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HomeMy WebLinkAbout894781~RODUC~RS 88-PAID UP OIL AND GAS LEASE RECEIVED LINCOLN COUNTY CLERI ":'TJ0K5'''j:O paP^O 00 I 8914 781 030gT28 9.' 16 JEANt,tE AGREEMENT, Made and entered into this 28t~ day of August 2003, by and between Julienne ltarrmver, a single wmnan, whose post office address is 8603 Powderhouse Road, Cheyenne, WY82009, hereinafter called Lessor, and Baseline Minerals, Iuc., whose post office address is 1645 Court Place, Suite 422, Denver, CO 80202, hereinafter called Lessee: WITNESSETH, That the Lessor, for and in consideration of Teh and More Dollars ($10.00 +), cash in hand paid, the receipt of which is hereby acknowledged, and the covenants and agreements hereinafter contained, has granted, demised, leased and let, and by these presents does grant, dmnise, lease and let exclusively unto the said Lessee, the land hereinafter described, 3v. ith the exclusive right for tlie purpose of mining, exploring by geophysical and other methods, and operating for and producing therefrom oil and all gas of whatsoever nature or kind, specifically including coalbed methane and any and all substances produced in association therewith from coal-bearing formations, with rigbts of way and easements for laying pipe lines, and erection of structures thereon to produce, save and take care of said products, all that certain tract of land situated in the County of Lincoln; State of Wyoming, described as follows, to-wit (hereinafter "leased premises"): . Township 23 North, Range 115 West, 6a' P.M. Section 26:N2N2 containing 160.00 acres, more or less. 1. It is agreed that this lease shall remain in force for a term of 3 (three) years from this date (hereinafter "primary term") and as long thereafter as oil or gas of whatsoever nature or kind, specifically including coalbed methane and any and all substances produced in association therewith from coal-bearing forumtions, is produced from said leased premises or on acreage pooled therewith, or drilling operations are continued as hereinafter provided. If, at the expiration of the primary term of this lease, oil or gas is not being produced on the leased premises or on acreage pooled therewith but Lessee is then engaged in drilling or reworking operations thereon, then this lease shall continue in force so long as operations are being continuously prosecuted on the leased premises or on acreage pooled therewith; and operations shall be considered to be continuously prosecuted if not more than ninety (90) days shall elapse between the completinn or abandonment of one well and tile beginning of operations for the drilling ora subsequent well. If after discovery ofoil ot gas on said land or on acreage pooled 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 ninety (90) days from date of cessation of prodt,ction or from date of cmnpletion of dry hole. Ifoil or gas shall be discovered and produced as a result of such operations at or after the expiration of the primary term of this lease, this lease shall continue in force so long as oil or gas is produced from tile leased premises or on acreage pooled therewith. 2. This is a PAID-UP LEASE, In consideration of the down cash payment, Lessor agrees that Lessee shall not be obligated, except as othe/wise 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 said land and as to any strata or stratum by delivering to Lessor or by filing tbr record a release or releases, and be relieved of all obligation thereafter accruing as to the acreage surrendered. 3. In consideration of the premises the said Lessee covenants and agrees to pay Lessor the following royalties: (a} On. oil and other liquid hydrocarbons, 17.50% of that produced and saved from said land, the same to be delivered at the wells or to the credit of Lessor, free of all costs of production or delivery, into die pipeline to which the wells may be connected; provided however Lessee ~nay from time to time purchase any royalty oil or other liquid hydrucarbons in Lessee's possession, paying the market price therefore prevailing for the field where produced on the date same is produced and run to the pipeline or storage tank therefore (or if there is no market price prevailing for such field on such date, then the market price prevailing in Ihe nbarest field in which there is a market price on such date for oil or liquid hydrocarbons of the same or similar grade, gravity or quality); (b) on gas, including cashinghead gas or olher gaseous substances, ' produced fi'om the land and sold, or used off the premises, or used in the masmfaytnre of gaso!ine or other products therefi-om (including within the foregoing any gas so used by Lessee, either alone or in association with others, or by or through any company or other entity with which Lessee is affiliated by stock ownership or otherwise, or s01d by Lessee to any such affiliated company or entity), the market value at the well of 17.50% of the ~as so sold or used (or if there be no market value at Well then the market value at the well in the nearest field where there is a market value at the well for gas of the same of similar quality), but in no event shall the royalty be based on an amount less than the gross 15roceeds received from any sale of such gas. It is expressly understood and agreed that Lessee shall not in any event