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1 Rood-
(Fold -Up Rev. Rev. 1
THIS AGREEMENT, made and entered into this 1 5t d February, 2000
James E. S. Marland, a married man dealing with his sole and separate property
4 West Port, Irving, CA 92620 -2655
Hanson Strahn. Inc.. P.O. Box 3020. Cheyenne. WY 82003
WITNESSETH;
or less.
PACEIV
OIL AND UAL LEASE
For the purpose of calculating payments provided for herein, it shall be deemed that the lands covered by this lease contain 910.02
by and between
hereinaftercaAed lessor(whetherone or more), and
herein after called lessee:
1. That lessor, for and in consideration of ten and more dollars 10.00+ in hand paid,
receipt of which is hereby acknowledged, and of the agreements of lessee hereinafter set forth, hereby grants, demises, leases and lets exclusively unto lessee the lands described
below for the purpose of investigating, prospecting, exploring (by geophysical and other methods), drilling, mining, operating for and producing oil or gas, or both (as defined below),
together with the right to construct and maintain pipelines, telephone and electric lines, tanks, ponds, roadways, plants, equipment, and structures thereon to produce, save and take
care of said oil and gas (which right shall include specifically a right -of -way and easement for ingress to and egress from said lands by lessee, or its assignees, agents or permittees,
necessary to or associated with the construction and maintenance of such pipelines, telephone and electric lines, tanks, ponds, roadways, plants, equipment, and structures on said
lands to produce, save and take care of the oil and gas), and the exclusive right to Inject air, gas, water, brine and other fluids from any source into the subsurface strata, and any and
all other rights and privileges necessary, incident to, or convenient for the economical operation of said land, alone or conjointly with neighboring land, for the production,
saving and taking care of oil and gas and the injection of alr, gas, water, brine, and other fluids Into the subsurface strata, said lands being situated in the County
a Lincoln State of Wyoming
described as rdlows, to wit:
Township 26 North, Range 113 West, 6th P.M.
Section 28: Resurvey Lot 49
Sections 19, 28, 29 and 30: Resurvey Lot 53 45
BOOK PR pACI ...18 5
RECEIVED
LINCOLN COUNTY CLERK
Y9 �a y� 01 FFB Ail 10: 37
In addition to the land described above, lessor hereby grants, leases, and le x usi el un i ee, to the same extent as if specifically described, lands whic are owned or
claimed by lessor by one of the following reasons: (1) all lands and rights acquired or retained by lessor by avulsion, accretion, reliction or I88 e result, of In the
boundaries or centerline of any river or stream traversing or adjoining the lands described above; (2) all riparian lands and rights which are m y '(den ItiB) ted or
attributed to lessor in any lake, stream or river traversing or adjoining the lands described above by virtue of lessor's ownership of the land de p alff ail in any
road, easement or right -of -way traversing or adjoining the lands described above which are or may be incident, appurtenant, related or attrlbuYi s r'l5 virtue of 'lessor's ownership
of the land described above; and (4) all strips or tracts of land adjacent or contiguous to the lands described above owned or acquired by lessor through adverse possession or other
similar statutes of the state In which the lands are located.
acres, whether there actually be more
The term oil as used In this lease shall be interpreted to include any liquid hydrocarbon substances which occur naturally in the earth, including drip gasoline or other natural
condensate recovered from gas without resort to manufacturing process. The term gas as used in this lease shall be interpreted to Include any substance, either combustible or non-
combustible, which Is produced in a natural state from the earth and which maintains a gaseous or rarified state at ordinary temperature and pressure conditions, including but not limited
to helium, nitrogen, carbon dioxide, hydrogen sulphide, coalbed methane gas, casinghead gas and sulphur.
three (3)
Subject to the other provisions herein contained, this lease shall remain in force for a term of 4toe {55 years from this date (herein called "primary term and as long thereafter
as oil and gas, or either of them, is produced from the leased premises or drilling operations are continuously prosecuted. For purposes of this lease, a well completed for the production
of coalbed methane gas shall be deemed to be producing gas under this lease at all times when dewatering of the coal seams from which the coalbed methane gas will be produced
is occurring. For purposes of this lease, "drilling operations" shall include operations for the drilling of a new well and operations for the reworking, deepening or plugging back of a well
or hole or other operations conducted in an effort to establish, resume or re- establish production of oil and gas; drilling operations shall be considered to be "continuously prosecuted"
if not more than one hundred twenty (120) days shall elapse between the completion and abandonment of one well or hole and the commencement of drilling operations on another
well or hole; drilling operations shall be deemed to be commenced for a new well at such time as lessee has begun the construction of the wellsite location or the road which provides
access to the wellsite location; and drilling operations shall be deemed to be commenced with respect to reworking, deepening, plugging back or other operations conducted in an effort
to resume or re- establish production of oil and gas at such time as lessee has the requisite equipment for such operations at the wellsite.
