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HomeMy WebLinkAbout937334 Form A.pproved by t. and Effective January 6, 1998 STATE VL'-flYOMING OIL AND GAS LEASE Lease # 08-001 S Parcel # 178 Fund Code: CS 00\1478 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: -ì SWNW Section: 13 Township: 27 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 òf, 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. // LESSOR, STATE OF WYOMING, Acting by and through its . ~~~~ ¿;2'c7C ~/ Lessee Slgnature:_~to/~~~_BY' Address :---.J.-4(/. {~.?/? &y- _ Office City:-L.1.L'¿A state:'?VL Zip:~·;Y---F· Phone:___~.s...J.:>cJ.7~~~? ~-- Corómi'~sione~:S;' . . ,/ "..~,.~,.~> /~~~~?;'t: ;.~'~~.t~,·:> . " ,.:'" ***Stipulations apply to this lease. The following numbers correspond to the stipulations printed with the oarcels offered with this auction. The stioulations can also be referenced online at slf-web.state.wv.us.*** ParcellD Stipulation # 178 14 103 RECEIVED 3/3/2008 at 2:02 PM RECEIVING # 937334 BOOK: 688 PAGE: 478 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY OIL AND GAS TERI.._ OOð479 Section 1. THE LESSEE AGREES: (a) BOND. To furnish a bond with an approved corporate suraty company authorized to transact business In the State of Wyoming, or such other surety as may be acceptable to the lessor, in the penal sum es 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 tem1S 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 improvaments 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 as the lessor may decide upon commencement of drilling operations and alter the discovery of oil or gas. (b)PAYMENTS. To make all payments eccruing hereunder to the Office of State Lands and Investments, 122 West 25th Street, Cheyenne, Wyoming 82002.Q600. (c)RENTALS. Prior to the disœvery of oil or gas in paying quantities to pay the lessor in advance, beginning with the effective date hereOf, an annual rental of $1.00 per acre or fraction thereof. After the discovery of oil or gas in paying quantities to pay the lessor in advance beginning with the first day of the lease year 8IJCC8eding the laase yeer in which actual discoll9ry was mada, an annual rental of $2.00 per acre or fraction thereof, unless changed by agreement. Such rental so peid for anyone year shall be crediled on the royalty for that year. Annual rentals on all leases shall be payable in advance for the first year and each year thereafter. No notice of rental due .shell be sent to the lessee. If the rental is not paid on or before the date it becomes due, notice of default will be sent to the lessea, and a penalty of $0.50 per acre for late payment will be assessed. TIle lassee is not lagally obligated to pay either the rental or the penalty, but if the rental and penalty are not peld within thirty (30) days alter the notice of defaull hes been received, the lease will tem1inate automatically by operation of law. Tem1ination of the lease shall not reliell9 the lessee of any obligation Incurred under the lease other then the obligation to pay rental or penalty. The lessee shell not be entitled to a credit on royelty due for any penalty peid for late peyments of rental on an operating lease. (d)ROYALTIES.The royalties to be paid by lessee are: (i) On oil, one-sixth of thet produced, saved, and sold from said land, the same to be delivered at the wells or to the credit of lessor into the pipe line to which the wells may be connected. (ii) On gas, including casingheed gas or other hydrocarbon substances, produced from said land saved and sold or used off the premises or in the marwfacture of gasoline or other products therefrom, the market value at the well of one-aixth of the gas so sold or used, provided thai on gas sold at the wells, the royalty shall be one-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, butane, sulphur, nilrogen, carbon dioxide, and helium, at such royalty as shall be mutually detem1ined to be fair and reasonable. (iv) For royalty purposes 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 deductible item; provided, howevar, that the allowance for the cost of extraction may exceed Iwo-Ihirds of the amount or value only on approval of the lessor and in no ell9nl shall the price for gas, or netural gasoline, be less than that received by the United Stale of America for its royalties from the same field. (v) Natural gas and oil ectually 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 recoll9ry purposes shall be royalty free. (a) 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 royalty oil, gas, or other kindred hydrocar\:Jons, free of charga on the premises where produced, or, at the option of the lessor, and in liau of said royalties In kind, the lessee agrees to pay tha 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 hydrocartJons in kind such as oil, gas, or other kindred hydrocarbons shall be good merchantable oil, gas, or other kindred hydrocarbons. The lessee shell if necessary furnish storaga for royalty oil free of charge for thirty (30) days alter the end of the calender month in which the oil is produced, upon the leased premises, or at the such place as the lessor and the lessee mey mutually agree upon, provided, that the lessee shell not be held liable for loss or destruction of royelty oil so stored from causes beyond his control. TIle free storage of oil, es harein provided, shall apply only as long es the said oil is the property of the lessor. (I) MEASUREMENTS OF PRODUCTION. To gauge, measure and correct for temperature 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 aroordance therewith. To keap books, records, and reports pertaining to the production from the land herein leased as well as those pertaining to tha 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 agent of tha lessor. To furnish the lessor with original pipe line reports showing the