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Home My WebLink About20131327.tiffRESOLUTION RE: AUTHORIZE OIL AND GAS LEASE EXTENSION, AND AUTHORIZE CHAIR TO SIGN (NE1/4, S21, T5N, R61 W) — BONANZA CREEK OPERATING COMPANY, LLC 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 July 9, 2003, by Resolution #2003-1839, the Board authorized the Lease to El Camino Resources, Inc., for 160.0 net mineral acres, more or less, described to -wit: NE1/4 of Section 21, Township 5 North, Range 61 West of the 6th P.M., Weld County, Colorado, and WHEREAS, on June 26, 2006, by Consent Agenda approval, the Board consented to Assignment of the Lease from El Camino Resources, Inc., to Bonanza Creek Operating Company, LLC, and WHEREAS, on March 25, 2013, by Resolution #2013-0786, the Board corrected previous errors in the lease records, and WHEREAS, Weld County desires to accept the proposal submitted by Bonanza Creek Energy Operating Company, LLC, to lease the above described mineral acreage for $1,500.00 per net mineral acre, for a total sum of $240,000.00, which lease is to run for a period of one (1) year, commencing June 3, 2013, and ending at 12:00 noon on June 3, 2014, unless otherwise held, as stated in the lease agreement 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 proposed offer of Bonanza Creek Energy Operating Company, LLC, be, and hereby is, accepted fora period of one (1) year. BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized to sign said lease. b- UG) �t5t1)C �Lavvti,�" ' 411 Cc, GA 2013-1327 LE0215 OIL AND GAS LEASE - (NE1/4, S21, T5N, R61W) — BONANZA CREEK OPERATING COMPANY, LLC PAGE 2 The above and foregoing Resolution was, on motion duly made and seconded, adopted by the following vote on the 3rd day of June, A.D., 2013. BOARD OF COUNTY COMMISSIONERS WELD CTY, COLORADO Weld County Clerk to the Board ounty Attorney Date of signature: JUN 1 2 2013 ougYas Rademacher, Pro -Tern Sean P. Conway `dli� ^2! Barbara Kirkmeyer 2013-1327 LE0215 WELD COUNTY LARGE -TRACT OIL AND GAS LEASE Containing 160.0 acres, more or less: Containing 160.0 net mineral acres, more or less: THIS LEASE AGREEMENT, dated this 3'r°i- day off 2013, made and entered into by and between WELD COUNTY, COLORADO, a political subdivision of the STATE OF COLORADO, acting by and through the BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF WELD, for its respective interests, do BOARD OF COUNTY COMMISSIONERS, 1150 O STREET, P.O. BOX 758, GREELEY, CO 80632, hereinafter called Lessor, and: Bonanza Creek Energy Operating Company, LLC, a Delaware Limited Liability Company 410 17th Street Suite 1400 Denver, CO 80202 hereinafter called Lessee: WITNESSETH WHEREAS, said Lessee has applied to Lessor for an oil and gas lease covering the land herein described, and has paid a bonus consideration of $1,500.00 per mineral acre, fixed by Lessor as an additional consideration for the granting of this lease, and Lessee agrees to pay an annual rental of $160.00 computed at the rate of $1.00 per mineral acre or fraction thereof per year, and the following consideration: WHEREAS, all the requirements relative to said application have been duly complied with and said application has been approved and allowed by Lessor; THEREFORE, in consideration of the agreements herein, on the part of Lessee to be paid, kept and performed, Lessor does lease exclusively to Lessee for the sole and only purpose of drilling for, development of and production of oil and gas, or either of them, thereon and therefrom with the right to own all oil and gas so produced and saved therefrom and not reserved as royalty by Lessor under the terms of this lease, together with rights -of -way, easements and servitudes for pipelines, telephone and telegraph lines, tanks and fixtures for producing and caring for such product, and housing and boarding employees, and any and all rights and privileges necessary for the exploration and operation of said land for oil and gas, the following described land situated in the County of Weld, State of Colorado, and more particularly described as follows: DESCRIPTION OF LAND SECTION TOWNSHIP RANGE NE1/4 21 5N 61W TO HAVE AND TO HOLD said land, and all the rights and privileges granted hereunder to Lessee until the hour of twelve o'clock noon on the '?"K day of3..2014, as primary term, and so long thereafter as oil and gas, or either of them, is produced in paying quantities from said land or Lessee is diligently engaged in bona fide drilling or reworking operations on said land, subject to the terms and conditions herein. Drilling or reworking operations shall be deemed to be diligently performed if there is no delay or cessation thereof for a greater period than sixty (60) consecutive days, unless an extension in writing is granted by Lessor; provided that such drilling or reworking operations are commenced during said primary term or any extension thereof, or while this lease is in force by reason of production of oil and gas or either of them, or that such reworking is commenced within (60) sixty days upon cessation of production for the purpose of re-establishing the same, and provided further that such production is 3939069 Pages: 1 of 12 06/10/2013 02:42 PM R Fee:$0.00 Steve Moreno, Clerk and Recorder, Weld County, CO Sill WI zI'.' Yu'rti��h'!i%1 k7 11111 t,COar5 Ap pData\Local\Microsoft\W in( )nanza Lease_LargeT: 2013-1327 Large -Tract Oil and Gas Lease Page 2 commenced during such primary term or any extension thereof, or while this lease is in force by reason of such drilling or reworking operations or other production. EXPLORATION - Lessor reserves the right to conduct exploration on the leased land provided such exploration does not interfere with rights granted herein. In consideration of the premises, the parties covenant and agree as follows: 1. RENTAL - If this lease is extended for an additional term as provided for in the EXTENSION paragraph hereof, Lessee shall pay to Lessor the sum of Two and 50/100 Dollars ($2.50) per acre for the land covered hereby as delayed rental for the term of the extension. Rentals set at the time of established production shall be paid during the remaining life of this lease, annually, in advance, on or before each anniversary date hereof. There shall be no refund of unused rental. 