HomeMy WebLinkAbout937332
and sffl!lctive January 6, 1996
STATE c.., ,I:-,JYOMI NG
OIL AND GAS LEASE
Lease # 08-0015:
Parcel # 176
Fund Code: CS
- .1
Form Approved by th
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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:
1).:
SWSW Section: 28 Township: 26 North Range: 119 West of the 6th P.M.
County: Lincoln
Acres: 40.00
$40.00
($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 .~PE.ê·~ßE to become
effective on the 2nd day of, February, 2008 A.D. l-;)~:;':"'''''' ,'~\
LESSOR, STATE ~~!:;...,:-~i~~c-:~ through i~s oa d of ^~~~rh~fS~j~~~~s: ,
Lessee Signature: .P~~-*~~;') By:_ Director', ''''--__ ,.
Address :~li/ ¿;¡/';z.6;// ___ Office f State Lands"t.nV"estm~l;1ts
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City:p.. -~ðj State:ß·L Zip:~¿?/?:,Y' 'Z-._90rnr, ~)
Phone: /- ~a7.J:iZ.- f".¡?,~2c'~£ ~ .
"""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 #
176 14 RECEIVED 3/3/2008 at 2:00 PM
RECEIVING # 937332
BOOK: 688 PAGE: 472
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
1F
OIL AND GAS TEl
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Section 1. THE LESSEE AGREES:
(a) BOND. To fumlsh a bond with an approved corporate surety company authorized to Ira1sact
business In the State of Wyoming, or such other surety as may be acceptable to the lessor, In the
panal 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 tha lassor under the terms
heraof, and upon the full compliance of all other terms and conditions of this leasa and the rules
and regulations relating thereto, and also conditioned on the payment of all damages to the
suñace and improvements thereon where the leasa covers lands the suñace of which has been
sold or otherwise leased. Such bond or bonds fumished prior to the development of the lands
contained In this lease mey be increased in such raesonable amounts as the lessor may decide
upon commenœmant of drilling operations and after the discovery of 011 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, begiMlng with the effective date hereof, an ennual rantal of $1.00 per acre or fraction
thereof.
After the discovery of oil or gas in paying quantities to pay the lessor in advence beginning with
the first day of the lease year sucœeding the leasa year in which actual discovery was made, an
annual rental of $2.00 per acre or fraction theraof, unless changed by agreement Such rantaI so
paid for any ana yaar shall be credited on the royalty for that year.
Annuel rentals on all leases shall be payable in' advance for the first yaar and each year
thereafter. No notice of rantal due shall be sent to the lessaa. If the rental is not paid on or
before the date it becomes due, notice of default will be sent \0 the lessee, and a panalty of $0.50
per acre for late payment will be assessed.
The lessee is not legally obligated to pay either the rantal or the panalty, but if the rental and
penalty are not paid within thirty (30) days after the notice of default has been received, the leasa
will terminata automatically by operation of law. Termination of the lease shall not reliave the
lessee of any obligation incurred undar the lease other than the obligation to pay rental or
panalty. The lessee shall not be entitlad to a credit on royalty due for any penalty paid for lala
payments of rental on an operating leesa.
(d}ROYAL TIES. The royalties to be paid by lessee are:
(i) On oil, one-sixth of that produced, saved, and sold from said land, the same to be delivered
at tha 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 pramisas or In the manufacture of gasolina 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-slxth of the amount realized from such sale.
(ill) On all other hydrocarbons of value and gaseous substances and elements produced or
extracted, Including propena, butana, sulphur, nitrogen, carbon dioxide, and helium, at such
royalty as shall be mutually detarmined to be fair and reasonable.
(iv) For royalty purposas on gas and natural gasolina the value shall be as approved by the
lessor, and in the determination of the value of natural gasoline the fair cost of extraction shall be
considered as a deductibla item; provided, however, that the allowance for the cost of extraction
may exceed lw<Hhirds of tha 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 State of America tor
its royaltlas from the same field.
(v) Natural gas and oil actually used for operating purposes upon the land and, exœpt as to the
ultimate sale thereof, gas or liquid hydrocarbons returned to the sand for stimulating the
production of oil or secondary recovery purposas shall be royalty frae.
