The URL can be used to link to this page

Browse Search

Home My WebLink About20130174.tiffRESOLUTION RE: APPROVE UNIT AGREEMENT FOR KUMMER EXPLORATORY STATE UNIT COVERING CERTAIN PROPERTY OWNED BY WELD COUNTY, COLORADO, AND AUTHORIZE CHAIR TO SIGN - NOBLE ENERGY, INC. WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to Colorado statute and the Weld County Home Rule Charter, is vested with the authority of administering the affairs of Weld County, Colorado, and WHEREAS, Weld County, Colorado, is the owner of vast acres of mineral lands located in Weld County, Colorado, and WHEREAS, on October 27, 2008, by Resolution #2008-2844, the Board entered into an Oil and Gas Lease, recorded at Reception No. 3588456, dated November 6, 2008, and WHEREAS, the Board has been presented with a Unit Agreement for the Kummer Exploratory State Unit, which covers the leased property, between the County of Weld, State of Colorado, by and through the Board of County Commissioners of Weld County, and Noble Energy, Inc., 1625 Broadway, Suite 2200, Denver, Colorado 80202, with terms and conditions being as stated in said agreement for 640.0 net mineral acres, more or less, described to -wit: All of Section 23, Township 8 North, Range 61 West of the 6th P.M., Weld County, Colorado WHEREAS, after review, the Board deems it advisable to approve said agreement, a copy of which is attached hereto and incorporated herein by reference. NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld County, Colorado, that the Unit Agreement for the Kummer Exploratory State Unit between the County of Weld, State of Colorado, by and through the Board of County Commissioners of Weld County, and Noble Energy, Inc., be, and hereby is, approved. BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized to sign said agreement. CC" Ttti )(wc 13) i^3i73 2013-0174 LE0252 UNIT AGREEMENT FOR KUMMER EXPLORATORY STATE UNIT (S23, T8N, R61W) - NOBLE ENERGY, INC. PAGE 2 The above and foregoing Resolution was, on motion duly made and seconded, adopted by the following vote on the 14th day of January, A.D., 2013. BOARD OF COUNTY COMMISSIONERS WELD COUNTY) COLORADO Weld County Clerk to the Board BY: APOV u y •rney Date of signature: 1118113 William F. Garcia, t J f J ntCLVf-r-.. Dougl4./s Radema her, Pro -Tern hair Mike Freeman y / tic)," Barbara Kirkmeyer 2013-0174 LE0252 1625 Broadway Suite 2200 Denver, Colorado 80202 Tel: 303.228.4000 Fax: 303.228.4280 1'► noble ■ energy November 28, 2012 Certified Mail Article # 7011 2000 0001 4245 2735 Weld County, Colorado 915 10th Street P.O. Box 758 Greeley, CO 80632 RE: Noble Energy, Inc. — Kummer Exploratory State Unit Dear Royalty Interest Owner: Noble Energy, Inc. ("Noble") is planning to establish an exploratory 640 -acre state unit ("Unit") to develop oil, gas, and associated hydrocarbons from the Codell-Niobrara Formation in the following lands (the "Subject Lands") pursuant to Colorado Statute §34-60-116(b) and §34-60-118 and Colorado Oil and Gas Conservation Commission ("Commission") Rules 401.b. and 503.6.3.: Township 8 North, Range 61 West, 6th P.M. Section 23: All 640 acres, more or less, Weld County, Colorado. You are receiving this letter because Noble's records show that you own an interest in the Subject Lands. Pursuant to Colorado Statute § 34-60-118, Noble must obtain approval of 80% of the working interest owners and royalty and/or overriding royalty interest owners of the attached Unit Agreement. Noble is pursuing the establishment of the exploratory 640 -acre state unit in an effort to increase the recovery of oil, gas, and associated hydrocarbons underlying the Subject Lands. Noble is currently limited to drilling one well for the production of oil, gas, and associated hydrocarbons from the Subject Lands. If the Commission approves Noble's request for the state unit, this will allow Noble to increase the number of wells utilized to develop the valuable resources underlying the Subject Lands. Please review the Unit Agreement and attached exhibits, and if you approve, please sign and notarize the Unit Agreement and place your signature page of the Unit Agreement in the pre -paid, self addressed stamped envelope included herein within 10 days of receipt of this letter. By signing the attached Unit Agreement, you are giving your consent to Noble to commit your interest to the Unit on the Subject Lands. If you have any questions or comments, please contact Zach Shearon, Land Negotiator for Noble at 303-228-4343 or zshearon@nobleenergyinc.com. Noble thanks you in advance for your consideration and approval of the Unit Agreement in an expedited manner. Very truly yours, NOBLEIENERGY, INC. Zach Shearon land Negotiator Enclosures <'o/3 u/7y LEO512 Esther Gesick From: David Bauer Sent: Thursday, December 20, 2012 11:21 AM To: Esther Gesick Cc: Stephanie Arries; Barbara Kirkmeyer Subject: re: Kummer Exploratory State Unit Agreement Attachments: Kummer Exploratory State Unit Agreement (2).pdf Esther and Stephanie, I spoke with Zach at Noble regarding the request to sign the Kummer Unitization Agreement. I reviewed the Agreement. Further information: Noble owns 100% of the mineral rights in that 640 acre