HomeMy WebLinkAbout887285PRODUCERS 88-PAID UP
Rev. No. I(BAS) ~"2 ?~'J LINCOLn,, COLt~ITy CLERK
OIL G~ LEASE 03
This Oil and Gas Lease ("Lease") is made this 7th day of January 2003, by and between Michael L. Girany, a single!fi]hi]'', ,~tlbg(~'address is';727 Riverside. Way,
Reno, NV 89503, ("Lessor", whether one or more) and Baseline Minerals, Inc., whose address is 1645 Court Place, Suite 422, Denver, co 80202}'(Lessee).
WITNESSETH, For and Consideration of TEN DOLLARS, the covenants and agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Lessor does hereby grant, demise, lease and let exclusively unto sa d 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, and laying
pipelines, telephone and telegraph ines, bui ding tanks, plants, power stations, roadways and structures thereon to produce, save and take care of said products, 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 Lincoln
County, Wyoming described to wit:
Township 22 North, Range 114 West, 6~h P.M.
Section 6: SESW
Section 7: Lots I (38.25), 2 (38.29), NENW
Section 8: NENW
BOOK '~-!-~__pR PAGE~
and containing 196.54 acres, more or less (the "Premises").
1. It is agreed that this Lease shall remain in full force for a term of 5 (five) years from this date ("Primary Term") and as long thereafter as oil or gas of
whatsoever nature or kind is produced from the Premises or on acreage pooled or unitized therewith, or operations are continued as hereinafter provided. 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 or
reworking 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 one hundred eighty (180) 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 or reworking operations within one hundred
eighty (180) 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 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 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. Lessee covenants and agrees to pay royalty to Lessor as follows:
(a) On oil, to deliver to the credit of Lessor, free of cost in the pipeline to which Lessee may connect wells on the Premises, the equal one-eighth
(l/Sth) part of all oil produced and saved from the Premises.
(b) On gas of whatsoever nature or kind, liquid hydrocarbons and their respective constituent elements, casinghead gas or other gaseous substances,
produced from the Premises ("Gas") Lessee shall pay, as royalty, one-eighth (1/8th) of the net proceeds realized by Lessee from the sale at the well.
Lessee however shall not deduct the costs of treatment, compression, sales and marketing before the calculation and payment of such royalty.
(c) On other product produced from the Premises Lessee shall pay, as royalty one-eighth (l/Sth) of the net proceeds realized by Lessee
from the sale at the well.
4. Where Gas from a well capable of producing Gas is not sold or used after/he expiration of the Pmnary Term or any extens ons thereof, Lessee shall pay
or tender as royalty to Lessor, at the address set forth above, One Dollar ($1.00) per year per net mineral acre, such 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 and thereafter on or before the anniversary date of
this Lease during the period such well is shut in.
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. Lessee shall have the right to use, free of cost, gas, oil and water produced on the Premises for Lessee's operations thereon, except water from the wells
of Lessor.
7. When requested by Lessor, Lessee shall bury Lessee's pipeline below plow depth.
8. No well shall be drilled nearer than 200 feet to the house or barn now on the Premises without written consent of Lessor.
9. Lessee shall pay for damages caused by Lessee's operations to growing crops on the Premises.
10. Lessee shall have the right at any time to remove all machinery and fixtures (including casing) Lessee has placed on the Prenfises.
11. 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
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. No present 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.
12. 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 any one or more of the formations thereunder, to pool or unitize thc 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 sucb other land, lease or leases. Units pooled for oil
hereunder shall not substantially exceed 160 acres in area and units pooled for gas hereunder shall not substantially exceed 640 acres each plus a tolerance of ten
percent (10%) thereof, provided that should government authority having jurisdiction prescribe or permit the creation of units larger than those specified, for the
drilling or operation of a well at a regular location or for obtaining maximum allowable from an well to be drilled, drilling or already drilled, units thereafter created
may conform substantially in size with those prescribed or permitted by government regulations. 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 Uhit fnay-in~lfide land Upon Whii:h a Well-has tlleretofore bee~
completed or upon which operations for drilling have theretofore been commenced. Production, drilling, or reworking 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 in production, drilling or reworking 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 production 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
ternfinate any such plan or agreement and, in such event, the terms, conditions and provisions of this Lease shall be deemed modified to conforn] 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 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 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.
13. 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 or interruption caused by storm, flood, act of God or other event of force majeure 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 of time equal to the time Lessee was so prevented, anything in this Lease to the
contrary notwithstanding.
14. Lessor hereby agrees that Lessee shall have the right at any time to redeem for Lessor, by payment, any mortgages, taxes or other liens on the Premises,
in the event of default of payment by Lessor, and be subrogated to the rights of the holder thereof, and the undersigned Lessors, for 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.
15. Should any one 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 any one or more or all of the parties who execute this Lease as Lessor. All the provisions of
this Lease shall be binding on the heirs, successors and assigns of Lessor and Lessee.
IN WITNESS WHEREOF, this instrument is executed as of the date first above written.
ACKNO~VLEDGMENTS FOR USE IN ARIZONA, TEXAS, NEBRASKA, KANSAS, COLO., WYOMING, N. DAKOTA, MISSOURI
STATE OF
)
) ss.
COUNTY OF
The foregoing instrument was ac ~knowledged before me this
da>' of
My Commission Expires:
NYREE ROSE C. MAGDAMIT
Notary Pub!it - State of Nevada
Appointment Recorded in Washoe County
No: 01-68574-2 - Expires May 8, 2005
(INDIVIDUAL ACKNOWLEDGMENT)
,2003, by