OIL AND GAS LEASE
(PAID-UP)
AGREEMENT, Made and entered into
this 6th day of September, 2007, by and between Farmers National
Company, Agent for , located at 403 S. Cheyenne, Suite,
800, Tulsa, OK 74103-3842, party of the
first part, hereinafter called lessor, (whether one or more), and , located at party of
the second part, hereinafter called lessee.
WITNESSETH, That
the said lessor, for and in consideration of TEN AND MORE ($10.00) DOLLARS, cash
in hand paid, receipt of which is hereby acknowledged and of the covenants and
agreements hereinafter contained on the part of 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 the said lessee, for the sole and only
purpose of exploring by geophysical and other methods, mining and operating for
oil (including but not limited to distillate and condensate), gas (including
casinghead gas), coal gas and helium and all other constituents, and for laying
pipe lines, and building tanks, power stations and structures thereon, to
produce, save and take care of said products, all that certain tract of land,
together with any reversionary rights therein, situated in the County of , State of , described as follows,
to wit:
SE/4
of Section , Township
, Range ,
containing acres, more or less.
It is agreed that this lease shall remain
in force for a term of three (3) years
from date (herein called primary term) and as long thereafter as oil or gas, or
either of them, is produced from said land by the lessee.
In consideration of the premises the said
lessee covenants and agrees:
1st.
To deliver to the credit of lessor free of cost, in the pipe line to
which it may connect its wells, the three-sixteenths
(3/16) part of all oil (including but not limited to condensate and
distillate) produced and saved from the leased premises.
2nd. To pay lessor for gas of whatsoever
nature or kind (with all of its constituents) produced and sold or used off the
leased premises, or used in the manufacture of products therefrom, three-sixteenths (3/16) of the gross
proceeds received for the gas sold, used off the premises, or in the
manufacture of products therefrom but in no event more than three-sixteenths (3/16) of the actual
amount received by the lessee, said payments to be made monthly. During any period (whether before or after
expiration of the primary term hereof) when gas is not being so sold or used
and the well or wells are shut in and there is no current production of oil or
operations on said leased premises sufficient to keep this lease in force,
lessee shall pay or tender a royalty of One Dollar ($1.00) 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
ninety (90) days from the date such well is shut in and thereafter on the
anniversary date of this lease during the period such well is shut in, to the
royalty owners. When such payment or
tender is made it will be considered that gas is being produced within the
meaning of the entire lease.
3rd.
To pay lessor for gas produced from any oil well and used off the
premises, or for the manufacture of casinghead gasoline or dry commercial gas, three-sixteenths (3/16) of the gross
proceeds, at the mouth of the well, received by lessee for the gas during the
time such gas shall be used, said payments to be made monthly.
If the lessee shall commence to drill a
well or commence reworking operations on an existing well within the term of
this lease or any extension thereof, or on acreage pooled therewith, the lessee
shall have the right to drill such well to completion or complete reworking
operations with reasonable diligence and dispatch, and if oil or gas, or either
of them, be found in paying quantities, this lease shall continue and be in
force with like effect as if such well had been completed within the term of
years first mentioned.
Lessee is hereby granted the right at any
time and from time to time to unitize the leased premises or any portion or
portions thereof, as to all strata or any stratum or strata, with any other
lands as to all strata or any stratum or strata, for the production primarily
of oil or primarily of gas with or without distillate. However, no unit for the production
primarily of oil shall embrace more than 40 acres, or for the production
primarily of gas with or without distillate more than 640 acres; provided that
if any governmental regulation shall prescribe a spacing pattern for the
development of the field or allocate a producing allowable based on acreage per
well, then any such unit may embrace as much additional acreage as may be so
prescribed or as may be used in such allocation of allowable. Lessee shall file written unit designations
in the county in which the lease premises are located. Operations upon and production from the unit
shall be treated as if such operations were upon or such production were from
the leased premises whether or not the well or wells are located thereon. The entire acreage within a unit shall be
treated for all purposes as if it were covered by and included in this lease
except that the royalty on production from the unit shall be as below provided,
and except that in calculating the amount of any shut in gas royalties, only
the part of the acreage originally leased and then actually embraced by this
lease shall be counted. In respect to
production from the unit, Lessee shall pay Lessor, in lieu of other royalties
thereon, only such proportion of the royalties stipulated therein as the amount
of his acreage placed in the unit, or his royalty interest therein on an acreage
basis bears to the total acreage in the unit.
If said lessor owns a less interest in the
above described land than the entire and undivided fee simple estate therein,
then the royalties herein provided shall be paid to the lessor only in the
proportion which his interest bears to the whole and undivided fee.