section with Weld County having a 20% Royalty on that 640 acres. Noble has permitted 8 Niobrara wells for Section 23, T9N, R61W. Normally this area outside the Wattenburg Field would be allowed only 1 well per 640 acres. Noble was advised by the Oil and Gas Conservation Commission that they should apply for a Unit for the 640 so as to include all 8 of the wells. That way all of the produced oil and gas would be "pooled" and we'd receive the 20% royalty on the total production regardless of how many wells were actually on-line. It simplifies everyone's paperwork. Unitization really changes nothing for us — its more about Noble not having to "prove" that the higher density (80 acre spacing) is warranted. It speeds up their State approval process and ability to produce. Unitization reduces the number of wells to the optimal amount and they recover a higher percentage of the oil and gas. We will see more requests like this. There are already more drill sites going through Unitization up in the NE part of the County, north of Highway 14. Noble would like to get a copy of the executed Agreement back for presentation to the COGCC at a meeting they have on Jan 7. The wells won't be drilled until May 2013. I recommend that the BOCC sign the Agreement assuming Stephanie doesn't have caveats to add regarding things like severability, transfer of ownership, liabilities, etc. Article 7.2 is appropriate — it allows them to burn gas to generate electricity to run the facilities and NOT pay royalty on that gas (it's a cost of production). That ties in with Article 11.3 which would be the alternative — we'd get a royalty accounting showing the gas burned as an expense that reduced our revenue. Article 16 currently doesn't apply since Noble is the Working Interest Owner and the Operator, but should that change we'd be covered as in the current Agreement. Esther — don't forget to swap out page 4 (contains Article 1 —they screwed up and part 1.3 says "except oil shale" when it should have said "includes oil shale"). The Niobrara could be termed an oil shale so of course we want it included !! Thanks, I hope that helps, i David Bauer, P.E., CFM Director - Weld County Public Works Department P.O. Box 758 Greeley, Colorado 80632 (970) 304-6496 Confidentiality Notice: This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e-mail and destroy the communication. Any disclosure, copying, distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Esther Gesick Sent: Thursday, December 20, 2012 8:40 AM To: David Bauer Subject: FW: Kummer Exploratory State Unit Agreement Esther E. Gesick Deputy Clerk to the Board/Office Manager 1150 O Street P.O. Box 7581 Greeley, CO 80632 tel: (970) 336-7215 X4226 rL. Confidentiality Notice: This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e-mail and destroy the communication. Any disclosure, copying, distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: ZShearon@nobleenergvinc.com[mailto:ZShearon@nobleeneruvinc.com] Sent: Friday, December 07, 2012 10:42 AM To: Esther Gesick Subject: RE: Kummer Exploratory State Unit Agreement Attached is the cover letter and the original Unit Agreement and Exhibits that were sent on 11/28/12. The attached Unit Agreement does not have the new page 4 language. It would need to be inserted into the attached agreement. _acn'_r.er Or. Land Negotiator d:attenbeto Land direct: 303.228.4343 main: 303.228.4000 zs h earn n©nobleenertrymc.com 1.13 noble energy 2 From: Esther Gesick <egesick(olco.weld.co.us> To: "ZShearonro2nobleenergvinc.com" <ZShearon(glnobleenergvinc.com> Date: 12/07/2012 10:30 AM Subject: RE: Kummer Exploratory State Unit Agreement Can you send me the whole thing for reference? Thanks! Esther E. Gesick Deputy Clerk to the Board/Office Manager 1150 O Street P.O. Box 7581 Greeley, CO 80632 tel: (970) 336-7215 X4226 s ism tt 3 Confidentiality Notice: This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e-mail and destroy the communication. Any disclosure, copying, distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: ZShearon@nobleenergvinc.com[mailto:ZShearon@nobleenergvinc.com] Sent: Friday, December 07, 2012 10:29 AM To: Esther Gesick Subject: Kummer Exploratory State Unit Agreement Ester, When you track down the Unit Agreement in your office, can you replace the original page 4 with the attached page 4. The only change is in paragraph 1.3 Unitized Substanr;es. At the end of the paragraph it originally said "except oil shale" and the revised page 4 says "including oil shale." If yo'J could have this new page 4 included before the agreement is reviewed and signed by your office, it will save us from having to revise the agreement later if it can be inserted before we receive your original signature. Thank you for tracking down the agreement and following up with me. aa._cte a direct: 303.22S.4343 main: 303.228.4000 zsh earon©nobleenergyinc.com 49, noble energy The information contained in this e-mail and any attachments may be confidential. If you are not the intended recipient, please understand that dissemination, copying, or using such information is prohibited. If you have received this e-mail in error, please immediately advise the sender by reply e-mail and delete this e-mail and its attachments from your system. 