NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
OIL, GAS AND MINERAL LEASE
THIS AGREEMENT made this 31st day of July 2005, between
Xxxxx Xxxxxxxxxx and wife Xxxxxxxx Xxxxxxxxxx,
Lessor (whether one or more), whose address is:
X.X. Xxx 0000, Xxxxx, Xxxxx 00000
and Thrust Energy Corp., a Nevada corporation, having an address of 000-0000
Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0.
1. Lessor, in consideration of Ten Thousand and no/100 ($10,000.00) U.S.
Dollars, receipt of which is hereby acknowledged, and of the covenants and
agreements of Lessee hereinafter contained, does hereby grant, lease and let
unto Lessee the land covered hereby for the purposes and with the exclusive
right of exploring, drilling, mining and operating for, producing and owning
oil, gas, sulphur and all other minerals (whether or not similar to those
mentioned), together with the right to make surveys on said land, lay pipe
lines, establish and utilize facilities for surface or subsurface disposal of
saltwater, construct roads and bridges, dig canals, build tanks, power stations,
telephone tines, employee houses and other structures on said land, necessary or
useful in Lessee's operations in exploring, drilling for, producing, treating,
storing and transporting minerals produced from the land covered hereby or any
other land adjacent thereto. The land covered hereby, herein called "said
land," is located in the County of Xxx Xxxxx State of Texas and is described as
follows:
346.16 acres of land, more or less, out of the "Xx Xxxx' Xxxx Xxxxx Xxxxxx
Survey, A- 166, situate in Jims Xxxxx County, Texas, said tract being Xxxx 0 - 0
xxx 00-00 xx Xxxxxxx xx Xxxxx Xx. 0 and Lots 4-13 of Section or Block No.2 of
the Xxxxxxxx Xxxxxxx'x Re-Subdivision of the Camada Ranch as shown by map or
plat recorded in Volume I, Page 42, of the Transcribed Map Records, Xxx Xxxxx
County, Texas, and being more particularly described in that certain deed dated
January 14, 1980 from Xxx Belle Xxxxx Xxxx, individually and as Independent
Executrix of the Estate of Xxxx X. Xxxx, to Xxxxx Xxxxxxxxxx and wife Xxxxxxxx
Xxxxxxxxxx, recorded in Volume 390, Page 200, Deed Records of Xxx Xxxxx County,
Texas.
FOR ADDITIONAL TERMS AND CONDITIONS SEE ADDENDUM (00-00) XXXXXXXX HERETO AND
MADE A PART HEREOF.
This lease also covers and includes, in addition to that above described, all
land, if any, contiguous or adjacent to or adjoining the land above described
and (a) owned or claimed by Lessor by limitation, prescription, possession.
reversion or unrecorded instrument or (b) as to which Lessor has a preference
right of acquisition. Lessor agrees to execute any supplemental instrument
requested by Lessee for a more complete or accurate description of said land.
For the purpose of determining the amount of any bonus, delay rental or other
payment hereunder, said land shall be deemed to contain 346.16 acres, whether
actually containing xxxx or less, and the above recital of acreage in any tract
shall be deemed to be the true acreage thereof. Lessor accepts the bonus and
agrees to accept the delay rental as lump sum consideration for this lease and
all rights and options hereunder.
2. Unless sooner terminated or longer kept in force under other provisions
hereof, this lease shall remain in force for a term of Five (5) years from the
date hereof, hereinafter called "primary term," and as long thereafter as
operations, as hereinafter defined, are conducted upon said land with no
cessation for more than ninety (90) consecutive days.
3. As royalty, Lessee covenants and agrees: (a) To deliver to the credit of
Lessor, in the pipe line to which Lessee may connect its xxxxx, the equal
one-eighth part of all oil produced and saved by Lessee from said land, or from
time to time, at the option of Lessee, to pay Lessor the average posted market
price of such one-eighth part of such oil as the xxxxx as of the day it is run
to the pipe line or storage tanks, Lessor's interest, in either case, to bear
one-eighth of the cost of treating oil to render it marketable pipe line oil;
(b) To pay Lessor on gas and casinghead gas produced from said land (1) when
sold by Lessee, one-eighth of the amount realized by Lessee, computed at the
mouth of the well, or (2) when used by Lessee off said land or in the
manufacture of gasoline or other products, the market value, at the mouth of the
well, of one-eighth of such gas and casinghead gas, (c) To pay Lesser on all
other minerals mined and marketed or utilized by Lesser from said land,
one-tenth either in kind or value at the well or mine at Lessees election,
except that on sulphur mined and marketed the royalty shall be one dollar
($l.00) per long ton. If; at the expiration of the primary teem or at any time
or times thereafter, there is any well an said land or on lands with which said
land or any portion thereof has been pooled, capable of producing oil or gas,
and all such xxxxx are shut-in, this lease shall, nevertheless, continue in
force as though operations were being conducted on said land for so tong as said
xxxxx are shot-in, and thereafter this lease may be continued in force as if no
shut-in had occurred. Lessee covenants and agrees to use reasonable diligence to
produce, utilize, or market the minerals capable of being produced from said
xxxxx, but in the exercise of such diligence, Lessee shall not be obligated to
install of furnish facilities other than well facilities and ordinary lease
facilities of flow lines, separator, and lease tank, and shall not be required
to settle labor trouble or to market gas upon terms unacceptable to Lessee. If,
at any time or times after the expiration of the primary term, all such xxxxx
are shut-in for a period of ninety consecutive days, and during such time there
are no operations on said land, then at or before the expiration of said ninety
day period, Lessee shall pay or tender, by check or draft of Lessee, as royalty,
a sum equal to the amount of annual delay rental provided for in this lease.
Lessee shall make like payments, or tenders at or before the end of each
anniversary of the expiration of said ninety day period if upon such anniversary
this lease is being continued in force solely by reason of the provisions of
this paragraph. Each such payment or tender shall be made to the parties who at
the time of payment would be entitled to receive the royalties which would be
paid under this lease if the xxxxx were producing, and may be deposited in a
depository xxxx provided for below, Nothing herein shall impair Lessee's right
to release as provided in paragraph 5 hereof. In event of assignment of this
lease in whole or in part, liability for payment hereunder shall rest
exclusively on the then owner or owners of this tease, severally as to acreage
owned by each.
4. Lessee is hereby granted the right at its option, to pool or unitize any
land covered by this lease with any other land covered by this lease, and/or
with any other land, lease, or leases, as to any or all minerals or horizons, so
as to establish units containing not more than 80 surface acres, plus 10%
acreage tolerance; provided, however, units may be established as to any one or
more horizons, or existing units may be enlarged as to any one or more horizons,
so as to contain not more than 640 surface acres plus 10% acreage tolerance, if
limited to one or more of the following: (1) gas, other than casinghead gas, (2)
liquid hydrocarbons (condensate) which are not liquids in the subsurface
reservoir, (3) minerals produced from xxxxx classified as gas xxxxx by the
conservation agency having jurisdiction. If larger units than any of those
herein permitted, other at the time established, or after enlargement, are
required under any governmental rule or order, for the drilling or operation of
a well at a regular location, or for obtaining maximum allowable from any well
to be drilled, drilling, or already drilled, any such unit may be established or
enlarged to conform to the size required by such governmental order or rule.