Lessee shall have the right to use, free of
cost, gas, oil and water produced on said land for its operations hereon,
except water from wells of lessor.
When requested by the lessor, lessee shall
bury his 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.
Lessee shall pay for all damages caused by
its operations to growing crops on said land.
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.
If the estate of either party hereto is
assigned, and the privilege of assigning in whole or in part is expressly
allowed, the covenants hereof shall extend to their heirs, executors,
administrators, successors or assigns.
However, no change or division in ownership of the land or royalties shall
enlarge the obligations or diminish the rights of lessee. No change in the ownership of the land or
royalties shall be binding on the lessee until after the lessee has been
furnished with a written transfer or assignment or a true copy thereof. In case lessee assigns this lease, in whole
or in part, lessee shall be relieved of all obligations with respect to the
assigned portion or portions arising subsequent to the date of assignment.
All express or implied covenants of this
lease shall be subject to all Federal and State Laws, Executive Orders, Rules
and 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 such failure is the result of any such Law,
Order, Rule or Regulation.
This lease shall be effective as to each
lessor on execution hereof as to his or her interest and shall be binding on
those signing; notwithstanding some of the lessors above named may not join in
the execution hereof. The word
"lessor" as used in this lease means the party or parties who execute
this lease as lessor, although not named above.
Lessee may at any time and from time to
time surrender this lease as to any part or parts of the leased premises by
delivering or mailing a release thereof to lessor, or by placing a release of
record in the proper County.
Lessor hereby warrants and agrees to defend
the title to the land herein described, and agrees that the lessee shall have
the right at any time to redeem for lessor by payment any mortgages, 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.
Notwithstanding any provisions of this Oil and Gas Lease to the
contrary, it is understood that this Oil and Gas Lease shall be subject to the
terms and provisions on Exhibit "A", attached to and made a part hereof.
IN TESTIMONY
WHEREOF, we sign this the 6th day of September, 2007.
____________________________ ___________
David Smith,
Vice President
Farmers
National Company, Agent for
(Lessor)
ACKNOWLEDGMENT
STATE OF OKLAHOMA )
)§
COUNTY OF TULSA )
On this 6th day of September, 2007 before me, Randy Wheatley, Notary
Public in and for said County and State, personally appeared David Smith,
VP, Farmers National Company, Agent for
, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same in his authorized
capacity and that by his signature on the instrument in person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_____________________________________
Notary Public
(SEAL)
EXHIBIT "A"
This Exhibit "A" attached to and
made a part hereof this Oil & Gas Lease dated September 6, 2007, between Farmers
National Company, Agent for , hereinafter called
Lessor (whether one or more) and , hereinafter
called Lessee, covering:
SE/4
of Section , Township
, Range ,
containing acres, more or less.
Notwithstanding any provisions of the STANDARD LEASE FORM, which is the
first page of this lease, any of which may conflict with the following
provisions, it is understood and agreed that the following provisions,
conditions and limitations shall be controlling and shall modify and amend the
first page of this lease to the extent necessary to make them effective.
1.
It is
expressly agreed and provided that this lease cannot and shall not be
maintained after the expiration of the primary term solely by the payment of
shut-in gas royalties for a longer period than two (2) consecutive years
provided, however, this right to maintain this lease after the expiration of
the primary term for said two (2) year period shall be a recurring right and
may be exercised from time to time whenever the Lessee deems it necessary or expedient
to shut-in such a well. Following any such two
(2) year shut-in period, production shall resume and continue for a
minimum period of six (6) months before said right to maintain lease shall
recur.
2.
The
pooled acreage shall be all abutting and contiguous to the minerals herein
listed.
3.
Upon
termination of lease, Lessee is to remove all fixtures, equipment including
underground pipelines, concrete abutments, anchors, waste (junk), and restore
the surface to its original contour and state as nearly as possible to that
which existed prior to drilling operations.
4.
Lessee
agrees to maintain that area used for well location and tank battery in a neat,
orderly manner and eradicate all noxious weeds around and along roads, tank
battery and well sites.
5.
Shut-in
payments shall be $5.00 per acre.
6.
Lessee
shall pay monthly to Lessor as royalty on gas, including casinghead gas, liquid
hydrocarbons and other gaseous substances, produced at the wellhead or produced
from said land and sold or used off the premises, or used for the manufacture
of gasoline or other products, the agreed to royalty amount of the gross
proceeds at the wellhead of such gas sold or used. In no event shall royalty be based on an amount less than the gross
proceeds of the sale thereof.
7.