3 1625 Broadway Suite 2200 Denver, Colorado 80202 Tel: 303.228.4000 Fax: 303.228.4280 January 11, 2013 7 noble energy Certified Mail Article # 7011 2000 0001 4245 2834 Weld County Colorado Attn: Ms. Stephanie Arries 1150 "O" Street P.O. Box 758 Greeley, CO 80632 RE: Kummer Exploratory State Unit - Revised Dear Ms. Arries: Noble Energy Inc. ("Noble") has revised the enclosed Kummer Exploratory State Unit Agreement. The revisions address changes to Article 8.1, Article 11.4 and Article 14.1. • Article 8.1 was deleted to remove the Warranty and Indemnity language from the Agreement. • Article 11.4 was modified to state that Royalty Owners are entitled to well information as set out in the terms of the Lease(s) in the Unit Area. • Article 14.1 was revised to incorporate Shut-in language as set out in the Lease(s) in the Unit Area. Please retain the entire Agreement for your records and return the set of fully executed and notarized signature pages of the Agreement to the undersigned in the enclosed self-addressed stamped envelope. Should you have any questions, please contact me at 303-228-4343 or at zshearon@nobleenergyinc.com. Very truly yours, NOBL1 E )ERGY, INC. Zach Shearon Land Negotiator Enclosures UNIT AGREEMENT KUMMER EXPLORATORY STATE UNIT WELD COUNTY, COLORADO KUMMER EXPLORATORY STATE UNIT AGREEMENT TABLE OF CONTENTS ARTICLE 1 DEFINITIONS 1.1 Unit Area 4 1.2 Unitized Formations 4 1.3 Unitized Substances 4 1.4 Working Interest 4 1.5 Royalty Interest 4 1.6 Royalty Owner 4 1.7 Working Interest Owner 4 1.8 Tract 4 1.9 Tract Participation 5 1.10 Existing Operating Agreements 5 1.11 Unit Operator 5 1.12 Unit Participation 5 1.13 Oil and Gas Rights 5 1.14 Unit Operations 5 1.15 Unit Expense 5 1.16 Effective Date 5 1.17 Person 5 1.18 Other Agreements 5 ARTICLE 2 EXHIBITS 2.1 Exhibits 5 2.1.1 Exhibit A 5 2.1.2 Exhibit B 5 2.1.2 Exhibit C 5 2.2 Reference to Exhibits 5 2.3 Exhibits Considered Correct 6 2.4 Correcting Errors 6 2.5 Filing Revised Exhibits 6 ARTICLE 3 CREATION AND EFFECT OF UNIT 3.1 Oil and Gas Rights Unitized 6 3.2 Personal Property Excepted 6 3.3 Amendment of Leases and Other Agreements 6 3.4 Effect of Other Agreements and Existing Operating Agreements within Unit 6 3.5 Titles Unaffected by Unitization 6 1 ARTICLE 4 UNIT OPERATIONS 4.1 Unit Operator 7 4.2 Sub -Operator 7 ARTICLE 5 TRACT PARTICIPATION 5.1 Tract Participation 7 ARTICLE 6 ALLOCATION OF UNITIZED SUBSTANCES 6.1 Allocation of Production 7 6.2 Distribution within Tracts 7 6.3 Responsibility for Royalty Settlements 7 6.4 Comingling of Codell and Niobrara Benches of Codell-Niobrara Formation 7 ARTICLE 7 USE OR LOSS OF UNITIZED SUBSTANCES 7.1 Use of Unitized Substances 7 7.2 Royalty Payments 7 ARTICLE 8 TITLES 8.1 Transfer of Title 8 ARTICLE 9 USE OF SURFACE 9.1 Surface Use 8 ARTICLE 10 CHANGES AND AMENDMENTS 10.1 Changes and Amendments 8 ARTICLE 11 RELATIONSHIP OF PERSONS 11.1 No Partnership 8 11.2 No Joint Refining or Marketing 8 11.3 Royalty Owners Free of Costs 8 11.4 Information to Royalty Owners 8 ARTICLE 12 LAWS AND REGULATIONS 12.1 Laws and Regulations 9 2 ARTICLE 13 EFFECTIVE DATE 13.1 Effective Date 9 13.2 Certificate of Effectiveness 9 ARTICLE 14 TERM 14.1 Term 9 14.2 Termination by Working Interest Owners 9 14.3 Effect of Termination 9 14.4 Certificate of Termination 9 ARTICLE 15 APPROVAL 15.1 Original, Counterpart or Other Instrument 9 15.2 Joinder in Dual Capacity 9 15.3 Approval by the Colorado Oil and Gas Conservation Commission 9 ARTICLE 16 GENERAL 16.1 Amendments Affecting Working Interest Owners 10 16.2 Action by Working Interest Owner 10 16.3 Lien and Security Interest of Unit Operator 10 ARTICLE 17 SUCCESSORS AND ASSIGNS 17.1 Successors and Assigns 10 3 UNIT AGREEMENT KUMMER EXPLORATORY STATE UNIT WELD COUNTY, COLORADO THIS UNIT AGREEMENT for the KUMMER EXPLORATORY STATE UNIT ("Agreement"), entered into as of the Effective Date set forth in Article 13 below, by the parties who have signed the original of this instrument, a counterpart thereof, or other instrument agreeing to become a Person hereto, WITNESSETH: WHEREAS, in the interest of the public welfare and to promote conservation and increase the ultimate recovery of Unitized Substances from the Kummer Exploratory State Unit located in Weld County, Colorado, and to protect the rights of the owners of interests therein, it is deemed necessary and desirable to enter into this Agreement to unitize the Oil and Gas Rights in and to the Unitized Formation in order to conduct Unit Operations as herein provided, NOW, THEREFORE, in consideration of the premise and of the mutual agreements herein contained, it is agreed as follows: ARTICLE 1 DEFINITIONS As used in this Agreement: 1.1 Unit Area is the land described by Tracts in Exhibit B and shown on Exhibit A as to which this Agreement becomes effective or to which it may be extended as herein provided. 