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Home My WebLink About8670453 6 7 q O I i, N D GA A' 1. ;.T i d t r; a ti :tt MERE ti, WYOMING Agreement made and entered into this /3 day of Gi 2000, by and between William R. T liaferro, a single person, whose mailin g address is 106 Cedar, Rock Springs, Wyoming 82901, hereinafter called Lessor, and Baseline Minerals, Inc.,, a Colorado Corporation, duly qualified to do business in the State of Wyoming, the address of which for the purposes of this Agreement is 1645 Court Place, Suite 422, Denver, Colorado, 80202, hereinafter called Lessee; RECEIVED WITNESSETH: DZSt7K 448 Ply PAGE 6 9 1. Lessor, for and in consideration of $10.00 and more cash and other good and valuable consideration, in hand paid, the receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the Lessee to be paid, kept and performed, has granted, demised, leased and let and by these presents does grant, demise, lease and let exclusively unto said Lessee, with the exclusive right of mining, exploring by geophysical and other methods and operating for and producing therefrom oil and all gas of whatsoever nature or kind and to produce, save, market and take care of said products, without warranty of any nature whatsoever, all that certain tract or those certain tracts of land situate in the County of Lincoln, State of Wyoming, described as follows, to wit: In Township 23 North, Range 115 West, 6th P. M.: Section 27: NE /4NE /4. Section 33: SE /4SE /4. Section 34: S /2S/2. Section 35: SW /4NE /4; SE /4NW /4; SW /4; W /2SE /4. Containing 560.00 net mineral acres, more or less. 2. This lease shall remain in force for a term of Five (5) years from the date hereof and as long aossar oq reed TTegs aassaT pue :aanaosgegM Jsoo aaufo roue JO 'iaNaew ao; TTo aqq 6uTaedaad asTMaaupo ao '6uTssaadwoo '6uiTeaaq 'buTgeapigap '6uTgeaedas '6uTqaNaew '6uTaagTe6 go gsoo AUP 'S SOD uOT21.0npoad 'uOTgegTwTT gno1J TM 'buipnTouT 'AgTeAoa lions oq aTgegnqTaqqe saxeq gdaoxa 'aanaosgegM gsoo AUP aog uoTgonpaa gnoggTM 'ss{uel a6eaois oquT ao auTTadTd aqq oquT una sT TTo eons App aqq uo paonpoad aaagM pTaT; uT buTTTenaad AgTneab pue apeab aNTT Jo TTo aog aoTad gaNaew go (%L9 ggxTs -auo oq Tenba qunowe UP pueT pTes woa; paonpoad TTo AUP ao; 'Aqi Joa se aossaZ o� Ied TTegs aassaZ 'goaaaq uoTgeaapTsuoo uI •E °spuwT pTes go gaed P ao TTe sapnTouT goTgM Tun' eons .Cue woag ao sasTwaad paseaT aqq woa; paonpoad sT se6 ao TTo se aaggeaaagq 6uoT as aoaog uT anuTquoo TTeus aseaT sTgn 'aseaT sTgq. go waaq. auq go uoTTeaTdxa aqq aag4e ao qe pa3{aoMaa ao paTTTap 6uTaq 'paTTTap sTTaM ao TTaM eons Iue woag paonpoad pup paaanoosTp aq TTegs se6 ao TTo 3I 'TT GM aag4oue go 6UT7{1OMaa ao 6uTTTTap aqq aog suoTTeaado jo 6uTuuTbaq auq. pup TTaM auo go quawuopuege JO uoTlaTdwoo auk uaaMgaq asdeTa TTegs step (08T) Agg6TH pue paapunH aup uegq aaow qou gT pagnoasoad ATsnonuTquoo aq 01 paaapisuoo aq TTeus SuoTqeaado 6uTNaoMaa ao 6uTTTTap pua :pueT pTes go gaed e ao TTe sapnTouT goTLM fTun 6uTieaado ao quawdoTanap ao 6uTTTTap e uo ao pueT pTes uo pagnoasoad JCTsnonuTnuoo 6uTaq aae SUOTTeaado 6uTNao1aa ao 6uTTTTap SP aaggeaaauq 6uoT OS ao1O; uT anuTquoo TTegs aseaT sTIf uagq. 'uoaaaqq. suoTgeaado 6uTNaoMaa ao 6uTTTTap uT pa6p6ua uagi sT aassaZ qnq 'sasTwaad pazt4Tun ao paTood pTes ao pueT pies wo1J ao uo paonpoad 6uTaq you sT se6 ao TTo 'aseaT STgf JO waaq. JC1PUTad a1{ go uoTieaTdxa 'gI aapunaaaq VTne ;ap uT qou sT aassaZ 3T waaq JaewTad aqi go uoT ;eaTdxa aqf TTqun aJeuTwaa4 qou TTegs (waaq AaewTad agq. UTT4TM aq 'IT TT) 10 'aaq ;Paaagq s1Cep (o8T) igg paapunH aup UTL TM SUOTTeaado £UTNaoMaa ao 6 uTTTTap TPUOT1TPpe saouawwoo aassaZ jT aleuiwaaq qou TTegs aseaT ST14.1 'asneo ILIe aoJ aseao pTnogs saTgTquenb 6uTIed uT uoTgonpoad 'se6 ao TTo