2. ROYALTY PROVISIONS: A. Lessee Responsible for All Costs/Expenses: Lessee shall account for any and all substances produced on the leased land and shall pay to Lessor as royalty, in addition to the rentals provided, the royalties described in paragraphs B through E below, which shall be free of all costs of any kind. In this regard, Lessee agrees to bear one hundred percent (100%) of all costs and expenses incurred in rendering hydrocarbons produced on or from the Leased Premises marketable and delivering the same into the purchaser's pipeline for immediate transportation to an end user or storage facility. If a gas purchase contract makes any deductions for the expenses of dehydrating, transporting, compressing, manufacturing, processing, treating, gathering or marketing of such gas, then such deductions shall be added to the price received by Lessee for such gas for the purpose of the payment of royalties to Lessor. Additionally, royalties payable to Lessor shall never bear, either directly or indirectly, under any circumstances, the costs or expenses (including depreciation) to construct, repair, renovate or operate any pipeline, plant, or other facilities or equipment used in connection with the treating, separation, extraction, gathering, processing, refining, transporting, manufacturing or marketing of hydrocarbons produced from the Leased Premises or lands pooled therewith. It is the intent of the parties that the provisions of this Paragraph 2 are to be fully effective and enforceable. S o U= 5-. o — U mfIR- m31 N ..y LTIE vco a= o I 0L LL N ° cty.- re r 13 ma N� N NC -0 o_Iea -_ ®U� IoM mmm� gpNo`I mv m v= C') O B. Royalty Payment on Products: On products, Lessee shall pay Lessor a royalty payment of twenty percent (20%) of the gross market value or proceeds of sale thereof, whichever is higher. C. Royalty Payment on Residue Gas: On residue gas or gas remaining after separation, extraction or processing operations, Lessee shall pay Lessor twenty percent (20%) of the proceeds of sale or of the market value thereof, whichever is higher. D. Royalty Payment on Oil: At the option of Lessor, and with sixty (60) days' notice to Lessee, Lessor may take its royalty oil in kind, in which event Lessee shall deliver such royalty oil to Lessor on the leased land, free of cost or deduction, into the pipelines or storage tanks designated by Lessor, but Lessee shall not in such case be required to provide free tankage for any such oil for a longer period than one month after the same is run into tanks, With sixty (60) days' notice to Lessee, Lessor may cease taking oil royalty in kind. When paid in cash, Lessee shall pay Lessor for oil produced and saved from the leased land, twenty percent (20%) the market value of the oil at the wellhead, or the price actually paid to Lessee at the well by the purchaser thereof, whichever is higher; and in no event shall the royalties be based upon a market value at the well less than the posted price in the field for such oil, or in the absence of a posted price in the field for such oil, upon a market value at the well less C:\Users\mmeagher\AppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY01YUI7\Bonanza Lease_LargeTract NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 3 than the prevailing price received by other producers in the field for oil of like grade and gravity at the time such oil is run into pipelines or storage tanks. E. No Refund of Bonus: If Lessor owns a lesser interest in the oil and gas deposits of the above -described land than the entire and undivided fee simple estate, then the royalties and rentals herein provided shall be paid to Lessor only in the portion which its interest bears to the whole and undivided fee, but no refund of any bonus consideration shall be made by Lessor hereunder. G. Timing of Royalty Payments: All royalties payable under the terms of this lease shall be payable in cash (unless Lessor elects to take such royalty oil or gas in kind) to Lessor within one hundred twenty (120) days following the first commercial sale of production and thereafter no more than sixty (60) days after the end of the month following the month during which production takes place. Subject to the provisions of Paragraph 15 of this Lease concerning shut-in wells, royalties shall be paid to Lessor by Lessee and/or its assigns or by the product purchaser for oil and/or gas. Upon the failure of any party to pay Lessor the royalty as provided in this paragraph, Lessor may, at Lessor's option, elect to terminate this Lease by sending written notice to Lessee. Lessee shall then have thirty (30) days from the date of service of such written notice in which to avoid termination of this Lease by making or causing to be made the proper royalty payment or payments that should have been paid. If such royalty payment is not made on, or before, the expiration of the 30 -day period, or written approval is not obtained from Lessor to defer such payment, Lessor may elect to terminate this Lease by filing a Notice of Termination with the Weld County Clerk and Recorder. The effective date of said termination shall be the date said Notice of Termination is recorded. H. Effect of "Take or Pay Provision": In the event Lessee enters into a gas purchase contract which contains what is commonly referred to as a "take or pay provision" (such provision meaning that the gas purchaser agrees to take delivery of a specified minimum volume or quantity of gas over a specified term at a specified price or to make minimum periodic payments to the producer for gas not taken by the purchaser) and the purchaser under such gas purchase contract makes payment to Lessee by virtue of such purchaser's failure to take delivery of such minimum volume or quantity of gas, then Lessor shall be entitled to twenty percent (20%) of all such sums paid to Lessee or producer under the "pay" provisions of such gas purchase