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VV 1044
68i
2. This lease shall remain in force for a term
of Five (5) years from the date hereof and as long
thereafter as oil, or gas of whatsoever nature or kind, or
both or either of them is produced from said land or from
premises pooled or unitized therewith as provided
hereinafter or drilling operations are continued as
provided hereinafter. If prior to discovery of oil or gas,
on said land, or on acreage pooled or unitized therewith as
provided hereinafter, Lessee shall drill a dry hole or
holes thereon, or if after discovery of oil or gas,
production in paying quantities should cease for any cause,
this lease shall not terminate if Lessee commences
additional drilling or reworking operations within One
Hundred Eighty (180) days thereafter, or (if it be within
the primary term) shall not terminate until the expiration
of the primary term if Lessee is not in default hereunder.
If, at the expiration of the primary term of this lease,
oil or gas is not being produced on or from said land or
said pooled or unitized premises, but Lessee is then
engaged in drilling or reworking operations thereon, then
this lease shall continue in force so long thereafter as
drilling or reworking operations are being continuously
prosecuted on said land or on a drilling or development or
operating unit which includes all or a part of said land;
and drilling or reworking operations shall be considered to
be continuously prosecuted if not more than One Hundred and
Eighty (180) days shall elapse between the completion or
abandonment of one well and the beginning of operations for
the drilling or reworking of another well. If oil or gas
shall be discovered and produced from any such well or
wells drilled, being drilled or reworked at or after the
expiration of the primary term of this lease, this lease
shall continue in force so long thereafter as oil or gas is
produced from the leased premises or from any such unit
which includes all or a part of said lands.
3. In consideration hereof, Lessee shall pay to
Lessor, as royalty, for any oil produced from said land an
amount equal to one -sixth (16.67 of market price for oil
of like grade and gravity prevailing in the field where
produced on the day such oil is run into the pipeline or
into storage tanks, without reduction for any cost
whatsoever, except taxes attributable to such royalty,
including, without limitation, production costs, any cost
of gathering, marketing, separating, dehydrating, treating,
2
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0367044 68:,
b. If t`he shut -in occurs after royalty
payments on production have been made (i.e., such
shut -in is an interruption of production), the
payment of such shut -in rental in lieu of royalty
on such well may not maintain this lease in
effect for a period of more than three years from
the date of interruption of production shut -in of
such well, and such shut -in rentals in lieu of
royalty shall be paid as follows:
(i) If the shut -in continues for a
period of twelve consecutive months, Lessee
shall pay to Lessor at the end of such
period, an amount equal to $15.00 multiplied
by the net mineral acres of the lease;
(ii) If the shut -in continues beyond
the period described in the subparagraph
immediately preceding this subparagraph,
Lessee shall, within Thirty (30) days of the
continuation date, pay Lessor an amount
equal to $20.00 multiplied by the net
mineral acres of the lease; provided,
however, should production be recommenced
during the ensuing twelve month period,
Lessee shall have the right to withhold from
its production royalty payment to Lessor the
amount paid under this subparagraph; and
(iii) If the term of the shut -in
continues beyond the period described in,the
subparagraph immediately preceding this
,subparagraph, Lessee shall, within Thirty
(30) days of the continuation date, pay
Lessor an amount equal to $25.00 multiplied
by the net mineral acres of the lease;
provided, however, should production be
recommenced during the ensuing twelve month
period, Lessee shall have the right to
withhold from its production royalty
payments to Lessor the amount paid under
this subparagraph; and
(iv) If the term of the shut -in
continues beyond the period described in the
4
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0 3G X044 68;=
of the formations thereunder with other land in the same
general area by entering into a cooperative or unit plan of
development or operation approval, to modify, change or
terminate any such plan or agreement, provided, however,
that if the terms and provisions of such cooperative or
unit plan of development or operation are inconsistent with
any terms or provisions contained in the body of this
lease, the terms and provisions in the body of this lease
shall prevail. In the event that said above described land
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 royalty 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. Lessor shall formally
express Lessor's consent to any cooperative or unit plan of
development or operation adopted by Lessee and approved by
any governmental agency by executing the same upon request
of Lessee provided that any such ratification by Lessor
shall provide that if the terms and provisions of such
cooperative or unit plan of development or operation are
inconsistent with any terms or provisions contained in the
body of this lease, the terms and provisions in the body of
this lease shall prevail. Drilling operations on or
production from any unit or units formed in accordance with
the provisions hereof and covering all or part of the lands
described herein shall maintain this lease in force only as
to that portion of the land described herein included in
any such unit or units, and as to lands covered hereby and
not included in any such unit or units, this lease may be
maintained in any manner herein provided for, provided that
if it be by rental payments, rentals shall be reduced
proportionately to the number of net mineral acres not
included in any such unit or units and not being otherwise
maintained.