2. The lessee shall deliver to the credit of the lessor as royalty, free of cost, in the pipeline to which lessee may connect its wells the equal one- eighth (1/8) part of all oil produced
and saved from the leased premises, or lessee may from time to time at its option purchase any royalty oil in Its possession, paying the market price thereof prevailing for oil of like
grade and gravity in the field where produced on the date of purchase.
The lessee shall pay lessor, as royalty, on gas, including casinghead gas or other gaseous substances, produced from the leased premises and sold or used off the premises or
used in the manufacture of gasoline or other products, the market value at the well of one eighth (1/8) of the gas sold or used, provided that on gas sold the royalty shall be one eighth
(1 /8) of the amount realized from such sale. The amount realized from the sale of gas shall be the price established by the gas sales contract entered into fn good faith, by lessee and a
gas purchaser for such term and under such conditions as are customary in the industry. "Price" shall mean the net amount received by lessee after giving effect to applicable regulatory
orders and after application of any applicable price adjustments specified in such contract or regulatory orders. In the event lessee compresses, treats, purifies or dehydrates such gas
(whether on or off the leased premises) or transports gas off the leased premises, lessee in computing royalty hereunder may deduct from such price a reasonable charge for each of
such functions performed.
3. This is a paid -up lease and all cash consideration first recited above and annual rentals have been paid to lessor In advance to keep this lease in lull force and effect throughout
the primary term. In consideration of the payment of such cash consideration and advance annual rentals, lessor agrees that lessee shall not be obligated, except as otherwise 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 land described above, and as to any strata or stratum, by delivering to lessor or by filing of record a release or releases, and be relieved of all obligations thereafter accruing to
the acreage surrendered
4. Any payments required to be made to lessors pursuant to this lease, other than the payment of royalties, may be paid by lessee to the lessor or to lessor's credit in the
Bank. at (or its successor orsuccessors or any bank with
which it may be merged or consolidated, or which succeeds to Its business assets or any part thereof, by purchase or otherwise) which shall continue as the depository regardless of
changes in the ownership of said land or the oil and gas. All such payments may be made by cash, check or draft, mailed or delivered on or before the due date for that payment. Any
payments so made shall be binding on the heirs, devisees, executors, administrators, and personal representatives of lessor and on lessor's successors in interest or on lessor's assigns.
5. It at the expiration of the primary term of this lease, oil or gas Is not being produced from the leased premises but lessee is then engaged in drilling operations, this lease shall
continue in force so long as drilling operations are continuously prosecuted; and ff production of oil or gas results from any such drilling operations, this lease shall continue in force so
long as oil or gas shall be produced from the leased premises. If, after the expiration of the primary term of this lease, production on the leased premises should cease for any cause,
this lease shall not terminate'if lessee is then engaged in drilling operations, or within one hundred twenty (120) days attar each such cessation of production commences or resumes
drilling operations, and this lease shall remain in force so long as drilling operations are continuously prosecuted, and if production results therefrom, then as long thereafter as oil or
gas is produced from the leased premises.
6. If at any time, either before or after the expiration of the primary term of this lease, there is a well capable of producing oil or gas on lands covered by this lease, or on other
lands with which lands covered by this lease are pooled or unitized, but the well is shut -in, whether before or after production therefrom, and this lease is not being maintained otherwise
as provided herein, this lease shall not terminate (unless released by lessee) and it shall nevertheless be considered that oil or gas is being produced from lands covered by this lease
during all times while the well is so shut-in. Lessee shall use reasonable diligence to market the oil or gas capable of being produced from such shut -in well, but shall be under no
obligation to market the oil or gas under terms, conditions or circumstances which, in lessee's judgment exercised in good faith, are unsatisfactory, When the lease is continued in force
In this manner, lessee shall pay or tender to the lessor or lessor's successors or assigns, an amount equal to $1.00 year per net mineral acre covered by the lease. Such payments
shall be made on or before the shut -in royalty payment date, as defined below, next occurring after the expiration of one hundred twenty (120) days from the date the well was shut -in,
unless prior to such date oil or gas from the well is sold or used or the lease is otherwise maintained as provided herein. In like manner, on or before each succeeding shut -in
royalty payment date while such well remains shut -in, lessee shall make payment of shut -in royalty in the same amount and manner. The term "shut -in royalty payment date" shall mean the
anniversary date of this lease. Any shut-in royalty payment may be made by cash, draft or check, mailed or tendered on or before the shut -in royalty date. Lessee's failure to pay or tender,
or properly pay or tender, any such sum shall render lessee liable for the amount due but it shall not operate to terminate the lease.
