HomeMy WebLinkAbout908715Fom~ ApprOved by Ihe Boa~
and Effective January 6, 1998
Lease # 05-00165
STATE OF WYOMING Parcel # 181
OIL AND GAS LEASE Fund Code: CS
This indenture of lease entered into by and between the State of Wyoming, acting by and through its Board of Land Commissioners as LESsoR, and
the following as LESSEE:
Zinke & Trumbo Inc.
Section l. PURPOSE. The LESSOR, in consideration of the rents and royalties to be paid and the covenants and agreements to be
kept and performed by the LESSEE, does hereby grant and lease to the LESSEE, the .exclusive right to drill for, mine, extract,
remove, and dispose of all the oil, gas and associated hydrocarbon substances and gaseous substances and elements produced
therewith, including sulphur, hydrogen sulfide, sulphur dioxide, nitrogen, carbon dioxide and helium, which may be produced from the
following described land, to wit:
Lot 44 (formerly All Sec. 36) Resurvey Township: 23 North Range: 115 West of the 6th P.M.
County: Lincoln Total Acres: 640.00 Advance Rental: $640.00
($1.00 per ace or fraction thereof)
Together with the right of ingress and egress and the right to use so much of the surface of said lands as is necessary to
construct and maintain thereupon all works, building, plants, waterways, roads, communication lines, pipe lines, reservoirs, tanks,
pumping stations, or other facilities necessary to the proper conduct of operations there under.
Section 2. TERM OF LEASE. This lease shall become effective on the day and year set out below and shall remain in effect for
a primary term of five (5) years and for so long thereafter as leased substances may be produced frol'n the lands in paying quantities.
This lease may also be extended beyond its primary term in the absence of production of leased substances as may be provided by
the statutes of the State of Wyoming and the regulations of the Board of Land Commissioners adopted pursuant thereto. Provided,
however, if drilling, completion, testing or reworking operations are being diligently conducted, either during the primary term or
during any extension thereof, this lease shall continue in full force and effect so long as such operations are being conducted and so
long thereafter as oil or gas may be produced in paying quantities. This lease may be relinquished or terminated at an'earlier date as
herein provided.
Section 3. If the LESSOR owns an interest in oil and gas in said land less than the entire fee simple estate, then the~[9yalties
and rentals to be paid LESSOR shall be reduced proportionately.
Section 4. LESSEE expressly represents that, if an individual, LESSEE is a citizen of the United States, or has declared an
intention to become a citizen, and is over 19 years of age-and if a corporation, is duly qualified to transact business in Wyoming.
Section 5. This lease is issued under the authority conferred by Title 36, W.S. 1977 as to the State and School Lands, and Title
11, W.S. 1977 as to Farm Loan lands, and shall be subject to, and operations by LESSEE hereunder shall be conducted in
compliance with the specific lease terms set out on the reverse of this lease, and with all applicable State statutory requirements and
the regulations issued thereunder, including those providing for: the leasing of State or Farm Loan Lands for oil and gas; the
conservation of oil and gas; and the regulation of security transactions.
Section 6. HEIRS AND SUCCESSORS IN INTEREST. It is covenanted and agreed that each obligation hereunder shall extend
to and be binding upon, and every benefit thereof shall inure to the heirs, executors, administrators, successors of, or assigns of the
respective parties hereto.
Section 7. SOVEREIGN IMMUNITY. The State of Wyoming and the lessor do not waive sovereign immunity by entering into this
lease, and specifically retain immunity and all defenses available to them as sovereigns pursuant to Wyoming Statute 1-39-104
(a)and all other state laws.
IN WITNESS WHEREOF,this lease has been executed by LESSOR and LESSEE to become effective on the 2nd day of A~pr£1
2005 A.D.
Address: I'2-0'..7.- E, 3~¢'''~ ~'~-:
City, '")'-'~, 15 ,,-. ,, S~ate, .0 ~,- Zip.."/c/I O,F''
Phone ,
LESSOR, STATE OF VVYOMING, Acting by and through its Board of Land Commissioners.