contract. Such royalty payments shall be due and owing to Lessor within sixty (60) days after the receipt of such payments by Lessee. If the gas purchaser "makes up" such gas within the period called for in the gas contract and Lessee is required to give such purchaser a credit for gas previously paid for but not taken, then Lessor shall not be entitled to royalty on such "make up" gas. If Lessee is not producing any quantities of gas from the Leased Premises but is receiving payments under the "pay" portion of such "take or pay" gas purchase contract provision, such payments shall not relieve Lessee of the duty to make shut-in royalty payments if Lessee desires to continue this Lease, but such "take or pay" royalty payments shall be applied as a credit against any shut-in royalty obligation of the Lessee. Lessor shall be a third -party beneficiary of any gas purchase contract and/or transportation agreement entered into between Lessee and any purchaser and/or transporter of Lessor's gas, irrespective of any provision of said contracts to the contrary, and such gas purchase contract and/or transportation agreement will expressly so provide. Further, Lessor shall be entitled to twenty percent (20%) of the value of any benefits obtained by, or granted to, Lessee from any gas purchaser and/or transporter for the amendment, modification, extension, alteration, consolidation, transfer, cancellation or settlement of any gas purchase contract and/or transportation agreement. I. Recovery of Liquid Hydrocarbons: Lessee agrees that before any gas produced from the Leased Premises is used or sold off the Leased Premises, it will be run, free of cost to c:\Users\mmeagherwppoata\Local\Microsoft \windows\Temporary Internet Files \Content.Outlook\ZY01 YUI7\Bonanza Lease_LargeTractNE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 4 Lessor, through an adequate oil and gas separator of a conventional type or equipment at least as efficient, to the end that all liquid hydrocarbons recoverable from the gas by such means will be recovered on the lease and Lessor properly compensated therefor. J. Excess Payments to Lessor: Any payment of royalty or shut-in gas royalty hereunder paid to Lessor in excess of the amount actually due to the Lessor shall nevertheless become the property of the Lessor if Lessee does not make written request to Lessor for reimbursement within one (1) year from the date that Lessor received the erroneous payment, it being agreed and expressly understood between the parties hereto that Lessor is not the collecting agent for any other royalty owner under the lands covered hereby, and a determination of the name, interest ownership and whereabouts of any person entitled to any payment whatsoever under the terms hereof shall be the sole responsibility of Lessee. It is further expressly agreed and understood that: (i) this provision shall in no way diminish the obligation of Lessee to make full and punctual payments of all amounts due to Lessor or to any other person under the terms and provisions of this Lease, and (ii) any overpayments made to the Lessor under any provisions of this Lease shall not be entitled to be offset against future amounts payable to parties hereunder. K. Effect of Division Order: The terms of this Lease may not be amended by any division order and the signing of a division order by any mineral owner may not be made a prerequisite to payment of royalty hereunder. L. Limitation of Sale to Subsidiaries and/or Affiliates: Oil, gas or products may not be sold to a subsidiary or affiliate of Lessee as defined herein without the Lessor's prior written permission. M. Royalty Payable on All Gas Produced: Lessee shall pay Lessor royalty on all gas produced from a well on the Leased Premises and sold or used off the Leased Premises, regardless of whether or not such gas is produced to the credit of Lessee or sold under a contract executed by or binding on Lessee. Should gas be sold under a sales contract not binding on Lessee, Lessor's royalty will be calculated based on the highest price paid for any of the gas produced from the well from which such gas is produced. In no event will the price paid Lessor for Lessor's share of gas be less than the price paid Lessee for Lessee's share of gas. O 2. LESSOR'S ACCESS TO LEASED PROPERTY AND RECORDS 0a- 0 A. Records Generally: Lessee agrees to keep and to have in its possession complete and -- accurate books and records showing the production and disposition of any and all 9 : substances produced on the leased land and to permit Lessor, at all reasonable hours, to o examine the same, or to furnish copies of same to Lessor upon request along with purchaser's support documentation. Lessor will not be unreasonable with requests. All said m v 5 books and records shall be retained by Lessee and made available in Colorado to Lessor for � m. a period of not less than five (5) years. 44,2E O o B. Access to Premises: Lessor shall have free access, at all times, to all wells, tanks, and other d'et 2 p equipment on the Leased Premises, including drilling wells, and Lessee agrees to furnish uJ,_g Lessor, or Lessor's nominee, currently and promptly, upon written request, with full well or mre information including cores, cuttings, samples, logs (including Schlumberger and other av v Y electrical logs), copies and results of deviation tests and directional and seismic surveys, and m" the results of all drill stem tests and other tests of other kind or character that may be made of M Ems.