6. No surface activities shall be commenced by
Lessee under this lease unless and until Lessee shall have
entered into a surface owner's agreement with the owner of
the surface estate of the lands described herein which
6
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uana pup 1 4ou ao alsgsa aopgans gons U1Oaq paaaAas sT agPgsa
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129
1.1,704.950
08437011 6
hereunder shall be reduced in the proportion of the acreage
covered hereby is reduced by said release or releases.
10. At the end of One (1) year after the
expiration of the primary term hereof, Lessee covenants and
agrees to execute and deliver to Lessor a written release
of all of the land covered hereby SAVE AND EXCEPT THEREFROM
oil and gas rights from the surface down to, but not below,
the stratigraphic equivalent of 100 feet below the base of
the deepest formation then producing or drilled in and
under that portion of lease premises which have been
allocated to a producing well or wells by inclusion in a
pooled unit or participating area as defined below, created
for such well or wells or if such producing well is a lease
well, 160.0 acres plus 10% tolerance surrounding each
producing oil well and 160 acres plus 10% tolerance
surrounding each producing gas well; provided, however,
that if at such date oil and gas is being produced on or
from said land or said pooled or unitized premises, or if
drilling, reworking, deepening, sidetracking or re-
completion operations are being conducted thereon pursuant
to Paragraph 2 in an effort to restore or enhance
production, or if shut -in payments have been made pursuant
to Paragraph 3, and Lessee is also engaged in drilling or
reworking operations on the lease premises or on lands
pooled or unitized therewith, the date for the execution
and delivery of such release shall be postponed and the
entire lease shall remain in force so long as such
operations on said well or wells are prosecuted with
reasonable diligence, and if, after the completion or
abandonment of such well or wells, Lessee commences the
drilling of an additional well within One Hundred and
Eighty (1$0) days from the completion or abandonment of the
preceding well, or continuously conducts drilling
operations in good faith and with reasonable diligence on
said lease or land pooled or unitized therewith without any
cessation for longer than One Hundred and Eighty (180)
days, said lease shall remain in full force and effect
during such drilling operations and until the end of One
Hundred and Eighty (180) days after the completion or
abandonment of the final well, at which time Lessee shall
execute and deliver to Lessor said written release.
Provided further, if on or after such date, the lease is
being maintained by payment of shut -in rental in lieu of
production royalty pursuant to Paragraph 3, such shut -in
8
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a0SSaT goTTM uT s91P buzonpoad ao gTun buTonpoad TenpTATpuz
UP uT papnTouz abeaaoe g2Liq. Sp pauTgap aq TTpgs „pane
5UTgedTDTgred„ ao „g paTood„ papTAoad anogpuzaaaq
Se ggdap og Se pagzmTT pup STTam ao TTaM buzonpoad s oq
paaeooTTP abeaaos TTp o1 Se assaT a1f uTequTew TTpgs Tp1uaa
`389
6
084,7014
prevent such loss or forfeiture by complying with and
discharging the obligation as to which Lessee has been
judicially determined to be in default.
12. Lessee shall pay all reasonable costs and
expenses, including reasonable attorney's fees, incurred by
Lessor in the enforcement of any portion of this lease
against Lessee or incurred in the recovery of any damage
for any breach hereof by Lessee. The parties agree that
any and all suits for any and every breach of this oil and
gas lease shall be instituted only in the courts of the
State of Wyoming; and it is mutually understood and agreed
that this lease shall be governed by the laws of the State
of Wyoming, both as to interpretation and performance.
13. Waiver by either Lessor or Lessee of any
breach of any condition or provision of this oil and gas
lease shall be limited to the particular instance and shall
not operate or be deemed to waive any future breach or
breaches of said condition, the failure of either Lessor or
Lessee to insist, in any one instance or more, upon the
performance of any of the conditions or provisions of this
oil and gas lease or to exercise any right or privilege
herein conferred, shall not be construed as thereafter
waiving any such condition, provision, right or privilege,
but the same shall continue and remain in full force and
effect.