Director, ~ce of state Lands and Inves~/tments ;~ ~ { ,-!~ ~tF~~}i [~
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RECEIVED 51261200~ ~t"i0i 43' ~
RECEIVING # 908715
BOOK: 586 PAGE: 275
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
0!L AND GA~ TERMS
Section 1. THE LESSEE AGREES: :
(a) BOND. To furnish a bond with an approved corporate surety company authorized to transact
business in the State of Wyoming; or.st~ch other Surely as may be acceptable to the lessor, in the
penal sum as required by the current rules of the State Board of Land Comn~issiphers,
conditioned upon the payment of all rentals and royalties acoruing to the lessor under the terms
hereof, and upon the full compliance of all other terms and conditions of this lease and the rules
and regulations relafing thereto, and also conditioned on the payment of all damages to the
surface and improvements thereon where the lease covers lands the surface of which has been
sold or otherwise leased. Such bond or bonds furnished prior to the development of the lands
contained in this lease may be increased in such reasonable amounts as the lessor may decide
upon commencement of drilling operations and after Ihe discovery of oil or gee.
lb)PAYMENTS. To make all payments accruing hereunder to the Office of State Lands and
Inveslments, 122 West 25th Street, Cheyenne, Wyoming 82002-0600.
lc)RENTALS. Prior to the discovery of oil or gas in paying quantities to pay the lessor in
advance, beginning with the effective date hereof, an annual rental of $1.00 per acre or fraction
thereof.
After the discovery of oil or gas in paying quantities to pay the lessor in advance beginning wilh
the first day of the lease year succeeding the lease year in which actua d scevery was made, an
annual rental of $2.00 per acre or fraction thereof, unless changed by agreement. Such rental so
paid for any one year shall be credited on the royally for that year.
Annual rentals on all leases shall be payable in advance for the first year and each year
thereafter. No notice of rental due shall be sent to the lessee. If the rental is not paid on or
before the date it becomes due, notice of defau t wi I be sent to the lessee, and a penalty o! $(3.50
pot acre for late payment will be assessed.
The lessee is not legally obligated to pay either the rental or the I~enalty, but if the rental and
penalty are not paid within thirty (30) days after the notice of default has been received, the lease
will terminate automatically by operation of law. Termination of the lease shall not relieve the
lessee of any obligation incurred under the lease other than the obligation to pay rental or
penalty. The lessee shall not be entitled to a credit on rOyalty due for any penalty paid for late
payments of rental on an operating lease.
(d)ROYALTIES. The royalties to be paid by lessee are:
ti) On oil, one-sixth of that produced, saved, and sold from said land, the same to be delivered
at the wells Or to the credit of lessor into the pipe Iine to which the wells may be cor~nected.
(ii} On gas, including casinghead gas or other hydrocarbon substances, produced from said
land saved and sold or used off the premises or in the manufacture of gasoline or other products
therefrom, the market value at the well of one-sixth of the gas so s01d or used, provided that on
gas sold at the wells, lhe royalty shall be one-sixth of the amount realized from such sale.
(iii) On afl other hydrocarbons of value and gaseous subslences and elements produced or
extracted, including propane, butane, sulphur, nitrogen, carbon dioxide, and hefium, at such
royalty as shall be mutually delermined tO be fair and reasonable.
(iv) For royalty purposes on gas and natural gasoline the value shall be as approved by the
lessor, and in the determination of the value of natural gasoline the fair cost of extraction shall be
cor~sidered as a deductible item; provided, hoWever, that the allowance for the cost of extraction
may exceed two-thirds of the amount or value only on approval of the lessor and in no event shell
the price, for gas, or natural gasoline, be less than thai received by the United State of America for
its royalties fr6m the same field.
tv) Natural gas and oil actually used for operating purposes upon the land and except as to the
ultimate sale thereof, gas or liquid hydrocarbons returned to the sand for stimulating the
production of oil or secondary recovery purposes shall be royalty free.
(e) DISPOSITION OF ROYALTY OIL AND GAS. To deliver to the lessor, or to such individual,
firm or corporation as the essor may des gnatea I royalty oil gas o~ o her k ndred hydrocarbons
free of charge on the premises where produced, or, at the option of the lessor, and in lieu of said
royalties in kind, the lessee agrees to pay the lessor the field market price or value of all royalty
oil, gas, or other kindred hydrocarbons produced and saved.