-. wells on the Leased Premises. Lessor or Lessor's nominee shall be furnished with, and have mm vr free access at all times to, Lessee's books and records relative to the production and sale of (WNa m0v el �Ghom Mein , — C:\Users\mmeagher\AppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY01 YUI7\Bonanza Lease_LargeTract_NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 5 oil, gas or other minerals from the Leased Premises, including reports of every kind and character to local, state or federal governmental authorities. Lessor shall have the right, at its election, to employ gaugers or install meters to gauge or measure the production of all minerals produced from the premises, and Lessee agrees to prepare and deliver to Lessor or Lessor's gauger or nominee duplicate run or gauge tickets for all minerals removed from the premises. Lessee shall furnish to Lessor daily drilling reports on each well drilled upon request. C. Gas Purchase Agreements/Gas Contracts: At least thirty (30) days prior to the delivery or the execution of any contract for the sale, delivery, transporting or processing of gas produced from the Leased Premises, Lessee shall provide Lessor with a complete copy of each proposed contract for the purchase, transportation and/or processing of such gas that Lessee intends to execute (each a "Gas Contract"), whereupon, Lessor may object if the terms of said Gas Contract conflict with the terms and conditions of this Lease. Lessee shall furnish to Lessor, within a reasonable time after its execution, a copy of any Gas Contract or transportation agreement entered into in connection with the Leased Premises, or if there is already a Gas Contract or transportation agreement in effect due to Lessee's operations in the field, then a copy of that contract. Furthermore, a copy of any amendments to the gas purchase contract or transportation agreement shall be furnished said Lessor within thirty (30) days after execution thereof; and on request of Lessor and without cost to the Lessor, Lessee shall furnish Lessor a copy of the following reports: core record, core analysis, well completion, bottom hole pressure measurement, directional survey records, electrical and induction surveys and logs, gas and oil ratio reports, paleontological reports pertaining to the paleontology of the formations encountered in the drilling of any wells on the Leased Premises, and all other reports which pertain to the drilling, completing or operating of the wells located on the Leased Premises. Such information shall be solely for Lessor's use, and Lessor shall attempt to keep same confidential for twelve (months after receipt, subject to its obligation to comply with the Public Records requirements under Colorado law. Lessee agrees that it will not enter into any contract for the sale, delivery, transporting or processing of gas produced from the Leased Premises which shall extend more than two (2) years from the effective date of such sales contract unless such contract has adequate provisions for redetermination of price at intervals of no less frequency than one (1) year to ensure that production from this Lease is not being sold for less than the then current market value. so o D. Lessee to Advise Regarding Well Status: Lessee shall advise Lessor, in writing, of the location of all wells drilled upon the Leased Premises on or before thirty (30) days prior to commencement of operations, and shall advise Lessor, in writing, the date of completion and/or abandonment of each well drilled within thirty (30) days after completion or abandonment. 3. MEASUREMENTS: All production shall be accurately measured using standards established by the American Gas Association (AGA) and/or the American Petroleum Institute (API) and all measuring devices shall be tamper proof as nearly as possible. Oil royalties due within the terms of this lease shall be calculated on actual and accurate measurements within API standards unless a different means of measurement, subject to Lessor's approval, is provided. 4. PAYMENTS AND REPORTS: All payments and reports due hereunder shall be made on or before the day such payments and reports are due. Nothing in this paragraph shall be construed to extend the expiration of the primary term hereof. Oil royalty payments and supporting documents shall be submitted prior to the last day of the month following each month's sale of production, and gas royalty payments and supporting documents shall be submitted prior to the last day of the second month following each month's sale of production. All payments shall be C:\Users\mmeagher\AppData\Local\Microsoft\Windows\TernpOrary Internet Files\Content.Outlook\ZY01YUI7\Bonanza Lease_LargeTractNE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 6 made by cash, check, certified check, or money order. Payment having restrictions, qualifications, or encumbrances of any kind whatsoever shall not be accepted by Lessor. A penalty for a late payment shall be charged as set forth in the PENALTIES paragraph herein. 5. PENALTIES: A penalty shall be imposed for, but not limited to, late payments, improper payments, operational deficiencies, violation of any covenant of this lease, or false statements made to Lessor. Penalties shall be determined by Lessor, unless otherwise provided for by law, and may be in the form of, but not limited to, interest, fees, fines, and/or lease cancellation. A penalty schedule shall be prepared by Lessor and shall become effective immediately after public notice. Said schedule may be changed from time to time after public notice. 6. LAW: The terms and conditions of this lease shall be performed and exercised subject to all laws, rules, regulations, orders, local ordinances or resolutions applicable to, and binding upon, the administration of lands and minerals owned by the County of Weld, and to laws, rules and regulations governing oil and gas operations in Colorado. Violations shall result in penalties as provided for by law or as set forth in the aforementioned schedule or shall, at the option of Lessor, result in default as provided hereinafter. 