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HomeMy WebLinkAbout902277Montana 88b-Rev. 3-04- PAID UP RECEIVED LINCOLN COUNTY CLERK 902277 OIL AND GAS LEASE AGREEMENT Made and entered into this by and between Beverly A. Calhoun, a single woman P.O. Box 2 Opal, Wyoming 83124 12th day of Auqust 2004 Party of the first part, hereinafter called lessor (whether one or more), and Zone Exploration, Inc. P.O. Box 1362 Billings, Montana 59103 Party of the second part, hereinafter called lessee. WITNESSETH, That the said lessor, for and in consideration of Ten and More DOLLARS cash in hand paid, receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained does hereby grant, demise, lease and let exclusively unto lessee, its successors and assigns, for the purpose and with the exclusive right, to explore by geophysical and other methods, to drill and operate for, to produce oil, all gases, including, but not limited to, casinghead gas and coal gas, and all other hydrocarbons, and to build pipelines, power lines, telephone lines, tanks, power stations, pools, roadways and other structures thereon, with any and all easements reasonably required for same, and any and all other rights and privileges reasonable, necessary or incident thereto, all that certain tract of land and lands riparian thereto, together with any reversionary rights therein, situate in the County of Lincoln , State of Wyoming , described as follows: Township 21 North, Range 113 West, 6th PM Section 22: Lots 7, 8 and 9. Said land shall be considered to comprise 67.98 acres, more or Jess. 1. It is agreed that this lease shall .remain in force for a term of five (5) years from date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee, its successors and assigns. 2. In consideration of the premises the said lessee covenants and agrees: First. The lessee shall deliver to the credit of lessor, as royalty, free of cost in the pipeline to which lessee may connect its wells, the equal one-eighth part of all oil produced and saved from the leases premises, or, at lessee's option, may buy or sell such one-eighth royalty and pay lessor the market price for oil of like grade and gravity prevailing in the field on the day such oil is run into 'pipeline or into storage tanks. Second. The lessee shall pay lessor, as royalty, for gas, coal gas or casinghead gas of whatsoever nature or kind produced and sold from said land or used for the manufacture of gasoline or any other products, one-eighth of the market price of such gas in its natural state at the well. Third. While there is a gas well or wells on the land covered by this lease or acreage pooled therewith, whether it be during or after the primary term hereof, and such well or wells are shut-in, and there is no other production, drilling operations or other operations being conducted capable of keeping this lease in force under any of its Provisions, lessee shall pay as royalb/ to lessor (and if it be within the primary therm hereof such payment shall be in lieu of delay rentals) the sum of one dollar ($1) per Year per net mineral acre, such payment to be made in the manner described in paragraph 3 below on or before the anniversary date of this lease next ensuing after the expiration of ninety (90) days from the date such well or wells are shut-in, and thereafter on the anniversary date of this lease during the period such wells are shut-in, and upon such payment it shall be considered that this lease is maintained in full force and effect. o9o;8; 77 064 7 3. This is a PAID-UP LEASE. In consideration of the down cash payment, lessor agrees that lessee shall not be obligated, except as otherwise provided herein, to commence or continue any operations during the primary term. 4. Where gas from a well capable of producing gas is not sold or used, lessee may pay or tender as royalty to the royalty owners One Dollar per year per net royalty acre retained hereunder, such payment or tender to be made on or before the anniversary date of this lease next ensuing after the expiration of 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. If such payment or tender is made, it will be considered that gas is being produced within the meaning of this lease. 5. Lessee shall have the right to drill to completion with reasonable diligence and dispatch: 1) any well commenced within the term of this lease, and 2) any well commenced within one hundred eighty (180). days between the completion of or abandonment of one well and the commencement of another. If oil and gas or either of them be found in paying quantities in any such well, this lease shall continue and be in force with like effect as if such well had been completed within the term of years herein first mentioned. 6. If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided shall be paid the lessor only in the propodion which his interest bears to the whole and undivided fee. However, such rentals shall be increased at the next succeeding rental anniversary after any reversion having occurred to cover the interest as acquired with notice of said reversion to lessee. 7. Lessee shall have the right to use, free of cost, gas, oil and water produced on said land for its operations thereon, except water from wells and reservoirs of lessor: Lessee shall have the fight at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove casing. 