EXHIBIT 10.7
OIL, GAS AND MINERAL LEASE
THIS AGREEMENT made this 30th day of November, 1949, between
Seven J Stock Farm, Inc
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Lessor (whether one or more), and Xxxxxxx Petroleum Company Lessee,
WITNESSETH:
1. Lessor in consideration of Ten and no/100 Dollars ( $10.00 ) in
hand paid, of the royalties herein provided, and of the agreements of
lessee herein contained, hereby grants, leases and lets, exclusively unto
Lessee for the purpose of investigating, exploring prospecting, drilling
and mining for and producing oil, gas and all other minerals, laying
pipelines, building roads, tanks, purpose of investigating, exploring,
prospecting, drilling and mining for and producing oil, gas and all other
minerals, laying pipe lines, building roads, tanks, power stations,
telephone lines, houses for its employees, and other structures thereon to
produce, save, take care of, treat, transport, and own said products, the
following described land in Houston County, Texas, to-wit:
10,463.54 acres, more or less, formerly known as the Xxxxxx Ranch
Plantation, located in the Xxxx Xxxxx Xxxxx, Abst. 29, Xxxxxx Xxxxx League,
Abst. 23, and Xxxxxxx Xxxxx League, Abst. No. 50, being the same land
described in deed dated March 9, 1948, from Xxxx X. Xxxxxx et al to Seven J
Stock Farm, Inc., recorded in Volume 261, Page 551, Deed Records of Houston
County Texas
and any and all land and rights and interest in land owned or claimed by
Lessor, adjacent or contiguous to the land above described. Lessor agrees
to deliver to Lessee any supplemental instrument deemed necessary or
required by Lessee for a more complete or accurate description of the land
and interests covered hereby. For the purpose of determining the amount of
any money payment hereunder, including the down cash payment, said premises
shall be treated as comprising 10,463.54 acres, whether there be more or
less.
2. Subject to the other provisions herein contained, this lease shall
be for a term of five years from this date (called "primary term") and as
long thereafter as oil, gas or other mineral is produced in paying
quantities from said land hereunder, or land with which it or any part may
be pooled, or as long as operations are prosecuted as hereinafter provided.
3. Royalties payable to lessor are: (a) On oil, and on condensate
saved at the well, one-eighth of that produced and saved from said land,
the same to be delivered at the well or to the credit of Lessor in the pipe
line to which the xxxxx may be connected; Lessee may from time to time
purchase any such royalty oil or condensate in its possession, paying the
market price therefor prevailing for the field where produced for oil or
condensate of like kind and gravity on the date of purchase. (b) On gas,
including casinghead gas or other gaseous substance, produced from said
land 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-eighth of the
gas so sold or used, provided that on gas sold at the well the royalty
shall be one-eighth of the amount realized from such sale; if gas or
gas-condensate and/or other liquefiable hydrocarbon should be discovered on
said land or land with which it or any part thereof may be pooled, and
which substance or substances can not be profitably produced for lack of a
market at the well or xxxxx, Lessee may pay or tender to the parties
entitled to the royalty from the above land a sum equal to the amount of
the annual rental payable in lieu of drilling operations; such payment to
be made on or before the rental date, ( or subsequent anniversary thereof
whether or not within the primary term) next ensuing after the expiration
of 30 days from the completion or shutting in of such well or xxxxx and
annually thereafter, and such payment or tender shall be made in the manner
provided below for the payment of delay rentals and in the bank to which
delay rentals may be paid, and while such royalty is so paid or tendered
this lease shall be considered as producing in paying quantities such of
the above mentioned substances as the well or xxxxx are capable of
producing. Such payment or tender may be made jointly to the credit of any
adverse claimants of the same royalty interest. Any payments made as
royalty on such a shut in well or xxxxx shall be credited against any
royalties on oil, gas or other minerals produced from the land covered
hereby or land with which it or any part thereof may be pooled therewith
during any year for which payment for a shut in well or xxxxx is made. (c)
On all other minerals mined and marketed, one-tenth either in kind or value
at the well or mine, at Lessee's election, except, that on sulphur the
royalty shall be One ($1.00) Dollar per long ton. Each royalty herein
provided in all instances shall bear its proportionate part of production,
severance and other direct tax or taxes applicable thereto. No royalty
shall be payable on gas returned to the formations under said land or unit
authorized hereunder, and Lessee shall have free use of oil, gas, coal,
wood and water from said land, except water from Lessor's xxxxx, for all
operations hereunder, and the royalty on oil, gas and coal shall be
computed after deducting any so used.