sell or contract for sale of gas for less than the market value of such gas at the well determined as of the date such gas is produced and delivered, provided, however, that for purposes hereof any contract entered into by Lessee (other than with ahy snbsidiary, or any company or other entity with which Lessee is affiliated by stock oualership or otherwise) for the sale of such gas shall be deemed to be a sale of the gas at the market value thereof to the extent that either such contract provided for redetermination of the purchase price of the gas not less often than annually duriug tile term of such contract based upon the market value of gas prevailing on such determination date in the field or area in which the gas is produced, or such contract has beeu approved in writing by Lessee. (c) If the gas from any gas well situated on this lease should be sufficiently impregnated with gasoline, condensate or other liquid hydrocarbons in suspension that paying quantities of such gasoline, condensate or other product can be separated from said gas and liquefied as a praci~ical lease operation by the iustallation by Lessee of traps, separators or other divides ordinarily used in the industry for such purpose on the lease, then Lessee agrees and shall be obligated to install upou the lease such device or devices to the end that so much of said gasoline, condensate or other Products as can be separated through such devices before marketing be recovered and Lessor shall receive its royalty as specified in paragraph 3(a) of the gasoline, condensate or other liquefied products recovered on the lease in such manner, together with a royalty on residue gas in the amount and determined as provided in paragraph 3(2nd) of this lease. The royalties provided iu this paragraph 3 shall be determiued and delivered to Lessors free of any development, production, compression, processing, transportation, delivery or like costs excepting, however, taxes applicable to Lessor's share of production which are paid by Lessee. 4. If at any time, whether before or after the expiration of the primary term, Lessee shall have completed a well or wells on the above described premises (or land with which the said premises or any part thereof may be pooled) which well or wells are capable of producing gas in commercial quantities but are shut in with the result that gas is not produced and sold or used, Lessee may pay as royalty to Lessor for each such shut-in well on or before the expiration of ninety (90) days after (i) the date of completion of such gas well as evidenced by the Welt Completion Report filed with the appropriate state or other governmental regulatory agency or commission having jurisdiction, or (ii) the date such gas ceases to be sold or used, as the case may be, an amount equal to Teu Dollars ($10.00) per acre of land covered by this lease, which shall be attributed to the producing unit upon which the well or wells are located and upon making said payment, it will be considered that each such well is producing gas in paying quantities within the meaning of this lease for a period of one (1) year after the expiration of said ninety 90) day period. In like manner and upon like payments being made annually on or before the expiration of the last preceding year for which such payment or ender has been made, it will be considered that said well or wells are producing gas in com~nercial quantities for successive periods ofone.(I) year each; provided, however, that this lease may not be maintained in force solely by payment of shut-in gas well royalty for any well under this paragraph for more than two (2) consecutive years after the effective date oftbe first such payment, or for shorter periods at various intervals not to exceed in the aggregate two (2) year in all. 5. If said Lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties (but not the shut-in gas royalty) herein provided for shall be paid the 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 6f cost, gas, oil and water produced on said land for Lessee's operation thereon, except water from the wells of Lessee. 7. When requested by Lessor, Lessee shall bury Lessee's pipeline below plow depth. 8. No well shall be drilled nearer than 400 feet to the house or barn now on said premises without written consent of Lessor. 9. Lessee shall pay for damages caused by Lessee's operations on said land and shall negotiate and settle said damages prior to entering upon the leased premises. 10. Lessee shall have the right at any time to remove all machinery and fixtures placed on said premises, including .the right to draw and remove Casing as Icone as it~done within six (6) months following the termin~flhis lease. 002 1 I. The rights of Lessor and Lessee hereunder may be assigned m whole or pa~. No clmnge [n o~merslfip of Lessor's ~n~crest (by ~signmenl . or ofi~env~se) sh~ll bc bh~d~ng ou Lessee uufil Lessor has been furnished w~fl~ notice, consisting ofce~ified ~opies of alt recorded ~nstmmen(s or documents and o~her ~nfo~afion necessaw ~o establish a complete chain ofrecm'd title from Lessor, and then only wi~b tespec~ ~o payments ~hereafler nmde. No off, er kind of notice, wbe(her actual or constructive, shall be b~nding on Lessee. No presen~ or future d~v~sion of Lessee's ownership as ~o d~fferen~ porfions or parcels of sa~d land sb~ll operate ~o enlarge the obligations or d~minish ~he rights of Lessee, m~d ~ll Lessees' operations may be conducted w]fl~out regard to any such division, l~all or any p~ of this lease ~s assi~ed, no leasehold owner shall be fiable for any ac~ or omission o~ any o(her leasehold owner. 