Lessee shall exercise said option as to each desired unit by executing an
instrument identifying such unit and filing it for record in the public office
in which this lease is recorded. Each of said options maybe exercised by Lesser
at any time and from time to time while this lease is in force, and whether
before or after production has been established either on said land, or on the
portion of said land included in the unit, or on other land unitized therewith.
A unit established hereunder shall be valid and effective for all purposes of
this lease even though there may be mineral, royalty, or leasehold interests in
lands within the unit which are not effectively pooled or unitized. Any
operations conducted on any part of such unitized land shall be considered, for
all purposes, except the payment of royalty, operations conducted upon said land
under this lease. There shall be allocated to the land covered by this, lease
within each such unit (or to each separate tract within the unit if this lease
covers separate tracts within the unit) that proportion of the total production
of unitized minerals from the unit, after deducting any used in lease or unit
operations, which the number of surface acres in such land (or in each such
separate tract) covered by this lease within the unit bears to the total number
of surface acres in the unit, and the production so allocated shall be
considered for all purposes, including payment or delivery of royalty,
overriding royalty and any other payments out of production, to be the entire
production of unitized minerals from the land to which allocated in the same
manner as though produced therefrom under the terms of this lease. The owner of
the reversionary estate of any term royalty or mineral estate agrees that the
accrual of royalties pursuant to this paragraph or of shut-in royalties from a
well on the unit shall satisfy any limitation of limitation of term requiring
production of oil or gas. The formation of any unit hereunder which includes
land not covered by this lease shall not have the effect of exchanging or
transferring any interest under this lease (including, without limitation, any
delay rental and shut-in royalty which may become payable under this lease)
between parties owning interests in land covered by this lease and parties
owning interests in land not covered by this lease. Neither shall it impair the
right of Lesser to release as provided in paragraph 5 hereof, except that Lessee
may not so release as to lands within a unit while there are operations thereon
for unitized minerals unless all pooled leases are released as to lands within
the unit. At any time while this lease is in force Lessee may dissolve any unit
established hereunder by filing for record in the public office where this tease
is recorded a declaration to that effect, if at that time no operations are
being conducted thereon for unitized minerals. Subject to the provisions of
this paragraph 4, a unit once established hereunder shall remain in force so
long as any lease subject thereto shall remain in force. If this lease now or
hereafter covers separate tracts, no pooling or unitization of royalty interests
as between any such separate tracts is intended or shall be implied or result
merely from the inclusion of such separate tracts within this lease but Lessee
shall nevertheless have the right to pool or unitize as provided in this
paragraph 4 with consequent allocation of production as herein provided. As
used in this paragraph 4, the words "separate tract' mean any tract with royalty
ownership differing, now or hereafter, either as to parties or amounts, from
that as to any other part of the leased premises.
5. If operations are not conducted on said land on or before the first
anniversary date hereof, this tease shall terminate as to both parties, unless
Lessee on or before said date shall, subject to the further provisions hereof,
pay or tender to Lessor or to Lessor's credit in the Xxxxx Fargo Bank at 000 X.
Xxxx Xx., Xxxxx, Xxxxx 00000 or its successors, which shall continue as the
depository, regardless of changes in ownership of delay rental, royalties, or
other moneys, the sum $1,730.75 U.S. which shall operate as delay rental and
rover the privilege of deferring operations for one year from said date. In
like manner and upon like payments or lenders, operations may be further
deferred for like periods of one year each during the primary term. If at any
time that Lessee pays or tenders delay rental, royalties, or other moneys, two
or more parties are, or claim to be entitled to receive same, Lessee may, in
lieu of any other method of payment therein provided, pay or tender such rent at
royalties, or other money, in the manner herein specified, either jointly to
such parties or separately to each in accordance with their respective
ownerships thereof, as Lessee may elect. Any payment hereunder may be made by
check or draft of Lessee deposited in the mail of delivered to Lessor or too
depository bank on or before the last date for payment. Said delay rental shall
be apportionable as to said land on an acreage basis, and a failure to make
proper payment or lender of delay rental as to any portion of said land or as to
any interest therein shall not affect this lease as to any portion of said land
or as to any interest therein as to which proper payment or tender is made. Any
payment or tender which is made in an attempt to make proper payment but which
is erroneous in whole or in part as to parties, amounts, or depository shall
nevertheless be sufficient to prevent termination of this lease and to extend
the tone within which operations maybe conducted in the same manner as though a
proper payment had been made; provided, however, Lessee shall correct such error
within thirty (30) days after Lessee has received written notice thereof from
Lessor. Lessee may at any time and from time to time execute and deliver to
Lessor or file for record a release or releases of this lease as to any part or
all of said land or of any mineral or horizon thereunder, and thereby be
relieved of all obligations as to the released acreage or interest. If this
lease is so released as to all minerals and horizons under a portion of said
land, the delay rental and other payments computed in accordance therewith shall
thereupon be reduced in the proportion that the acreage released bears to the
acreage which was covered by this lease immediately prior to such release.
6. If at any time or times during the primary term operations are conducted
on said land and if all operations are discontinued, this lease shall thereafter
terminate on its anniversary date next following the ninetieth day after such
discontinuance unless on or before such anniversary date Lessee either(1)
conducts operations or (2) commences or resumes the payment or tender of delay
rental; provided, however, if such anniversary date is at the end of the primary
term, or if there is no further anniversary date of the primary term, this lease
shall terminate at the end of such term or on the ninetieth day after
discontinuance of all operations, whichever is the later date, unless on such
later date either (1) Lessee is conducting operations or (2) the shut-in well
provisions of paragraph 3 or the provisions of paragraph 11 are applicable.
Whenever used in this lease the word 'operations' shall mean operations for and
any of the following: drilling, testing, completing, reworking, recompleting,
deepening, plugging back or repairing of a well in search for or in an endeavor
to obtain production of oil, gas, sulphur or other minerals, excavating a mine,
production of oil, gas, sulphur or other mineral, whether or not in paying
quantities.
7. Lessee shall have the use, free from royalty, of water, other than from
Lessor's waterwells, and of oil and gas produced from said land in all
operations hereunder. Lessee shall have the right at any time to remove all
machinery and fixtures placed on said land, including the right to draw and
remove casing. No well shall be drilled nearer than 200 feet to the house or
barn now on said land without the consent of the Lessor. Lessee shall pay for
damages caused by its operations to growing crops and timber on said land.
8. The rights and estate of any party hereto may be assigned from time to
time in whole or in part and as to any mineral or horizon. All of the covenants,
obligations, and considerations of this lease shall extend to and be binding
upon the parties hereto, their heirs, successors, assigns, and successive
assigns. No change or division in the ownership of said land, royalties, delay
rental, or other moneys, or any part thereof, howsoever effected, shall increase
the obligations or diminish the rights of Lessee, including, but not limited to,
the location and drilling of xxxxx and the measurement of production.