(e) DISPOSmON OF ROYAl TV OIL AND GAS. To daliver to the lessor, or to such individual,
firm or corporation as the lessor may dasignate, all royalty oil, gas, or other kindred hydrocarbons,
fraa of charge on the premises where prqduœd, or, at the option of tha lessor, and in lieu of said
royeltles In kind, the lassee egrees 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 oil frae of charge tor thirty
(30) days after the end of the calendar month in which the oil is produced, upon the leased
pramisas, or at the such place as the lessor and the lessee may mutually agree upon, provided,
that the lessae shall not be held liable for loss or destruction of royalty oil so stored from causes
beyond his control.
The fraa storage of 011, as hareln provided, shall apply only as long as the said ollis the property
of the lessor.
(f) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for temperature all
production from said tands in conformance with the rules and ragulations adopted by the Board of
Lend 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 leesed as
well 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 ell times for the inspection of any duly
authorized agent of the lassor.
To fumish the lessor with original pipe line repOrts showing the day, month, yaar, emount,
gravities, end temperatures of all oil run and with monthly reports showing the month, year,
amount, and price of all gas and natural gas gasolina and other products produced and sold from
the land harein leased, and the amount of ges returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is otharwisa
axtendad by the Office of State Lands and Investments to make payment on or before the
twentieth (20th) day of tha calendar month sucœedlng the month of production and ramoval and
sale of oil end gas from said lend, and to fumlsh swam monthly statamants therewith showing in
dalail the quanlily and quality of the production (per well if requirad whara practical) from the land
hereby leased, and the quantity and quality of the production (perwell where practical) from offset
wells upon comaring or contiguous land operated by the lessee, his operator or sub-lessee and
such other Information as may be called for in lha form or report prescribed by lessor.
(h) WELLS TO BE DRILLED. To drill end operate affectlvely all wells necessery to reasonably
offsat wells upon and production from adjoining lands.
To drill such additional wells at such times or places as ere necessary and assential to tha
proper development and commercial production of the oil and gas content of said land.
(I}LOG OF WELLS AND REPORTS. To keep a log, In the form approved by the lessor, of each
well drilled by the lassee on tha lands herain laased, showing the strata and character of the
formations. water sands and mineral daposits penatrated by the drill, amount of casing, size and
whara set, and such othar information as tha lessor may requira which log or copy theraof shall
ba fumishad to the laasor.
To file progress reports, In tha form prescribed by lhe lessor, at the end of each thirty (3D) day
period whila each well is being drilled.
To fila annually, or at such times as the lassor may require, maps showing the davelopmant of
tha structure and the loCation of all wells, pipe lines and other works used in connection with the
operations of the lessee upon said land.
To make such other reports pertaining to the production and operations by the lassee on said
land, and raport such other Informalion as may ba possessad by the lessee on the wells,
production or operations of others on lands òn the serna geologic structure that may be of
importance in effacting proper davelopment and operation of the lands herein leased, as may be
called for by the lassor. All logs, maps, and reports shall be submitted in duplicate and the Office
of Stale Lands and Invesbnents may weive such reports es conditions may wørranl.
OJPRODUCTION. To operate the wells upon the land herein leased in a competent and aflicient
mannar in an andaavor to recovar all tha oil and gas economically possibla from said land and to
prevent the under drainage of the oil and gas thereunder by wells operated by the lessee or
others on comering or contiguous lands to those leased herein. All plans or methods for tha
purpose of stimulating or ina_ing production on lands herein leased other than those in
common use shall first be presented to the lessor for approval before being put into actual
operation.
No production agreaments limiting, restricting, proraling, or otherwisa affecting the
neluralproduction from said lend shall be entered into by the lessee, nor shall the lessee limit,
restrict, or prorate tha natural production from said land in any wey 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 other hydrocarbons in paying quantitias end if the lessee is
unable to establish a satisfactory markst for the oil, gas or hydrocarbons produced from said well,
the lessee may apply for end tha lessor may grant permission for the suspansion of production
operations until such timas as a satisfectory market for tha product from said well can ba
developed. During tha time any such suspension of operations is in effact, the lessee shall
continua \0 pay tha annual rantal of $2.00 per acre or fraction theraof provided by (c) above, and
this lease shell remain In effact as though oil or gas was being produced from said lands.