7 If lessor owns a lesser interest in the above described land than the entire and undivided fee simple estate therein, then the royalties, including shut -in royalty, herein provided shall
be paid to lessor only in the proportion which lessor's interest bears to the whole and undivided tee. Any interest fn production from the lands described herein to which the interest of lessor
may be subject shall be deducted from the royalty herein reserved.
8. Lessee shall have the right to use, free of cost, gas, oil and water produced on said and for its operation thereon, except water from wells and reservoirs of lessor. Lessee
shall have thedght at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove casing,
9. Lessee shall pay to lessor reasonable amounts for damages caused by its operations to growing crops on said land. When requested by lessor, lessee shall bury its pipelines
which traverse cultivated lands below plow depth. No well shall be drilled nearer than two hundred (200) feet to a house or barn now on said premises, without written consent of lessor.
Lessee shall have the right at any time (but not the obligation), to remove all improvements, machinery, and fixtures placed or erected by lessee on said premises including the right to
pull and remove casings.
7Sl /3 G yJ
10. ac .a iQ hereby given the right and power at any time and from time t recurring right, either before or after production, as to at o he land described
above and as to ore of the formations hereunder, to pool or unitize the I ate and the mineral estate covered by this lease with oft or leases in the
immediate vicinit uction of oil and gas, or separately for the production of i in lessee's judgment it is necessary or advisable to do so, c. ,espective 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 a declaration of such unitization or reformation, which
declaration shall describe the unit. Any unit may include land upon which a well has heretofore been completed or upon which drilling operations have been commenced. Production,
drilling or reworking operations or a well shut -in for any reason anywhere on a unit which includes at or a part of this lease shall be treated as if it were production, drilling or reworking
operations or a well shut -in under this lease. In lieu of the royalties elsewhere herein specified, lessor shall receive on production from the unit so pooled royalties only on the portion of
such production allocated to this lease' such allocation shall be that proportion of the unit production that the total ngfnber of surface acres covered by this lease and included in the unit
bears to the total number of surface acres in such unit.
11. Lessee shall have the right to unitize, pool, or combine all or any part of the land described above 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 terminate any such plan or 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 requirements of this lease, express 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 land described above 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 the royalty payments
to be made hereunder to lessor shall be based upon production only as so allocated.
12. If the estate of either party hereto is assigned or sublet, and the privilege of assigning or subletting in whole or in part is expressly allowed, the express and implied covenants
hereof shall extend to the sublessees, successors and assigns of the parties; and in the event of an assignment or subletting by lessee, lessee shall be relieved and discharged as to
the leasehold rights so assigned or sublet from any liability to lessor thereafter accruing upon any of the covenants or conditions of this [ease, either express or implied. No change in
ownership of the land, royalties, or other payments, however accomplished, shall operate to enlarge the obligations or diminish the rights of lessee or require separate measuring or
Installation of separate tanks by lessee. Notwithstanding any actual or constructive knowledge of or notice to lessee, no change in ownership of said land or of the right to receive royalties
or other payments hereunder, or of any interest therein, whether by reason of death, conveyance or any other matter, shall be binding on lessee (except at lessee's option in any particular
case) until one hundred twenty (120) days after lessee has been furnished written notice thereof, and the supporting information hereinafter referred to, by the party claiming as a result
of such change in ownership or interest. Such notice shall be supported by original and certified copies of all documents and other instruments or proceedings necessary in lessee's
opinion to establish the ownership of the claiming party.
13. In the Interest of conservation, the protection of reservoir pressures and recovery of the greatest ultimate yield of oil and /or gas, lessee shall have the right to combine the
leased premises with other premises in the same general area for the purpose of operating and maintaining repressuring and recycling facilities, and for such purpose may locate such
facilities, including input wells, upon leased premises, and no royalties shall be payable hereunder upon any gas used for repressuring and recycling operations benefitting the leased
premises.