Notwithstanding any other actual or constructive knowledge or notice thereof of
or to Lessee, its successors or assigns, no change or division in the ownership
of said land or of the royalties, delay rental, or other moneys, or the right to
receive the same, howsoever effected, shall be binding upon the then record
owner of this lease until thirty (30) days after there has been furnished to
such record owner at his or its principal place of business by Lessor or
Lessor's heirs, successors, or assigns, notice of such change or division,
supported by either originals or duly certified copies of the instruments which
have been properly filed for record and which evidence such change or division,
and of such court records and proceedings, transcripts, or other documents as
shall be necessary in the opinion of such record owner to establish the validity
of such change or division, if any such change in ownership occurs by reason of
the death of the owner, Lessee may, nevertheless pay or lender such royalties,
delay rental, or other moneys, or part thereof, to the credit of the decedent in
a depository bank provided for above. In the event of assignment of this lease
as to any part (whether divided or undivided) of said land, the delay rental
payable hereunder shall be apportionable as between the several leasehold
owners, ratably according to the surface area or undivided interests of each,
and default in delay rental payment by one shall not affect the eight of other
leasehold owners hereunder.
9. In the event Lessor considers that Lessee has not complied with all its
obligations hereunder, both express and implied, Lessor shall notify Lessee in
writing, setting out specifically in what respects Lessee has breached this
contract. Lessee shall then have sixty (60) days after receipt of said notice
within which to meet or commence to meet all or any part of the breaches alleged
by Lessor. The service of said notice shall be precedent to the bringing of any
action by Lessor on said lease for any cause, and no such action shall be
brought until the lapse of sixty (60) days after service of such notice on
Lessee. Neither the service of said notice nor the doing of any acts by Lessee
aimed to meet all or any of the alleged breaches shall be deemed an admission or
presumption that Lessee has failed to perform all its obligations hereunder. If
this lease is canceled for any cause, it shall nevertheless remain in force and
effect as to (1) sufficient acreage around each well as to which there are
operations to constitute a drilling or maximum allowable unit under applicable
governmental regulations, (but in no event less than forty acres), such acreage
to be designated by Lessee as nearly as practicable in the form of a square
centered at the well, or in such shape as then existing spacing rules require;
and (2) any part of said land included in a pooled unit on which there are
operations. Lessee shall also have such easements on said land as are necessary
to operations on the acreage so retained.
10. Lessor hereby warrants and agrees to defend title to said land against
the claims of all persons whomsoever. Lessor's rights and interests hereunder
shall be charged primarily with any mortgages, taxes or other liens, or interest
and other charges on said land, but Lessor agrees that Lessee shall have the
right at any time to pay or reduce same for Lessor, either before or after
maturity, and be subrogated to the rights of the holder thereof and to deduct
amounts so paid from royalties or other payments payable or which may become
payable to Lessor and for assigns under this lease. If this lease covers a less
interest in the oil, gas, sulphur, or other minerals in all or any part of said
land than the entire and undivided fee simple estate (whether Lessor's interest
is herein specified or not), or no interest therein, then the royalties, delay
rental, and other moneys accruing from any part as to which this lease covers
less than such full interest shall be paid only in the proportion which the
interest therein, if any, covered by this lease, bears to the whole and
undivided fee simple estate therein. All royalty interest covered by this lease
(whether or not owned by Lessor) shall be paid out of the royalty herein
provided. This lease shall be binding upon each party who executes it without
regard to whether it is executed by all those named herein as Lessor.
11. If, while this lease is in force, at, or after the expiration of the
primary term hereof, it is not being continued in force by reason of the shut-in
well provisions of paragraph 3 hereof, and Lessee is not conducting operations
on said land by reason of (1) any law, order, rule or regulation, (whether or
not subsequently determined to be invalid) or (2) any other cause, whether
similar or dissimilar, (except financial) beyond the reasonable control of
Lessee, the primary term and the delay rental provisions hereof shall be
extended until the first anniversary date hereof occurring ninety (90) or more
days following the removal of such delaying cause, and this lease maybe extended
thereafter by operations as if such delay had not occurred.
IN WITNESS WHEREOF, this instrument is executed on the date first above written.
LESSOR: LESSEE:
/s/ Xxxxx Xxxxxxxxxx Thrust Energy Corp., a Nevada corporation
Xxxxx Xxxxxxxxxx
/s/ Xxxxxxxx Xxxxxxxxxx By: /s/Xxxxxx Xxxxx
Xxxxxxxx Xxxxxxxxxx Name: Xxxxxx Xxxxx
Title: President
By: /s/Xxxxx Xxxxxxxxxx
LESSOR
Xxxxx Xxxxxxxxxx her attorney in fact
STATE OF
COUNTY OF ACKNOWLEDGMENT
This instrument was acknowledged before me on the 19th day of August, 2005, by
Xxxxx Xxxxxxxxxx individually and as agent for Xxxxxxxx Xxxxxxxxxx.
Xxxxx X. Xxxxx
Notary Public, State of Texas
My Comm. Exp. 10-10-2006
PROVINCE OF BRITISH )
COLUMBIA, CANADA )
)
CITY OF VANCOUVER )
The Oil, Gas and Mineral Lease, as between Xxxxx Xxxxxxxxxx and wife
Xxxxxxxx Xxxxxxxxxx (as Lessor) and Thrust Energy Corp. (as Lessee) dated July
31, 2005 for certain oil, gas and mineral lands in Xxx Xxxxx County, Texas, was
acknowledged before me on the 8th day of August, 2005, by Xxxxxx Xxxxx,
President of Thrust Energy Corp., a Nevada corporation, on behalf of said
corporation.
Notary Public in and for the province of British Columbia, Canada
My Commission Expires: December 31, 2005
Xxxxxx A.S. Fogarassy
Barrister & Solicitor
000-000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Telephone 000-000-0000
ADDENDUM
ATTACHED TO AND BY REFERENCE MADE A PART OF THAT CERTAIN OIL, GAS AND MINERAL
LEASE MADE AND ENTERED INTO BY AND BETWEEN XXXXX XXXXXXXXXX AND WIFE XXXXXXXX
XXXXXXXXXX, AS LESSOR, AND THRUST ENERGY CORP., A NEVADA CORPORATION, AS LESSEE,
UNDER DATE OF JULY 31, 2005.
12. Notwithstanding anything to the contrary, in the event of conflict
between the provisions of this ADDENDUM and the printed pages of the Oil, Gas
and Mineral Lease, the terms of this ADDENDUM shall control and supersede the
provisions of the printed Oil, Gas and Mineral Lease.
13. SUBSTANCES COVERED: This Lease covers oil, gas, casinghead gas, other
gaseous substances and associated hydrocarbons in either a liquid or gaseous
phase or state and such minerals as may be produced in association with the
production of oil, gas, casinghead gas, other gaseous substances and associated
hydrocarbons; provided, however, that nothing in this Lease shall be deemed to
authorize the gasification or in situ combustion of coal or lignite, and this
Lease shall not be deemed to cover either coal or lignite. The classification of
a well as either a gas well or oil well by the Texas Railroad Commission shall
be conclusive in respect of its classification under the terms of this Lease.