4. Lessee, at its option, is hereby given the right and power to pool
or combine the acreage covered by this lease or any portion thereof with
other land, lease or leases in the immediate vicinity thereof when in
Lessee's judgment it is necessary or advisable to do so in order properly
to develop and operate said premises in compliance with any lawful spacing
rules which may be prescribed for the field in which this lease is situated
by any duly authorized authority, or when to do so would, in the judgment
of Lessee, promote the conservation of the oil and gas in and under and
that may be produced from said premises, such pooling to be into a unit or
units not exceeding 43 acres each for the exploration and development of
oil and 647 acres each for the exploration and development of gas,
gas-condensate and other hydrocarbons. Lessee shall execute in writing and
file for record in the county or counties in which the land is situation an
instrument identifying and describing the pooled acreage. The entire
acreage so pooled into a tract or unit shall be treated for all purposes
except the payment of royalties on production from the pooled unit as if it
were included in this lease. If production is found on the pooled acreage,
it shall be treated as if production is had from this lease, whether the
well or xxxxx be located on the premises covered by this lease or not. In
lieu of the royalties elsewhere herein specified, Lessor shall receive on
production from a unit so pooled only such portion of the royalty
stipulated herein as the amount of his acreage placed in the unit or his
royalty interest therein on an acreage basis bears to the total acreage so
pooled in the particular unit involved. Lesee shall not be liable to any
party for reduction of the acreage content of any unit resulting from loss
or failure of title or for any cause beyond its control, nor shall lessee
be obligated to make any retroactive apportionment of royalty or sums paid
on production in the event of any such reduction in acreage content.
5. If operations for drilling are not commenced on said land or on
acreage pooled with such land, or any part thereof on or before one year
from this date, the lease shall then terminate as to both parties, unless
on or before such anniversary date Lessee shall pay or tender to Lessor or
to the credit of Lessor in The City National Bank at Houston, Texas (which
bank and its successors are Lessor's agent and shall continue as the
depository for all rentals payable hereunder regardless of changes in
ownership of said land or the rentals) the sum of Ten Thousand Four Hundred
Sixty-Three and 54/100 Dollars ($10,463.54), herein called rental), which
shall cover the privilege of deferring commencement of drilling operations
for a period of twelve (12) months. In like manner and upon like payments
or tenders annually the commencement of drilling operations may be further
deferred for successive periods of twelve (12) months each during the
primary term. The payment or tender of rental may be made by the check or
draft of Lessee mailed or delivered to said bank on or before such date of
payment. If such bank (or any successor bank) should fail, liquidate or be
succeeded by another bank, or for any reason fail or refuse to accept
rental, Lessee shall not be held in default for failure to make such
payment or tender of rental until thirty (30) days after Lessor shall
deliver to Lessee a proper recordable instrument, naming another bank as
agent to receive such payments or tenders. If such bank charges or deducts
a fee for acting as depository, such charge shall be borne by Lessor and
shall not affect the validity of the lease. The down cash payment is
consideration for this lease according to its terms and shall not be
allocated as mere rental for a period. Lessee may at any time execute and
deliver to Lessor or to the depository above named, or place of record a
release or releases covering any portion or portions of the land covered
hereby, and thereby surrender this lease as to such portion or portions and
be relieved of all obligations as to the acreage surrendered, and
thereafter, if within the primary term, the rentals payable hereunder shall
be reduced in the proportion that the acreage covered hereby is reduced by
said release or releases.