8. Lessee shall pay for all damages caused by its operations on said lands. Lessee shall bury its pipelines below plow depth. No well shall be drilled nearer than 200 feet to the house or barn now on said premises, without the written consent of the lessor. 9. Lessee is hereby granted the right and power to pool or combine the acreage covered by this lease, or any portion thereof, with other land, lease or leases in the vicinity thereof at any time and from time to time, whether before or after production, when in lessee's judgment it is necessary or advisable to do so for the prevention of waste and the conservation and greatest ultimate recovery of oil or gas. Such pooling shall be into a unit or units not exceeding in area the acreage prescribed or required in any Federal or State law, order, rule or regulation for the drilling or operation of one well, or for obtaining the maximum allowable production from one well or 40 acres each for the production of oil, or 640 acres each for the production of gas, whichever is the larger. Such pooling shall be effected by lessee's executing and filing in the office where this lease is recorded an instrument identifying and describing the pooled acreage. The production of pooled substances and development and operation on any podion of a unit so pooled, including the commencement, drilling, completion and operation of a well thereon, shall be considered and construed, and shall have the same effect, except for the payment of royalty, as production, development and operation on the leased premises under the terms of this lease. The royalties herein provided shall accrue and be paid to lessor on pooled substances produced from any unit in the propodion, but only in the proportion that lessor's acreage interest in the land covered hereby and placed in the unit bears to the total acreage in the land placed in such unit. 10. If the estate of either party hereto is assigned, and the privilege of assigning in whole or in pad is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns, but no change in the ownership of the land or assignment of rentals or royalties shall be binding.on the lessee until after the lessee has been furnished with a written transfer or assignment or a cedified copy thereof; and it is hereby agreed in the event this lease shall be assigned as to a part or parts of the above described lands, and the assignee or assignees of such pad or pads shall fail to make default in the payment of the proportionate pad of the rents due from him or them, such default shall not operate to defeat or affect this lease in so far as it covers a pad or pads of said lands which the said lessee or any assignee thereof shall make due payment of said rentals. An assignment of this lease, in whole or in pad, shall, as to the extent of such assignment, relieve and discharge the lessee of all obligations hereunder. 11. All express or implied covenants of this lease shall be subject to all federal and state laws, executive orders, rules and regulations. This lease shall not be terminated in whole or in part, nor lessee held liable in damages for failure to comply with its terms, if compliance is prevented or if the failure to comply is the result of any such law, order, rule or regulation. This lease, fudher, shall not be terminated in whole or in part, nor lessee held liable in damages, because of a temporary cessation of production or of drilling operations due to breakdown of equipment or due to the repairing of a well or wells, or because of failure to comply with any of the provisions of this lease if the failure is the result of the exercise of governmental authority, lack of market, act of God, strike, fire, explosion, flood or any other cause reasonably beyond the control of lessee. 09o ; '77 064 8 12. Lessee may at any time release this lease as to part or all of the lands above described after which all payments and liabilities thereafter to accrue, as to the lands released, shall cease and determine. In the event of a partial release, the shut in royalty payment above mentioned shall be reduced proportionatelY. 13. Lessor hereby warrants and agrees to defend the title to the lands herein described, and agrees that the lessee shall have the right at any time to redeem for lessor, by payment, any mortgage, 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 holder thereof and lessee may reimburse itself by applying to the discharge of any such mortgage, tax or other lien, any royalty or rentals accruing hereunder. 14. This lease and all its terms, conditions and stipulations binds each executing lessor and shall extend to and be binding on his assigns, heirs and devisees and successors, and those of the lessee, though unsigned by other lessors named herein. IN WITNESS WHEREOF, We sign the day and year first above written. · 'Beverly A. Calhoun///// ACKNOWLEDGMENT State of Wyoming } ) SS. County of (~'~-/Yt ~..,'~ } On this / ~ day of ,/~~~" , 2004 , before the undersigned, a Notary Public within and for said County and State, personally appea~'ed ~everl~; A. Calhoun, a single woman , known to me to be the person(s) whose name(s) is (are) subscribed to the foregoing instrument, and acknowledged to me that (s)he (they) executed the same. My Commission Expires: (SEAL) ~ ' My Commission '. {~  Exp res ' '~, ~.'. Nov. 13, 2006 .'_(_0 ~,~ ~ '1,.' '.-.' ~