1.2 Unitized Formation shall mean the Codell-Niobrara Formation. The Codell-Niobrara Formation is the primary target in the proposed Kummer Exploratory State Unit. The Codell- Niobrara Formation's upper boundary is defined as the top of the Niobrara Formation with the top of the Greenhorn Limestone Formation as the base. 1.3 Unitized Substances are all oil, gas, gaseous substances, sulphur contained in gas, condensate, distillate, and all associated and constituent liquid or liquefiable hydrocarbons within or produced from the Unitized Formation, including oil shale. 1.4 Working Interest is a cost bearing interest and is an interest in Unitized Substances by virtue of a lease, operating agreement, fee title or otherwise. A Royalty Interest created out of a Working Interest subsequent to the execution of this Agreement by the owner of such Working Interest shall continue to be subject to such Working Interest burdens and obligations as are stated in this Agreement, the Unit Operating Agreement, and any applicable Other Agreements. 1.5 Royalty Interest is a right to or non -cost bearing interest in any portion of the Unitized Substances or proceeds thereof other than a Working Interest. 1.6 Royalty Owner is a Person hereto who owns a Royalty Interest. 1.7 Working Interest Owner is a Person hereto who owns a Working Interest. 1.8 Tract means each oil and gas lease, and the lands contained therein, that has been described as a "Tract" and given a Tract number in Exhibit B. 4 1.9 Tract Participation is the interest share of a Tract in the Unit Area based on the number of acres in each Tract as a percentage of the total acres in the Unit Area. 1.10 Unit Operating Agreement is the Unit Operating Agreement, Operating Plan, for the Kummer Exploratory State Unit, Weld County, Colorado dated November 15, 2012. Such Unit Operating Agreement governs the drilling of a well or wells, providing for credits and charges, providing for costs of unit operations, conduct of operations, and the allocation of production therefrom, on the Tracts of lands covered by the Unit Agreement. 1.11 Unit Operator is Noble Energy, Inc. 1.12 Unit Participation of a Working Interest Owner is the sum of the Working Interests of such Working Interest Owner in each Tract included within the Unit Area based on the Tract Participation of such Tract. 1.13 Oil and Gas Rights are the rights to explore, develop, and operate lands within the Unit Area for the production of Unitized Substances, or to share in the production so obtained or the proceeds thereof. 1.14 Unit Operations are all operations conducted pursuant to this Agreement, the Unit Operating Agreement, and any applicable Other Agreements. 1.15 Unit Expense is all costs, expense or indebtedness incurred by Working Interest Owner or Unit Operator pursuant to this Agreement, the Unit Operating Agreement, and any applicable Other Agreements. 1.16 Effective Date is the time and date this Agreement becomes effective as provided in Article 13. 1.17 Person is any individual, corporation, partnership, association, receiver, trustee, curator, executor, administrator, guardian, tutor, fiduciary, or other representative of any kind, any department, agency, or instrumentality of the state, or any governmental subdivision thereof, or any other entity capable of holding an interest in the Unitized Formation. 1.18 Other Agreements are agreements entered into between signatories to this Unit Agreement governing the drilling of a well or wells, or production therefrom, on the lands covered by this Unit Agreement, for the Codell-Niobrara Formation or other formations that underlie the Unit Area. The Unit Operator or Working Interest Owner may enter into other agreements for the development of the Unit Area. ARTICLE 2 EXHIBITS 2.1 Exhibits. The following exhibits, which are attached hereto, are incorporated herein by reference: 2.1.1 Exhibit A is a map that shows the boundary lines of the Kummer Exploratory State Unit Area and the Tracts therein. 2.1.2 Exhibit B is a schedule that describes each Tract in the Kummer Exploratory State Unit. 2.1.3 Exhibit C is a schedule that describes the percentage of interest in the Unit Area for any Working Interest Owner, Unleased Mineral Interest Owner, if any, and Royalty Interest Owner. 2.2 Reference to Exhibits. When reference is made to an exhibit, it is to the exhibit as originally attached or, if revised, to the last revision. 5 2.3 Exhibits Considered Correct. Exhibits A, B, and C shall be considered to be correct until revised as herein provided. 2.4 Correcting Errors. The shapes and descriptions of the respective Tracts have been established by leasehold interests. If a Working Interest Owner subsequently determines that any Tract, because of diverse royalty or working interest ownership on the Effective Date, should have been divided into more than one Tract, or that any mechanical miscalculation or clerical error has been made, Unit Operator, with the approval of the Working Interest Owner, shall correct the mistake by revising the exhibits to conform to the facts. Each such revision of an exhibit made prior to thirty (30) days after the Effective Date shall be effective as of the Effective Date. Each such revision thereafter made shall be effective at 7:00 A.M. on the first day of the calendar month next following the filing for record of the revised exhibit or on such other date as may be determined by the Working Interest Owner and set forth in the revised exhibit. 