14. If lessor, during the primary term of this lease, receives a bona fide offer from a third party to purchase from lessor a lease covering any or all of the substances covered by
this lease and covering all or a portion of the land described herein, with such lease to become effective upon expiration of this lease, which lessor is willing to accept from the offering
party, lessor hereby agrees to notify lessee In writing of said offer immediately, including in the notice the name and address of the offeror, the price offered and all other pertinent terms
and conditions of the offer. Lessee, for a period of fifteen (15) days after the receipt of the notice, shall have the prior and preferred right and option to purchase the lease or part thereof
or interest therein covered by the offer at the price and on the terms and conditions specified in the offer. All offers made up to and including the last day of the primary term of this lease
shall be subject to the terms and conditions of this paragraph 14. Should lessee elect to purchase the lease pursuant to the terms hereof, it shall so notify lessor in writing by mail, teletax,
or telegram prior to expiration of said fifteen (15) day period. Lessee shall promptly thereafter furnish to lessor the new lease for execution by lessor along with lessee's sight draft payable
to Lessor in payment of the specified amount as consideration for the new lease, such draft being subject to approval of title according to the terms thereof. Upon receipt thereof, lessor
shall promptly execute said lease and retum same along with the draft through lessor's bank of record for payment.
15. In the event lessor considers that lessee has not complied with all its obligations hereunder, either express or implied, lessor shall notify lessee In writing, setting out specifically
in what respects lessee has breached this lease. Lessee shall then have sixty (60) days after receipt of said notice within which to meet or commence to meet all or any part of the
breaches alleged by lessor. The service of said notice shall be precedent to the bringing of any action by lessor on said lease for any cause, and no such action shall be brought until
the lapse of sixty (60) days after service of such notice on lessee. Neither the service of said notice nor the doing of any acts by lessee aimed to meet all or any of the alleged breaches
shall be deemed an admission or presumption that lessee has failed to perform all its obligations hereunder. This lease shall never be forfeited or cancelled for failure to perform in whole
or in part any of its implied covenants, conditions, or stipulations until a judicial determination is made that such failure exists and lessee fails within a reasonable time to satisfy any
such covenants, conditions, or stipulations.
16. All express and Implied covenants of this lease shall be subject to all federal and state, county or municipal laws, executive orders, rules and regulations, and lessee's
obligations and covenants hereunder, whether express or implied, shall be suspended at the time or from time to time as compliance with such obligations and covenants is prevented
or hindered by or is in conflict with federal, state, county, or municipal laws, rules, regulations or executive orders asserted as official by or under public authority claiming jurisdiction,
or Act of God, adverse field, weather, or market conditions, inability to obtain materials in the open market or transportation thereof, wars, strikes, lockouts, riots, or other conditions or
circumstances not wholly controlled by lessee, and this lease shall not be terminated In whole or in part, nor lessee held liable in damages for failure to comply with any such obligations
or covenants if compliance therewith is prevented or hindered by or is in conflict with any of the foregoing eventualities. The time during which lessee shall be prevented from conducting
drilling or reworking operations during the primary term of this lease, under the contingencies above stated, shall be added to the primary term of the lease.
17. Lessor hereby warrants and agrees to defend the title to the lands described above, and agrees that the lessee, at its option, shall have the right at any time to pay for lessor,
any mortgage, taxes or other liens existing, levied or assessed on or against the above described lands in the event of default of payment by lessor and be subrogated to the rights of
the holder thereof, and lessor hereby agrees that any such payments made by lessee for the lessor may be deducted from any amounts of money which may become due the lessor
under the terms of this lease.
?'"1.4 4
i
STATE OF CALIFORNIA
COUNTY OF
On this
James E.
to me known to be
as his
Giv
My commission e
STATE OF
COUNTY OF
18 This lease and all its terms, conditions, and stipulations shall extend to and be binding on all successors in interest, in whole or in part, of said lessor or lessee.
19. With respect to and for the purpose of this lease, lessor, and each of them if there be more than one, hereby release and waive the right of homestead.
RED
REOF witness our hen s as of the day and year first above written.
m es E. S. Marland
mes E. S. Marland
On this
j
S. Marland, a married man dealing with his
the person 41Ci
day of
ss.
February, 2000
S.S.i 567 -86 -5966
INDIVIDUAL
described In, and who executed the foregoing instrument, and who acknowledged to me that
ss.
186
before me personally appeared
sole and separate property
he executed the same
iver of the right of homestead.
day. Februar 2000
Notary Public for the State of California
residing at
CORPORATE
dayof before me personally appeared
to me personally known, who, being by me duty sworn, did say that he is the
and that the seal affixed to said instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its board
of directors, and said acknowledged said instrument to be the free act and deed of said corporation.
Given under my hand and seal this dayof
My commission expires:
Notary Public for the State of
residing at