14. ADDITIONAL ROYALTY PROVISIONS: Notwithstanding anything herein to the
contrary, the Lessee shall pay to the Lessor royalties as follows:
a. It is agreed and understood by Lessor and Lessee that all royalty
payments referred to in this Agreement as one-eighth (1/8) shall be construed to
be and are hereby changed to be one-fourth (1/4), this shall include oil, gas,
sulfur and associated liquid or liquifiable hydrocarbons. It is further agreed
and understood that Lessee shall pay the Lessor a royalty equal to one-fourth
(1/4) of the gross proceeds of sale of all oil and/or gas and saved in any
combination from the leased premises as further set forth below.
b. Should oil be produced from any well, the gross proceeds of sale of lease
products of such oil shall be free to the Lessor of any cost to whichever point
is first encountered: 1) the point of sale to an independent nonaffiliated third
party purchaser; or 2) to an affiliated purchaser, provided the sale is at
prevailing market rates; or 3) the point of entry into an independent
nonaffiliated third party owned pipeline system; or 4) the point of entry into
an affiliate owned pipeline system, provided transportation rates are at
prevailing markets rates. Upon written request by the Lessor, written
justification of changes made by the Lessee must be submitted and agreed to in
writing by the Lessor.
c. Should gas, including casinghead gas, be produced and saved from any
well, the gross proceeds of sale of lease products of said gas shall be free to
the Lessor of any cost to whichever point is first encountered: 1) the point of
entry into a facility to remove CO2, H2S, N2 or obtain plant products; or 2) the
point of entry into an independent nonaffiliated third party owned pipeline
system; or, 3) the point of entry into a pipeline system owned by a gas
distribution company, or any subsidiary or such gas distribution company, which
is regulated by the Railroad Commission of Texas or, 4) the point of entry into
an affiliated pipeline system, if the rates charged by such pipeline system are
reasonable, as compared to independent pipeline systems, based on such pipeline
system's location, distance, cost of service and other pertinent factors. Upon
written request by the Lessor, written justification of changes made by the
Lessee must be submitted and agreed to in writing by the Lessor.
d. The Lessee agrees that all royalties accruing to the Lessor herein shall
be without deduction of any costs incurred by the Lessee except as agreed
herein. Except for all taxes and fees levied upon oil and gas produced,
including, without limitation, severance taxes, Lessor's royalty is to be free
and clear of all costs, claims, charges and expenses of any nature, including
third party post production costs on or off the premises except as herein
provided, and except for the reasonable costs of CO2, H2S and N2 removal, there
shall be no deduction for the cost of gathering, separating, dehydrating,
compressing or treating the gas to make it marketable. Unless otherwise
specifically agreed in writing, there shall be no deduction for transportation
costs prior to entry of gas into a pipeline system.
14.1. ROYALTY ON LOST PRODUCTION: Lessee shall be liable to Lessor for the
royalty on any and all oil or gas which may be lost or wasted due to leakage,
fire or other reasons which are as a result of the Lessee's gross and willful
negligence.
15. TIME, METHOD AND MANNER OF PAYMENT: Lessee agrees that all royalties which
are required to be paid hereunder shall be due and payable within sixty (60)
days after the month of production of oil or gas or other products covered
hereby; provided however, on the first month's production, the royalty payment
may be paid within sixty (60) days after the first sales and in no event longer
than sixty (60) days after the end of the month of which the oil or gas was
produced. Lessor, at Lessor's option, may be paid directly from the first
purchase of oil covered hereby. The execution and delivery of a division order
shall never be a requirement or condition precedent to distributing actual
royalties to Lessor unless in the form prescribed by the Texas Natural Resources
Code. If required by the Lessee, as a condition to payment, Lessor will execute
and deliver to Lessee or the purchaser of oil and gas, a written statement of
Lessor's interest in minerals or royalties and his current address and social
security or taxpayer's identity number. Lessor agrees to reimburse Lessee for
incorrect or unauthorized payment. Any royalty not paid within the time
specified herein shall be deemed delinquent and shall bear simple interest at
the rate of twelve (12%) percent per annum, or if lesser, the maximum amount of
nonusurious interest that may be lawfully charged. Neither Lessee nor its
purchaser of oil or gas shall be authorized to make any deductions or
adjustments against present or future royalty payments for royalty amounts
previously paid without first giving Lessor or royalty owner thirty (30) days
advanced notice of same along with a full explanation of such overpayment.
Lessee expressly grants to Lessor and any royalty owner the right to audit
production, revenue and the calculation and payment of revenues to Lessor and
royalty owners, by such royalty owner giving Lessee notice of the exercise of
this right and, within 30 days after receipt of such notice, Lessee shall make
available to the requesting royalty owner at Lessee's offices all books and
records and gas contracts (together with copies thereof if requested by royalty
owners' expense) along with all other data necessary for royalty owner or his
agent to audit such production, revenue and/or royalty payments.
16. MINIMUM INCOME CLAUSE: Anything in this lease to the contrary
notwithstanding, Lessee, its successors and assigns, shall pay to Lessor a
minimum guaranteed royalty in the event of production, which will be in a sum
not less than the annual delay rental, or Twenty Five Dollars ($25.00) per acre,
whichever is greater, multiplied by the number of acres allocated to proration
unit(s), as prescribed in Paragraph 17A, for producing well(s) located on or
pooled with the leased premises. Also, no tender or payment of minimum income as
provided in this paragraph shall ever perpetuate this lease or be construed as
constructive production in paying or commercial quantities.
17. POOL1NG: (i) Lessee shall have NO right to pool until and unless Lessee
has first developed all said lands available for development under the formula
set out in Paragraph 17 A below and there remains insufficient acreage to
constitute a retained tract called for under Paragraph l7 A below unless
otherwise agreed by written instrument by Lessee and Lessor. Thereafter, pooling
and/or unitization is permitted; however, all such remaining production acreage
shall be included in the pooled unit created, and the royalties payable from
production under such pooled unit shall be paid on a surface acreage basis.
(ii) Subject to subparagraph 17(i), Lessee's rights and power
to pool or combine said premises or part thereof, as to gas or oil, with any
other land, shall be in proration unit(s) not exceeding the acreage for
proration units provided in Paragraph 17A. For the purposes of this lease,
horizontal completion and the classification of a well as an oil or gas well
shall be provided in Paragraph 17A. The point of production for purposes of this
paragraph shall be the deepest producing perforation at the given time should
governmental authority having jurisdiction permit. The creation of a larger
units in order to obtain the maximum proration allowable, then such units shall
be increased in size to conform to the requirements for such allocation units.