All royalty
payments due under this lease shall be made by Lessee on or before the last day
of the month following the month in which payment is received from the
purchaser. All delinquent royalty payments shall bear interest at the rate of
twelve percent (12%) per annum until paid.
8.
Lessors
reserve all rights to grant, lease, mine and/or produce any minerals from said
lands except interests in gas and oil and their constituent products herein
leased to lessee. Lessors specifically reserve the ownership of all radioactive
substances, including those which may be produced with or derived and/or
extracted from any gas or liquid produced by the Lessee under the terms of this
lease.
9.
All
surface equipment, including but not limited to roads, pipeline and tank
batteries, but excluding wellhead and pumping equipment, shall be located by
Lessee at such place or places mutually acceptable to both Lessor and
Lessee. In designating such locations,
Lessor shall act in good faith, having due regard to the most direct route for
roads and pipelines and the present or future surface use which may be
reasonably anticipated. Surface
equipment, excluding wellhead and pumping equipment, will be relocated by
Lessee upon Lessor's request, but at Lessor's expense. If Lessor fails to designate the location of
roads, pipelines and other surface equipment, the same will be located by
Lessee, but in such manner as to cause the least interference with Lessor's
farming and intended development of the surface of the leased premises for commercial
or residential use.
10.
Lessee
agrees that it will comply with all regulations and statutes of all
governmental entities having jurisdiction over compliance with environmental
legislation. Lessee further agrees to
accept the leased premises in its "AS IS" condition. It is acknowledged that Lessee has been advised to inspect the
property to determine that it is suitable for the purposes intended and to
ascertain that no environmental hazards or toxins are now present.
11.
Lessee,
his successors and assigns, hereby agree that, for the purpose of calculating
royalty payments hereunder on all production from the leased premises, such
calculations shall be made at the point of sale and shall be free of any and
all delivery costs and shall not be burdened by any costs of production,
including but not limited to, transportation expenses or any expenses
associated with or attributable to treatment, gathering, trucking, processing
or pipeline construction and maintenance.
The value of the oil shall be based on the highest posted price, plus
premium if any, paid for oil of like gravity in the area from which the oil is
produced.
12.
Lessee
shall IDEMNIFY AND HOLD LESSORS HARMLESS from any claims, damages, actions or
causes of action from any environmental damage or contamination caused or
contributed to by Lessee subsequent to the commencement of this lease.
13.
In the
event oil or gas production is encountered and the marketing agreement
consummated with a reputable purchaser, Lessee hereby agrees, upon written
request to furnish pertinent details of the terms of the purchase contract.
14.
Lessee
agrees to make a diligent effort to obtain the highest price available in this
immediate area for oil and/or gas.
15.
This
lease contemplates the full prospecting and development for oil and gas of the
land hereby leased, including the obligation to offset producing wells on the
leased premises, commensurate with practices of the oil and gas industry.
Lessee agrees to drill as many offset wells as may be necessary to prevent any
undue drainage of oil and gas from the land included herein, which
drainage may be caused by the drilling
of wells producing oil and gas in paying quantities on adjacent lands. Failing
to do so, Lessee agrees to release this lease as to those offset lands upon
written demand.
16.
It is
contemplated and agreed by both Lessor and Lessee that this lease shall, at all
times and in all respects, be subject to valid orders, rules and regulations of
any duly constituted authority having jurisdiction of the subject matter hereof.
17.
In the
event a portion or portions of the leased premises is pooled or unitized with
other land so as to form a pooled unit or units, operations on, completion of a
well upon, or production from such unit or units will not maintain this lease
in force as to that portion of the leased premises not included in such unit or
units. The lease may be maintained in
force as to any portion of the leased premises covered hereby and not included
in such unit or units in any manner provided for herein; provided, however, if
at the end of the primary term or after the expiration of the primary term,
Lessee is then engaged in drilling or
reworking operations on the leased premises or on acreage pooled therewith, or
if Lessee has completed a well as a producer or a dry hole anywhere on the
leased premises or lands pooled therewith within ninety (90) days prior to the
expiration of the primary term, this lease shall remain in full force and
effect as to all non-unitized acreage so long as Lessee commences drilling operations on the leased premises or on acreage pooled
therewith within ninety (90) days of the completion of such well as a producer
or a dry hole and conducts continuous operations thereon with no cessation of
longer than ninety (90) days between the completion of drilling or reworking
operations on a well and the commencement of such operations for the next
succeeding well.
18.
