HomeMy WebLinkAbout937331
and Effective January 6, 1998
ì:)-~-ß-~- ~ V~ n ~ VLYJ..LL>4\:r Parcel # 175
OIL AND GAS LEASE Fund Code: CS
000469
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:
Lots 4:9-10:SENW Section: 25 Township: 26 North Range: 119 West of the 6th P.M.
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County: Lincoln
Acres: 160.00
$160.00
($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 expr'essly represents' that, if an individual, LESSEE is a citizen of
the United States, or has declared an intention to become a citizen, and is over 19 years of
age-and if a corporation, is duly qualified to transact business in Wyoming.
Section 5. This lease is issued under the authority conferred by Title 36, W.S. 1977
as to the State and School Lands, and Title 11, W.S. 1977 as to Farm Loan lands, and shall
be subject to, and operations by LESSEE hereunder shall be conducted in compliance with the
specific lease terms set out on the reverse of this lease, and with all applicable state
statutory requirements and the regulations issued thereunder, including those providing for:
the leasing of State or Farm Loan Lands for oil and gas; the conservation of oil and gas;
and the regulation of security transactions.
Section 6. HEIRS AND SUCCESSORS IN INTEREST. It is covenanted and agreed that each
obligation hereunder shall extend to and be binding upon, and every benefit thereof shall
inure to the heirs, executors, administrators, successors of, or assigns of the respective
parties hereto.
Section 7. SOVEREIGN IMMUNITY. The State of Wyoming and the lessor do not waive
sovereign immunity by entering into this lease, and specifically retain immunity and all
defenses available to them as sovereigns pursuant to Wyoming Statute 1-39-104 (a) and all
other state laws.
IN WITNESS WHEREOF, this lease has been executed by LESSOR and LESSEE to become
effective on the 2nd day of, February, 2008 A.D. . .1
LESSOR, STATE OF WYOMING, Acting by and through its
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***Stipulations apply to this lease. The following numbers correspond to the stipulations printed with the
Darcels offered with this auction. The stiDulations can also be referenced online at slf-web.state.wv.us. ***
ParcellD Stipulation #
175 5
14
4
103
RECEIVED 3/3/2008 at 1 :59 PM
RECEIVING # 937331
BOOK: 688 PAGE: 469
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMFRFR, WY
OIL AND GAS TER~
00ð470
Section 1. THE LESSEE AGREES:
(a) BOND. To furnish a bond with an approved corporate surety company authorized \0 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 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 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 increased in such reasonable amounts astha lessor may decide
upon commencement of drilling operations and after the discovery of oil or gas.
(b)PAYMENTS. To make all payments accruing hereunder to the Office of State Lands and
Investments, 122 West 25th Strea~ Cheyenne, Wyoming 82002-0600.
(c)RENTAlS. Prior to tha discovery of oil or gas in paying quantities to pay the lessor in
advance, begimlng with the efføclive 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 wes mede, en
annual rental of $2.00 per acre or fraction thereof, unless chenged byagreament. Such rental so
peid for any ona year shall be credited on the royally for that year.
Annual rentals on all leases shall ba payable in advance for tha first year and each year
thereafter. No notice of rental due shall be sent to the les898. If the rental is not paid on or
before the date it becomes due, notice of default will be sent to the lessee, and a penally of $0.50
per acre for late payment will be assessed.
The lessee is not legally obligated to pay either the rental or the penelty, but if the rental and
panalty BfB not paid within thirty (30) days after the notice of default has been received, the 198se
will terminate automatically by operation of 1_. Termination of the lease shell not relieve 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 cradit on royalty due for any penalty paid for late
payments of rental on an oparating lease.
(d)ROYALTIES. The royalties to be peid by lessee are:
(i) On oil, one-sixth of that produced, seved, 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 manufacture of gasofina or other products
therefrom, the market velue 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 realized from such sale.
(m) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, including propana, butane, sulphur, nitrogen, carbon dioxide, and helium, at such
royalty as shall be mutually detennined to be fair and reasonable.
(iv) For royally purposes on gas and natural gasolina the value shall be as approved by the
lessor, and in the determination of the value of nalural gasoline the fair cost of extraction shall ba
considered as e deductible item; provided, however, that 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 than that received by the United Stala of America for
its royalties from tha same field.