12. Lessee ~s hereby gr~Ied tbe figb~ ~o pool or consofid~te the land covered by ~h~s lease, or any p~ or pa~s fl~ereo~ as to all s~ra~a or any stratum, ~vitb any other land, lease or leases, or any pa~ or pa~s thereof as lo all strata or any stratum, in the immediate vicinity thereof for the production ofoil and gas, or either of them, when in Lessee's judgment itls necessary or advisable to do so in order properly to develop and operate said leased premises or to promote the couservation of 0il or gas in and under and that may be produced therefrom. Pooling in one or more instances shall not e~must the rights of Lessee hereunder to pool this lease or poaions thereof iuto other or different units. Units pooled or consolidated for oil or gas hereunder shall not exceed the number of acres specified for producing units set foflh in Paragraph 13 of tbis lease; provided that if any Federal or state law, or any order, rule or regulation of governmental authority shall prescribe spacing pattern for the development of the field or allocate a producing allowable in whole or in pail based on acreage per well, then any such units may embrace as much additional acreage as may be so prescribed or as may be used in such allocation or allowable. Lessee shall file ~xitten unil designations in the county iu which the premises are located, and shall foflhwitb fo~ard to Lessor a copy of such unit designation, together with a plat thereof ~cluding the legal description of the unit and of the portion of the leased premises included therein. Such units may be designated either beIore or after the completion of any well or wells. Drilling or reworking operations or production on any pa~ of the pooled acreageshall be ~eated, for all pu~oses hereof as if such drilling or re~vorking operations are upou, or such production.is from the land described in this lease included xvithin such pooled unit, whether the well or wells be located on land covered by this lease or not. The entire acreage included in a unit shall be treated for all pu~oses, except the payment of royalties on production fi'om the unit, asif it were included in this lease. In the event of such pooling, Lessor shall receive on production from a uuit so pooled only such portion of the royalty stipulated bereiu as the amount of Lessor' acreage placed in the unit, or i~ royalty interest therein on an acreage basis bears to ~l~e total acreage so pooled in the paflicular u~t involved. An3ahing in this lease to the contr~ no~ithstanding, in the event only a paa, or paas, of the land covered by this lease is pooled or consolidated with other land or lands, operations on or production from such pooled unit or units will maintain this lease in force only as to the land covered hereby which is included in such unit or units and only ~ to such land which is included within a pmaicipating area and, following expiration of the primaw term of this lease, only as to the strata or stratum from which production of oil, liquid hydrocarbons, gas or their respective constituent products is obtained by the unit well or ~vells. This lease may be maintained in force as lo any land covered hereby and not included in such pooled unit or units in any manner provided for in this lease. 13. Anything in this lease to the contraw notwithstanding, it is understood and agreed that this lease shall terminate at the expiration of the primary term as to all lands held under this lease at the expiration of the primary term, except for auy producing tracts as described beloxv, unless Lessee is then engaged in drilling operations 0n this lease or, within the ninety (90) day period preceding the expiration of the primaw term, Lessee shall have completed or abandoned a well drilled on this Ieee. In either of such events, this lease shall continue in force, as to all lands held under this lease at the expiration of such primaw term, only so long as Lessee is engaged in continuous drilling operations on said land, and drilling operations shall be deemed continuous if not more than ninety (90) days (commencing on the day of completion or abandonment in the case of a well completed or abandoned within the ninety (90) day period preceding the expiration of the primaw term) elapse bet~veen the completion or abandonment of one well and the commencement of drilling operations for another well. At the expiration of the primaw te~, units the contiuuous drilliug provisions specified above in this paragraph shall then be applicable, or at such later date as Lessee shall fail to continuously drill this lease Witbiu the niuety (90) day time periods specified above for continuous drilling operations in effect at the end of the primary term, this lease shall terminate except where Lessee has completed a well on said land which is producing, or capable of producing, i~ commercial quantities. This lease shall continue in effect only as to those depths from the surface to the deepest depth drilled by the lessee, i~ successors or assigns on the leased lands or lauds pooled therewith. Thereafter, the leasehold