17A. PRORATION UNITS: Within 120 days after the completion of any well
located on the leased premises or pooled with a portion of the leased premises
as permitted hereunder, Lessee shall designate and describe in writing that part
of leased premises allocated to such well for production purposes, which shall
be referred to as a proration unit, and such designation shall be filed in the
Official Records of Xxx Xxxxx County, Texas; provided however, no more than
forty (40) acres of land shall be allocated to a proration unit for a vertically
producing oil well if completed at a depth 9,000 feet or less below the surface;
no more than eighty (80) acres of land shall be allocated to a proration unit
for a vertically drilled producing oil well if completed at a depth of more than
9,000 feet below the surface; no more than 160 acres of land shall be allocated
to a proration unit for a vertically drilled producing gas well completed at a
depth 9,000 feet or less below the surface; and no more than 320 acres of land
shall be allocated to a proration unit for a vertically drilled producing gas
well if completed at a depth of more than 9,000 feet below the surface; and not
more than 640 acres shall be allocated to a proration unit for a well that is a
horizontal completion producing oil well and not more than 640 acres for a well
that is horizontal completion producing gas well. For purposes of this lease,
horizontal completion means an oil or gas well in which the horizontal component
of the gross completion interval exceeds 150 feet in length in the Xxxxxx Xxxxxx
Formation, Buda Limestone Formation or any other formation located below the
base of the Xxxxxx Xxxxxx and the classification of a well as an oil or gas well
shall be pursuant to the rules and regulations of the Texas Railroad Commission.
The acres allocated to each proration unit may be increased by a ten per cent
(10%) tolerance and on each occasion during the primary term or during a period
after the primary term that Lessee is then engaged in the actual drilling of a
well in search of oil or gas on the land covered hereby or has drilled a well
within a period of 180 days, if a producing well is (a) recompleted at different
depths and/or (b) recompleted as an oil well after previously completed as a gas
well, the acreage and depths which may be retained around such well shall vary
and be adjusted according to the formula set forth above. Notwithstanding the
above, in the event the Railroad Commission of Texas (or other governmental
authority having jurisdiction) requires, as opposed to permits, pursuant to
applicable field rules, the allocation of larger tracts of land to the proration
unit to any such producing well in order to obtain the maximum production
allowable, then the proration may be increased to the amount of acreage
surrounding each well required to obtain such fill allowable. Each such
proration unit shall be in the form of a square or rectangle to the extent
reasonably practicably with the well located thereon being sufficient distances
from the boundary lines of such retained tract as to comply with the rules and
regulations of the Railroad Commission of Texas.
18. RELEASE CLAUSE: Notwithstanding any other provision in this lease to
the contrary, at the expiration of the primary term of this lease or, if later,
the end of the extended period provided below, this lease shall terminate SAVE
AND EXCEPT the interest of Lessee in and to that part of the leased premises
allocated to each proration unit upon which a producing well is located in
accordance with the acreage limitation provided in Paragraph 17 A; and further
SAVE AND EXCEPT that part of the leased premises included in a pooled unit in
accordance with Paragraphs 17 and 17 A upon which a producing oil or producing
gas well is located; and further SAVE AND EXCEPT the interest of Lessee under
each such retained tract from the surface to one hundred feet (100') below the
stratigraphic equivalent of the base of the then deepest producing formation in
which the Lessee has an interest, together with acreage around such wellbore
that corresponds with the formula set forth above. For the purposes of this
Paragraph 18, the point of production for purposes of determining the amount of
acreage which Lessee may allocate to each well shall be the deepest producing
perforation at the date release or partial release are called for in this
paragraph and at that time, the acre designations may be increased by a ten per
cent (10%) tolerance. Notwithstanding the above, in the event the Railroad
Commission of Texas (or other governmental authority having jurisdiction)
requires, as opposed to permits, pursuant to applicable field rules, the
allocation of larger or smaller tracts of land or units to any such producing
well in order to obtain the maximum production allowable, then this lease shall
continue in force and effect as to the amount of acreage surrounding each well
required to obtain such full allocation. Lessee shall, upon the expiration of
this lease or parts hereof, file of record in the office of the County Clerk of
Xxx Xxxxx County, Texas, an instrument releasing this lease insofar as said
lease has terminated, specifically describing by metes and bounds the retained
tracts surrounding each producing well and the depths which may be retained by
the Lessee thereunder. If requested by Lessor, Lessee shall, whether prior to
recording such release or later, deliver to Lessor a plat depicting the location
of each retained tract along with the log of each well within a retained tract
and proof of the depth claimed by Lessee to be retained within each tract.
If, on the dates the partial releases called for herein would otherwise be
required, Lessee is then engaged in the actual drilling of a well in search of
oil or gas on the land covered hereby or has drilled a well thereon within a
period of one hundred and eighty (180) days prior to such date (i.e. the
extended period referred to above), then the provisions of this Paragraph 18
shall not be applicable until such time as the Lessee allows a period of one
hundred and eighty (180) consecutive days to lapse between the completion of a
well and the actual commencement of drilling (as defined under definitions
below) on subsequent well or xxxxx on the lands covered hereby or pooled lands
herewith. Provided however, Lessee shall be entitled to accumulate and later use
time saved between the drilling of xxxxx up to a maximum of one hundred and
eighty (180) days; however, Lessee shall inform Lessor in writing of time saved
and of Lessee's intent to use such time in the future.
At such time as a partial termination of this lease occurs under the provisions
of this paragraph, each retained tract shall be considered as a separately
leased tract, in the same manner as if Lessor had executed separate and distinct
leases covering each such retained tract. Lessee shall not be obligated to
protect against drainage, if any, between and among "separately leased tracts".
Notwithstanding a partial termination of this lease under the above provisions,
it is agreed that Lessee have and retain such easements of ingress and egress
including the right to lay pipelines over those lands partially released so as
to enable Lessee to develop and operate the retained tracts. Further, it shall
not be necessary for Lessee to remove or relocate any pipelines, tanks and
batteries or other surface equipment or installations from any portions of this
lease, which have terminated for so long as it continue to be used for the
development of and operations on such retained tracts.
The formula set forth in Paragraph 18 above for retaining tracts shall not be
construed as an agreement or stipulation on the part of Lessor that such
drilling constitutes reasonable development of the leased premises. Lessee
agrees to drill such additional well or xxxxx on each retained tract, (or such
portion or portions thereof as may be in force and effect from time to time); as
would a reasonably prudent Operator to reasonably develop the same for the
production of oil and/or gas.
In the event Lessee fails to timely record said release or partial release
required under this lease pursuant to Paragraph 17 A herein, Lessor shall, if
such release is not recorded within sixty (60) days of receipt of written demand
of Lessor, be entitled to execute and record an affidavit indicating expiration
of the lease period. It is expressly agreed and understood by Lessor and Lessee
that such affidavit shall effect as a release executed by the Lessee.
19. ASSIGNMENT CLAUSE: Lessee agrees that there shall be no full assignment
of this lease without Lessor's prior written consent, however, Lessee shall be
permitted to assign fractional interest of this lease to partnerships or joint
ventures in which Lessee is a partner or co-venturer, or to participants in the
form of fractional undivided working interest, provided that Lessee retains the
operational rights and responsibilities hereunder. It is further agreed Lessee
shall remain liable as a surety for performance for all of Lessees obligations
hereunder and in the event of performance, Lessor shall be entitled to all of
its remedies to Lessee and each of its assigns thereafter.