2.5 Filing Revised Exhibits. If an exhibit is revised, Unit Operator shall execute an appropriate instrument with the revised exhibit attached and file the same for record in the county or counties in which this Agreement is filed. ARTICLE 3 CREATION AND EFFECT OF UNIT 3.1 Oil and Gas Rights Unitized. All Oil and Gas Rights of Royalty Owners in and to the Tracts described in Exhibit "B," are hereby unitized insofar as the respective Oil and Gas Rights pertain to the Unitized Formation, so that Unit Operations may be conducted with respect to the Unitized Formation as if the Unit Area had been included in a single lease executed by all Royalty Owners, as lessors, in favor of the Working Interest Owner, as lessee, and as if the lease contained all of the provisions of this Agreement. 3.2 Personal Property Excepted. All lease and well equipment, materials and other facilities heretofore or hereafter placed by any Working Interest Owner on the lands covered hereby shall be deemed to be and shall remain personal property belonging to and may be removed by Working Interest Owners. The rights and interests therein of the Working Interest Owner are set forth in the Unit Operating Agreement, or any applicable Other Agreements. 3.3 Amendment of Leases and Other Agreements. The provisions of the various leases, agreements, division and transfer orders, or other instruments pertaining to the respective Tracts or the production therefrom are amended to the extent necessary to make them conform to the provisions of this Agreement, but otherwise shall remain in effect. 3.4 Effect of Other Agreements and Existing Operating Agreements Within Unit. Notwithstanding anything else herein, the Unit Operator may have entered into Other Agreements with the parties to this Agreement with respect to the Codell-Niobrara Formation. As to wells already drilled and as to future wells planned under the Other Agreements, if any, it is intended that those agreements shall remain in full force and effect and this Unit Agreement shall not change the terms of those agreements as they relate to the interests created therein. If there is any conflict between such Other Agreements and this Agreement, the Other Agreements shall govern. It is not the intent of this Agreement to change any existing interests in the Unit Area or to grant to any Person any interest in addition to that owned pursuant to the Other Agreements. 3.5 Titles Unaffected by Unitization. Nothing herein shall be construed to result in the transfer of title to Oil and Gas Rights by any Person hereto to any other Person or to Unit Operator. 6 ARTICLE 4 UNIT OPERATIONS 4.1 Unit Operator. Noble Energy, Inc. shall be Unit Operator. Unit Operator shall have the exclusive right to conduct Unit Operations, which shall conform to the provisions of this Agreement, the Unit Operating Agreement, or any applicable Other Agreements existing with Working Interest Owner at the time the Unit is created. If there is any conflict between such Unit Agreement, Unit Operating Agreement, or any applicable Other Agreements, the Unit Operating Agreement shall govern. 4.2 Sub -Operator. The Unit Operator may appoint sub -operators as it deems appropriate to operate specific tracts of land within the Unit Area pursuant to agreements entered into prior to the formation of this Unit. It is intended that operations within the Unit will proceed pursuant to those agreements. ARTICLE 5 TRACT PARTICIPATION 5.1 Tract Participation. Tract Participation is the interest share of a Tract in the Unit Area based on the number of acres in each Tract as a percentage of the total acres in the Unit Area (hereinafter referred to as "Tract Participation"). The interests within each Tract are set forth in Exhibit C attached hereto. ARTICLE 6 ALLOCATION OF UNITIZED SUBSTANCES 6.1 Allocation of Production. All Unitized Substances produced and saved on the Unit Lands shall be allocated to each owner based on the following calculations: (1) each Tract's surface acreage divided by the total acres in the Unit Area shall equal the Party's percentage of unitized production in such Tract; then (2) Party's percentage of unitized production in such Tract shall be multiplied by the Tract Participation (defined above) which shall equal the Party's percent of interest in the Unit Area. The total surface acreage of the Unit Area is approximately 640.73 acres. 6.2 Distribution within Tracts. The Unitized Substances allocated to each Tract shall be distributed in according to the allocation formula set forth in Section 6.1 above. 6.3 Responsibility for Royalty Settlements. Payment of royalties, overriding royalties, production payments and all other payments chargeable against or payable out of Unitized Substances shall be made in accordance with the terms of the Unit Operating Agreement, or any applicable Other Agreement. 