go AaanoosTp aaq ;e gT ao 'uoaaagq saTog ao aToq JCap e TITIP TTPLIs aassaZ 'aaq ;euTaaaq papTnoad SP gDTMaaagq pezTgTun ao paTood aFeaaoe uo ao 'pueT pTes uo se6 10 TTo go JaanoosTp oq aoTad gi aaq ;euTaaaq papTnoad Se panuTquoo aae suoTTeaado buTTTTap ao 1ag4eUTaaa11 papTnoad Se InTMaaagf pazTgTun ao paTood sasTwaad woag ao pueT pTes woaj paonpoad sT wagf go aaggTa ao ggoq ao 'pup{ ao aan3eu aanaosgegM go se6 ao 'TTo Se aaggeaaagq X 69 5t1049S0 086'704 for gas of whatsoever nature or kind produced and sold or used on the leased premises, or used in the manufacture of any products therefrom an amount equal to one -sixth (16.67 of the market price for gas prevailing in the field, where produced, on the day such gas leaves the well to be sold, used on or off the leased premises, or in the manufacture of products therefrom, without reduction for any cost whatsoever, except taxes attributable to such royalty, from such gross proceeds, including, without limitation, production costs, any cost of gathering, marketing, separating, dehydration, treating, compressing, sweetening or otherwise preparing the gas for market, or any other cost whatsoever. In the event gas from a well producing gas is not sold or used, Lessee may pay a shut -in rental payment in lieu of royalty, subject to the following conditions: a. If the shut -in occurs and continues from completion of the well, such that no royalty payment has ever been paid on such well's 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 the shut -in of such well, and such shut -in rentals in lieu of royalty shall be paid, in advance, as follows, it being provided, however, that the first such rental shall be paid on or before the anniversary date next ensuing after the expiration of Ninety (90) days from the date the well is shut -in: (i) $1.25 per net mineral acre per month of the first year of such shut -in (this equals $15.00 per year); (ii) $1.67 per net mineral acre per month of the second year of such shut -in (this equals $20.04 per year); and (iii)$2.09 per net mineral acre per month of the third year of such shut -in (this equals $25.08 per year). b. If the shut -in occurs after royalty payments on production have been made (i.e., such 3 69 siq; 6uTpaoaad ATagpzpawwT gdpa6papdgns au; uT pagzaosap poTaad auq puoeiaq sanuTquoo uT -gnus auk Jo waa4 31 41 ;I (AT) pup 'gdpa6pasdgns szq aapun pzpd qunowp auk .zossa7 o; squawApd A3Tplioa uoT onpoad s ;T woaq pTouuIIM oq qu6Ta auq 9A 4 TTpus aassaZ 'poTaad Liluow aATaM4 6uTnsua auq 6uzanp paouawwooaa aq uoTwnpoad pTnous 'aanaMOq 'papTAoad :aspaT agq go saaop TpaauTw lau au; Aq paTidzlinw 00'SZ$ oq Tpnba ;unowp up .zossa7' iipd 'aq.pp uozgpnuT uoo auq go sxpp (0£) Agazgy uzLiDTM 'TTpus aassaZ 'gdpa6papdgns stgq 6uzpaoaad JTaTeTpawwT gdpa6papdgns et uT pagzaosap poTaad auq puoeiaq sanuzquoo uT ;nqs au; jo waa; 3I (TTT) pup :Lidpa6papdgns szq; aapun pzpd ;unowp au; aossar oq quawApd AgTprioa uoz ;onpoad sqT woaj pToggq o; Tu5ta au; anpu TTpgs aassaZ 'poTaad q uow aATaM; 6uTnsua au; 6uTanp paouawwooaa aq uoTganpoad pTnous 'aanaMOLi 'papznoad !aspaT au; go saaop TpaauTw Jau auq Aq paTTdT Tnw 00 "oZ$ oq Tpnba qunowp up aossaq ripd 'agpp uoT pnuzwoo aq4 go sripp (OE) A4aTLiS uzugTM 'TT pus aassaZ 'gdpa6papdgns sTq; 6uzpaaaad JiTaTeTpawwT gdpa6papdgns uT pagTaosap poTaad au; puoriaq sanuTquoo uT ;nqs 9u4 ;I (TT) 'aspaT aL{ Jo saaop TpaauTw qau iiq paTTdz4Tnw 00 °ST$ 04 Tpnba qunowp up 'poTaad lions go pua au; aossaq o; ripd TTpus aassaZ 'sq ;uow anzgnoasuoo anTaM; go poTaad P aoj sanuzwoo uT ;nqs au; gI (z) sMOTTOJ SP pTpd aq TTpus A;TpAoa 4 nazT uT sTpquaa Liz -gnus Lions pup 'TTati Lions go uT-gnus uozgonpoad go uoT dnaaaquT go agpp au; woa; sapaA aaagq upgq aaow go poTaad p aoj ;oagja Liz aspaT sTLT UT uTpw qou jipw TTaM Lions uo ii ;TpAoa go nazi uT Tpwaa uT -gnus eons go quauiiipd aq; '(uozlonpoad go uoT dnaaa ;uT up ST Liz -gngs 369 S't701.9S0 086'7045 subparagraph, this lease shall immediately terminate. 