, a satisfectory agreement may be entered into by which the pmduc\ion of its royalty gas may be deferred until It can be produced and sold for consumption and use entil1lly 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, es to State loan and Investments Board Lands, W.S. 1977, to remova any improvements owned by lessee within a l1Iasonable time after the tennination of this lease. Lessee agrees \het any such improvements not removed within a reasonable time after tennination of this laase shall be disposed of pursuant to the above statutes. Saction 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel leases procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or illegal purposas, or for the violation of the covenants of the lease, upon proper proof thereof, in the event that the lessee shall default in the perfonnance or obsarvance of any of the terms, covenants, and stipulations hereof, or of the ganeral regulations promulgated by the Board of land Commissioners and in force on the date hereof, the lessor shall serve notice of such faiknl or default either by personal service or by certiflad or registered mail upon the lessee, and if such failure or default continues for a pariod of thirty (30) days after the service of such notice, then and in that event the lessor may, at its option, declare a forfeiture and cancel this lease, whereupon all rights and privileges, obtained by the lessee hereunder shall tenninate and cease and the lessor may ........nter and take possession of said premises or any part thereof. Thesa provisions shall not be const!\Jed to prevent the exercise by lessor any legal or equitable remedy which the lessor might otherwise have. A waiver of any particular cause or forfaiture shall not prevent the cancellation and forfeiture of this lease by any other cause of forfeiture, or for the same ceuse 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 oparations have been conducted under the lease on the land to be I1Ilinquished, the lessee shall file with the State land Board and State loan and Investment Board, a written relinquishment or surrender, duly signed and acknowtedged and stating therein thet no operations heve bean conducted on the land. Tha ralinquishment so filed shall become eft'ective on the date and hour of receipt thereof in the office of the Director or at some latar 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 I1Ilinquished, the lessee shall give sixty (60) days notice and shall file with the Director a written I1Ilinquishment or surrender duly acknowtedged and stating therein that operations have been conductad on the land. The I1Ilinquishment shall not become effective until the land and the wells therson shall have been placed in condition acceptable to lessor and shall heve been approved by the Stale Oil 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 waived by lessor. A relinquishment heving become effective there shall be no recourse by lessee and the lease as to the relinquished lands may not be reinstated. ûOi)459 STATE OF WYOMING ) ) § COUNTY OF CAMPBELL ) Before me on the 28th day of February, 2008, John 1. 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: tkv~d.~&cu~ Notary Public My commission expires: 5 J 2 Le- J {94 I '