(v) Netural gas and oil actually used for oparatlng purposes upon the land and, except as to \he
ultimate sale thereof, gas or liquid hydrocarbons returned to the sand for stimulating the
production of oil or secondary recovery purposes shell be royalty frae.
(e) DISPOSITION OF ROYALTY Oil AND GAS. To deliver to the lessor, or to such individuel,
firm or corporation as the lessor may designate, all royalty oil, gas, or other kindred hydrocarbons,
frae of charge on tha 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.
Whan tha lassor elects to take its royally oil, gas, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shell be good merchantable oil, gas, or other kindred
hydrocarbons. The les898 shall if neœssery furnish storage for royally oil free of charge for thirty
(30) days after tha end of the calendar month in which the oil is produced, upon the leased
premises, or at the such place as the lessor and the lessee may mutually agree upon, provided,
that the lessee shall not be held liable for loss or destruction of royalty oil so stored from causes
beyond his control.
The free storege 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 temparature all
production from said lands in conformance with the rules and regulations adopted by the Board of
land Commissioners and report said production to the lessor in accordance therewith.
To keep books, records, and reports partaining to the production from the land herein leased as
well as those pertaining to the production from offset wells operated by the less99, his operator,
or sub-/essee on other lands, which shall be opaned 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, amoun~
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 State Lands and Investments to make payment on or before the
twentieth (20th) day of the calendar month sucϿding 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 (par well if required where practical) from the land
hereby 198sed, and the quantity and quality of the production (par well where practical) from ofrsat
walls upon cornering or contiguous land operated by the les898, his oparator or sub-lessee and
such other information as may be called for in the form or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill and oparate effectively all wells necessary to reasonably
offset wells upon and production from adjoining lands.
To drill such additional wells at such times or places as are necessary and essential to the
propar 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 less99 on the lands herein leased, showing the strata and character of the
formations, water sands and mineral deposits panetrated by tha drill, amount of casing, size and
where set, 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 the form prescribed by the lessor, at the end of each thirty (30) dllY
period while eech 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 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 øffecting proper development and operation of the/ands herein leased, as may ba
called for by the løssor. All logs, maps, and reports shall be submitted in duplicate and the OIIice
of State lands and Investments may waive such reports as conditions may warrant.
ü)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 tha under drainage of the oil and gas thereunder by wells operated by the lessee or
others on cornering or contiguous lands to those leased herein. All plans or methods for the
purpose of stimulating or increasing production on lands herein leased other than those in
common use shall first be presented \0 the lessor for approval before being put into actual
operation.
No production agreements limiting, restricting, prorating, or othllrwise affecting the
natural production from said land shall be entered inte:> by the lessee, nor shall the lessee limit,
restrict, or prorate the nalural production from sllid 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 lease
obtain production of oil, gas, or o\har 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 les898 may apply for and the lessor may grant parmlssion for the suspansion 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 oparations is in affect, the lessee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof provided by (c) above, and
this lease shall remain in effect as though oil or gas was baing produced from said lands.
(I)D/lIGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling,
producing, and oparating of wells on the land covered hereby, unless consent to suspend
operations temporarily is granted by the lessor; to carT)' 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 water to the oil or gas bearing sands or
strata to the destruction or injury of such deposits, tha preservation and conservation of the
property for future productive oparations and to the health and safety of workmen and employees;
to plug securely in an approved manner any well before abandoning it, and not to abandon any
well wi\houl parmission of the lessor, not to drill any well within two hundred (200) feet of any of
the outer boundaries of the land covered hereby, unless to .t drainage by wells
drilled on lands adjoining less than 200 feet from the prop", '1 '" '''~ " ,,,reof; to conduct all
operations subject to the inspection of the lessor; to carry out at the less99'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 safely of workmen including the replanting and
reseeding of driiling sites and other areas disturbed by drilling operations and on failure of the
lessee so to do the lessor shall have the righ~ together with other recourse herein provided, to
enter on the property to repair damage or prevent waste attheløssee'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 less99 of grazing rights thereof for ectual dameges thereto and injury to
improvements thereon, provided, that the lessee shall not be held responsible for acts of
providence or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To 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 tha 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 BSSign this lease or any
interest therein, nor sublet any portion of the leBS9d premises, except with \he 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 Investments when authority to do so has been delegated by the Board and will ba
recorded with the lease. The Board reserves the right of disapproval of such overriding royalties
when in its opinion they b'1COf1le excessive and hence are delrimentalto the proper development
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 case of forfeiture of this lease,
but this shall not ba construed to
prevent the removal, alteration or ranewal 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 surfece of the land embraced within this
lease under existing laws or laws hereafter enacted, and in accordance with the rules of the
Board of Land Commissions Insofar as the surfece is not neœssary for the use of the less99 In
\he conduct of oparations 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 rightlHlf-way and
easements and reselVØsthe right to grant such other rights-of-way and easømønls as provided by
the statutes of the State of Wyoming, as long as such rightlHlf-way and easemønts do not confIiå
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 \he Board finds
such action would impair the lessor's reserved right to take its royalty gas in kind and \0 pI.fchase
all other gas allocated to the leased lands a provided in Section 3(e)balow.