14. Except as may be herein otherwise provided,
all notices required or permitted herein shall be deemed to
have been properly given when sent by certified United
States mail, addressed to the Lessor or Lessee at the above
addresses.; the date of such service shall be the date on
which the notice is deposited in the United States Post
Office; all notices shall be sufficient within the terms of
this oil and gas lease when signed by any one or more of
the notifying parties or their agents and mailed to any one
or more of the opposite parties; personal delivery of such
written notice shall have the same effect as notice given
by mail; the above addresses may be changed for the
purposes of this oil and gas lease by notification of the
opposite party in writing. All royalties, rentals and
other payments due under this lease shall be payable to
Lessor at 79 North 1 st East Street, Green River, Wyoming
82935. No change in this address shall be binding on
10
681.
6uTgTnsaa goaaag quawaoaogua AUP 10J pup uotgoadsut
eons aoJ STpuotssagoad eons ao; aossaq og sasuadxa
aTgpuospaa aLil aossaq asangwtaa pupwap uodn kTa1ptpawwt
TTpgs aossaq 'aapunaaag appw uaaq anpq pinogs gotgM
s uawApd Tp4O4. 91 11 JO (008) quaoaad Aqq6TE upgq SSaT st
aapunaaaq aossaq Aq aossaT oq appw ATTpngop squawipd Tp gol
91 -P qPI-D Tpanaa TTpgs uoTgoadsuT uotgpoT ;Taan gons iUP
1Pg1 quana all UT :apaA appuaTpo gopa aouo upIi. ATquanbaaq
aaow pagonpuoo aq qou TTpgs sgtpnp eons pup gTpnp
aTq go aTPp agq butpaoaad sgfuow 9E age Oq pa4TwiT ag TTpgs
1Tpnp uoTgpoTgTaan cans pus fuoT4P0T3Taan eons uT paatnbaa
aq Jpw gpgq aoupgstssp aTgpuospaa Tip gstuang TTpgs aassaq
pup :UOT1PDTJtaan gons 6uTNpw go asodand aLiq. ao4 aassaq
oq 6uTgTaM uT aoTlou aTgpuospaa uodn pup sawtq aTgpuospaa
TTp aassaq 04 'lTTT(IpTT InogTiM pup Nsta s,aossaq
Jp 'uoTgPoTgTaan Lions ao; Aapssaoau aassaq ;o spaooaa
aLiq o; pup sastwaad aLiq oq ssaoop anpg TTpgs sasodand
Lions ao; aossaq Aq pa oidwa sTpuotssa ;oad gons ipgq saaabp
aassaq pup 'aapunaaaq aossaq Aq aoupwaogaad buTAgTaan
go asodand agq aog Aapssaoau sTpuotssagoad aaggo pup
saaaut6ua 'squp ;un000p AoTdwa oq aapunaaag gg6ta all aA T
TT pgs aossaq aossaq appw aap squawSpd AgTpIioa gotgM
uo stspq aqq 6uTmogs spaooaa pup sNooq 6utpnTout 'aapunaaaq
a Aq pros ao pasn 'panowaa spb pup Tto Tip go spaooaa
pup sNooq uaggta1 agpanoop daaN TTpgs aossaq 9T
°uotsTATp Lions
iup papbaa gnoLigrM pagonpuoo aq Apw suoTgpaado s,aassaq
pup aassaq ;o 1g6za gsTuTwTp ao suotgp6TTgo agq. abapTua
oq agpaado TTpgs pupT pips go sTaoapd to suotgaod quaaaggTp
01 Sp dtgsa s,aossaq go uoTSTATp aangng ao quasaad
ON •paaan000 ppq a6upgo ou ;t SP fTastoaad squawked
aNpw oq anuTquoo ku aossaq pup aassaZ uo 6uTputq aq
TTpgs 'aATqonagsuoo ao Tpngop aaggagM 'aoTgou go puts{ aaglo
ON •appw aa3gpaaaLl squawLpd oq goadsaa LiliM ATuo uatl
pup 'aossaq woo; aTgT paooaa go utpto a '4aTdwoo p ListTgp1sa
oq i1PSSaoau uoTgpwao ;uT Jain° pup squawnoop ao squawnagsuT
papaooaa TTp go satdoo pat4t4aao go buTgstsuoo 'aotlou L[TM
pagsTuang uaaq spq aassaZ 'nun aassaZ uo 6utputq aq TTpgs
(asTMaaggo JO quawu6tssp Aq) gsaaaqut s,aossaq go dtgsaauMo
uT sabupgo ON °4apd uT ao aTOgM uT paubtssp aq Apw
aapunaaag aassaZ pup aossaq go sgg6Ta aLis °5T
°papTAoad utaaaq Sp a5upgo gong
go aoTgou paATaoaa spg aossaq aaggP Sip 08 ITqun aassaZ
)69
tt=01,,3N0
TT
otio7o4'
therefrom. Acceptance of any royalty payment under this
lease shall not prejudice the right of Lessor to protest or
question the correctness thereof. The aforesaid right to
audit shall extend beyond the termination of this lease for
a period of Thirty -Six (36) months.