6. If prior to the discovery of oil, gas or other mineral upon said
land or land with which it or any part thereof is pooled, Lessee should
drill a dry hole or holes, or should drill a well or xxxxx capable of
producing oil, gas or other minerals but from which there is no production,
or if after discovery of oil, gas or other mineral and production thereof,
said production cases, this lease shall not terminate if Lessee commences
additional drilling or reworking operations within ninety (90) days
thereafter or (if it be within the primary term) commences or resumes the
payment or tender of rentals on or before the rental-paying date next
ensuing after the expiration of three (3) months from date of completion of
a dry hole, well or cessation as hereinabove defined. If, during the last
year of the primary term and prior to the discovery of oil, gas or other
mineral on said land or on such pooled acreage, Lessee should drill a dry
hole or holes thereon, or well or xxxxx capable of producing oil, gas or
other minerals, but from which there is no production, or if during said
last year of the primary term production ceases, no rental payment or
operations are necessary in order to keep the lease in force during the
remainder of the primary term. If at the expiration of the primary term,
oil, gas or other mineral is not being produced on said land or such pooled
acreage but Lessee is then engaged in drilling or reworking operations
thereon, this lease shall remain in force so long as operations are
prosecuted with no cessation of more than sixty (60) consecutive days, and
if they result in the production of oil, gas or other mineral so long
thereafter as oil, gas or other mineral is produced from said land or on
such pooled acreage. In the event a well or xxxxx producing oil or gas in
paying quantities should be brought in on adjacent land and within offset
distance as fixed by the spacing rules of the Railroad Commission or any
other governmental or regulatory body for the field in which said well is
located, and draining leased premises, Lessee agrees to drill such offset
xxxxx as a reasonably prudent operator would drill under the same or
similar circumstances.
7. Lessee shall have the right at any time during or after the
expiration of this lease to remove all property and fixtures placed by
Lessee on said land, including the right to draw and remove all casing.
When required by Lessor, Lessee will bury all pipe lines below ordinary
plow depth, and no well shall be drilled within two hundred (200) feet of
any residence or barn now on
said land without Lessor's consent. Lessee shall pay Lessor for damages to
Lessor's growing crops caused by Lessee's operations.
8. The rights of either party hereunder may be assigned in whole or in
part, and the provisions hereof shall extend to their heirs, successors and
assigns; but no change or division in ownership of the land, rentals or
royalties, however accomplished, shall operate to enlarge the obligations
or diminish the rights of Lessee; and no change or division in such
ownership shall be binding on lessee until forty-five (45) days after
Lessee shall have been furnished by registered U.S. mail at Lessee's
principal place of business with a certified copy of recorded instrument or
instruments evidencing same. In the event of assignment hereof in whole or
in part, liability for breach of any obligation hereunder shall rest
exclusively upon the owner of this lease or of a portion thereof who
commits such breach. In the event of the death of any person entitled to
rentals hereunder, Lessee may pay or tender such rentals in the manner
provided above to the credit of the deceased or the estate of the deceased
until such time as Lessee is furnished with satisfactory evidence of the
lawful appointment and qualification of an executor or administrator of the
estate, or if there be none, until Lessee is furnished with evidence
satisfactory to it as to the heirs or devisees of the deceased. If at any
time two or more persons be entitled to participate in the rentals payable
hereunder, Lessee may pay or tender said rentals jointly to such persons or
to their joint credit in the depository named herein; or, at Lessee's
election, the proportionate part or parts of said rental to which any
participant or participants may be entitled may be paid or tendered to such
participant or participants separately or to their separate credit in said
depository, and the balance of the rentals if any, may be paid or tendered
jointly to such other parties as may be entitled to participate in said
rentals or to their joint credit in said depository; and payment or tender
to any participant of his portion of the rentals hereunder shall maintain
this lease as to such participant. In event of assignment of this lease as
to a segregated portion of said land, the rentals payable hereunder shall
be apportionable as between the several leasehold owners ratably according
to the surface area of each, and default in rental payment by one shall not
affect the rights of other leasehold owners hereunder.
9. The breach by Lessee of any obligation arising hereunder shall not
work a forfeiture or termination of this lease, nor cause a termination or
reversion of the estate created hereby, nor be grounds for cancellation
hereof in whole or in part. In event Lessor considers that Lessee has not
complied with all its obligations hereunder, both express and implied,
before production has been secured or after production has been secured,
Lessor shall notify Lessee in writing, setting out specifically the facts
relied upon as constituting a breach hereof. Lesee if in default 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 brining 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.
The service of such notice or the doing of any acts by Lessee aimed to meet
all or any of the alleged breaches shall not be deemed an admission or
presumption that Lessee has failed to perform all its obligations
hereunder. After the discover of oil, gas or other mineral in paying
quantities on said premises, Lessee shall reasonably develop the acreage
retained hereunder; but in discharging this obligation it shall in no event
be required to drill more than one oil well per forty three (43) acres, or
more than one gas well per 647 acres of the area retained hereunder and
capable of producing oil or gas or other mineral in paying quantities as
the case may be. In case of cancellation or termination of this lease for
any cause, Lessee shall have the right to retain under the terms hereof
around each oil or gas well producing, being worked on or drilling
hereunder (as long as such operations are continued in good faith), the
maximum acreage allocable to each such well as fixed by the rules of the
Railroad Commission or by other governmental regulatory body applicable to
such well or xxxxx, but in no event less than 20 acres.