When the lessor elects to take its royally oil, gas, or other hydrocarbons in kind such as oil, gas,
or other kindred hydrocarbons shall be good merchantable oil, gas, ar other kindred
hydrocarbons. The lessee shall if necessary furnish storage for royalty oil free of d'uacge for thirty
(30} days after the end of the calendar month in which the oil is produced, upon the leased
premises, or at the such place as the lessor and the lessee may mutua y agree upon, provided,
that the lessee shall not be held liable for loss or destruction of royalty oil so stored from causes
beyond his control.
The free storage of oil, as herein provided, shall apply only as long as the said oil is the property
of the lessor.
(f) MEASUREMENTS OF PRODUCTIONi To gauge, r~ee~Jre find correi:t for temperature all '
production from said lands in conformance with the rules and regulations adopted by the Board of
Land Commissioners and report said production to the lessor in accordance therewith.
To keep books, records, and repods pertaining to the production from the land herein leased as
well as those pertaining to the production from offset wells operated by he lessee, his operator,
or sub-lessee on other lands, which shall be opened at all times for the inspection of any duly
authorized agent of the lessor.
To furnish the lessor with original pipe line reporls showing the day, month, year, amount,
gravities, and temperatures of all oil run and with monthly reports showing the month, year,
amount, and price of all gas and natural gas gasoline and other products produced and sold from
the land herein leased, and the amount of gas returned to the sand.
(g) MONTHLY PAYMENTS AND STATEMENTS. Unless the time of payment is othem~ise
extended by the Off~ce of State Lands and Investments to make payment on or before the
twentieth (20th) day of the calendar month succeeding the month of production and removal and
sale of oil and gas from said land, and to furnish sworn monthly statements therewith showing in
detail the quantity and quality of the production (per well if required where practical) from the land
hereby leased, and the quantity and quality of the production (per well where practical} from offset
wells upon cornering or contiguous land opera ed by the lessee, his operator or sub-lessee and
such other information as may be celled for in the form or report prescribed by lessor.
th) WELLS TO BE DRILLED. To ddll and operate effectively all wells necessary to reasonably
offset wells upon and production from adjoining lands.
To drill such additional wells at such times or places as are necessary and essential to the
proper development and commercial production of the oil and gas content of said land.
ti)LOG OF WELLS AND REPORTS~ To keep a log, in the fonm approved by the lessor, of each
well drilled by the lessee On` the lands herein leased, showing the strata and character of the
formations, water sands and mineral deposits penetrated by the dr , amount of cesing, size and
where set, and SUch other inf~mation as the lessor may require which leg or copy thereof shall
be furnished to the lessor. --
To fie progi-ess reports, in the form prescribed by the lessor, at the end of each thirty (30) day
pedod while each well is bain9 drilled.
To file annually, or at such fin~es as the lessor may require, maps showing the development of
the structure and Ihe Iocat on of all wells, pipe lines and other works used in connection with the
operations of the lessee upon~said land.
To make such other repods pertaining to the production and operations by the lessee on said
land, and report such other information as may be possessed by lhe lessee on the wells,
production or operations of othere on lands on the same geologic structure that may be of
importance in effecting proper development and operation of the lands herein leased, as may be
celled for b~the lessor. All logs, maps, and reports shall be submitted in duplicate and the Office
ti)PRODUCTION. To operate the wells upon the land herein leesed in a competent and efficient
manner in an endeavor to recover all the oil and gas economically possible from said land and to
prevent the under drainage of the oil and gas thereunder by wells operated by the lessee or
olhers on cornering or contiguous lands Io those leased herein. All plans or methods for the
purpose of stimulating or increasing production on lands herein leased other than lhoso in
common use shall first be presented to lhe lessor for approval before being put into actual
operation.
No production agreements limiting, restricting, prorating, or otherwise affecting the
naturalproduction from said land shall be entered into by the lessee, nor shall the I~ssee limit,
restrict, or prorate the natural production from said land in any way or in any event, except with
the consent in v~ifing of ~he lessor first had an obtained.