6.4 Commingling Codell and Niobrara Benches as the Codell-Niobrara Formation. Working Interest Owner and Royalty Owners shall allow for commingling of production from the Codell and Niobrara benches of the Codell-Niobrara Formation under this Unit Agreement. ARTICLE 7 USE OR LOSS OF UNITIZED SUBSTANCES 7.1 Use of Unitized Substances. Working Interest Owner may use or consume Unitized Substances for Unit Operations, including but not limited to the injection thereof into the Unitized Formation. 7.2 Royalty Payments. No royalty, overriding royalty or other payments shall be payable on account of Unitized Substances used, lost or consumed in Unit Operations. 7 ARTICLE 8 TITLES 8.1 Transfer of Title. Any conveyance of all or any part of any interest owned by a Person with respect to any Tract shall be subject to this Agreement. No change of title shall be binding upon Unit Operator, or upon any Person other than the Person so transferring, until 7:00 A.M. on the first day of the calendar month next succeeding the date of receipt by Unit Operator of a photocopy or a certified copy of the recorded instrument evidencing such change in ownership. ARTICLE 9 USE OF SURFACE 9.1 Surface Use. There is one fee surface owner in the Unit Area. There is no federal or state surface ownership within the Unit Area. The use of the surface of the Unit Area shall be governed by any surface use agreements executed between the Working Interest Owner or Unit Operator and any surface owner within the Unit Area. For purposes of clarification, Working Interest Owner and Unit Operator have existing surface use agreements with the surface owner within the Unit Area for development and production. Working Interest Owner and Unit Operator intend to utilize the existing or common surface facilities, to the extent reasonable, to develop and produce from the Codell-Niobrara Formation under the Unit Area established by this Kummer Exploratory State Unit Agreement. If Working Interest Owner or Unit Operator utilize new surface locations for the wells drilled in the Unit Area and such areas are not subject to an existing surface use agreement, Working Interest Owner or Unit Operator shall use reasonable efforts to secure a surface use agreement with the respective surface owner. ARTICLE 10 CHANGES AND AMENDMENTS 10.1 Changes and Amendments. Any change of the Unit Area or any amendment to this Agreement shall be in accordance with Section 34-60-118, Colorado Revised Statutes. ARTICLE 11 RELATIONSHIP OF PERSONS 11.1 No Partnership. The duties, obligations and liabilities of the Persons hereto are intended to be several and not joint or collective. This Agreement is not intended to create, and shall not be construed to create, an association or trust, or to impose a partnership duty, obligation or liability with regard to any one or more of the Persons hereto. Each Person hereto shall be individually responsible for its own obligations as herein provided. 11.2 No Joint Refining or Marketing. This Agreement is not intended to provide, and shall not be construed to provide, directly or indirectly, for any joint refining or marketing of Unitized Substances. 11.3 Royalty Owners Free of Costs. This Agreement is not intended to impose, and shall not be construed to impose, upon any Royalty Owner any obligation to pay Unit Expense unless such Royalty Owner is otherwise so obligated. 11.4 Information to Royalty Owners. Each Royalty Owner shall be entitled to all information in possession of Unit Operator to which such Royalty Owner is entitled by an existing agreement with any Working Interest Owner or shall be entitled to any information as stated in the terms of the Lease(s) that lie within the Unit Area. 8 ARTICLE 12 LAWS AND REGULATIONS 12.1 Laws and Regulations. This Agreement shall be subject to the laws of the state of Colorado, to the valid rules, regulation and orders of any duly constituted regulatory body of said state; and to all applicable federal, state and municipal laws, rules, regulations and orders. ARTICLE 13 EFFECTIVE DATE 13.1 Effective Date. The Unit Agreement shall be effective the first day of the month next following the approval thereof by the Colorado Oil and Gas Conservation Commission pursuant to Title 34, Article 60 of the Colorado Revised Statutes as amended and re-enacted. 13.2 Certificate of Effectiveness. Unit Operator shall file for record in the county or counties in which the affected lands are located a certificate stating the Effective Date. ARTICLE 14 TERM 14.1 Term. The term of this Agreement shall be for the time that Unitized Substances are produced in paying quantities, or other Unit Operations are conducted without a cessation of more than sixty (60) consecutive days, unless sooner terminated by Working Interest Owners in the manner herein provided. If a well drilled under the terms of this Agreement is Shut-in, Operator shall comply with the Shut-in provisions in the Lease(s) that lie within the Unit Area. 14.2 Termination by Working Interest Owners. This Agreement maybe terminated at any time by Working Interest Owner(s) owning a Unit Participation of sixty-five percent (65%) or more whenever such Working Interest Owner(s) determine that Unit Operations will not be or are no longer profitable or feasible. 