HomeMy WebLinkAbout937329
and Sffective January 6, 1998
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OIL AND GAS LEASE Fund Code: AG
(:>0,,),4163
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 97 (formerly SE Sec 9) Resurvey Township: 25 North Range: 119 West of the 6th P.M.
County: Lincoln
Acres: 166.60
$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 tö become
effective on the 2nd day of, Fe~ruary, 2008 A.D.
LESSOR, STATE OF WYOMING, Acting by and through its
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Lessee signature:~L _ ;~~. By:
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Director .~. :~{,' :
State Lands ~ëInv stments
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***Stipulations apply to this lease. The following numbers correspond to the stipulations printed with the
Darcels offered with this auction. The stiDulations can also be referenced online at slf-web. state.wv. us. ***
ParcellD Stipulation #
173 5
14
103
RECEIVED 3/3/2008 at 1 :58 PM
RECEIVING # 937329
BOOK: 688 PAGE: 463
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
OIL AND GAS TE~
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bond with an approvad corporate surety company authorizad 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 tha current rulas 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 therato, and also conditioned on the payment of all damagas to tha
surface and improvamants tharaon whera the leasa covers lands the surfaca of which has been
sold or otharwise leasad. Such bond or bonds furnishad prior to the development of the lands
containad in this lease may ba increased in such raasonable amounts as tha lessor may decide
upon commencement of drilling operations and after the discovery of oil or gas.
(b)PAYMENTS. To make all payments accruing heraunder to the Office of State Lands and
Invastments, 122 West 25th Street, Cheyanne, Wyoming 82002-0000.
(c)RENTAlS. Prior to the discovery of oil or gas in paying quantities to pay the lessor in
advance, beginning with the effective data hereof, an annual rantal of $1.00 par acre or fraction
theraof.
After the discovery of oil or gas In paying quantities to pay the lessor In advance baglnning with
tha first day of the leasa yaar succeeding the lease year in which actual discovery was made, an
annual rantal of $2.00 per acre or fraction theraof, unless changed by agreement. Such rental so
paid for anyone year shall be creditad on the royalty for thet year.
Annual rantals on all leases shell ba payable in advance for the first yaar and each yaar
theraafter. 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 ba sent to the lessee, and a penalty of $0.50
per acre for late payment will ba assessed.
The lessee is not legally obligatad to pay either the rental or tha penalty, but If the rantal and
panalty are not paid within thirty (30) days after the notice of default has baan raceivad, the leasa
will terminata automatically by operation of law. Tennination of the lease shall not relieve the
lessee of any obligation incurred undar the lease other than the obligation to pay rantal or
penalty. The lessee shall not be entitled to a credit on royalty due for any penalty paid for late
paymants of rantal on an operating leasa.
(d)ROYAL TIES. The royalllas to be paid by lassee are:
(i) On oil, one-sixth of that produced, savad, and sold from said land, the same to ba delivered
at the wells or to the cradit of lessor into the pipa line to which the wells may be connected.
(ii) On gas, including casinghead gas or other hydrocarbon substances, produced from said
land savad and sold or used off the pramises or in the manufactura of gasolina or other products
therefrom, the market value at the wall of ona-sixth of the ges so sold or usad, provided that on
gas sold at the wells, the royalty shall be ona-sixth of the amount realized from such sale.
(Iii) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, including propane, butana, sulphur, nitrogen, carbon dioxide, and helium, at such
royalty as shall be mutually detennlnad to be fair and raasonable.
(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 gasolina the fair cost ofaxtraction shell be
considerad as a daductible item; provided, however, that the allowance for the cost ofaxtraction
may exceed lwIHhirds of the amount or value only on approval of the lessor and in no event shall
the price for gas, or natural gasoline, ba less than that received by the United State of Amarica for
its royalties from the same fiald.
(v) Natural gas and oil actually usad for operating purposas upon the land and, except as to the
ultimate sale thereof, gas or liquid hydrocarbons ratumad to the sand for stimulating the
production of oil or secondary racovery purposes shell ba royally free.
(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, orother kindred hydrocarbons,
frea of charge on the premisas whera produced, or, at the option of the lessor, and in lieu of said
royalties in kind, the lessea agraes 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 shall if necessary furnish storage for royalty 011 free of charge for thirty
(30) days after the end of the calendar month in which the oil is produced, upon the leased
pramises, or at the such place as the lessor and the lessee may mutually agrea upon, providad,
that the lessee shall not be held liable for loss or destruction of royalty oil so storad from causas
beyond his control.
The frae ~torage of oil, as herein provided, shall apply only as long as the said oil is the property
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauga, measura and correct for temperature all
production from said lands in confonnance with the rules and regulations adopted by the Board of
Land Commissioners and raport said production to the lessor in accordance therewith.