(k)SUSPENSION OF OPERATIONS. Should any well drilled upon lands covered by this lease
obta n production of oil, gas, or other hydrocarbons in paying quantities and if the lessee is
unable to establish a satisfactory markel for the oil. gas or hydrocarbons produced from said well,
the lessee may apply for and the lessor may grant permission for the suspension of production
operations until such times as a satisfacto~ market for the product from said well can be
developed. Dudng the time any such suspension of operations is in effect, the lessee shall
continue to pay the annual rental of $2.00 per acre or fraction thereof prov ded by lc) above, and
this lease shall remain in effect as though oil or gas was being produced from said lands.
0)DILIGENCE-PREVENTION OF WASTE. To exercise reasonable diligence in drilling,
producing, and operating of wells on the land covered hereby, unless consent to suspend
operations temporarily is granted by the lessor; to carry on all operations hereunder in a good and
workmanlike manner in accordance with approved methods and practice, having due regard for
.00276
/he prevention of waste of oil and gas, or the entrance of water Io the oil or gas bearing sands or
strata to the destruction or injury of such deposits, the preservation and conservation of the
property for future productive operafions and to the health and safety of workmen and employees;
to plug securely in an approved manner any well before abandoning it, and not to abandon any
well without permission of the lessor, not to drill any well within two hundred (200) feet of any of
· the outer boundaries of the land covered hereby, unless to protect against drainage by wells
drilled on lands adjoining less than 200 feet from the property lines thereof; to conduct all
operations subject to the inspection of the lessor; to carry out at the lessee's expense all
reasonable orders and requirements of the lessor relative to the prevention of waste and
preservation of the properly and the health and safely of workmen including the replanting and
reseeding of. drilling Sites ~and other areas disturbed by dri ng operations and on failure of the
lessee so to do the lessor shall have the right together with other- re~se h~rein provided, to
enter on the property to repair damage or prevent was e at the lessee's expense; to abide by and
conform to valid applicable regulations prescribed to reimburse the owner of the surface, if other
than the lessor, or lessee of grazing rights thereof for actual damages thereto and injury to
improvements thereon, provided, that the lessee shall not be held responsible for acts of
providence or actions beyond his control.
tm)TAXES AND WAGES-FREEDOM OF PURCHASE. To pay, when due all taxes lawfully
assessed and levied under the laws of the State of Wyoming upon improvements, oil and gas
produced from the land hereunder, or other dghts, property or assets of the lessee, to accord all
workmen and employees complete freedom of purchase, and to pay all wages due workmen and
employees in conformance with the laws of the State of Wyoming.
tn)ASSIGNMENTS OF LEASE-PRODUCTION AGREEMENTS· Not to assign this lease or any
interest therein, nor sublet any port on of the leased premises, except with the consent in writing
of the lessor first had and obtained.
All overriding royalties to be valid, must have the approval of the Board or by the Office of State
Lands and Investments when authority to do so has been delegated by the Board and will be
recorded with the lease. The Board reserves the right of disapproval of such overriding royalties
when in its opinion they become excessive and hence are detrimental to the proper development
of the leased lands.
(o)DEUVER PREMISES IN CASE OF FORFEITURE To del var up he leased premises, with all
permanent improvements thereon, n good order and cond t on n case of forfeilure of this lease,
but this shall not be construed to
prevent the removal, alteration or renewal of equipment and improvements in the ordinary
course of operations.
Section Z THE LESSOR EXPRESSLY RESERVES:
la) The right to lease sell pr otherwise d spose of the surface of the and embraced within lhis
lease under existing laws or laws hereafter' enacted, and in accordance with the rules of the
Board of Land CommissionS inSOfar as the Surface is not necessary for the use of the lessee in
the conduct of operations hereunder.
lb)The right to lease, sell, o[ otherwise dispose of other mineral or subsurface resources not
covered by the leaSe, in aCCOrdance with the applicable laws and the rules of the Board of Land
Commissioners.
lc)From the operation of this lease the surface lands heretofore granted for rights-of-way and
easements and reserves the right to grant such other rights-of-way and easements as provided by
the statutes of the State of Wyoming, as long as such rights-of-way and easements do not conflict
with the operations for oi and gas on the land herein leased.