4. If operations for the drilling of a well for oil or gas are not commenced or if there is no oil and gas being produced on said land or on acreage pooled or unitized therewith as hereinafter provided on or before five years from the date hereof, this lease shall terminate as to both parties. 5. 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 land described herein and as to any one or more of the formations hereunder 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 a declaration of such Unitization or reformation, which declaration shall describe the unit. Any unit may include land upon which a well has theretofore been completed, or upon which operations for drilling have theretofore been commenced, or land where the drilling of a well is planned for in the near future. Production, drilling or reworking operations anywhere on a unit which includes all or a part of this lease shall be treated as if it were production, drilling or reworking 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 the 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 above described land as to one or more of the formations thereunder with other land in the same 5 69� GDPJJIIS cans iq pauMO spup' TTp pup Aup saanoo quawaa16p °paUT UTpw asi!aagfo 5uzaq qou pup sgTun ao gTun eons Aup uT papnTouT qou saaop TpaauTw qau go aagwnu agq. oq iTagpuoTgaodoad paonpaa aq TTpgs sTpquaa 'squawkpd Tpquaa Aq aq qT JT 1E141 papTAoad '10j papTAoad UTaaag aauupw AUP UT lOGUTPqUTPW aq APW aSpaT spgq 'sgTun ao gTUn lions iue uT papn'ouT qou pup Agaaag paaaAoo spupT oq SP pup 'sgTun ao stun gone i U uT papnTout utaaag pagTaasap pupT agq go uoTgaod ipgq oq Sp ATuo aoao3 uT aspaT sTgf uzpquTpw TTpgs uzaaag pagTaosap spupT agq go gapd ao Tip 5uzaanoo pup goaaag suoTsTAoad agq ggTM aouppaooap uT pawao; sgTun ao gTun iup woag uoT Ionpoad to uo suoTTpaado SuliTTIQ •TTPAaad TTpgs aspai stgq Jo Jpoq agq uT suoTsTAoad pup swam agq 'aspaT sTgq go Apoq agq uT pauzpquoo SUOTSInoad ao swaaq iup gl 1.uaqszsuoouT GIP uoT1paado ao gUawdoTaAap 3o UPTd gTun ao aATTeaadooa lions go SUOTSTnoad pup swam agq gT Tern apTAoad 'Tugs aossar )1q u0i qPDTJTqPI Bons AUP gpgq papTAoad aaseaZ go gsanbaa uodn awes agq 5uTgnoaxa iq Jouabp Tpquawuaano5 AUP Aq panoaddp pup aassar Aq pagdopp uoTgpaado ao quawdoTanap go upTd gTun ao aATTeaadooa AUP oq quasuoo s,aossaq ssaadxa 1 TT awao3 TTpgs aossa7 •pagpooTTp os Sp iTuo uoTgonpoad uodn paspq aq TTpgs aossari oq aapunaaag appw aq oq squawipd AgTpAoa agq pup 'pup' go gopac aagfo .pup oq qou pup pagpooTTp eT qT goTgm oq pupT go gopa4 ap'noTgapd agq woag paonpoad uaaq 5uznpg Sp papapEaa aq 'aossaZ oq aapunaaag ptpd aq o, igTpioa agq 5uTgndwoo go asodand agq ao; 'TTpgs pupT go gopaq apTnoTJapd AUP oq pagpooTTp uoTgonpoad @tn. uagq 'upTd paps Aq paaanoo pup' agq. go suoTgaod 4uaaaggTp oq pagpooTTp sT woagaaagq uoTlonpoad agq JgaaagM uozgpaado ao 'quawdoTanap go upTd faun ao aATgpaad000 Lions Jup aapun palpaado aq aaggpaaaq TTpgs goaaago, gapd Aup ao pupT pagTaosap anogp pips Tegq que e agq uI •TTpAaad TTpgs aspaT sTgq go Jpoq agq uT suoTsTAoad pup swaaq agq 'aspaT sTql go Apoq agq uT pauT uoo suoTsTAoad JO swaaq Jup glTm qua ?sTsuoouz GIP uoTTeaado ao quawdoTaAap go upTd gTun JO aATgpaad000 Lions go suoTsTAoad pup swaaq agq gT gpgq. 