(e)The right to slIer or modify the quantily and rate of production to the end that waste may be
eliminated or that production may conform to the lessee's fair shere of allowable production under
any system of State or National curtailment and proration authorized by law.
(f)ln addition to its right to teke its royalty gas in kind, the lessor reserves \he right and option to
purchase all other gas produced for sate or use off the leased lands. This option shall be
exercised only if the Board finds that the lessee has received and is willing to accept a bone fide
offer from a purchaser who intends to sell or transport the gas into interstate commerce end that
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 terms 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 parmit an interstate sale if it finds
that no intrastate purchaser is willing and able to purchase the gas upon terms which are
reasonably comperableto and at least as favorable to the les898. 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 entirely within the State of
Wyoming.
Section 3. APPRAISAL OF IMPROVEMENTS. The lessee shall have the right subject to the
provisions of Title 36, as to State and State School lands, and Title 11, as \0 State Loan and
Investments Board Lands, W.S. 1977, to remove any improvements owned by lessee within a
reasonable time after the termination of this lease. Lessee egrees that any such improvements
not removed within a reasonable time after tennination of this lease shall be disposed of pursuant
to the above statutes.
Section 4. FORFEITURE CLAUSE. The Board shall heve the power and authority to cancel
lea88s procured by fraud, deceit, or misrepresentations, or for 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 default in the performance or observance of any of the terms,
covenants, and stipulations hereof, or of the general regulations promulgated by the Board of
Land Commissioners and in force on the date hereof, the lessor shall serve notice of such failure
or defaulleither by parsonal service or by certified or registered mail upon the les898, and if such
fllilure or default continues for a period 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 terminate and cease
and the lessor may rEHII1ter and take possession of said premises or any pert thereof. 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 cause or forfeiture shall not
prevent the cancellation and forfeiture of this lease by any other cauSe of forfeiture, or for the
same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and
surrendered to lessor as to all or any legal subdivision of said lands as follows:
(a) If no oparations have b99n conducted under the lease on the land to be relinquished, the
less99 shall file with the State Land Board and State Loan and Investment Board, a wriUen
relinquishment or surrender, duly signed and acknowtedged and stating therein that no operations
have been conducted on the land. The relinquishment so filed shall become øffecIive on the dale
and hour of receipt thareof in the office of the Director or at some later date, if such be so
specified by the lessee therein. If the said relinquishment fails to state that no operations have
been conducted, the effective date of relinquishment shall be the date the relinquishment is
approved by the Board.
(b) If operations heve been conducted under the lease on land proposed to be relinquished,the
less99 shell give sixty (60) days notice and shall file with the Director a written relinquishment or
surrender duly acknowledged and stating therein thet oparations 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 shall have been approved by \he Stale Oil
and Gas Suparvisor.
All rentals becoming due prior to a surrender or relinquishment bacoming effective, shall ba
payable by lessee unless payment thereof shall be waived by lessor. A relinquishment having
become effective there shall ba no recourse by less99 and the lease as to the relinquished tands
may not be reinstated.
OOÛ471
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/~~~Ú-
Notary Public
My commission expires: . 5 I z- La.. / () ~
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