14.3 Effect of Termination. Upon termination of this Agreement, the further development and operation of the Unitized Formation as a unit shall be abandoned, and Unit Operations shall cease. Each oil and gas lease and other agreement covering lands within the Unit Area shall remain in force for thirty (30) days after the date on which this Agreement terminates, and for such further period as is provided by the lease or other agreement. 14.4 Certificate of Termination. Upon termination of this Agreement, Unit Operator shall file for record in the county or counties in which the land affected is located a certificate that this Agreement has terminated, stating its termination date. ARTICLE 15 APPROVAL 15.1 Original, Counterpart or Other Instrument. An owner of Oil and Gas Rights may approve this Agreement by signing the original of this instrument, a counterpart thereof or other instrument approving this instrument hereto. The signing of any such instrument shall have the same effect as if all Persons had signed the same instrument. 15.2 Joinder in Dual Capacity. Execution as herein provided by any Person as either a Working Interest Owner or a Royalty Owner shall commit all interests owned or controlled by such Person and any additional interest thereafter acquired. 15.3 Approval by the Colorado Oil and Gas Conservation Commission. Notwithstanding anything in this Section to the contrary, all tracts within the Unit Area 9 shall be deemed to be qualified for participation if this Agreement is duly approved as the Plan of Unitization and Operating Plan by Order of Colorado Oil and Gas Conservation Commission pursuant to Section 34-60-118, Colorado Revised Statutes. ARTICLE 16 GENERAL 16.1 Amendments Affecting Working Interest Owner. Amendments hereto relating wholly to Working Interest Owner may be made if signed by the Working Interest Owner. 16.2 Action by Working Interest Owner. Except as otherwise provided in this Agreement, any action or approval required by Working Interest Owner hereunder shall be in accordance with the provisions of the Unit Operating Agreement and any applicable Other Agreement. 16.3 Lien and Security Interest of Unit Operator. Unit Operator shall have a lien upon and a security interest in the interests of Working Interest Owner in the Unit as provided in the Unit Operating Agreement and any applicable Other Agreement. ARTICLE 17 SUCCESSORS AND ASSIGNS 17.1 Successors and Assigns. This Agreement shall extend to, be binding upon, and inure to the benefit of the Persons hereto and their respective heirs, devisees, legal representatives, successors and assigns and shall constitute a covenant running with the lands, leases and interests covered hereby. IN WITNESS WHEREOF, this Agreement is approved on the dates opposite the respective signatures. 10 Title: Chair UNIT OPERATOR AND WORKING INTEREST OWNER Noble Energy, Inc., a Delaware corporation By: Title: �G/nF f.:y zcl Date::coo uo: Noble Energy WyCo, LLC By: Titl Date: nuc,21i-)C!l J ROYALTY INTEREST OWNER Date: JAN 1 4 2013 11 x2i e77y ACKNOWLEDGMENTS NOTE: The following forms of acknowledgment are the short forms approved by the Uniform Law on Notarial Acts. The validity and effect of these forms in any state will depend upon the statutes of that state. Acknowledgment in Representative Capacity State of Colorado City and § ss. County of Denver This instrument was acknowledged before me on by Joseph H. Lorenzo Noble Energy, Inc. (Seal, if any) State of Colorado City and County of Denver as ort \ ' ,ao i3 Attorney -In -Fact of Title (and Rank) Notary Public My commission expires: 04/24/2014 Acknowledgment in Representative Capacity § ss. This instrument was acknowledged before me on by Joseph H. Lorenzo as Attorney -In -Fact Noble Energy WyCo, LLC (Seal, if any) State of Colorado Uvfc,o: X0/3 of rd, bkirt-64- Title (and Rank) Notary Public My commission expires: 04/24/2014 Acknowledgment in Representative Capacity § ss. County of Weld This instrument was acknowledged before me on /C.C-no_C_ by /t)'//47)1 Gf (Seal, if any) as (/a// /7 :a?G'/3 Z /[l L C` //1 T� (4I&2,' S ` /C /A / j of Title (and Rank) Notary Public My commission expires: /7 - �/� MY COMM. EXP. 04.10.2P"r 12 Exhibit A Kummer Exploratory State Unit Township 8 North, Range 61 West Section 23: All 15 14 13 22 24 27 26 25 Exhibit B Kummer Exploratory State Unit Tract Descriptions: Tract 1: Township 8 North, Range 61 West Section 23: All U Kummer Exploratory State Unit Tract and Unit Ownershi Tract Interest x (Tract Acres / Unit Acres) = Unit Interest N t Tract Gross 80.000000% 100.000000% 80.000000% x 640.73 / 640.73 = 100.000000% 20.000000% 20.000000% x 640.73 / 640.73 = 0.000000% 100.000000% 100.000000% Total Unit Interests: Esther Gesick Subject: Attachments: FW: Kummer Exploratory State Unit Agreement Kummer Exploratory State Unit Agreement revised 1-4-13.pdf From: ZShearon@nobleenergyinc.com [mailto:ZShearon@nobleenergyinc.com] Sent: Tuesday, January 08, 2013 1:15 PM To: Stephanie Arries Subject: Re: Kummer Exploratory State Unit Agreement Stephanie, Attached is a revised Unit Agreement signed by Noble. The changes are in the following: - Article 8.1 was deleted which was the Warranty and Indemnity language - Article 11.4 was reworded so that the royalty owners are entitled to well