rights shall continue effective so long and ouly so long as the leased lands continue to produce hereunder and so long thereafter as Lessee may be conducting operations on said land with a view of developing and/or restoring production therefrom andwith no cessation of such operations on a well or wells thereon for more tb~ ninety (90) days until production from such tract and strata or stratum is restored. At the expiration of the primary term, if Lessee is not engaged in contiuuous drilling operations on the leased lands, Lessee shall release this lease as to any lands not ;vithin a producing pooled unit, producing spacing unit or paaicipating area of a federal or secondary recovery unit. For any wells located on leased lands xvhich are not covered by a spacing order of the Wyoming Oil and Gas Consemation Commission ("Commission"), "producing spacing unil", as used above, shall mean the acreage peaaining to such wells pursuant to Chapter 3, Section 2 of the Commission. 14. The provisions contained in paragraph 12 of this printed lease form regarding acreage covered by this lease which shall be held by drilling operations on or production from any pooled unit or units shall not be altered or amended by any pooling, unitization 0r like agreement or instrument, or any amendment thereto ratification or ac~owledgment thereof, unless same shall be specifically designated as an amendment of para,apb 12 of this lease. It is fi~flber agreed that neither this lease nor any terms o~ provisions herein shall be altered, amended, extended or ratified by any division order or transfer 0rder executed by Lessor, its successors, agents 0r assig~s, but that any division orders or transfer orders shall be solely for the pu~ose of confirming the extent of Lessor's interest in production oil ~d gas from the bereiu described premises, or any land or lands pooled therewith. Auy amendment, alteration, extension or ratification or tiffs lease or of any term or provision of this lease shall be made by an instrument in writing clearly denominated as to ils pu~ose and effect, describing the specific te~s or provisions of the lease affected and the proposed change or modificatiou thereof, and executed by the party against whom any such amendment, alteration, extension ratification is songht robe enforced, and any pu~o~ed amendmeut, alteration, extension or ratification not so drafted and executed shall be of no force or effect. 15. 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 he terminated, in whole or in pan, 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. 16. Lessor hereby agrees that the Lessee Shall have the right at any time to redeem for Lessee, by payment, any moflgages, 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 bolder thereof, and the undersigued Lessors, for themselves, their heirs, successors and assigus, hereby surrender and release all right of dower and homestead in the premises described herein, insofar as said right of dower and homestead may in any way affect Ihe pu~oses for which this lease is made, as recited herein. 17. Lessee shall notify Lessor in writing of the location of all wellsto be drilled upon the premises, or on any land pooled therewith, not later thau ten (l 0) days prior to commencement of operations, ~d shall advise Lessor in uxiting of the date of completion and/or abandomnent of each such weft witl~Jn tbifly (30) days ~fler completion or abandonmenL 18. Lessee assumes all risk and liability of any kind and nature incident to, occasioned by 0r resulting in any manner from Lessee's operations hereunder, except that occasioned by Lessor's own negligence; agrees to keep the leased premises duly and fully protected against liens of every character arising in connection with or resulting from, said operations; and agrees to indemnify and hold Lessor ha~less from and against any and all liens and claims of any kind for damages occasioned by, or on account og s~id operations and agaiust any and all claims for property damage, personal iuiury or death snstained by any person or persons whomsoever, nat[~ral or co,orate, in connection with, or resulting from Lessee s operations hereunder, and whetber or not involving active or passive negligence on the pa~ of Lessee or its agents, contractors or employees. 19. Upon expiratiou or termination of this lease for any reason its to all or'any portion of the land herein described, Lessee shall be obligated at its expense promptly to prepare, execute and file iu the public records in the county in wlfich such land or po~ion thereof is located au appropriate release instrument covering all or such po~ion of said land, and to for~vard a copy of same as so recorded to Lessor. 20. Should any one or more of the panics hereinabove named as Lessor fail to execute this lease, it shall neveflheless 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 paflies who execute this lease as Lessor. All tbe provisions of tiffs lease shall be biuding on the heirs, successors and assigns of Lessor a~ Lessee. 1N WITNESS WHE~OF, this instrument is executed as of the date first above xwitten. ., , : .. ~' I ;.~ ~ . ~'qli~rrowe,' 0~,~4' ,' ,~.t 0 0 3 INDIVIDUAL ACICNOWLEDGEMENT STATE OF COUNTY OF The foregoing instrument was acknowledged before me this My Commission Expires: J~:~ ,2003, by Julienne Harrower. otary Public