17. Lessee agrees to indemnify and hold harmless
Lessor from and against any and all liability, loss,
damage, claims, demands, costs and expenses of whatsoever
nature, including court costs and reasonable attorney's
fees, which may result or arise from Lessee's operations
and activities hereunder; Lessee further agrees to defend
against any claims brought or actions filed against Lessor
with respect to or resulting from lessee's activities and
operations hereunder, whether such claims or actions are
rightfully or wrongfully brought or filed.
18. The royalties and rentals hereinabove
provided are determined with respect to the entire estate
in the leased substances and if Lessor owns a lesser
interest therein, the royalties and rentals to be paid
Lessor shall be reduced proportionally. Lessee at its
option may purchase or discharge in whole or in part any
tax, mortgage or other lien upon said land, or may redeem
the same from any purchaser at any tax sale or adjudication
and may reimburse itself from any royalties accruing
hereunder and shall be subrogated to such lien with the
right to enforce same.
19. Lessor hereby grants to Lessee the right and
option to extend the primary term of the lease from Five
(5) years to Ten (10) years by paying or tendering to
Lessor on. or before the expiration of the fifth year of
this lease the sum of Ninety -eight and No /100 Dollars
($98.00) per net mineral acre for all or part of the land
which Lessee elects to continue to hold hereunder,
provided, however, that if Lessee fails to drill a
producing oil well within the first year of the extended
term, this lease shall terminate; provided further that
Lessee may delay such termination for one additional year
by the payment to Lessor the sum of $1.00 per net mineral
acre on or before the end of said first year and may delay
such termination from year to year until the end of the
extended term by the payment of a like sum on or before the
end of each succeeding extended year. In the event that the
12
oq GigsAsd suins AgTsAoa wnuirurui 'Tv Ions AqTpAoa urnwrTuTW
piss prsd uaaq ssLi .1ossa2 'poiaad Tsnuus Jus 1o3 'qou ao
aallagM aururaagap TI Ts 'LiprMaaag1 pazTgTun zo paTood pup'
pus assaT sILil iq paaanoa pusT aT4 uo palsooT sTTaM TTs
uroa3 paurslgo SP gsaaaaur IgTsI oa s ,aossar oq aTgsgnqTaqqs
spaaooad uorgonpoad TTs pus sTsquaa TTaM uT -gnus TTs 3
qunours ags6aa66s aLiq gpgq poogsaapun sr qr '9Aogs pagsorpui
sy •uoTTsururaaq cans quaAaad IOU 'CsTap qou TTsus Lidsa6sasd
sTq uT 1o3 paprnoad wins AgTsAoa urnurrurwr 3o quauiAsd
Ggq 'assaT STLil 30 SUOTSInoad aaggo aLiq aapun 'gasd uT
ao aToLiM uT 'uoigsururaaq oq goaCgns ao pagsuTwraaq aq TTsus
assaT sTgq aanauaLiM TsLiq paaa6s sr iI •sTSSq a6saaos us
uo pauorgaodds aq oq aapunaaau aTgsisd urns AgTsAoa wrnuriuTUl
aqq 3o gasd sqr ao sru JO3 aTgisuodsaa act TTsus aassaq
gong 'igaaGg paaanoo pusT Ggq. 30 uoigaod s of SP assaT
sTql 3o quauru6Tsss AUP 30 quaAa aLiq uI asaA 6u3paaoons
ao 5uipeoaad ius 1o3 .1088G oq anp aouaaa33rp AUP do aNsur
oq paTTdds aq qou TTsus ssaoxa Lions 'urns AgTsJoa urnwrTuTwr
piss usgq aagsaa6 urns s (Tsquaa TTaM uT -111us 6urpnIouT)
1gTs1oa ags6aa56s aLiq uroa3 aapunaaGg aAraoaa
'aoa33a uT sr assaT sTgq uoTgM uT poTaad Tsnuus ius 5uranp
