HomeMy WebLinkAbout937328
Form Approved by t(
and Effective JanuàryEi~---1'99'ej
STATE
OIL AND
"... NYOMING
GAS LEASE
Lease # 08-0014
Parcel # 172
Fund Code: AG
õOð460
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 90 (formerly All Sec 15) Resurvey Township: 25 North Range: 119 West of the 6th P.M.
County: Lincoln
Acres: 659.80
$660.00
($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 expréssly 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,:ibecome
effective on the 2nd day of, February, 2008 A.D. ~~
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LESSOR, STATE OF W~OMI~G, Acting by and through its
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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. ***
Parcel ID Stipulation #
172 14
104
RECEIVED 3/3/2008 at 1 :57 PM
RECEIVING # 937328
BOOK: 688 PAGE: 460
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
OIL AND GAS TERI
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bond with an approved corporata surety company authorized to transact
business in the State of Wyoming, or such other surety as may be accaptabla to the lessor, in the
penal sum as required by the currant rules of the State Board of Land Commissioners,
conditioned upon the payment of all rentals and royalties accruing to the lessor under the terms
hereof, and upon the full compliance of all other terms and conditions of this lease and the rules
and regulations relating thereto, and also conditioned on the payment of all damagas to the
surface and improvements thereon whare the laase covers lands the surface of which has been
sold or otherwise leased. Such bond or bonds furnished prior to the development of the lands
oontained in this lease may be inaeased in such reasonable amounts as the lessor may decide
upon commencement of drilling operetions and after the discovery of oil or gas.
(b)PAYMENTS. To make all payments accruing heraunder to the Office of State Lands and
Investments, 122 West 25th Street, Cheyeme, Wyoming 82oo2.œoo.
(c)RENTALS. Prior to the diacov8l)l of oil or gas in paying quantities to pay the lessor in
advance, begiMing with the effective data 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 lassor 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 aae or fraction thereof, unless changed by agreement. Such rental so
paid for anyone year shall be credited on the royalty for that year.
AMual rentals on all leases shall be payable In advance for the first year and each year
thereafter. No notice of rental due shell be sent to the lessee. If the rental is not paid on or
before the data it becomes due, notice of default will be sent to the lessee, and a penalty of $0.50
per aae for late payment will be assessed.
The lessee is not lagally 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 leasa
will terminate automatlcelly by operation of law. Termination of the lease shall not relieve the
lessee of any obligation incurred under the lease other than tha obligation to pay rental or
penalty. The lessee shall not be entitled to a credit on royalty due for any penelty 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 walts 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
tand saved and sotd or used off the premises or In the mllllUfacture of gasoline or other products
therefrom, the market value at the wall of one-slxlh of the gas so sold or used, provided that on
gaa sotd et tha walla, the royalty shall be on....aixth of the amount realized from such sale.
(iii) On all othar hydrocarbons of value and gaseous substances and alements produced or
extracted, including propene, butane, sulphur, nitrogen, carbon dioxide, and helium, at such
royalty as shall be mutually determined to be feir and reasonable.
(iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the
lessor, and in the determination of the value of natural gasoline tha fair cost of extraction shall be
considered as a deductible Item; provided, howe_, that the allowance for the cost of extraction
mey exceed two-thirds of the amount or value only on approval of the lessor and in no event shall
the prica for gas, or natural gasolina, be leas than that received by the United Slate of America for
its royalties from the same field.
(v) NatUlllI gas and oil actualty 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 shall be royalty free.
(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, all royelty oil, gas, or other kindred hydrocarbons,
free of charge on the premises whera produced, or, at the option of the lessor, and In lieu of said
royalties in kind, the lessee agrees to pay the lassor the field market price or value of all royalty
oil, ges, or other kindred hydrocarbons produced and saved.
\M)en the lessor elects to taka its royalty oil, ges, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantabla oil, gas, or other kindred
hydrocarbons. The lessee shell if necessary furnish storage for royalty oil free of charge for thirty
(30) days after the end of the calandar month in which the oil is produced, upon the leased
premises, or at the such place as the lassor and tha lessee may mutually agree upon, provided,
that the lassee shall not be hald liable for loss or destruction of royalty oil so stored from causes
beyond his control.
The free storage of oil, as herein provided, shell apply only as long as the seid oil is the property
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauge, meesure and correct for temperature all
production from said lands in conformance with tha 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 reports pertaining to the production from the land herein leased as
wall as those pertaining to the production from offset wells 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 agant of the lessor.
To furnish 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 returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is otherwise
extended by the Office of Slate Lands and Investments to make payment on or before the
twentieth (20th) dey of the calendar month succeeding the month of production and removal and
sale of oil and gas from said iand, and to furnish swom monthly statements therewith showing in
detail the quantity and quality of the production (per wall if required where practical) from the land
heraby leased, and the quantity and quality of the production (per well where practical) from offset
wells upon comering or contiguous land operated by the lessee, his operator or sub-lessee and
such other information es may be called for in the form or report prascribed by lessor.
(h) WELLS TO BE DRILLED. To drill and operate effectively all walls necess8l)l to reasonably
offset walls upon and production from adjoining lands.
To drill such edditional wells at such times or placas 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 mineral daposlts penetrated by the drill, amount of casing, size and
whare set, and such other information 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 each thirty (30) day
period while each wallis 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 seid 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 walls,
production or operetions of others on lands on the same geotogic structura that may be of
importance in effacting 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 Invastments may weive such reports as conditions may werrant.
(j)PRODUCTION. To operate the walls 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 to
prevent the under drainage of the oil and gas thereunder by walls operated by the lessee or
others on comering 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, rastricting, prorating, or otherwise affacting the
natural production from said land shall be entered into by the lessee, nor shell the lessee limit,
restrict, or prorate the natural production from said land In any way or In any event, except with
the consent in writing of the lessor first had an obtained.
