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PRODUCERS 88-PAID UP
Rev. No.1 (CßG)
OIL AND GAS LEASE
ÜOv341
This Oil and Gas Lease ("Lease") is made this ~day of January. 2009 between Fred S. Nelson. a married man dealin!!: in his sole and seoarate
orooertv and as heir to the Estates of Marcus D. Nelson and Florence M. Nelson. deceased whose address is 290 Howell Road. Laramie. WY 82072
("Lessor", whether one or more), and
40% Yates Petroleum Corooration. 20% Yates Drillin!!: ComDanv. 20% ABO Petroleum COI'Doration and 20% MYCa Industries. Inc.
whose address is 105 South 4"' Street. Artesia. NM 88210, ("Lessee").
WITNESSETH For and Consideration of TEN DOLLARS, the covenants and agreements contained herein, and other good and valullble
consideration the receipt ~nd sufficiency of which are hereby acknowledged, Lessor does hereby grant, demise, lease and let exclusively unto said Lessee, with
the exclusive rights for the purposes of mining, exploring by geophysical and other methods and operating for and producing therefrom oil and all gas of
whatsoever nature or kind (including coal bed gas), and laying pipelines, telephone and telegraph lines, building tanks, plants, power stations, roadways and
structures thereon to produce, save and take care of said products (including dewatering of coal bed gas wells), and the exclusive surface or subsurface rights
and privileges related in any manner to any and all such operations, and any and all other rights and privileges necessary, incident to, or convenient for the
operation alone or conjointly with neighboring land for such purposes, all that certain tract or tracts of land situated in Cou~ty, of Lincoln State of
Wvominl! ,described to wit: RECEIVED 2/12/2009 at 4:18 PM
RECEIVING # 945245
BOOK: 715 PAGE: 341
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER. WY
Wherever the term one-eighth (1I8th) appears herein, it shall by this reference be amended to read Fifteen Percent (15%).
TownshiD 21 North. Ran!!:e 113 West. 6th P.M.
Sections 19 & 30: Resurvey Tract 42(159.98)
Sections 20 & 21: Resurvey Tract 39(160.38), Resul'Vey Tract 40(319.03)
and containing 639.390 acres, more or less (the "Premises").
1. It is agreed that this Lease shall remain in full force for a term of ---Ih:L W years from this date ("Primary Term") and as long thereafter
as oil or gas of whatsoever nature or kind is produced from the Premises 01' on acreage pooled or unitized therewith, or operations are continued as
hereinafter pl·ovided. If, at the expiration of the Primary Term, oil or gas is not being produced from the Premises or on acreage pooled or unitized therewith
but Lessee is then engaged in drilling, reworldng, or dewatering operations thereon, then this Lease shall continue in force so long as such operations are
being continuously prosecuted. Operations shall be considered to be continuously prosecuted if not more than ninety (90) days shall elapse between the
completion or abandonment of one well and the beginning of operations for the drilling of a subsequent well. If after discovery of oil or gas on the Premises or
on acreage pooled or unitized therewith, the production thereof should cease from any cause after the primary term, this Lease shall not terminate if Lessee
commences additional drilling, reworking or dewatering operations within ninety (90) days from date of cessation of production or from date of completion of
a dry hole. If oil or gas shall be discovered and produced as a result of such operations at or after the expiration of the Primary Term, this Lease shall
continue in force so long as oil or gas is produced from the Premises or on acreage pooled or unitized therewith.
2. This is a PAID-UP LEASE. In consideration of the payment made herewith, Lessor agrees that Lessee shall not be obligated, except as
othenvlse provided herein, to commence or continue any operations during the primary term. Lessee may at any time or times during or after the Primary
Term surrender this Lease as to all or any portion of the Premises and as to any strata or stratum, by delivering to Lessor or by filing for record a release or
releases, and be relieved of all obligations thereafter accruing as to the acreage surrendered.