Should
a well be drilled and subsequently be a producing well, then and in that event
Lessee agrees at the end of the primary term to release all zones 100 feet
below the total depth drilled on the above described land or lands unitized
therewith. Lessee shall be obligated, subject to other terms of this paragraph
to file of record in the courthouse a release of this lease, thereby releasing
all zones of formations 100 feet below the total depth drilled. Said release
shall be filed within sixty (60) days following the expiration of the primary
term of the lease. If such release is not filed within said sixty (60) day
period, then Lessee shall be subject to damages and for attorney fees incurred
by Lessor in obtaining such release.
19.
Lessee
agrees to promptly provide Lessor with a copy of the recorded lease document.
20.
The
installation of any salt-water disposal equipment by Lessee in the operation of
the lease shall be subject to the approval of Lessor. Lessee shall not be permitted to use any well drilled on the
leased premises as a salt-water disposal well without the written consent of
the Lessor and without compensating Lessor for the use thereof. Provisions herein do not apply to the
disposal of salt water produced from wells located on lands covered by this
lease or land unitized therewith.
21.
Lessee
represents that they are not an officer, director, or employee of the bank or
agent, their subsidiaries, or any of their affiliated entities, nor does Lessee
anticipate assigning this lease to any of these parties.
22.
This
lease is given and granted without warranty, express or implied, in law or in
equity.
23.
All
utility lines shall be buried to a depth of no less than 48 inches or a depth
as required by electric company supplying the service, upon written request by
Lessor.
24.
Lessor,
if and only if he is also a surface owner of the leased premises, shall have
the right to take in kind his royalty share of any gas produced from a gas well
for farming and agricultural purposes only.
Lessor shall not have the right to take or use more gas than his royalty
share of the gas produced during any accounting period used by Lessee. Any gas so taken shall be taken at or near
the mouth of the well at a point designated by Lessee. All equipment necessary for the taking of
gas and measuring of the same shall be furnished by Lessor at his own risk and
expense. Such equipment shall be
installed by or under the supervision of Lessee and the method of taking gas
and the point of connection of taking must be such as to not interfere with the
operation of the well and must be submitted to Lessee before the gas is taken. For gas taken by Lessor in an amount less
than the full royalty fraction provided for gas in this lease, Lessee shall
have the right to make a corresponding reduction in gas royalty payments due
Lessor, said payments to be made in accordance with the terms of this lease. Lessee, nor its assigns, shall never be
liable to Lessor, Lessor's agents or employees or any other as regards to the
gas taken, the use thereof, the equipment used, the manner of its use, the use
to which put or anything incident thereto or resulting therefrom. Lessee, nor its assigns, shall never be
under any obligation to produce gas from any well unless practical or
economical to do so and Lessee or its assigns shall have at all times dry land
access to and from and around any equipment used in Lessor's irrigation
operations. Such equipment shall at all
times be situated and operated as not to unreasonably interfere with operations
by Lessee in the production of oil or gas on the land.
25.
Lessee
shall notify Lessor of any assignment of Lessee's rights hereunder, stating the
name and current mailing address of the Assignee, and shall furnish a copy of
such assignment within 60 days of its recording in the county records.
26.
Lessee
is unconditionally obligated to Lessor to make the payment of royalties
hereunder, irrespective of the failure or bankruptcy of any third party oil and
gas purchaser and without the necessity of Lessor executing a division order or
transfer order. Further, Lessee shall
bear full responsibility for payment of all royalties hereunder, irrespective
of any split-stream marketing of production.
27.
Lessee
agrees that before any gas produced from the leased premises is used or sold
off the leased premises, it will run, free of cost to Lessor, through a
conventional separator or other comparable equipment, so that all liquid
hydrocarbons recoverable from gas by such means will be recovered on the leased
premises. Distillate and condensate
produced from gas strata shall be extracted by ordinary mechanical means on the
leased premises. Such distillate and condensate shall be accounted for by the
barrel as oil.
28.
It is
agreed and understood by Lessor and Lessee, and it's assigns, that should any
and all wells be drilled upon said lands, all money paid for surface and crop
damages of any type caused by any operations thereon, shall be paid to the
current tenant.
29. Lessee represents
that the Premises are not currently producing oil, gas, casinghead gas or other
gaseous substances; and that no portion of said Premises is currently held by
an active oil and gas lease or is in a producing unit. Also, Lessee
represents that production revenue from the Premises is not being held in
suspense for the benefit of the Lessor or its predecessors in title.
IN TESTIMONY
WHEREOF, signed this 6th day of September,
2007.
________________________ ______________
David
Smith, Vice President
Farmers
National Company, Agent for
(Lessor)
***************************************************************************************************************
End
of Exhibit