information as set out in the lease(s) in the Unit Area - Article 14.1 was changed to incorporate shut-in language as per the terms of the lease(s) in the Unit Area. We noticed under the terms of the Weld County Lease that most of the items you requested were already addressed in the lease, therefore we stated more clearly in the Agreement that we would comply with the terms of the lease. Let me know if you have any questions. direct: 303.226.4343 main: 303.228.4000 zshearon@tmlylernergyinc.con IV, noble From: Stephanie Arries <sames(5co.weld.co.us> To: "ZShearonQnobleenerovinc.com" <ZShearonAnobleenemvinc.com> Cc: David Bauer <dbauer@co.weld.co.us> Esther Gesick <egesickcico.weld.co.us> Bruce Barker <bbarker@co.weld.co.us> Date: 12/21/2012 09:39 AM Subject: Kummer Exploratory State Unit Agreement 1 a Stephanie Arries From: Sent: To: Subject: ZShearon@nobleenergyinc.com Thursday, December 27, 2012 3:55 PM Stephanie Arries Re: FW: Kummer Exploratory State Unit Agreement Hello Stephanie, I read your e-mail and I am just getting back into town. I don't think the changes will be a problem but I need to run it by a few people. I probably will not have the agreement back to you until maybe the end of next week due to people being out of the office for the holidays. I will follow up with you later next week if I have any issues and to also let you know when I should have the agreement back to you. Thank you, Zach j3V)t-aP?-y393 Stephanie Arries <sarries@co.weld.co.us> wrote: To: "ZShearon@nobleenergyinc.com" <ZShearon@nobleenergyinc.com> From: Stephanie Arries <sarries@co.weld.co.us> Date: 12/27/2012 01:35PM Subject: FW: Kummer Exploratory State Unit Agreement Zach I wanted to follow up with you to see if you had questions concerning the email I sent last week (below). If you wanted this to go on the Board's agenda next Wednesday, I could get that done if the changes I requested could be implemented, and the Agreement signed by Noble - and emailed to me. The original could be mailed to us for final signature and it would not matter that it was received after tomorrow. Just let me know Stephanie L. Arries Assistant Weld County Attorney 1150 "O" Street P.O. Box 758 Greeley, Colorado 80632 Tel: 970-356-4000 ext 4394 Fax: 970-352-0242 Email: sarries(a co.weld.co.us<mailto:sarries@co.weld.co.us> [cid:image001.jpg@0ICDDF5B.452B5C60] STATEMENT OF CONFIDENTIALITY & DISCLAIMER: The information contained in this email message is attorney privileged and confidential, intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this email is strictly prohibited. If you have received this email in error, please notify us immediately by replying and delete the message. Thank you. From: Stephanie Arries Sent: Friday, December 21, 2012 9:39 AM To: 'ZShearon@nobleenergyinc.com' Cc: David Bauer; Esther Gesick; Bruce Barker Subject: Kummer Exploratory State Unit Agreement Zach I am writing to you concerning the above -referenced agreement. David Bauer, the Weld County Director of Public Works has shared much of the information he obtained from the conversation he had with you with me and others here at the County. I have also had an opportunity to review the agreement you sent to Weld County, and I have a couple of requests for some language changes. First, the provisions of Article 8 require that Weld County warrant title to its mineral interest, and agree to indemnify Noble in the advent of an adverse claim. The County does not warrant title to the property interests it has. Additionally, the County believes that the provisions of the Colorado TABOR Amendment to the Colo Constitution prohibit it from entering into agreements which would require it to indemnify any party to the contract. Such Agreements are considered unfunded obligations and therefore illegal. Second, The Agreement states that Noble will provide the County with such information as is set forth in the agreement. However, there is no provision covering the information to which it is entitled. Therefore, the County would request that it be provided with the following data: (1) monthly production reports; (2) a copy of the electric log; (3) monthly or quarterly summary of costs/expenses; (4) an annual statement of the average price per barrel. Third, the agreement addresses termination, which appears to contemplate a complete termination. The County would like to also be given notice if Noble intends to shut in the well(s) due to economic considerations. Such notice would be important when Weld County considers annual budget issues. In that same vein, the County would be interested in a "produce or pay" provision. If you would like to discuss any of the foregoing, please feel free to call or email me. Thank you Stephanie L. Arries Assistant Weld County Attorney 1150 "O" Street P.O. Box 758 Greeley, Colorado 80632 Tel: 970-356-4000 ext 4394 Fax: 970-352-0242 Email: sarries(n co.weld.co.us<mailto:sarries@co.weld.co.us> [cid:image001.jpg@0 1CDDF5B.452B5C60] STATEMENT OF CONFIDENTIALITY & DISCLAIMER: The information contained in this email message is attorney privileged and confidential, intended only for the use of the individual or entity named above. If the 2 Hello