20. LIMITATION ON SHUT-IN: It is expressly agreed that Lessee's right to
maintain this lease in force after the primary term by shut-in gas well payments
shall not continue for any one shut-in period of more than two (2) years
immediately following the primary term, or in reocurring periods after the
primary term not to exceed three (3) years in the aggregate and that shut-in
payments shall be Twenty Five and no/100 Dollars ($25.00) per each acre for each
acre of land then covered by this lease, which payment shall maintain the lease
in full force and effect for a period of one (1) year from date such well is
completed or shut-in.
21. SURFACE PROTECTION CLAUSES: As a part of the consideration for this
lease Lessor and Lessee agree as follows:
21.1. ROADS AND GATES: Lessee agrees, the extent practicable in its
operations, to use existing gates and roadways. Lessee and all persons entering
or leaving said lands in connection with Lessee's operations hereunder shall
keep all outside and interior gates along the route or routes designated for
such use securely closed except when vehicles are passing through. Lessee
agrees to keep gates locked as reasonably requested by surface owner. With
respect to new roadways, Lessee agrees to consult with surface owner as to the
location and to reasonably accommodate surface owner in selecting reasonable
access and will construct such diversion terraces along new roads to reduce soil
erosion. No new openings to, or leading to the county road shall be made
without the surface owner's consent. Upon the construction of any new roads,
damages shall be paid by Lessee to surface owner for new construction of the
roads at One and 25/100 Dollars ($1.25) per foot. Lessee will regularly grade
the roads it uses and maintain such roads for passage by ear. Lessee will make
all repairs and maintenance within a reasonable time not to exceed thirty (30)
days after notice by Lessor or surface of the need for such repair or
maintenance. If Lessee uses any roads concurrently with other mineral leases,
then Lessee shall be obligated for its proportionate part or share of the
resulting deterioration of commonly used roads as well as all responsibility for
road damages caused solely by Lessee.
21.2. FENCES: Lessee shall consult with surface owner prior to cutting any
fence. If Lessee desires to cut a boundary fence, Lessee must obtain permission
from the adjoining landowner prior to cutting any fence. Should it be necessary
to cut any fence or fences on the leased premises for the purposes of passage
and Lessee obtains permission (which permission shall not be unreasonably
withheld) from the surface owner (and as to boundary fences, from the adjoining
landowner). Prior to cutting such fence there shall be installed six (6) 10-foot
posts with not less than 8-inch tops, each buried five (5) feet into the ground
with three (3) posts on each side of the proposed cut. The posts are to be
properly braced with horizontal braces and wired so that when the fence is cut,
there will be no slackening of the wires. After any interior fence is cut, a
metal gate shall immediately be placed in the fence, which if requested by
Lessor or surface owner, shall be locked. Lessee shall install a cattle guard
and metal gate across the same together with an aluminum gate adjacent to said
cattle guard at all intersections of ranch fences and roads to be used by
Lessee, which shall be left in place at the termination of the lease and become
the property of the surface owner.
21.3. DRILLSITE LOCATIONS AND OPERATIONS: It is agreed by and between the
Lessor and Lessee that location of any well(s), access road(s), pipeline(s)
route, electrical and/or communications route shall be approved by the Lessor or
one of their representatives in writing prior to location thereof. However,
such approval shall not be unreasonably withheld. Lessee will maintain all
improvements used in connection with Lessee's operation in a good state of
repair and will promptly cause to be repaired and restored any damage to such
resulting from Lessee's use or operations. Drilling mud pits shall be lined and
the liner shall be of such material and qualities and installed in such a
fashion as to prevent the loss of fluids. On each drillsite, the slush pits,
tanks, separators, treaters and any other pertinent well and lease equipment
above the surface on or off the drillsite including tank batteries shall be
enclosed by a barded wire fence capable of turning livestock promptly after the
completion of any drilling operations and such fence shall be maintained by
Lessee for so long as such equipment remains on leased premises or during the
period of production resulting from such operations. No drilling operations,
pipeline construction, seismic lines or operations of any nature shall be
conducted within 300 feet of any house, camphouse, barns, water xxxxx or
permanent improvements, without express written consent of the surface owner.
Lessee agrees to protect the surface of the leased premises from water erosion
caused by its operations by building and maintaining such water diversion
terraces as necessary. Lessee will use every effort to prevent fires on said
lands and will use every effort to prevent papers, boxes, sacks and containers
and waste materials of any kind from coming on said land and littering the
premises. Prior to use, Lessee shall pay the surface owner for each drill site
and tank battery and pit location, if not located within the drill site, not
less than Two Thousand and no/l00 Dollars ($2,000.00) per acre and not more than
the highest purchase price paid within the area per acre for comparable land
with comparable use. Lessee agrees that at all times the leased premises shall
be used, operated and constructed in compliance with all applicable laws,
statues, rules and regulations of any governmental authority having jurisdiction
including, without limitation, all safety regulations and requirements of the
U.S. Department of Transportation and all environmental laws, statues, rules and
regulations of any federal, state or local authority at any time applicable to
this lease.
21.4. DRILLSITE RESTORATION: Within ninety (90) days after completion or
abandonment of any well drilled on said lands, Lessee will clean up the well
site and remove from said lands any and all oil and/or gas waste materials, oil
spills, junk, and any material and substances that might cause injury to person
or livestock; will level all mounds and generally restore such location to its
original condition as is reasonably practicable except for the minimum amount of
surface needed to service a well and the reserve pit( s) shall be filled, level
and restored within six (6) months after completion of a well. Upon the
abandonment of each well, all gravel and other material shall, at the option of
surface owner, either be removed or stacked and each drill site, tank battery
location and/or pit shall then be restored by placing top soil thereon in such
quantity and manner that grass and other vegetation may grow thereon, and Lessee
shall plant locations with Coastal Bermuda as surface owner may reasonably
request.
21.5. SURFACE FACILITIES: By the acceptance hereof, Lessee agrees that
prior to erecting any pipeline, compressor stations or other non-drilling
related lease facilities which may be needed by Lessee for producing oil and gas
and operating this lease, Lessee shall advise Lessor of Lessee's intentions.
Lessor and Lessee will then mutually select the site or sites for locating
equipment and pipeline, taking into consideration the operations of Lessor and
surface owner and Lessee's needs in conducting its operations under the terms of
this lease in a reasonable manner, however, said site(s) shall be approved by
the Lessor or one of their representatives in writing prior to location thereof.
Such approval shall not be unreasonably withheld. Lessee is prohibited from
constructing any, oil or gas refinery, or plant, on the leased premises without
first obtaining a separate written lease agreement with Lessor except a refinery
or plant used solely for oil or gas produced from the leased premises.
21.6. CONTAMINATION: Lessee will use every effort to prevent the escape of
saltwater or other noxious materials and will not permit same to run into any
surface water tank, water well, creek, ravine, or upon or over the premises, nor
to penetrate, seep, flow or be injected into any subsurface fresh water stratum,
but will be contained and disposed of in keeping with applicable governmental
rules and regulations. Lessee has no right to dispose of salt water on the
leased premises or use any well located on the leased premises for salt water
disposal.