'aanamoq 'papTAoad "uawaaa &p ao upTd gone 1CUP agpuzwaaq ao abupgo 'AjTpow ol 'Tpnoaddp uoTgpaado ao quawdoTaAap go upTd TTUn JO aATTeaad000 p out 5uTaaqua iq paap Tpaaua5 9 go'Lim uTa194 pegzaosep spuPT sql ;o aq-pgsa go aaumo all ggtm quawaaa&p s,aaumo aopgans P anpg TTpgs GGSSGrl TTqun pup ssaTun aspa' sTgf Aq paouawwoo aq TTpgs saTTTATgop aDPJans ON Y 1049€ 0 aopgans agq oquT paaaqua aapun aassaq °9 08€0045 7 701 owner and which overlie any mineral estate whatsoever leased in whole or in part by Lessee, whether such mineral estate is severed from such surface estate or not, and even if such surface estate is not described herein; provided, however, that if Lessee shall provide evidence to Lessor that the Lessee has in good faith attempted to enter into a surface owner's agreement with such owner of the surface estate and has been unable to reach agreement with such surface owner, Lessor, upon the written request of Lessee, may consent to waiver of this provision, which consent shall not be unreasonably withheld. 7. No well drilled by Lessee hereunder shall be abandoned by Lessee until Lessee has given written notice to Lessor of Lessee's intention to abandon and has given Lessor an opportunity to acquire and assume responsibility and liability and acquire any bonding required by the State of Wyoming for the plugging and abandoning costs of such well. Should Lessor not respond within 30 days of said written notice or fail to assume said responsibility and liability or fail to provide proof of bonding in said 30 days, Lessee shall be entitled to abandon such well. 8. If requested in writing by Lessor during the term of this lease, Lessee shall fence all sump holes on the lands covered by this lease which have been caused by Lessee's operations. 9. Upon expiration or sooner termination of this lease, Lessee shall quietly and peaceably surrender possession of the premises to Lessor and shall deliver to Lessor a good and sufficient release of oil and gas lease so as to .effectively clear title to said premises from any interest of Lessee therein and Lessee shall fill all sump holes caused by Lessee's operations and restore the surface of the ground to its original condition, as nearly as possible. Lessee shall have the right for a period of One (1) year after the expiration of this lease to remove all property and fixtures placed by Lessee on said land, including the right to draw and remove all casing. Lessee may at any time or times execute and deliver to Lessor or place of record a release or releases covering any portion or portions and be relieved of all obligations as to the acreage surrendered and thereafter the rentals payable 8 uT ;nqs eons 'E gdsabpapd oq qusnsand igTpAoa uoT ;onpoad 3 naTT uT Tp ;uaa uT -gngs 3o quawAsd !q pauTp ;uTpw 6uTaq sT assaT aq; 'a pp tons aagjp ao uo 3T 'aaqlan3 papTnoad •aspaTaa uaq ;TaM pTps aossar' oq aaATTap pus agnoaxa TTags Gasser' Ga goTgM qp 'TTaM TpuT3 aqf 3o quawuopusgp ao uoTgaTdwoo aqq aaggp sApp (08T) ;gSTg pup paapunH aup 3o pua agq TTqun pus suoTgsaado but'TTap tons buianp goa33a pus aoao3 TTn3 uT UTpwaa TTpgs aspaT pips 'skpp (08T) ICgt6Td pus paapunH aup upgq aa6uoT ao3 uoTTessao Jus fl014TM ggTMaaagq pazTTTun ao paTood pupT ao assaT pTps 110 aoua6TTTp aTgpuossaa ggTM pus L Ts3 pooh uT suoTgpaado buTTTTap sgonpuoo ATsnonuTquoo ao 'TTaM buTpaoaad aql 3o quawuopupgp ao uoT ;GTdwoo ag; uioa3 sJpp (o8T) Lgg6Td pup paapunH aup uT4gTM Tram TpuoTTTpps us 3o 6uTTTTap ag; saouawwoo Gasser' 'sTTaM ao TTaM tons 3o quawuopupgs 10 uoTgaTdwoo aq aai3p '3T pus '9oua6TTtp GTgpuospaa qTTM pagnoasoad Gap sTTaM ao TTaM pips uo suoTgpaedo tons SP bu0T os aoao3 uT uTpwaa TTsgs assaT a1Tqua ag; pus pauodgsod aq 'Tpgs assaTaa tons 3o AaaATTap pus uonnoaxa aq; ao3 agpp aqf 'ggTMaaaq3 pazT ;Tun ao paTood spuPT uo ao sasTwaad assaT uo suoTJpaado 6uTNaomaa 10 6 uTT'Tap uT pabs6ua osTs sT Gasser' pus 'S gdsa6Pasd o; qusnsand apses uaaq anpq squawisd uT -gngs 3T ao 'uoT4onpoad aoupqua 10 aao1saa oq gao33a UP uT Z gdpa6pasd o; qusnsand uoaaagf pagonpuoo 6uTeq Gas suoT ;saado uoipaidwoo -aa ao 6UT){osagapTs '6uTuadaap '6uTNaomaa 'buT'ITIP 3T ao 'sasTwaad pazT ;Tun ao paTood pTss ao pup' piss woa3 ao uo paanpoad 6uTaq sT sP6 pus TTo a ;Pp tons ;s 3T Tpq; 'aanamoq 'papTnoad 'TTaM ss6 6uTonpoad gosa 6uTpunoaans aousaaTo; 9 ,501 snTd saaos 091 pus TTaM TTo SuTonpoad tope buTpunoaans aoupaaTol %0T snTd saaop 0 091 'TTaM assaT p sT TTam 6uTonpoad tons 3T ao sTTaM ao TTam tons ao3 pa ;paao 'MoTaq pauT3ap SP sari 6uT ;pdTOTgapd ao ;Tun paTood P uT uoTsnTouT Rq sTTaM ao TTam buTonpoad P oq pagsooTTP uaaq GAEL' goT4M sasTwaad assaT 3o uoTgaod gsgq. aapun pus uT paITTap ao buTonpoad uagl uoT ;swao3 gsadaap age 3o asst ag; moTaq ;aa3 00T 3o quaTpATnba oTgdsa6Tgsals age 'MOTaq qou qnq 'off umop aos3ans ag; woa3 sgg6Ta ss6 pup TTo YQ02iddN3HI IddDXd QNV HAYS Agaaag paaanoo pus' agq 3o up 3o aspaTaa ua ;TaM P aossar' o; aaATTap pup agnoaxe o; saaabp pup squsuanoo Gasser' '3oaaaq waaq iapwTad aqq 3o uoTgpaTdxa ag; aa33p apaA (T) aup 3o pua ate ;I* •0' •saspaTaa ao aspaTaa pTps )q paonpaa sT Agaaag paaanoo abpaaop aq; JO uoT ;aodoad uT paonpaa aq TTpgs aapunaaaq 9 shall however, obtained unitized 70: rental shall maintain the lease as to all acreage allocated to a producing well or wells and limited as to depth as hereinabove provided. "Pooled unit" or "participating area" shall be defined as that acreage included in an individual producing unit or producing area in which lessor is receiving his proportionate share of the revenue from all production from all wells in said pooled unit or participating area. 11. In the event the Lessor at any time considers that operations are not being conducted in compliance with this lease and that such constitutes a default or breach of any of the conditions herein contained to be kept on the part of the Lessee, Lessor may, at the election of Lessor, declare this oil and gas lease terminated and said oil and gas lease shall thereafter be null and void and of no further force and effect, provided, however, anything herein contained to the contrary notwithstanding, Lessor shall not exercise such termination, unless and until the Lessor shall have given the Lessee written notice, by certified mail, of the facts relied upon as constituting such default or breach, and unless the Lessee shall have failed to commence any operations that are then legally necessary to remedy such default or breach within a period of Sixty (60) days after the mailing of such notice, it being intended that service of said notice and the lapse of Sixty (60) days without Lessee's meeting or commencing to meet the alleged breaches shall be a condition precedent to any action by Lessor for any cause hereunder, and provided further, that any indemnification provision hereunder termination. It is provided, production of oil and gas has been covered hereby or on land pooled or with any part hereof), this lease shall not forfeiture or loss, insofar only as it included in a pooled unit or participating area as defined in Paragraph 10 above or, if the producing well is classified as a lease well, 160.0 acres plus 10% tolerance surrounding each producing oil well and 160.0 acres plus 10% tolerance surrounding each producing gas well, for the failure to comply with the express or implied obligations of this lease except after final judicial ascertainment of such failure and Lessee has been given a period of Sixty (60) days after such final judicial ascertainment to survive such that after from the land therewith (or be subject to covers lands OT 'nun aassaq uo 6urpurq aq TTPgs ssaappP szgq uT a5upgo ON '10628 buTwoAM 'sbuzads xooI 'gaaags appaD 901 JP JOSSaq o� aTgpApd aq TTaus aspal sTgq. aapun anp s uawipd aaggo pup slpquaa 'saTgTaJo.t ITV °6uTgTaM uT Agapd agTsoddo alp. go uor oT;z 4ou