7. SURRENDER: Lessee may at any time, by paying to Lessor all amounts then due as provided herein, surrender this lease insofar as the same covers all or any portion of the land herein leased and be relieved from further obligations or liability hereunder with respect to the land so surrendered; provided that this surrender clause and the option herein reserved to Lessee shall cease and become absolutely inoperative immediately and concurrently with the institution of any suit in any court of law by Lessee, Lessor or any assignee of either to enforce this lease, or any of its terms expressed or implied. In no case shall any surrender be effective until Lessee shall have made full provision for conservation of the leased products and protection of the surface rights of the leased land. 8. ASSIGNMENTS: A. Fee for Assignments: Lessee, upon payment of a $25.00 fee and prior written consent of Lessor (which shall not be unreasonably withheld), shall have the right to assign the entire leasehold interest of said Lessee in all or part of the land covered hereby. Prior to written approval by Lessor of assignment of this lease, Lessee (assignor) shall not be relieved of its obligations under the terms and conditions herein. An assignment shall not extend the term of this lease. B. Partial Assignment: If any assignment of a portion of the land covered hereby shall be approved, a new lease shall be issued to the assignee covering the assigned land, containing the same terms and conditions as this lease, and limited as to term as this lease is limited, and the assignor shall be released and discharged from all further obligations and liabilities as to that portion so assigned. C. Lessee to Notify: Lessee shall notify Lessor of all assignments of undivided percentage or other interests. Said interests will not be recognized or approved by Lessor, and the effect of any such assignments will be strictly and only between the parties thereto, and outside the terms of this lease, and no dispute between parties to any such assignment shall operate to relieve Lessee from performance of any terms or conditions hereof or to postpone the time therefore. Lessor shall at all times be entitled to look solely to Lessee or his assignee shown on its books as being the sole owner hereof, and for the sending of all notices required by this lease and for the performance of all terms and conditions hereof. C:\Users\mmeagher\AppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY01YUI7\Bonanza Lease_LargeTract_NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 7 D. Filing with Lessor: Although not binding on Lessor, all instruments of every kind and nature whatsoever affecting this lease should be filed with the Lessor. 9. OVERRIDING ROYALTY: Any and all reservations or assignments or overriding royalties shall be subject to approval by Lessor. The total of said overriding royalties shall not exceed five percent (5%), including any overriding royalty previously provided for unless production exceeds a monthly average of fifteen (15) barrels per day or ninety thousand cubic feet of gas per day (90 MCF/D). In the event production drops to this amount or less, any overriding royalties which exceed five percent (5%) may be suspended. Lessor's approval of a reservation or assignment of an overriding royalty shall not bind Lessor for payment of said overriding royalty and shall not relieve Lessee of any of its obligations for payment of royalties to Lessor as provided by ROYALTY paragraphs herein. 10. OFFSET WELLS: Lessee agrees to protect the leased land from drainage by offset wells located on adjoining lands not owned by Lessor, when such drainage is not compensated for by counter -drainage. It shall be presumed that the production of oil and gas from offset wells results in drainage from the leased land, unless Lessee demonstrates to Lessor's satisfaction, by engineering, geological, or other data, that production from such offset well does not result in such drainage, or that the drilling of a well or wells on the leased land would not accomplish the purposes of protecting the deposits under the leased land. Lessor's decision as to the existence of such drainage shall be final, and Lessee shall comply with Lessor's order thereon or surrender this lease as to any such undeveloped acreage as designated by Lessor. 11. DEVELOPMENT: Upon discovery of oil and gas or either of them on the leased land, Lessee shall proceed with reasonable diligence to develop said land at a rate, and to an extent, commensurate with the economic development of the field in which the leased land lies. o ;- r -:s U� m2� m3-= N • to w°-_ LL O -y N rc11)&w a IOmo. oN Nt— LL w� No r No 0 0\£ O)mw= (4).,(>6=-- .AtIM 12. POOLING CLAUSE: Lessee may at any time or times pool any part or all of said land or lease or any stratum or strata with other lands and leases, stratum or strata, in the same field so as to constitute a spacing unit to facilitate an orderly or uniform well -spacing pattern or to comply with any order, rule, or regulation of the State or Federal regulatory or conservation agency having jurisdiction. Such pooling shall be accomplished or terminated by filing of record a declaration of pooling, or declaration of termination of pooling, and by mailing or tendering a copy to Lessor, or to the depository bank. Drilling or reworking operations upon or production from any part of such spacing unit shall be considered for all purposes of this lease as operations or productions from this lease. Lessee shall allocate to this lease the proportionate share of production which the acreage in this lease included in any such spacing unit bears to the total acreage in said spacing unit. 13. UNITIZATION — COMMUNITIZATION: In the event Lessor permits the land herein leased to be included within a communitization or unitization agreement, the terms of this lease may be deemed to be modified to conform to such agreement. When only a portion of the land under this lease is committed by an agreement, Lessor may segregate the land and issue a separate lease for each portion not committed thereunder; the term of such separate lease shall be limited as to the original term of this lease. The terms of the lease on that portion remaining in the unit shall be deemed to be modified to conform to such agreement. Non -producing leases shall terminate on the first anniversary date of the lease following the termination date of the unit or part thereof modifying the lease, but in no event prior to the end of the primary term of the lease or the extension term of the lease. 