dey, month, yeer, amount, gravities, and tamperltures of all 011 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 henoln leased, and the amount of gas returned to the sand. (g) MONTHLY PAYMENTS AND STATEMENTS. Unless tha time of payment is otherwise extended by the Office of State lends and Investments to make peyment on or before the twentieth (20th) day of the calender month sucœeding tha month of production and removal and sale of 011 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 required where practical) from the land hereby leased, and the quantity and quality of the production (per wetl where practical) from offset wells upon cornering or contiguous land operated by the lessee, his operator or sub-lessee end such other Information as may be called for in the form or report prescribed by lessor. (h) WEllS TO BE DRillED. To drill and operate effectively all wells necessery to reasonebly offset wells upon and production from adjoining lands. To drill such additional wells at such timas or places as are necessery and essential to the proper development and commarcial production of the oil and gas content of said land. (i)LOG OF WELLS AND REPORTS. To keap a log, in tha form approved by tha lessor, of each well drilled by the lessee on the lands henoin leased, showing the strata and charactar of the formations, water sands end mineral deposits penetrated by the drill, amount of casing, size and where set, and such other information as the lessor may require which log or copy thereof shell be furnished to the lessor. To file progress reports, In the form prescribed by the lessor, at tha end of each thirty (30) dey period while each well is being drilled. To file annually, or at such times as the lessor may require, maps showing the dell9lopment of \he structure end the location of ail_lis, pipe lines and other works used in connection with the operations of the lessee upon said land. To make such other reports pertaining to tha 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 effecting proper dall9lopment and operation of the lands herein teased, as may be called for by the lessor. All logs, maps, and reports shall be submitted in duplicate and the 0tIi0e of State lands end Investments may waive such reports as conditions may warrant. O)PRODUCTION. To operate the _lis upon the land herein leased in a competent and efficient manner in an endeavor to recover all the 011 and gas economically possible from said lend and to preventtha 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 plens or methods for tha purpose of stimulating or increasing production on lands herein leased other than those in common use shall first be presented to the lessor for approvel before being put into ectual operation. No production øgreements limiting, restricting, prorating, or otherwise effecting the neturelproduction from said land shall be entered Into by the lessee, nor shall tha lessee limit, restrict, or prorate the natural production from said land in any wlY or in any event, except with the consent In writing of the lessor first had an obtained. (k)SUSPENSION OF OPERATIONS. Should eny well drilled upon lands covered by thlsleese obtain production of oil, gas, or other hydrocarbons In peying quantities and if the lessee is unable to establish e setisfactmy markel for the oil, gas or hydrocarbons produced from said well, the lessee may apply for and the lessor may grant permission for the suspension of production operations until such times as a satisfactory market for the product from said wall can be devaloped. During the time any such suspension of operations is in effect, the lessee shall continue to pey the annual rental of $2.00 per acre or fraction thereof provided by (c) aboll9, and this lease shall remain in effect IS though oil or gas was being produced from said lends. (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 tamporarily is granted by the lessor; to carry on all operations hareunder in a good and workmanlike manner in accordance with approved methods and prectice, having dua regard for the prevention of waste of oil and gas, or tha entrance of water to the oil or gas bearing sands or strata to the destruction or injury of such deposits, the preservation and conservation of tha property for future productive operations and to tha health and safety of workmen and employees; to plug ....,...e!y in an approved manner any well before abandoning it, and not to abendon 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 covared hereby, unless to 1St drainaga by wells drilled on lands adjoining less than 200 feet from the proptOuy III ,... u.....eot; to conduct all operations subject to the inspection of the lessor; to carry out et the lessee's expense all reasoneble orders and requirements of the lessor relatill9 to the prevention of waste and preservation of the property and the health and ssfety of workmen including the replanting Ind reseeding of drilling sites and other areas disturbed by drilling operations and on failure of the lessee so to do the lessor shall have tha righL together with othar recourse herein provided, to enter on tha property to repair damage or prevent waste at the lessee's expense; to abide by and conform to valid applicable regulations prescribed to reimburse tha owner of the surface, if other thIn the lessor, or lessee of grazing rights thereof for actual damagas thereto and injury to improvements thereon, provided, that the lessee shell not be held responsible for acts of providence or actions beyond his control. (m)TAXES AND WAGES-FREEDOM OF PURCHASE. To pey, when due all taxes lawfully Issessed and levied undar 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 ell workmen and employees complete freedom of purchase, and to pay all wagas due workmen and employees in conformance with the laws of the State of