(I}DILlGENCE-PREVENTION OF WASTE. To axercise reasonabla diligance in drilling,
producing, and operating of wells on tha land covered haraby, unless consant to suspend
operations tamporarily is granted by tha lassor; to carry on all operations heraLnder in a good and
wottananlika manner in accordance with approved mathods and practice, having due regard for
the pravention of wasta of oil and ges, or \he antrance of water to the 011 or gas bearing sands or
strata to the destruction or Injury of such daposits, the presarvation end conservation of the
property for futura productive operations and to the health end safety ofworkrnen and employees;
to plug sacurely In an approved mannar any well before abandoning it, and not to abandon any
well without permission of the lessor, not to drill any well within two hundred (200) feet 'of any of
the outer boundaries of the land covered hareby, unless tlnst drainage by wells
drilled on lands adjoining less than 200 feet from the property IInas thereof; to conduct all
operations subject to tha Inspection of tha lessor; to carry out at the lessee's axpense all
raasonabla orders and raquirements of tha lessor ralative to tha pravention of waste and
preservation of the property and the health and satety of workmen including the replanting and
reseeding of drilling sites and othar areas disturbed by drilling operations and on failure of the
lassee so to do the lessor shall have the right, together with othar recoursa herein provided, to
enter on the property to repair damage or prevent waste at the lessea's axpense; to abide by and
conform to valid applicabla ragulations prescribed to reimbursa tha ownar of the surfaca, if other
than the lassor, or lessee of grazing rights thereof for actual damages thereto and injury to
Improvements thereon, provided, that Ihe lessee shall not be held responsible for acts of
providance or actions beyond his control.
(m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when dua all taxes lawfully
assassed and lavled under the laws of lhe State of Wyoming upon improvements, 011 and gas
produced from the land hereunder, or other rights, property or assats of the lessee, to accord all
workman and employees complete traadom of purchase, and 10 pay all wagas dua workmen and
employeas 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 pramisas, except with the consant in writing
of the lassor first had end obtained.
All overriding royeltias to ba valid, must have the approval of tha Board or by the Office of State
Lands and Investments when authority to do so has been dalegated by the Board end will ba
recorded with tha leasa. Tha Board reservas the right of disapproval of such ovaniding royaltias
when in its opinion they become axcessive and hence are datrimental to the proper davelopment
of tha leased lands.
(o}DELlVER PREMISES IN CASE OF FORFEITURE. To dalivar up the leesed premisas, with all
permanent improvemants thereon, in good order end condition in case of foñeiture of this lease,
but this shall not be construed to
pravent the removal, alteration or renewal of equipment and irnprovamants in tha ordinary
course of operations.
Section 2. THE LESSOR EXPRESSLY RESERVES:
(a) Tha right to leasa sell, or otherwisa dispose of the suñace of tha land ambraced within this
lease under existing laws or laws heraafter enacted, and in accordance with the rules of the
Board of Land Commissions insofar as the suñace is not necessary tor the use of tha lessee in
the conduct of operations hereunder.
(b}The right to leasa, sell, or otherwise dispose of other mineral or subsuñace resources not
covered by the laase, In accordance with tha applicable laws and the rules of the Board of Land
Commissionars.
(c}From the operation of this laase, the suñaca lands heretofora granted for rightlHlf-way and
easements and reserves the right to grant such other rig~-way and easaments as provided by
the statutes of tha 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 right to rafuse to commit the laasad lands to a unit plan of development if tha Board finds
such action would impair tha lassor's rasarvad right to taka its royalty gas in kind and \0 purchase
all other gas allocated to tha laased lands a provldad in Section 3(a}betow.
(e}The right to alter or modify tha quantity and rata of production to the end that waste may be
eliminated or that production may conform to the lassae's fair share of allowabla production under
any system of State or National curtailmant end proration authorizad by law.