14. PRODUCTION: Lessee shall, subject to applicable laws, regulations and orders, operate and produce all wells upon the leased land so long as the same are capable of producing in paying quantities, and shall operate the same so as to produce at a rate commensurate with the rate of c:Wsers\mmeagherwppoata\Local \Microsort\windows\Temporary Internet Files\Content.Outlook\ZY01 YUI7\Bonanza Lease_LargeTract_NE4-2 1 -5-6 1. docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 8 production of wells on adjoining lands within the same field and within the limits of good engineering practice, except for such times as there exist neither market nor storage therefore, and except for such limitations on, or suspensions of, production as may be approved in writing by Lessor. Lessee shall be responsible for adequate site security on all producing properties. 15. SHUT-IN WELLS: If Lessee shall complete a well on the leased land productive of gas and Lessee is unable to produce such gas due to a lack of suitable market therefore, Lessor may grant Lessee suspension of his obligations to produce hereunder until a suitable market for such gas can be found, and during any such suspension period, it shall be deemed that gas is being produced hereunder in paying quantities. Except, however, that beginning on the anniversary date next, of the year of an extension of the lease by reason of a shut-in well, Lessee shall pay to Lessor a shut-in royalty equal to $2.50 per acre of the lease per annum in addition to the annual rental. The minimum amount of such shut-in royalty payment shall be $240. Each year's shut-in royalty shall be forfeited to Lessor except for the shut-in royalty paid for the year during which the well begins production. The maximum extension of the lease, due to the existence of a shut-in well, shall be five (5) years beyond the extension term as described in the EXTENSION paragraph herein, The granting of any further extensions shall be at the sole option of Lessor. U Uy 16. OPERATIONS: No exploration, drilling or production operation, including permanent installations, shall be within 200 feet of any existing building or other improvement, including water well or reservoir, without the written permission of the owner of said improvements. Lessee shall keep a correct log of each well drilled hereunder, showing by name or description the formations passed through, the depth at which each formation was reached, the number of feet of each size casing set in each well, where set, and the total depth of each well drilled. Lessee, within thirty (30) days after the completion or abandonment of any well drilled hereunder, shall file in the office of Lessor a complete and correct log of such well, together with a copy of the electric log and the radioactivity log of the well when such logs, or either of them, are run; and also a copy of all drill stem test results, core records and analyses, record of perforations and initial production tests, if any. If any of the information required by this paragraph is contained in reports required to be filed with the Colorado Oil and Gas Conservation Commission, the requirements of this paragraph for such information may be satisfied by such filing with said Commission, except for copies of the reports as are required by the following paragraph, and provided that all such information is immediately available to Lessor. Any proprietary information so submitted shall not be subject to public inspection under Colorado law. Lessee shall bury pipelines below plow depth. Lessee shall set and cement sufficient surface casing to protect the fresh water wells of the area. 17. NOTIFICATION: Lessee shall notify Lessor and the surface lessee or surface owner of the location of each drill site at least two weeks prior to commencing drilling operations thereon. Lessee shall notify Lessor before commencing to plug and abandon any well by copy of Lessee's request for approval or sundry notice of intent to plug and abandon. 18. BONDS: Lessee shall be liable for all damages to the surface of the land, livestock, growing crops, water wells, reservoirs, or improvements caused by Lessee's operations on said land. No operations shall be commenced on the land hereinabove described unless and until Lessee shall have filed a good and sufficient bond with Lessor, in an amount to be fixed by Lessor, to secure the payment for such damages as may be caused by Lessee's operations on said land and to assure compliance with all the terms and provisions of this lease, the laws of the State of Colorado, and the rules and regulations thereto appertaining. A bond may be held in effect for the life of production of any well. C:\Users\mmeagher\AppData\Local\Microsoft\Windows\TenlpOrary Internet Files\Content.Outlook\ZY01 YUI7\Bonanza Lease_LargeTract_NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 9 19. SETTLEMENT: Lessee shall not remove any machinery, equipment or fixtures placed on said land, other than drilling equipment, nor draw the casing from any well unless and until all payments and obligations currently due Lessor under the terms of this lease shall have been paid or satisfied. Any machinery, equipment or fixtures left on this land for a period of more than six (6) months after the expiration hereof, shall automatically become the property of Lessor. 20. OTHER DISCOVERY: Should Lessee discover any valuable products other than oil and gas, on or within the leased land, Lessee shall within seven (7) days report such discovery to Lessor, in which event Lessee and Lessor may negotiate a provision for production of such discovery. 