'aossa7 1uana auq uI •poraad Tsnuus a TgsorTdds aLiq 3o pua
Ggq aag3s sAsp (09) A XTS uTLilTM aossaT oq prsd aq TTsus
wins AgTsAoa urnuriurwr prss pus poiaad aTgsorTdds aLiq- 5uianp
aoss3Z oq
all uGgq
5uiaq urns
x-S 'T3Td
aad 00'0i$
Tsnuus„ a1q pGITso aag3suTaaau 6uraq 3oaaGg asaA gosa
ao3 aurrq 3o poiaad urns uasa) aag3saaGgq iTTsnuus pus us5aq
1sar3 uoTlonpoad TsaauTur Lions uoTgM uT Liluour at1 6 uTMOTTO3
g uour auq 3o App 1saT3 aLiq uo 6uTouawrwroo poTaad Tsnuus AUP
103 assaT s1Li1 o3 1usnsand sGT1TsAoa 3r JsLq paaa6s sr qr
'LilTMaaauf pazigrun ao paTood pusT uroa3 ao igaaaq paaaA0
pusT aLiq 11013 STsaaurw 30 u0TWnpoad Aq pauis1ursur 6uraq
sr assaT sT4; UegM 'iLasa1uoo all oq assaI sTgq uT pauTsluoo
aq Jsw 1 T1 6uTggAus 6urpusgsufTM1oN 'OZ
•paardxa psu assaT aaT1ua aT1 3T upgq suorsTAoad pus spusT
prss o1 SP aossa7 0q gg6ra aagsaa5 ou 14 TM qnq 'papuagxa
Iou spusT all oq JTdds oq anuiluoo TTsus 3oaa3Li LT pus
ZT 'TT '6 sudsa6sasd 3o suorsinoad aTgsorTdds 'uTaaaq
palToaa a6saaos a1g 3o 1asd )Too ao3 papuagxa sT assaT
69
prsd
'(„urns
lions)
os 1unours Tsgoq aLiq uaaMgaq aouaaa33rp
A1TsAoa wrntururur„ aqq paTTso aag3suiaaaq
(00'009's) sasTT 00T /ou pus paapunH
'•a•i 'assaT s1Li1 UII41TM pauis1uoo aaos qau
1ssaT Js 3o urns a41 o1 Iunours Iou op „poraad
ttiOL9S0
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08670ilet
69
Lessor hereunder shall be subject to the proportionate
reduction provisions contained in Paragraph 18 hereof.
21. Should Lessee be prevented from complying
with any express or implied covenant of this lease, from
conducting drilling or reworking operations thereon or from
producing oil or gas therefrom by reason of fire, flood,
storm, or other Act of God, governmental law, order or
regulation, labor disputes, war or inability to secure men,
materials, permit(s) or transportation or any other cause
beyond the control of Lessee, then while so prevented,
Lessee's obligation to comply with such covenant shall be
suspended, and Lessee shall not be liable in damages for
failure to comply therewith, and this lease shall be
extended while and so long as Lessee is prevented by any
such cause from conducting drilling or reworking operations
on or from producing oil or gas from the lease premises or
land pooled or unitized therewith; and the time while
Lessee is so prevented shall not be counted against Lessee,
anything in this lease to the contrary notwithstanding.
Provided, however, the provisions of this paragraph shall
be limited to a period not to exceed three years.
22. Should Lessee elect not to place this lease
of record, Lessor agrees, upon request of Lessee, to
execute a Memorandum of lease indicating the parties
hereto, the legal description hereof, a description of the
estate demised hereunder, and the term hereof, in
sufficient form to be placed of record; Lessee's election
to request such, a Memorandum shall not prohibit Lessee from
later placing this lease of record, should it determine to
do so.
IN WITNESS WHEREOF, the parties hereto have set
their hands the day and year first above written.
ATTEST:
Secretary
Susan Taliafe ro Hehr, Lessor
Baseline Mineral Inc. a
Col. ad• Corpor t ".n, Lessee
By
14
ames, Pr- sident
69
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