3. The royalties to be paid by Lessee are: (a) on oil and other liquid hydrocarbons, Twelve and One-Half Percent (12.50%) of that produced and
saved from said land, the same to be delivered at the wells, or to the credit of Lessor Into the pipeline to which the wells may be connected; Lessee may from
time to time pm'chase any royalty oil in its possession, paying the market price therefore prevailing for the field where produced on the date of purchase; (b)
on gas and the constituents thereof produced from said land and sold or used off the premises or in the manufacture of products therefrom, the market value
at the well of Twelve and One-Half Percent (12.50%) of the product sold or used. On products sold at the well, the royalty shall be Twelve and One-Half
Percent (12.50%) of the net proceeds realized from such sale. All royalties paid on gas sold or used off the premises or in the manufacture of products
therefrom will be paid after deducting from such royalty lessor's proportionate amount of all post-production costs, including but not limited to gross
production and severance taxes, gathering and transportation costs from the wellhead to the point of sale, treating, compression, and processing. On product
sold at the well, the royalty shall be Twelve and One-Half Percent (12.50%) of the net proceeds realized from such sale, after deducting from such royalty
lessor's proportionate amount of all of the above post-production costs and expenses, If any.
4. Where Gas from a well capable of producing Gas (or from a well in which dewatering operations have commenced), is not sold or used after the
expiration of the Primary Term, Lessee shall payor tender as royalty to Lessor at the address set forth above One Dollar ($1.00) per year per net mineral
acre, snch payment or tender to be made on or before the anniversary date of this Lease next ensuing after the expiration of ninety (90) days from the date
such well is shut In or dewatering operations are commenced and thereafter on or before the anniversary date of this Lease during the period such well is shut
in or dewatering operations are being conducted
5. If Lessor owns a lesser interest in the Premises than the entire and undivided fee simple estate therein, then the royalties (Including any shut-In
gas royalty) herein provided for shall be paid Lessor only in the proportion which Lessor's interest bears to the whole and undivided fee.
6. When requested by Lessor, Lessee shall bury Lessee's pipeline below plow depth.
7. No well shall be drilled nearer than 200 feet to the house or barn now on the Premises without written consent of Lessor.
8. Lessee shall pay for damages caused by Lessee's opemtions to growing crops on the Premises.
9. Lessee shall have the right at any time to remove all machinery and fixtures (including casing) Lessee has placed on the Premises.
10. The rights of the Lessor and Lessee hereunder may be assigned in whole or part. No change in ownership of Lessor's Interest (by assignment
or othenvise) shall be binding on Lessee until Lessee has been furnished with notice, consisting of certified copies of all recorded instruments or documents
and other information necessary to establish a complete chain of record title from Lessor, and then only with respect to payments thereafter made. No other
kind of notice, whether actual or constructive, shall be binding on Lessee. No pl"esent or future division of Lessor's ownership as to different portions or
parcels of the Premises shall operate to enlarge the obligations or diminish the rights of Lessee, and all Lessee's operations may be conducted without regard
to any such division. If all or any part of this Lease is assigned, no leasehold owner shall be liable for any act or omission of any other leasehold owner.
11. Lessee, at its option, is hereby given the right and power at any time and from time to time as a recurring right, either before or after
production, as to all or any part of the Premises and as to anyone or more of the formations thereunder, to pool or unitize the leasehold estate and the mineral
estate covered by this Lease with other land, lease or leases in the immediate vicinity for the production of oil and gas, or separately for the production of
either, when in Lessee's judgment it is necessary or advisable to do so, and irrespective of whether authority similar to this exists with respect to such other
land, lease or leases. Likewise, units previously formed to include formations not producing oil or gas, may be reformed to exclude such non-producing
formations. The forming or reforming of any unit shall be accomplished by Lessee executing and filing of record 11 declaration of such unitization or
reformation. which declaration shall describe the unit. Any unit may include land upon which. a well bas tåcrotofcre becn complctcd or upon which
operations for drilling have theretofore been commenced. Production, drilling, reworking or dewatering operations or a well·shut in for want of a market
anywhere on a unit which includes all or a part of this Lease shall be treated as if it were production, drilling, reworking or dewatering operations or a well
shut in for want of a market under this Lease. In lieu of the royalties elsewhere herein specified, Including shut-in gas royalties, Lessor shall receive royalties
on production from such unit only on the portion of such prodnction allocated to this Lease; such allocation shall be that proportion of the unit production
that the total number of surface acres covered by this Lease and included in the Unit bears to the total number of surface acres in such Unit. In addition to
the foregoing, Lessee shall have the right to unitize, pool, or combine all or any part of the Premises as to one or more of the formations thereunder with other
lands in the same general area by entering into a cooperative or unit plan of development or operation approved by any governmental authority and, from
time to time, with like approval, to modify, change or tenninate any such plan 01' agreement and, in such event, the terms, conditions and provIsions of this
Lease shall be deemed modified to conform to the terms, conditions, and provisions of such approved cooperative or unit plan of development or operation
and, particularly, all drilling and development reqnil"ements of this Lease, exp"ess or implied, shall be satisfied by compliance with the drilling and
development requirements of such plan or agreement, and this Lease shall not terminate or expire during the life of such plan or agreement. In the event that
the Premises or any part thereof, shall hereafter be operated under any such cooperative or unit plan of development or operation whereby the production
therefrom is allocated to different portions of the land covered by said plan, then the production allocated to any particular tract of land shall, for the purpose
of computing the royalties to be paid hereunder to Lessor, be regarded as having been produced from the particular tract of land to which it Is allocated and
not to any other tract of land; and royalty payments to be made hereunder to Lessor shall be based upon production only as so allocated. Lessor shall
formally express Lessor's consent to any cooperatiye or unit plan of development or operation adopted by Lessee and approved by any governmental agency
by executing the same upon request of Lessee.