Wyoming. (n)ASSIGNMENTS OF lEASE-PRODUCTION AGREEMENTS. Not to assign this lease or any interest therein, nor sublet any porlion of tha leased premises, except with tha consent in writing of the lessor first hed and obtained. All overriding royaltias to be valid, must have the approval of the Board or by the Office of Stale lands and Investments when authority to do so hes been delagatad by the Board and will be recorded with the laase. The Board reserves tha right of disapproval of such overriding royallies when in its opinion they become excessive and hence ere detrimental to the proper development of the leased lands. (o)DElIVER PREMISES IN CASE OF FORFEITURE. To deliver up the leased premises, with all permanant 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 ordinary course of operations. Section 2. THE lESSOR EXPRESSLY RESERVES: (a) The right to leese sell, or otherwise dispose of the surface of the land embreced within this lease under existing laws or laws hereafter enacted, and in accordanœ 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 hereunder. (b)The right to lease, sell, or otherwise dispose of other mineral or subsurface resources not covered by the lease, in accordance with the applicable laws and the rules of the Board of land Commissioners. (c)From the operation of this lease, the surface lands heretofore granted for rights-of-way and easements and reserves the right to grent such other rights-of-way and easements 8S 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 right to refuse to commit the leased lands to a unit plan of dell9lopment if the Board finds such action would impair the lessors reserved right to take its royalty gas in kind and to purchase all other gas ellocated to the leased lands e provided in 'Sectlon 3(e)below. (e)The right to alter or modify the quantity and rate of production to tha end that waste may be eliminated or that production may conform to the lessee's fair share of allowable production L01der eny system of State or National curtailment end proration euthorized by law. (f)ln addition to its right to take its royalty gas in kind, the lessor reserves the right and option to purchese all other gas produced for sale or use off the leased lands. This option shall be exercised only if the Board finds that tha lessee has received and is willing to accept a bona fide offer from a purchaser who intends 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 tha 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 permit an interstate sala if it finds that no intrastate purchaser is willing end able to purchase the gas upon tenns which are reasonably comparable to and at least as favorable to the lessee. 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. Tha lessee shall have tha right subject to tha 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 owned by lessee within a reasonable time alter the terminetion of this lease. lessee agrees that any such improvements not removed within a reasonable tima after termination of this lease shall be disposed of pursuant to the aboll9 statutes. Section 4. FORFEITURE CLAUSE. The Board shell have tha power and authority to cancel leases procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or iIIagal purposes, or for the violation of the covenents of tha lease, upon proper proof thareof, in the event that the lessee shall default in the performance or observance of any of the tanns, covenants, and stipulations hereof, or of the ganeral regulations promulgated by the Board of land Commissionars and in force on the data hereof, the lessor shell serve notice of such failure or default either by personal service or by certified or registered mail upon the lessee, and if such failure or defa~1t continues for a period of thirty (30) days alter the servica of such notice, then and in that event the lessor may, at its option, declara a forfeiture and cancel this lease, whereupon all rights and privilages, obtained by the lessee hereunder shall terminate and cease and tha lessor may re-enter and take possession of said premises or any pert thereof. These provisions shall not be construed to prevent the exercise by lessor any lagal or equitable remedy which the lessor might otherwise heve. A waiver of any particular cause or forfeiture shell not prevent the cancellation and forfeiture of this lease by any othar 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 operations have been conducted under the lease on the land to be relinquished, tha lessee shall file with the State land Board and State loan and Investment Board, a written relinquishment or surrender, duly signed and acknowledged and stating therein Ihat no operations have been conducted on the land. The relinquishment so filed shall become effactive on the date and hour of receipt thereof in the office of the Director or at some later date, if such be so specified by the lessee therein. If the said relinquishment falls to state that no operations heve been conducted, the effective date of relinquishment shall be the date the relinquishment is approved by the Bosrd. (b) If operations hell9 bean conducted under tha lease on land proposed to be relinquished, the lessee shall gill9 sixty (60) days notice and shall file with the Director a wril\en relinquishment or surrender duly acknowledged and staling therein that operations have been conducted on the land. The relinquishmant shall not become effective until the land and the wells thereon shall hall9 been placed in condition acceptable to lessor and shall have been approved by the State Oil and Gas Supervisor. All rentals becoming due prior to a surrender or relinquishment becoming effactill9, shell 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 ) ) § ) ôOÙ480 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: Lkv~~~¡~ Notary Public My commission expires: s/Z-Le)tJ'7 .