21. WATER: This lease does not grant permission, express or implied, to Lessee for water exploration, drilling, or establishing water wells without the written permission of the surface owner. If Lessor is the surface owner, said permission shall not be unreasonably withheld. If Lessee desires to establish or adjudicate any water right for beneficial use on the leased land, any such adjudication or application shall be in the name of Lessor if Lessor is the surface owner. The same shall apply to any non -tributary water rights established on the leased land which may be put to beneficial use off said land. 22. DEFAULT: Upon failure or default of Lessee to comply with any of the terms and provisions hereof including, but not limited to, the failure to comply with laws, rules and regulations governing Colorado oil and gas operations, Lessor is hereby authorized upon notice and hearing, as hereinafter provided, to cancel this lease as to all of the leased land so claimed or possessed by lessee hereunder. In the event of any such default or failure, Lessor shall, before making any such cancellation, send to Lessee by certified mail, to the post office address of said lessee as shown by the records of Lessor, a notice of intention to cancel for such failure or default, specifying the same, stating that if within forty-five (45) days from the date of mailing said notice, Lessee shall correct such failure or default, no cancellation will be made. If such failure or default is not corrected within forty-five (45) days after the mailing of such notice, and if Lessee does not request a hearing on such notice within forty-five (45) days, this lease will terminate and be canceled by operation of this paragraph without further action by Lessor, or further notice to Lessee. 23. EXTENSION: If Lessee fails to make discovery of oil and gas, or either of them, in paying quantities during the primary term hereof, or during drilling operations commenced during the primary term hereof, Lessee may make written application to Lessor for an extension of this lease. The granting of such extension shall be at the sole option of Lessor, according to the following conditions: o rs`y A. Extension Limit: No lease term will be extended for more than six (6) months from the original expiration date. U : B. Extension Payment: The Lessee shall pay to the Lessor the sum of one-third of the original (sic, with a minimum bonus of Six Hundred Fifty Dollars ($650.00) per acre, whichever is greater. vDJ O 41 LS. �� C. Delay Rental: The Lessee must pay to the Lessor the sum of Two and 50/100 Dollars ' ($2.50) per acre leased as delayed rental for the term of the extension. w =I' A Nxr D. No Change in Royalty: The royalty will remain the same. actor--- SU 24. HOLD HARMLESS: Lessee shall indemnify Lessor against all liability and loss, and against all mm v claims and actions, including the defense of such claims or actions, based upon, or arising out of, ® damage or injury, including death, to persons or property caused by, or sustained in connection m -m= M T.1 • C:\Users\mmeagheMppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY01YUI7\Bonanza Lease_ LargeTract_NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 10 with, operations on this leased land or by conditions created thereby, or based upon any violation of any statute, ordinance, or regulation. 25. CONDEMNATION: If the leased land shall be taken in any condemnation proceeding, this lease shall automatically terminate as of the date of taking. The award for such condemnation shall be paid to Lessor, except for any specific award(s) paid to Lessee for severed oil and gas reserves, in which event 50% of such specific award(s) shall be paid to Lessor in lieu of royalty lost by virtue of the condemnation. Improvements shall be removed by Lessee per terms in the SETTLEMENT paragraph herein. If only a portion of the leased land is taken by condemnation, Lessor may, at its option, terminate this lease or terminate only that portion of the lease so taken. 26. ERRORS: Every effort is made by Lessor to avoid errors in all procedures including, but not limited to, auction listings and lease preparation. Lessor shall not be liable for any inconvenience or loss caused by errors which may occur. Lessee shall notify Lessor immediately upon discovery of any errors or discrepancy whatsoever. 27. ARCHAEOLOGY: Lessee shall not destroy, disturb, mar, collect, remove or alter any prehistoric or historic resources of any kind on Weld County lands as provided by law. These resources include, but are not limited to, all artifacts of stone, wood or metal, pictographs, structures, and bones. A discovery of anything of prehistoric or historic nature shall be reported to Lessor or the State of Colorado Archaeologist immediately. 28. DEFINITIONS: For purposes of this Lease, the following definitions apply: A. "Products" refers to any and all substances produced on the leased property, including all oil and gas, found on or under the leased property. NM V y TI S - U a ma Nm G v-°® pa om M Oaco^'- mNj NU m M�4. yr 'O N `0.:. mmv mm (Wmw B. "Market Value" shall mean for gas and products therefrom (i) the gross price at which gas or products therefrom are sold pursuant to a Gas Contract, as defined in paragraph 2C, or (H) if not sold pursuant to a Gas Contract, as defined in paragraph 2C, the highest gross price reasonably obtainable for the quantity of gas or products available for sale, through good faith negotiations for gas or products produced from the Leased Premises at the place where such gas or product is available for sale on the date of such a contract with adequate provisions for redetermination of price at intervals of no less frequency than two (2) years to ensure that the production is being sold for no less than the current market price. Included within the definition of "Market Value" as used herein is the presumption that Gas Contracts are arms -length contracts with purchasers who are not subsidiaries or affiliates of Lessee. "Market Value" shall never be less than the amount actually received by the Lessee for the sale of hydrocarbons. C. "Affiliate" is defined as the parent company or a subsidiary of Lessee, a corporation or other entity having common ownership with Lessee, a partner or joint venturer of Lessee with respect to the ownership or operation of the processing plant, a corporation or other entity in which Lessee owns a ten percent or greater interest, or any individual, corporation or other entity that owns a ten percent or greater interest in Lessee. D. "Costs" and/or "Expenses" shall mean all costs of