Aq aspaT spb pup 'To szg go sasodand agq ao; pabupgo aq Rpw sassaappp anogp age. TTPw )q uaAT6 aoTgou SP goaJJa awes alp anpg Tlpus aoTgou uaggTaM gone 3o Aaantlap Ipuosaad osatgapd agTsoddo agq go aaow ao auo AUP 0 paTTpw pup squa6P aTagq ao saTgapd 6UTAgTgou alp go aaow ao aU0 iUP Aq pauBTs ua4M aspal spb pup Izo sTIf go swaaq alp utgliM quazoTggns aq TIPgs saoTgou TIP :aozggo sod sagPqs pagtun age uT pagTsodap sT aoTgou auk uoTuM uo agpp agq aq ITPus aDTAJas eons go agpp agq 'sassaappp anogp agq qP aassaq ao aossaq aq 0 passaappp 'ITPw segP1S pagTUn paTJTgaao Aq quas uagi uaAT6 ATaadoad uaaq aiPg o pawaap aq TIPgs uTaaag pa nTuwaad ao paaTnbaa saoTgou TIP 'paptnoad asiMaagfo uTeaag aq iPw SP jdaoxs •tI •4o 4Ja puP aoaog TTng uT UtPwaa pup anuTquoo TT Pus aUPS agq qnq 'a6a1TATad ao gg6Ta 'uoTSTAoad 'uorTrpuoo tjons AUP 6uTATPM aaggpaaagq SP panagsuoo aq you TTPus 'paaaajuoo uzaaau a6a11AT1d JO gubza AUP astoaaxa oq ao aspaT spb pup Izo szq go suoTsTAoad ao suoTgTpuoo at go AUP Jo aouPwaogaad aq uodn 'aaow ao aDUPq.SUT auo iUP uT '1STSUT 0 aaSSaq ao aossaq aaglTa go aanTTp; agq 'uozltpuoo PIPS go sagoPaaq ao goPaaq aangn; AUP anTPM oa pawaap aq ao agPaado you TT PTS pup aouPgsuT a2TnoTqapd alp oq pa1rwTT aq IIPgs aspaT spb puP Tro stgq. go uo JO UOT T uoo AUP Jo goPaaq AUP go aassaq ao aossaq aagfza Aq aaATPM '£T •aouPwao ;aad pup uoTgpgaadaaqu-r oq SP ggoq 'buzwoJM go agpgs aq go sMPI agq Aq pauaanob aq ITPus aspaT szpq �pg� paaabp puP pooisaapun AIIPngnw sT qT pup !6uTwo4M go agPgs auf go sganoo agq uT XTuo pagn 4Tgsuz aq ITPus asPaT spb puP IT0 'szgq go gopaaq Aaana pup AUP aoj sgTns TIP puP JUP gPg aaa6P saT aPd age aassaq Aq 3oaaag goPaaq JUP aog abpwpp AUP J0 AI A0Daa agq uT paaanou-r JO aaSSaq �suTP &P asPaT sign go uotgaod AUP Jo gUawao1OJUa Ogg UT aossaq Aq paaanou-r 'saa; s,Aauao 4 4p aTgPUOSPaa 6UTpnlouz 'sasuadxa pup sgsoo algpuospaa TIP APd IT Pus aassaq 'Z1 •gTnPjap uT aq pauzwaagap ATIPZOZpnc uaaq spq aassaq goTLM 0 SP uoT :P6TTgo age bur6aPuosTp puP q TM 6uTATdwoo )q aangtagaoj ao ssoT gone quanaad 0 2. 1 1 0867045 70' 30 days after Lessee has received notice of such change as herein provided. 15. The rights of Lessor and Lessee hereunder may be assigned in whole or in part. No changes in ownership of Lessor's interest (by assignment or otherwise) 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 and Lessee may continue to make payments precisely as if no change had occurred. No present or future division of Lessor's ownership as to different portions or parcels of said land shall operate to enlarge the obligations or diminish the right of Lessee and Lessee's operations may be conducted without regard to any such division. 16. Lessee shall keep accurate written books and records of all oil and gas removed, used or sold by Lessee hereunder, including books and records showing the basis on which royalty payments are made to Lessor. Lessor shall have the right hereunder to employ accountants, engineers and other professionals necessary for the purpose of verifying performance by Lessee hereunder, and Lessee agrees that such professionals employed by Lessor for such purposes shall have access to the premises and to the records of Lessee necessary for such verification, at Lessor's risk and without liability to Lessee, at all reasonable times and upon reasonable notice in writing to Lessee, for the purpose of making such verification; and Lessee shall furnish all reasonable assistance that may be required in such verification; and such verification audit shall be limited to the 36 months preceding the date of the audit and such audits shall not be conducted more frequently than once each calendar year; in the event that any such verification inspection shall reveal that the total payments