To keap books, racords, and raports pertaining to the production from the land herain leased as
well as those pertaining to the production from offset wells operated by the lessea, his operator,
or sub-iessae on othar lands, which shall be opened at all times for the inspection of any duly
authorized agent of the lassor.
To furnish the lessor with original pipe line raports showing the day, month, yaar, amount,
gravities, and temperaturas of all oil run and with monthly raports showing the month, year,
amoun~ and price of all gas and natural gas gasolina and other products produced and sold from
the land herain leased, and the amount of gas returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment Is otherwise
extandad by the Office of State Lands and Investments to make payment on or befora the
twentieth (20th) day of the calendar month succaading the month of production and removal and
sala 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 requirad where practical) from the land
hereby leased, and the quantity and quality of the production (per well where practical) from offset
walls upon cornaring or contiguous land operatad by the lassea, his operator or sub-lessee and
such other infonnatlon as may be called for in the fann or raport prascribad by lessor.
(h) WELLS TO BE DRILLED. To drill and operata effectively all wells necessary to reasonably
offsat wells upon and production from adjoining lands.
To drill such additional wells 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 keap a log, in the fonn approvad by the lessor, of each
well drilled by the les88e on the lands herein leased, showing the strata and character of the
fonnations, water sands and mineral deposit. penetrated by the drill, amount of casing, size and
where set, and such othar infonnation as the lessor may requira which log or copy thereof shall
be furnished to the lessor.
To file prograss raports, in the fonn prascribed by the lessor, at the end of each thirty (30) day
pariod while each well is being drilled.
To file annually, or at such times as the lessor may raquire, maps showing the development of
the slructura 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 lessea on said
land, and report such other infonnation as may ba possessed by the lassee on the wells,
production or operations of others on lands on tha same geologic slructure that may be of
importance in effecting proper development and operation of the lands herein leased, as may be
called for by theleSSOf. All logs, maps, and raports shall be submitted in duplicate and the Office
of State Lands and Investments may waive such raports as conditions may werranl
mPRODUCTION. To operate the wells upon the land harein leased in a competent and efficient
manner in an endeavor to recover all the oil and gas economically possible from said land and to
pravent the undar drainage of the pil and gas theraunder by wells operated by the les88e or
others on cornering or contiguous lands to those leased herain. All plans or methods for the
purposa of stimulating or Increasing production on lands herein leased other then those in
common usa shall first be prasented to the lessor for approval before being put into actual
operation.
No production agreements limiting, rastricting, prorating, or otherwisa effecting the
naturalproduction from said land shall ba entered into by the lessea, nor shall the lessaa limi~
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 well drilled upon lands covered by this leasa
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 grant pennission for the suspension of production
operations until such times as a satisfactory 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 theraof provided by (c) above, and
this lease shall ramain in effect 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 grantad by the lessor; to carry on all operations hereunder in a good and
workmanlike manner in accordance with approved methods and practice, having due regard for
the prevention of waste of oil and gas, or the entrance of watar to the oil or gas bearing sands or
strata to the deslruction or injury of such deposits, the preservation and conservation of the
property for futura productive operalions and to the health and sefety of wor1<men and employees;
to plug securaly in an approvad manner any well bafora abandoning It, and not to abandon any
wall without pannission of the lessor, not to drill any well within two hundred (200) feet of any of
V· -·--v.
the outer boundaries of the land covered hereby, unless to ,st drainage by wells
drilled on lands adjoining less than 200 feet from the pro"""y """. u ,ereof; to conduct all
operations subject to the inspection of the lessor; to carry out at the lessae's expense all
raasonable orders and requirements of the lessor ralative 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 araas disturbad by drilling operations and on failure of the
lessae so to do the lessor shall have the righ~ together with other recourse herein provided, to
enter on the property to repair damage or pravent waste at the lessee's expense; to abide by and
confonn to valid applicable regulations prescribed to reimburse tha owner of the surface, if other
than the lessor, or lessee of grazing rights theraof for ectual damages thereto and Injury to
improvarnants theraon, providad, that the lassee shall not be held rasponsible for acts of
providence or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due all taxes lawfully
assassed and laviad under the laws of the State of Wyoming upon improvements, oil and gas
produced from the land heraunder, or other rights, property or assets of the lessee, to accord all
workmen and employees complete fraedom of purchase, and to pay all wages due workman and
employeas in confonnance with the laws of the State of Wyoming.
(n)ASSIGNMENTS OF LEASE-PROOUCTION AGREEMENTS. Not to assign this lease or any
interast therein, nor sublet any portion of the leased premisas, axcept with the consent in writing
of the lessor first had and obtainad.