(k)SUSPENSION OF OPERATIONS. Should any 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 satisfactoly market for the oil, gas or hydrocarbons produced from said well,
the lessee may epply for and the lessor mey grant permission for the suspension of production
operations until such times as a satisfactory market for the product from said wall cen be
dev'!lopad. During the time any such suspension of operations is in effact, the lessee shall
continue to pay the annual rental of $2.00 per aae or fraction thereof provided by (c) above, and
this lease shall remain in elfact 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 wells on the land covered hereby, unless consent to suspend
operations temporarily is granted by the lessor, to carry on all operations hereu1der in a good and
workmanlike manner in accordance with approved methods and practice, having due ragard for
the prevention of waste of oil and gas, or the entrance of water 10 the oil or gas bearing sands or
strata to the destruction or injury of such deposits, the preservation and conservation of the
property for Mure productive operations and to the health and safety of workmen and employees;
to plug securely in an approved mannar any well before abandoning it, and not to abandon any
well without pannission of the lessor, not to drill any well within two hundred (200) feet of any of
the outer boundaries of the land covered hereby, unlesÛ°¡,'" Jt ~!nage by wells
drilled on lands adjoining less than 200 feet from the pro¡....., ...,,,. ..,eraof; to conduct all
operations subject to the Inspection of the lessor; to carry out at the lessee's expense all
reasonable orders and requirements of the lessor relative to the prevention of waste and
pres8lVatlon of the property and the health and safety of workmen including the raplanting 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 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 regulations prescribed to reimburse the owner of the surface, if other
than the lessor, or lessee of grazing rights thereof for actual damages therato 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, property or assets of the lessee, to accord all
workmen and employees complete freedom of purchase, and to pay all wages due workmen and
employees in conformanca 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 approval of the Board or by the Office of State
Lands and Invastmenls when authority to do so has been delagated by the 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 excessiva and hence are detrimental to the proper development
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 ordin8l)l
course of operations.
Section 2. THE LESSOR EXPRESSLY RESERVES:
(a) The right to lease sell, or otherwise dispose of the surfaca 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 surfaca is not necessary for the use of the lessee in
the conduct of operations haraunder.
(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-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-of-way and easements do not conflict
with the operations for oil and gas on the land herein leased.
(d)The rightlo refuse to commit the leased lands to a unit plan of development if the Board finds
such action would impair the lessor'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
eny system of State or National curtailment and proration authorized by law.
(f)ln eddition to its right to take its royalty gas in kind, the lessor reserves the right and option to
purchase all other gas produced for 'sala or use off the leased lands. This option shall be
exercised only jf 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, consume, or sell the gas for use
or consumption entiraly within the State of Wyoming) are willing and abte to purchase the gas
upon terms reasonably comparable to and at least as favorable to the lessee as those offered by
the interstate purchasar. The Board shall waive this option and permit an interstate sala if it finds
thet no intrastate purchaser is willing and able to purchase the gas upon terms which are
reeaonably comperable to and at least as favorable to the lessee. As a condition to such waiver,
a satisfactory agreement mey 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 entiraly within the State of
Wyoming.
Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right aubject to the
provisions of Title 36, as to State and State School Lands, and Title 11, es to Stala Loan and
Investments Board Lands, W.S. 1977, to remove any improvements owned by lessee within a
raasonable time after the termination of this lease. Lessee agrees that any such improvements
nol removed within a reasonable time after termination of this laese shall be disposed of pI6SU8I1t
to the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shall heve the power and authority to cancel
laases procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or
iIIagal purposes, or for the violation of the covenants of the lease, upon proper proof thereof, in
the event that the lessee shell default in the performanca or observance of any of the terms,
covenants, and stipulations hereof, or of the ganaral ragulations promulgated by the Board of
Land Commissioners and in force on the date hereof, the lessor shall S81Ve notice of such failure
or default either by personal service or by certified or registered mail upon the lessee, and if such
failure or default continues for a period of thirty (30) days after the servica of such notica, then
and in that event the lassor may, at its option, declare a forfeiture and cancal this lease,
whereupon all rights and privilagas, obtained by the lessee hereunder shall terminate and ceasa
and the lessor may re-enter and take possession of said premises or any part thereof. These
provisions shall not be construed to prevent the exercise by lessor any lagal or equilable remedy
which the lessor might otherwise have. A waivar of any particular cause or forfeiture shall not
prevent tha cancellation and foñeiture of this lease by any other causa of forfeiture, or for the
same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and
surrandered to lessor as to all or any legal subdivision of said lands es follows:
(a) If no operations have been conducted under the lease on the land to be ralinquished, the
lessee shall file with the State Land Board and State Loan and Investment Board, a written
relinquishment or surrander, duly signed and ecknowledged and stating therein that no operations
have been conducted on the land. The rallnquishment so filed shell become affective on the dale
and hour of receipt thereof in the offica of the Director or at some later date, if such be so
specified by the lessee therein. If the said relinquishment feils 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 tha lease on land proposed to be ralinquished, the
lessee shall give sixty (60) days notice end shall file with the Director a written ralinquishment or
surrandar duly acknowledged and stating therein that operations heve been conducted on the
land. The relinquishment shall not become effective until the land and the wells thereon shall
hava been placed in condition acceptable to lassor and shall have been approved by the State Oil
and Gas SupetVlsor.
All rentals becoming due prior to a surrender or ralinqulshment becoming affective, 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 reinstated.
STATE OF WYOMING
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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:
[1/\ A/~~~'B.i ~~
Notary Public
My commission expires: 5/ z. f.¡¿! DC¡