PRODUCERS 88-PAID UP
Rev. No. I (CBG)
ûOû342
12. All express or implied covenants of this Lease shall be subject to all Federal and State Laws, Executive Orders, Rules or Regulations, and this
Lease shall not be terminated, in whole or in part, nor Lessee held liable in damages, for failure to comply therewith if compliance is prevented by, or if such
failure is the result of, any such Law, Order, Rule or Regulation. Any delay 01' interruption caused by storm, flood, act of God, or other event of force
majenre shall not be counted against Lessee. If, due to the above causes or any cause whatsoever beyond the control of Lessee, Lessee is prevented from
conducting operations hereunder, such time shall not be counted against Lessee, and this Lease shall be extended for a period oftime equal to the time Lessee
was so prevented, anything in this Lease to the contrary notwithstanding.
13. Lessor hereby warrants and agrees to defend the title to the lands herein described, and agrees that the lessee shall have the right at any time to
redeem for lessor by payment any mortgages, taxes or other liens on the above described lands, in the event of default of payment by lessor, and be subrogated
to the rights of the holder thereof, and the undersigned Lessors, fOI' themselves and their heirs, successors and assigns, hereby surrender and release all right
of dower and homestead in the Premises, insofar as said right of dower and homestead may in any way affect the purposes for which this Lease is made, as
recited herein.
14. Should anyone or more the parties named as Lessor herein fail to execute this Lease, it shall nevertheless be binding upon all such parties who
do execute it as Lessor. The word "Lessor", as used in this Lease, shall mean anyone or more or all of the parties who execute this Lease as Lessor. All the
pl"Ovisions of this Lease shall be binding on the heirs, snccessors, and assigns of Lessor and Lessee.
15. If at any time within the primary term of this lease and while the same remains in force and effect, lessor receives any bona fide offer,
acceptable to lessor, to grant an additional lease (top lease) covering all or part of the aforedescribed lands, lessee shall have the continuing option by meeting
any such offer to acquire such top lease. Any offer must be in writing, and must set forth the proposed lessee's name, bonus consideration and royalty
consideration to be paid for such lease, and include a copy of the lease form to be utilized which form should reflect all pertinent and relevant terms and
conditions of the top lease. Lessee shall have fifteen (15) days after receipt, from lessor, of a complete copy of any such offer to advise lessor in writing of its
election to enter into an oil and gas lease with lessor on equivalent terms and conditions. If lessee fails to notify lessor within the aforesaid fifteen (15) day
period of its election to meet any such bona fide offer, lessor shall have the right to accept said offer.
IN WITNESS WHEREOF, this instrument is executed as of the date first above written.
Signatures
FRék? S. ~h~h5ð()
ACKNOWLEDGMENTS FOR USE IN ARIZONA, OREGON, NEBRASKA, KANSAS, COLORADO, WYOMING, N. DAKOTA, NEW MEXICO
STATE OF Wvominl!
)
) SS.
)
<INDIVIDUAL ACKNOWLEDGMENT)
COUNTY OF Albanv
The foregoing instrument was acknowledged before me this
Fred S. Nelson
.).¡JJ-
day of
ri
. 2009-, by
My Commission Expires:
Irginla Von LUnen-NOTARY PUBUC
STATE OF
County of State of
Albany Wyoming
ion Expires Decembef 5.2009 <CORPORATE ACKNOWLEDGMENT)
COUNTY OF
The foregoing instrument was acknowledged before me this
day of
. 19-, by
of
a _ Corporation, on behalf of the corporation.
My Commission Expires:
Notary Public
FORMS/O&G LEASE producers 88:cla
3198