(f)ln addition to Its right to taka Its royalty gas In kind, the lassor reserves the right and option to
purchase all other gas produced for sale or usa off the laased lands. This option shall be
exercised only If the Board finds that the lessee has received end is willing to accept a bona lida
offer from a purchaser who intends \0 sell or transport tha gas into intarsiata commerce and that
one or more intrastata purchasers (I.a., purchasers who will usa, consume, or sell the gas for usa
or consumption entirely within tha State of Wyoming) ere willing end able to purchasa the gas
upon terms reasonably comparabla to and at least as favorable to tha lessee as those offered by
the interstate purchaser. The Board shall waiva this option and permit an interstata sale if It finds
that no intrastate purchaser is willing and abla to purchasa the gas upon terms which ara
reasonably comparabte to and at least as favorebla to the lessee. As a condition to such waiver,
a satisfactory agreement may be antered 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 tha Stata of
Wyoming.
Saction 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 Stata Loan and
Invesbnents Board Lands, W.S. 1977, to ramova any improvements owned by lessea within a
raasonable time aftar tha tarminalion of this lease. Lassee agreas that any such improvements
not ramoved within a raasonabla time after termination of this laasa shall be disposed of pursuant
to the above statutas.
Saction 4. FORFEITURE CLAUSE. The Board shall have the power and authority to cancel
leasas procured by fraud, decait, or misrepresantalions, or tor tha use of the lands for unlawful or
illegal purposes, or tor tha violation of tha covenants of the laasa, upon propar proof theraof, in
the avent that tha lessee shall dafault in the pañormanca or obsarvance of any of tha tanns,
covenants, and stipulations heraof, or of the general regulations promulgated by the Board of
Land Cornmissionars and in forca on tha data heraof, the lassor shall sarve notice of such faillXB
or default either by personal sarvice or by certified or regislered mall upon the lassee, and if such
failure or dafault continues for a period of thirty (30) days aftar tha sarvice of such notice, then
and in that avent the lessor may, at its option, declara a foñeiture and cancal this laase,
wharaupon all rights and privileges, obtained by the lessee hereunder shall terminate and cease
and the lessor may re-enter and taka possasslon of said premises or any part thereof. Thasa
provisions shall not ba conslrued to prevent the axercìse by lassor any legal or aquitabla remedy
which Iha lessor might otherwise have. A waiver of any particular cause or foñaitura shall not
prevent the cancellation and foñeiture of this leasa by any other cause of foñeitura, or for tha
sarna cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This leasa may be relinquished and
surrendered to lassor as to all or any legal subdivision of said lands as follows:
(a) If no operations have baen conducted under the laasa on the land \0 be ralinquishad, tha
lessea shall file with the State Land Board and State Loan and Invastment Board, a writtan
ralinquishment or surrandar, duly signed and acknowledged and stating therein \hat no operations
have been conducted on the land. The relinquislvnent so filed shall become atredive on the dale
and hour of raceipt thereof In the office of the Director or at some later date, if such be so
specified by the lessee therein. If the said rallnquislvnant falls to slata that no operations have
been conducted, the effective data of relinquishmant shall be the data the relinquishment is
approved by the Board.
(b) If operations have been conducted undar the laasa on land proposed 10 be relinquishad, the
lessee shall give sixty (BO) days notice end shall fila with the Director a written relinquishment or
surrender duly acknowledged and stating thareln that operations have been conducted on tha
land. Tha relinquishment shall not bacoma effective until the land and tha wells thareon shall
have been placed In condition acœptabla to lessor and shall have bean approved by the Stata 011
and Gas Supervisor.
All rentals becoming dua prior to a surrender or relinquishment becoming effective, shall be
payable by lessee unlass payment theraof shall be waived by lassor. A ralinquislvnant having
bøcoma effective there shall ba no recoursa by lassaa and tha lease as to the relinquished lands
may not ba reinstated.
VOU4?4
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_~-tcc~
Notary Public
My commission expires: 5/ ¿~ J 09
I