(d)The right to reftJse to commit the leased lands to a unit plan of development if lhe Board finds
such action would impair the lessor's reserved right to take ils royally gas in kind and to purchase
all other gas allocated to the leased lands a provided in Section 3(e)below.
la}The right to alter or modify Ihe quantity and rate of production 1o the end that wasle may be
~eliminated or that production may conform to the lessea's fair share of allOWable production under
any system of State or Nafional curtailment and proration authorized by law.
(f}ln addition to ts r ght o take its royalty gas in kind, the lessor reserves the right and option to
purchase all other gas produced for sale or use off the leased lands. This option shall be
exercised only if the Board finds that the lessee has received and is willing to accept a bona fide
offer from a purchaser who intends to sell or transport the gas into interstate commerce and that
one or more intrastate purchasers (i.e., purchasers who will use, consume, or sell lhe gas for use
or consumption entirely within the State of Wyoming) are willing and able to purchase the gas
upon terms reasonably comparable to and at least as favorable to the lessee as those offered by
the interstate purchaser. The Board shall waive this option and permit an interstate sale if it finds
that no intrastate purchaser is willing and able to purchase the gas upon terms which are
reasonably comparable to and at least as favorable io the lessee As a'cond t on to such waiver,
a satisfactory agreement may be entered into by which the production of its royalty gas may be
deferred until it can be produced and sold for consumption and use entirely within the State of
Wyoming
seCtior{ ~. APPRAISAL OF II~PRovEMENTS.'The 'lessee ~hall have the right subject Io the
provisions of Title 36, as to State and Stale School Lands, and Tifie 11, as to State Loan and
Investments Board Lands W.S. 1977, to remove any improvements owned by lessee within a
reasonable time after the termination of this lease. Lessee agrees that ar~y such improvements
not removed within a reasonable time after termination of this lease shall be disposed of pursueet
to the abev'e statutes· ....
Section 4. FORFEITURE CLAUSE. The Board shall have the powei and authority to cancel
leases procured by fraud, deceit, or misrepresentations, or for the use of the lands for unlawful or
illegal purposes, or for the violation of the covenants of the lease, upon proper proof thereof, in
the event that the lessee shall default in the performance or observance of any of the terms,
covenants, and stipulations hereof, or of the general regulations promulgated by the Board of
Land Commissioners and in force on the date hei~e~fl the lessor Shall serve notice of such failure
or default either by personal service or by cedified or rag stared mail upon the lessee, and if such
failure or default continues for a period of thirty (30) days after the service of such notice, then
and in that event the lessor may, at its option, declare a forfeiture and cancel this lease,
whereupon a r ghts and privileges, obtained by the lessee hereunder shall terminete and ceasa
and the lessor may re-enter and take possession of said premises or any part thereof. These
prdvisions shall no/be censlrue~ to prevent the exercise by lessor any legal or equitable remedy
which the lessor might otherwise have. A waiver of any particular cause or forfeiture shall not
prevent the cancellation and forfeiture of this lease by any other cause of forfeiture, or for the
same cause occurring at any other time.
Section 5. RELINQUISHMENT AND SURRENDER. This lease may be relinquished and
surrendered to lessor as to all or any legal subdivision of said lands as follows:
la) If no operations have been conducted under the lease on the land to be relinquished, the
lessee shall file with the State Land Board and State Loan and Investment Board, a written
roi nqu shment or surrender, duly signed and acknowlsdged and slating therein that no operations
have been conducted on the land. The relinquishment so filed §hall become effective on the date
and hour of receipt thereof in the office of the Director or at some later date, if such be so
specified by the lessee therein. If the said relinquishment fails to state that no operations have
been conducted, the effective date of relinquishment shall be the date the relinquishment is
approved by the Board.
lb) If operations have been conducted under the lease on land proposed to be relinquished, the
lessee shall give sixty (60) days notice and shall file with the Director a written relinquishment or
surrender duly acknowledged and stating therein that operations have been conducted on the
land. The relinquishment shall not become effective until the land and the wells thereon shall
have been placed in condition acceptable to lessor and shall have been approved by the State Oil
and Gas Supervisor.
All rentals becoming due prior to a surrender or relinquishment becoming effective, shall be
payable by lessee uhless payment thereof Shall be waived by less-or. A relinquishment having
become effective there shall be no recourse by lessee and the lease as to the relinquished lands
may not be reinstated·
~ 31VJ. S