21.7. REMOVAL OF EQUIPMENT: Except as otherwise provided herein, Lessee
shall have the right, at any time within six (6) months after the termination of
this lease to remove and property and fixtures placed on said land, except for
downhole tubing and rods which shall belong to Lessor as provided in
subparagraph 21.10 if Lessee fails to remove such property and fixtures within
said six (6) months, such property and fixtures shall be deemed abandoned by
Lessee and Lessor or surface owner (if different from Lessor) shall have the
option but not the obligation to either take possession thereof and dispose of
the same as Lessor sees fit provided, however, Lessee shall not be relieved of
any liability resulting from any operations on leased premises including the
duty to plug any well abandoned.
21.8. DAMAGES TO PROPERTY: Lessee agrees to pay Lessor or surface owner for
damages or repair such damages resulting to the surface of said lands and
damages to, but not limited to, ranch roadways used by Lessee, fences, gates,
cattle guards, houses, barns, windmills, cattle, livestock and wildlife caused
by Lessee's operations or such damages as Lessor may incur by reason of Lessee's
failure to comply with the terms of this lease. Except as otherwise provided in
EXHIBIT "A", compensation for all damages to property shall be based on the
replacement value thereof or the prevailing rates for similar damages in the
area at the time, whichever is greater.
21.9. SEISMIC AND PIPELINE PAYMENTS: If Lessee conducts seismic operations
on Lessor's (or surface owner if different from Lessor) lands or should Lessee
lay pipelines across the leased premises, then Lessee shall be required to
compensate the surface owner based on the prevailing rate being paid in the area
at the time for surface damages as a result of such operations. Seismic permit
agreements must be prepared and presented to the surface owner along with
estimated compensation to be paid to the surface owner thereof, prior to
commencement of such operations. Nothing herein shall restrict Lessee's right to
lay pipelines for transportation of lease gas or conduct seismic operations on
leased premises. All pipeline locations shall be shown in advance to surface
owners, sendoros shall be blade wide, shall be disked and planted in Coastal
Bermuda grass, and dog-legged at the boundary lines as instructed by the surface
owners and terraces shall be constructed across any clearings or pathways made
by Lessee in such a manner as may be necessary to prevent erosion. Each
pipeline right-of-way shall be reduced to writing on a form agreed by surface
owner and Lessee. Surface owner shall have the right to require the pipelines
be cut off from other lines at the termination of the Lease. All pipelines shall
be buried at leased thirty-six (36) inches below the surface.
21.10. SURFACE WATER: Lessee has no right to use water from stock tanks,
lakes, creeks, or rivers located on said lands or from Lessor's well's without
Lessor's prior written consent.
21.11. HUNTING AND FISHING PROHIBITED: A material consideration to the granting
of this lease is that no employee, representative or contractor of Lessee or any
other person allowed to come upon said land by Lessee, shall be permitted to
hunt, fish, swim, camp or picnic on said land and no dog, gun, firearm, fishing
equipment or other sporting paraphernalia of any type will be permitted on the
premises. Lessees shall use due diligence to prevent anyone entering the said
land from hunting or shooting at or killing wild game, or bringing or keeping
any type of dog or livestock on such property. There shall be no drugs or
alcohol on said land at any time.
22. ENVIRONMENTAL ISSUES: Lessee shall comply with all environmental laws
and regulations in the conduct of all drilling and producing operations on the
Lands and agree that Lessee shall not store nor dispose of toxic or Hazardous
chemicals or wastes on the Lands.
23. INDEMNITY: Lessee agrees to indemnify, protect and bold Lessor harmless
of and from any and all claims, demands, costs, expert fees, reasonable attorney
fees, expenses, damages, losses, causes of action or suits for damages (i)
arising out or from injury to persons (including death) and/or injury or damage
to or loss of any property or improvements caused by Lessee, its agents,
employees, servants, contractors or any person acting under its direction or
control; (ii) arising out of or any and all breach of the environmental
covenants below or any other covenant of Lessee and/or (iii) arising out of,
from or under any state, federal or local laws as a result of Lessee operations
on the Lands including, but not limited to, any environmental laws and any and
all environmental liability caused by Lessee on the land and the oil, gas and
other mineral estate covered by this lease. Further, neither Lessor nor surface
owner shall ever be liable for any claims, demands, costs, expenses, damages,
losses, causes of action or suits for damages because of injury to persons or
property resulting from the acts or omissions of Lessee, its agents, employees,
servants, contractors or any person acting under its direction and control on
the land covered by this lease; provided however, in the event Lessor files any
lawsuit asserting any claim(s) against Lessee, then Lessor's attorney fees
unless Lessor's attorney fees are awarded to be paid by Lessee by a court of
competent jurisdiction.
24. GOVERNING LAW: This lease shall be governed by, interpreted, construed,
and applied in accordance with the laws of the State of Texas. It is further
agreed by and between Lessee and Lessor, any suit brought as a result or arising
out of this Lease and/or Exhibit "A" attached thereto shall be filed in Xxx
Xxxxx County, Texas.
25. FORCE MAJEURE: Lessee shall not be liable for delays in Lessee's
performance of any covenant or condition hereunder, express or implied, or for
total or partial non-performance thereof, due to force majeure. The term "force
majeure", as used herein, shall mean any circumstance or any condition
reasonably unforeseen and reasonably beyond the control of Lessee, including
acts of God, acts of the public enemy, strikes, lockouts and accidents. If
Lessee is required to cease operations or work on the Lands by force majeure,
then until such time as such force majeure is terminated, and for a period of 90
days after such termination, each and every provision of this Lease that might
operate to terminate it shall be suspended and this Lease shall continue in full
force and effect during such suspension period. If any period of suspension
occurs before the Expiration Date, the term thereof shall be added to such
Primary Term. The provisions of this Paragraph shall have no applicability in
respect of any payments required to be made under any provision of this Lease,
it being expressly understood and agreed that the provision of this Paragraph
shall not override any requirement of such payments.
26. WARRANTY: Lessor does not warrant title, either express or implied, to
the Lands described in this lease.
27. EASEMENTS AND RESTRICTIONS: This lease is subject to all restrictions,
easements, agreements and instruments affecting the lands covered hereby and
presently appearing of record in the County in which such lands are located.
28. RECORDING: Lessee shall have the right to record this Lease or a
memorandum out-lining the primary terms in the public record.
29. MULTIPLE ORIGINALS: This Lease may be executed in multiple originals,
all of which shall be considered counterparts of one another. This Lease shall
be binding upon the parties who execute it as and when executed, whether or not
executed by all parties, and shall be binding upon and inure to the benefit of
the respective heirs, successors, representatives, and assignees of the parties
hereto. This Lease is not intended to create any partnership, association,
association for profit, or any other relationship by which either Lessor or
Lessee shall be liable for the acts, either of omission or commission, of the
other.
30. DRAINAGE: Notwithstanding anything herein to the contrary, Lessee, as a
reasonably prudent operator, shall at all times protect the leased premises from
drainage of oil and gas on adjoining lands.