actually made to lessor by Lessee hereunder is less than Eighty Percent (80 of the total payments which should have been made hereunder, Lessee shall, immediately upon demand reimburse Lessor the reasonable expenses to Lessor for such professionals for such inspection and for any enforcement hereof resulting agq Telp quana aL4 uI °x2aA papuagxa 6utpaaoons uD 3 ;o pua ago axo;aq JO uo mns GNTT P go quGmApd agq )q w.za1 papuagxa a4-. ;o pua agq Ttqun xpaJ oq xsai mo1J uot4PuTmxa4 eons APTap A u puP xpaJ sit pies ;o pua au axo;aq .zo uo at Tpaautu iau xad 00'T$ go inns aq4 xossaq 0 quamAsd auq Aq xpaJ Tauot1TppP aUO xog uoTTeuTmxaq cans iPZap .hem aassaq gPilq i q tng papTAoxd :agputmxaq Treys assaT sT114 'uxa4 papuagxa eq go apGA gsxt; auq uTUD.TM TTaM TTo 6utonpoxd TIT o; sits; aassaq ;t Teuq 'xaAaMOT 'paptAoxd 'xapunaxau pTou 04 anuTquoo 0 s4oaTa aassaq IDTTM pupT aui ;o qi d xo TTp xoj Gaps Tpxautm 4au xad (00'86$) sxsTToa 00T /oN puP 4g6Ta- AgauTN 4o uns agq assaT sTUf 30 aPai u -4.;t; atiq jo uot4axtdx9 auq axogaq xo 'uo aossG7 o 6utxapua4 xo BuTApd iq S1P9i (0T) uaa, oq sxiaA 3ATd wax; assaT auk 3o mxai AapmTad a44 puagxa 0 uoT4do pup 41.16Tx au4 aassaq oq squsx6 Agaxau xossaq '61 °auras aoxo ;ua oq 446tx agq I.IlTM u cans o; pagp6oxgns aq TTpgs pus xapunaxau 6utnxaa2 saT4TpAox 1CUP mox3 asxngmtax JPu pup UOT PDTpfCps JO @TVS XPq AUP qp xassgoxnd AUP uoa; @MPS auq. maapax Aem xo 'pup' pips uodn uaTT xa14 xo a6 &64xom 'x e4 AUP gxxd uT xo 3ToTM uT a6xauostp xo as2uaxnd iPu uoT4do sqT qp aassaq 'ATTPuotixodoxd paonpax aq TTeus xossaq pied aq o4 sTaquax pup saT4TPiCox auq 'utaxau4 4saxa4uT xassaT P SUMO xossaq 3T pue saoupgsgns paspaT auq uT as egsa a1Tqua eqj 04 gaadsax q4TM pautmxagap @JP paptnoxd anogputaxaq sTuquax pus saT4T2Iox aus '8T 'pa1T; xo 44Enoxq .lTTn ;6uo1M xo ATTng 4116T.z ax L' SUOTgOP xo smTPTD Mans xaugaLM 'xapunaxau suot4Pxado pup saT4TAT4DP s,aassaT wax; 6uT4Tnsax xo oq Jaadsax uVTM xossag gsuTp6s paTTg SUOTqas JO lg6noxq sutsTz AUP 4suTP6a puajap 04 saax6P xaufxng aassaq faapunaxat{ saT ITAI IoP puP suoTgPxado s,aassaq moxj astxs xo 4Tnsax 1Csm uaILiM 'Saa; S,A@UJOTTP aTgPUOSPGx pup s4soo gxnoa 6uTpnTaut 'axn�Pu xaAaos4s4M ;0 sasuadxa pup 91900 'spupuap 'sUTpT0 'a5euep 'ssoT 'AgTTTgPtT TIP puP AUP 1suts6& pup mox,; xossaq ssaTmxeg pTou pup AgTuwGpuT oq saax6P aassaq 'LT sgluom (98) XTS -A 1Ttjs 3o potxad s JO; assaT 9TU1 ;O uoT4putuxaq 3L1 puoAaq puagxa TTaus 4Tpnp 04 IuBTa pTpsaxoJP atIJ °Joaxa41 ssau1oaxxoo auq uoT1sanb xo 4sa1oxd 04 xossaq go 111611 agq aoTpnCaxd IOU TT2us assaT sTUI xapun 1uamk2d J1TPA01 ILL ;o aoup4daoov °mox ;axa141 ZT lease is extended for only part of the acreage recited herein, the applicable provisions of paragraphs 9, 11, 12 and 17 hereof shall continue to apply to the lands not extended, but with no greater right to Lessor as to said lands and provisions than if the entire lease had expired. 20. Notwithstanding anything that may be contained in this lease to the contrary, when this lease is being maintained by production of minerals from the land covered hereby or from land pooled or unitized therewith, it is agreed that if royalties pursuant to this lease for any annual period commencing on the first day of the month following the month in which such mineral production first began and annually thereafter (each such period of time for each year hereof being hereinafter called the "annual period do not amount to the sum of at least $10.00 per net acre contained within this lease, i.e., Fifty Six Hundred and no /100 Dollars ($5,600.00) (such sum being hereinafter called the "minimum royalty sum then the difference between the total amount so paid to Lessor during the applicable period and said minimum royalty sum shall be paid to lessor within Sixty (60) days after the end of the applicable annual period. In the event Lessor, during any annual period in which this lease is in effect, shall receive hereunder from the aggregate royalty (including shut -in well rental) a sum greater than said minimum royalty sum, such excess shall not be applied to make up any difference due to Lessor for any preceding or succeeding year. In the event of any assignment of this lease as to a portion of the land covered hereby, each Lessee shall be responsible for his or its part of the minimum royalty sum payable hereunder to be apportioned on an acreage basis. It is agreed that whenever this lease shall be terminated or subject to termination, in whole or in part, under the other provisions of this lease, the payment of minimum royalty sum provided for in this paragraph shall not delay nor prevent such termination. As indicated above, it is understood that the aggregate amount of all shut -in well rentals and all production proceeds attributable to Lessor's royalty interest, as obtained from all wells located on the land covered by this lease and land pooled or unitized therewith, shall determine whether or not, for any annual period, Lessor has been paid said minimum royalty sum. All minimum royalty sums payable to 13 086`045 70 quapTsa.zd 'seuegs Pfini aassaq ge.todaop P ouI sTeaauTN aossaq 'oa ,70e W O Zoj TTespg 'c3�eTj� •I ureTTITM AEI Aae- a.toaS '7151 ,zM anoge gsaT; JPGA pup yep auq spueu aTauq has aAet.1 oiaaau saTgaed auq 3OE?1 HM SSHNJ IM NI os op oq auTui.zagap pi noes 'p.zooai go aseaT sTgq 6uToaId .IaTeZ woaj aassaq gTgTtqo.d qou TTegs tunpuPxouiaw e eons gsanbaI oq uoTqoaTa s,aassaq :piooa.z Jo papeTd aq oq w,zo; quaToT ;ins uT ;oa/eu waaq auq pup 'aapunaaaq pasTwap ageqsa alp go uoTgdTaosap e 'goaaaq uoTgdT.zosap Te6aT auq 'oga.Iaq saTgaed aul 6uTgeoTpuT aseaT go wnpue.zowaw p agnoaxa oq 'aassaq go gsanba.1 uodn 'saa.z5e iossaq 'p.00aa go asea sTgq ape oq qou qoaTa aassaq pTnogs ZZ sipaJ aaatgq paaoxa of qou poTaad e oq pagTuiTT aq TTeus gde.16PIpd sTgq go suoTsTno.Id auq '1anaMOt4 'papTAo1d •6uTpuegsq Tmiou Aapaquoo auq oq aseaT STtfl UT 6UTL AUP 'aassaq gsuTe6e paqunoo aq jou T eqs paquana.td os sT aassaq aTTUM awTl atfl pup 'ufTMa.zatp pazTgTun .zo paZood pueT .xo sasTwaad aseaT auq wo.zg se6 JO ITO 6uTonpo.Id wo.J .zo uo suoTleiado 6uT3{ioMaz .zo 6uTTTT.zp 6uTgonpuoo wo.zq asneo eons .due iq paquanaad sT aassaq SP 6uoT os pup aTTUM papuagxa aq TZeus aSP sTgn pue 'ggTMaaaqq. JTdwoo oq aanTTeg .zo; sa6ewep uT atgwTZ aq qou TTegs aassaq pup 'papuadsns aq Tjegs queuanoo tons LVEM k dwoo oq uoTge6TTgo s,aassaq 'paquanaad os aTTuM uatgq 'aassaq go To.Iquoo auq puoAaq asneo aatflo AUP JO uoTTeg1odsueiq .IO (s) gTwaad 'sIeTiaTpw 'uaw aanoas oq igTlTgeuT .zo 12M 'sagndsTp .zogPT 'uoT.PTn5a1 10 1apao 'MWZ Tequawuaan.o6 'pop go qoy 1aggo to 'w.zogs 'pooTg 'a go uosea.z i.q wo1 ;aaauf se6 JO TTo 6uTonpoad wo.z; .zo uoaaau1 suoTTeaado 6uTNaoMa1 10 6uTTZT1p 6uTgonpuoo woag 'asea{ sTLiq go 4upuan00 paTTdwT .zo ssaidxa Aup ulTM buTATdwoo woag paquanaad aq aassaq pinogS 'TZ goaaau 81 udel6eled UT pauTpWoo suoTSTnoad uoTgonpaa ageuoTgaodoad auq oq qoa Cgns aq ZTpus 1apunaaau 1ossaq The State of Wyoming ss. County of Sweetwater The foregoing instrument was acknowledged before me by William R. Taliaferro this !V"--. day of 2000. me My Commission Expires: 1' t�`�� The State of Colorado ss. County of Denver The foregoing instrument was acknowledged before by Joseph W. Thames, President of Baseline Minerals, this #5/ of c knmi'sion Witness my hand and official seal. ,Witness my hand and official seal. J .it„ Notary Public Expires: i J 1 kilo/ft,/ trA 15 0 'i COUNTY OF SWEETWATER 70` Notary Public TERESA NOBLE NOTARY PUBLIC MY COMMISSION EXPIRES JULY 18, 2002 STATE OF WYOMING