10. Should Lessee be prevented from complying with any express or
implied covenants of this lease, from conducting drilling or re-working
operations thereon or on land with which it or any part thereof may be
pooled, or from producing oil, gas or other mineral therefrom by reason of
Acts of God, fire, riots, wars, strikes, lack of market (in situations
where Clause 3 (b) does not apply), inability to obtain equipment due to
governmental order or action, or by failure of carriers to transport
equipment, oil, gas or other mineral, or by regulations by State or Federal
action or by other superior or irresistible force of whatsoever nature and
not due to the negligence of Lessee, when while so prevented and for ninety
(90) days thereafter, Lessee's obligations to comply with any such
covenants shall be suspended, and lessee shall not be liable in damages for
failure to comply therewith; and this lease shall be extended and continued
in full force and effect while and so long as Lessee is prevented by any
such cause from conducting drilling or re-working operations on, or from
producing oil, gas or other mineral from the leased premises or land with
which it or any part thereof may be pooled and for ninety (90) days
thereafter; and for so long thereafter as oil, gas or other mineral is
being produced from the land covered hereby or land with which it or any
part thereof may be pooled; and the time while Lessee is so prevented shall
not be counted against Lessee, anything in this lease to the contrary
notwithstanding.
11. Lessor hereby warrants and agrees to defend the title to said land
(to the extent of the interest purported to be covered by this lease) and
agrees that Lessee at its option may discharge any tax, mortgage or other
lien upon said land, and in event Lessee does so, it shall be subrogated to
such lien with the right to enforce the same and receive and apply rentals
and royalties accruing hereunder toward satisfying same, and Lessor further
agrees that the interest of Lessor is and at times shall be and remain
primarily liable for such lien indebtedness, and that in any proceeding for
the enforcement or collection thereof the interest of Lessor shall be first
subjected to the payment thereof. Without impairment of Lessee' rights
under the warranty in the event of failure of title, it is
agreed that if Lessor owns an interest in said land less than the entire
fee simple estate, then the royalties and rentals to be paid Lessor shall
be reduced proportionately. The royalties and rentals hereinabove provided
for have been determined with respect to the entire fee or mineral estate
and the fact that this lease might purport to cover a less interest shall
not defeat the right of Lessee to reduce the royalties and rentals as above
provided. Failure of Lessee to reduce rentals shall not impair the right of
Lessee to so reduce the royalties. Lessee is hereby given the right to
acquire for its own benefit, deeds, leases or assignments covering any
interest or claim in the leased premises which Lessee or any other party
contends is outstanding and not covered hereby and even though such
outstanding interest or claim be invalid or adverse to Lessor. Should any
one or more of the parties above named as Lessor fail to execute this
lease, it shall nevertheless be binding upon all such parties who do
execute it as Lessor. The word "lessor" as used in this lease means the
party or parties who execute this lease as Lessor, although not named
above.
IN WITNESS WHEREOF, this instrument is executed on the date first above
written.
ATTEST: SEVEN J STOCK FARM, INC.
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/s/ X. X. Xxxx By J.R. Xxxxxx
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Secretary President
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CORPORATION ACKNOWLEDGEMENT
STATE OF TEXAS )(
)(
COUNTY OF XXXXXX )(
BEFORE ME, the undersigned, A Notary Public in and for said County and State, on
this day personally appeared J. R. XXXXXX, President of Seven J Stock Farm,
Inc., known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said Seven J Stock Farm, Inc., a Corporation, and that he executed the same as
the act of such corporation for the purposes and consideration therein expressed
and in the capacity therein stated..
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 30th day of November A. D.
1949
/s/ Xxxxxxxxx X. Xxxx Xxxxxxxxx X. Xxxx
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Notary Public in and for Xxxxxx County, Texas
This instrument was filed for record on the____day of _______, 19___at
______o'clock _________and duly recorded in Book 283, Page 330 DEED records of
this office HOUSTON County, Texas. No. 2585.