31. DEFINITIONS:
31.1. "Production", "production in paying quantities", "production in
commercial quantities" and "production in paying commercial quantities" shall
have the same meaning for purposes of this lease, namely production in
quantities sufficient to yield a return to the holders of the working interest
excluding severance taxes, in excess of the operating expenses and costs
(including all costs recognized by court precedent in Texas which are included
in determining whether oil or gas is being produced in paying or commercial
quantities), even though drilling costs may never be recouped by working
interest owners.
31.2. "operations for drilling", "drilling operations", "commencement of
operations", "commence operations", "commence drilling operations", "commences
drilling operations" shall have the same meaning being a drilling rig capable of
performing the drilling in position with the drillbit turning and the timely
prosecution of such drilling in good faith and with reasonable diligence toward
the completion of same as a dry hole or commercial well.
31.3. "operations for reworking", "reworking operations", "commencement of
reworking operations", "commence reworking operations", "commences reworking
operations" and "actual reworking operations" shall have the same meaning being
the actual re-entry of the drillbit with the drillbit turning into an existing
wellbore with a drilling or workover rig capable of re-entering and reworking
such well and the timely prosecution of such actual reworking operations in good
faith and with reasonable diligence toward the re-establishment or enhancement
of commercial production of oil or gas from such previously producing zone or
zones.
31.4. "Completed", "completion" shall have the same meaning and the date a
well is completed shall be (1) the date of the potential test conducted for
Railroad Commission purposes or (2) thirty (30) days after the drilling rig is
released from such well or (3) the date a well is abandoned as a dry hole,
whichever happens sooner.
31.5. "Shut-in": A well shall be considered and defined as "shut-in" on the
earlier of the following dates: (1) the date of the potential test conducted for
Railroad Commission purposes; (2) thirty (30) days after the drilling rig is
released; or (3) thirty (30) days after the day that a commercial well ceases
actual production.
31.6 "Dollar or Dollars": For the purposes of this lease the words Dollar
and Dollars shall be defined as the currency of the United States of America
("U.S.").
32. PREPARATION OF LEASE: The parties hereto expressly agree and stipulate
that there shall not be a presumption that this lease shall be construed more
strongly against the party drafting this lease or any paragraph, clause or
provision hereof.
33. OPTION TO EXTEND PRIMARY TERM: In consideration of the acceptance of
this lease by the Lessee, the Lessor agrees for himself and his heirs,
successors and assigns, that no other lease for the oil, gas and minerals
covered by this lease shall be granted by the Lessor during the term of this
lease or any extension or renewal thereof granted to the Lessee herein. If at
the expiration of its primary term, this Lease has not been or is not being,
extended pursuant to any of its provisions, then Lessee, its successors or
assigns shall have the option to extend the primary term of said lease for an
additional Five (5) years by paying or tendering to Lessor by certified payment
and delivery to Lessor or to Lessor's credit in a depository bank as hereinabove
provided, the sum of One Hundred Fifty and no/100 Dollars ($150.00) multiplied
by the total number of mineral acres subject to this lease and by amending the
annual delay rental provision to the sum of Fifty and no/l00 Dollars ($50.00)
per net mineral acre during the secondary term. Said payment or tender shall be
made on or before the expiration date of the initial primary term. Lessee shall
notify Lessor of its intention to exercise this option prior to 30 days before
expiration of the initial term.
34. INFORMATION REQUIRED: As a further condition for this Lease and not a
covenant only, Lessee agrees to furnish to Lessor designated representative and
agent, at the address specified on the signature page hereof, within 48 hours of
becoming available, unless stated otherwise, true and correct copies of the
following information:
34.1 When filed with the Agency, an official survey plat showing the
location of any well proposed to be drilled on the Lands or on lands pooled
therewith if authorized by the Lease;
34.2 Application to drill duly approved by the Agency, or if a separate
drilling permit is issued, the drilling permit;
34.3 Written notification of commencement of any operations;
34.4 Daily drilling report for each well, transmitted daily by telecopy;
34.5 All logging surveys, wireline tests, drillstem test charts, core
analyses or other third party information as may be run or prepared in the
drilling of such well;
34.6 Potential test or completion report filed with the Agency;
34.7 Notification of first sales of oil and/or gas from such well;
34.8 Plugging record, if completed as a dry hole or if subsequently
abandoned;
34.9 Any information Lessee obtains with respect to the Lands or any well or
xxxxx on the Lands (including, without limitation, title opinions, information
with respect to offset xxxxx, copies of interpreted Three Dimensional (3D)
seismic data including original (thermal) time-slice maps on horizons to be
selected by Lessor, geologic and geophysical surveys, whether by seismograph,
gravity, magnetic or other non-intrusive activity).
34.10 A fully executed duplicate original and also a recorded copy of this
Lease and/or Memorandum of Lease.
34.11. ACCESS: Lessee hereby acknowledges Lessor's right of access to all
operations conducted on the leased premises, including the drilling rig,
wireline logging truck or trailer, mud logger's truck or trailer and the right
to inspect all surveys, tests, cores and cuttings obtained thereby. All books,
accounts and other records pertaining to production, transportation, sale and
marketing of oil, gas or products from the Lands shall at any time during normal
business hours be subject to inspection and examination by Lessor and its
representatives. Any harm or injury incurred by Lessor as a result of reliance
upon such information or access to operations shall be solely at Lessor's risk.
34.12. CONF11DENTIALITY: For a period of one year from date of receipt of
such non-public information or if sooner until such information is generally
available to the public, Lessor agrees to keep confidential all nonpublic
information obtained under the terms of this paragraph and will not divulge such
non-public information to parties other than other mineral or royalty owners
under this lease, Lessor's or Lessee's attorneys, geologists, petroleum
engineers, accountants, financial consultants, guardians, designated
representatives/agents, or other personal or legal representatives, (who will be
informed to keep such information confidential); provided however, this
confidentiality provision shall not apply to any such information divulged,
released or made public as a result of or pertaining to the filing of any
lawsuit or any court proceeding or discussions with or dealings with any Lessee.
35. NOTICE: Whenever under this Lease provisions are made for notice of any
kind, by either party, it shall be deemed sufficient notice and service thereof
if such notice is given in writing to the parties and at the addresses set forth
below and deposited in the United States Mail, by Registered or Certified return
receipt requested, with postage prepaid.
To Lessor: To Lessor's designated representative and agent:
Xxxxx Xxxxxxxxxx Xxxx X. Xxxxxxxxxx
P.O. Box 1652 and 0000 Xxxxxxx Xxxx
Xxxxx, Xxxxx 00000 XxXxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
To Lessee:
Atten: Xxxxxx Xxxxx, President
Thrust Energy Corp.
000-0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Either party named above shall have the right upon giving ten (10) days prior
written notice to the other in the manner hereinabove provided to change its
address or individual (agent) for the purpose of notice.
SIGNED FOR IDENTIFICATION:
LESSOR: LESSEE:
/s/ Xxxxx Xxxxxxxxxx Thrust Energy Corp., a Nevada Corporation
Xxxxx Xxxxxxxxxx
/s/ Xxxxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxx
Xxxxxxxx Xxxxxxxxxx Name: Xxxxxx Xxxxx
Title: President
By: /s/ Xxxxx Xxxxxxxxxx
Xxxxx Xxxxxxxxxx her attorney in fact