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 baan delegatad by the Board and will be
racordad with the lease. The Board raserves the right of disapproval of such overriding royalties
when in Its opinion they become excessive and hence ara detrimental to the proper davaiopment
of the leased lands.
(o)DELIVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased pramises, with all
pannanent improvements thereon, in good order and condition In casa of forfeitura of this leasa,
but this shall not ba construed to
prevent the ramoval, alteretion 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 undar existing laws or laws heraafter anactad, and in accordance with the rules of the
Board of Land Commissions insofar as the surface is not necessary for the use of the lessee in
the conduct of operations hareunder.
(b)The right to lease, sail, or otherwise dispose of othar 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 leasa, the surface lands heretofore grantad for rights-of-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 easemants do not conflict
with the operations for oil and gas on the land heraln leasad.
(d)The right to refuse to commit the leasad lands to a unit plan of davelopment if the Board finds
such ection would impair the lessor's raserved right to take its royalty gas In kind and to purchase
all other gas allocated to the leesed lands a providad In Section 3(e)balow.
(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 confonn to the lessae's fair shera of allowable production under
any system of State or National curtailment and proration authorizad by law.
(f)ln addition to its right to taka its royalty gas in kind, the lessor raserves the right and option to
purchasa all othar gas produced for sale or usa off the leasad lands. This option shall be
exercisad only if the Board finds that the lessee hes receivad and is willing to accept a bona fide
offer from a purchaser who intends to sail or transport the gas into interstate commerce and that
one or mora intrastate purchasers (i.e., purchasers who will use, consume, or sail the gas for use
or consumption entiraly within the State of Wyoming) ara willing and able to purchase the gas
upon tenns raasonably comperable to and at least as favorable to the lessea as those offered by
the interstate purchaser. The Board shall waive this option and pannit an interstate sale if ìtfinds
that no intrastate purchaser is willing and able to purchase the gas upon terms which ere
raasonably comparable to and at least as favorable to the lessee. As a condition to such waiver,
a satisfactory egreement may ba 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 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 ownad by lessee within a
raasonable time after the tennination of this lease. Lessee agrees that any such Improvements
not ramoved within a reasonable time after tennination of this lease shall be disposed of pursuant
to the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shell have the power and authority to cencel
leases procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or
illegal purposes, or for tha violation of the covenants of the lease, upon proper proof thereof, in
the event that the lessea shall default in the perfannance or observance of any of the tenns,
covenants, and stipulations hereof, or of the general ragulatlons promulgatad by the Board of
Land Commissioners and in force on the date hereof, the lessor shall serve notice of such failure
or default either by personal service or by certifiad or registered mail upon the lessee, and if SUch
failure or default continues for a pariod of thirty (30) days after the sarvice of such notice, then
and in that event the lessor may, at its option, declare a forfeitura and cancel this lease,
wheraupon all rights and privileges, obtained by thelessea heraunder shall tenninate and cease
and the lessor may re-enter and take possession of said premises or any part thereof. These
provisions shall not ba construad to prevent the exercise by lessor any legal or equitable remedy
which the lessor might otherwise heve. A waiver of any particular causa or forfeitura shall not
pravent the cancellation and forfeiture of this lease by any other cause of forfeitura, or for tha
same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This leasa 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 ba rallnquishad, the
lessea shall file with the State Land Board and Slate Loan and Investment Board, a writtan
ralinqulshment or surrender, duly signad and acknowtedged and stating therein that no operations
have bean conducted on the land. The relinquishment so filad shall become elfactive on the date
and hour of raceipt thereof in the office of the Director or at some later date, if such ba so
specifiad by the lessee therein. If the said relinquishment fails to state that no operations have
baan conductad, the effective date of ralinquishment shall be the date the rallnquishmant is
approvad by the Board.
(b) If operations have bean conducted under the lease on land proposed to be rallnquishad, the
lessea shall give sixty (60) days notice and shall fila with the Director a written relinquishment or
surrender duly acknowfadgad and stating therain that operations heve been conducted on the
land. The relinquishment shall not become effective unlii the land and the wells theraon shall
have baan placed in condition acceptable to lessor and shall have been approvad by the Stale 011
and Gas Supervisor. .
All rentals becoming due prior to a surrender or relinquishment becoming effective, shall ba
payable by lessaa unless payment theraof shall be waived by lessor. A ralinquishment having
become effective there shall be no recourse by lessea and the lease as to the ralinquishad lands
may not ba reinstated. .
STATE OF WYOMING
)
) §
)
00\)465
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:
~tù.-~
Notary Public
My commission expires: Sj2l.Q I 0<7