gathering, production, transportation, treating, compression, dehydration, processing, marketing, trucking or other expense, directly or indirectly incurred by Lessee, whether as a direct charge or a reduced price or otherwise, including fuel use attributable to any of the services listed above. "Costs" or "Expenses" also include depreciation, construction, repair, renovation or operation of any pipeline, plant, or other facilities or equipment used in connection with the treating, separation, extraction, C:\Users\mmeagher\AppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY0I YUI7\Bonanza Lease_LargeTract_NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 11 gathering, processing, refining, transporting, manufacturing or marketing of hydrocarbons produced from the Leased Premises or lands pooled therewith. E. "Gas" as used herein shall mean all gases (combustible and noncombustible) including, but not limited to, all gaseous hydrocarbons, gaseous compounds, carbon dioxide, and helium. F. "Oil and gas" as used herein shall include all substances produced as by-products therewith, including, but not limited to, sulfur. G. "Paying quantities" as used herein shall mean and refer to quantities of oil and gas or of either of them sufficient to pay for the current cost of producing same. 29. HEIRS AND ASSIGNS: The benefits and obligations of this lease shall inure to, and be binding upon, the heirs, legal representatives, successors or assigns of Lessee; but no sublease or assignment hereof, or of any interest herein, shall be binding upon Lessor until the same has been approved by Lessor as explained in the ASSIGNMENTS paragraph provided above. 30. WARRANTY OF TITLE: Lessor does not warrant title to the leased premises, but it shall, upon request, allow Lessee access to such abstracts and other title papers as it has in its files. There shall be no obligation on Lessor's part to purchase new or supplemental or other title papers, nor to do any curative work in connection with title to the subject lands. All abstracts of title, whether new or supplementary, obtained by Lessee and covering the subject lands shall become the property of, and be delivered to, Lessor after Lessee has completed its title examination and curative work, subject, however, to the right of Lessee to use such abstracts upon request at any time during the term of the lease. - c U- 3SU _- New_�f 3 ▪ 0 w vo• s HLLO as 0)am�i taNiCL 11t N C r) o N to N o Tm w. m. v— Motes 31. FORCE MAJEURE: Neither party shall be responsible for delays or failures in performance resulting from acts or occurrences beyond the reasonable control of such party, including, without limitation: fire, explosion, power failure, flood, earthquake or other act of God; war, revolution, civil commotion, terrorism, or acts of public enemies; any law, order, regulation, ordinance, or requirement of any government or legal body or any representative of any such government or legal body; or labor unrest, including without limitation, strikes, slowdowns, picketing or boycotts. In such event, the party affected shall be excused from such performance (other than any obligation to pay money) on a day-to-day basis to the extent of such interference (and the other party shall likewise be excused from performance of its obligations on a day-to-day basis to the extent such party's obligations relate to the performance so interfered with). 32. SURVEYS, ABSTRACTS, TITLE OPINIONS AND CURATIVE WORK: A. If Lessee shall cause any of the exterior or interior lines of the property covered by this lease to be surveyed, Lessee shall furnish Lessor a copy of such survey. Lessee shall furnish Lessor, within a reasonable time, with a copy of all maps submitted to the Corps of Engineers of the United States Army, Railroad, or other governmental or official agency or department having jurisdiction, showing the proposed location of all roads, pipelines, canals and drill sites on the Leased Premises. B. In the event Lessee causes an abstract of title to be prepared covering the property herein leased, or any portion thereof, Lessor shall have access to said abstract at any reasonable time. In the event Lessee shall cause the title to be examined or should obtain a title opinion or title certificate upon the property herein leased, Lessee agrees to furnish Lessor a copy or photostatic copy thereof within a reasonable time of receipt of the same by Lessee with the understanding that neither Lessee nor the attorney or firm of attorneys rendering the opinion C:\Users\mmeagherAppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY01YUI7\Bonanza Lease_LargeTract_NE4-21-5-61.docx (Revised 5/2013) Large -Tract Oil and Gas Lease Page 12 or certificate shall be responsible to Lessor for its correctness, the said opinion or certificate being furnished to Lessor simply for its own convenience, information and personal use. Similarly, if any curative material is obtained by Lessee, a copy thereof shall immediately be furnished Lessor under the same conditions of non -liability on the part of the Lessee or the persons who may have obtained or prepared the same. IN WITNESS WHEREOF, Lessor has hereunto signed and caused its name to be signed by the CHAIR, BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF WELD, with the seal of the office affixed, and Lessee has signed this agreement, the day and year first above written. LESSOR: 9 ATTEST: ' \A Weld County Clerk to he +ard By Deputy Clerk to STATE OF Co(are to ) ss COUNTY OF beK-dc ) BOARD OF COUNTY COMMISSIONERS WELD COUNTORADO By: 7 Chair, Board of County Commissioners JUN 0.3 2013 LESSEE: By: day of The foregoing instrument was acknowledged before me this trek "1/45 20 d 3 , by C4r••<hrL.cr •Fur R4Kawin.. (i*tL tit!Orrea(• j Co...p,& ,LLC, Witness my hand and official seal. (V g?c( My Commission Expires: 9/as/xo/(si 3939069 Pages: 12 of 12 06/10/2013 02:42 PM R Fee:$0.00 Steve Mo eno, Cle k and Recorder, Weld County, CO �IIIKiln tfn'1W+LNrltWIFK\HI&lN,iA'RiYi , tIIII GREGORY R. CREER NOTARY PUBLIC STATE OF COLORADO NOTARY ID 20124062502 MY COMMISSION EXPIRES SEPT. 25, 2016 620/2 a e9a7 C:\Users\mmeagher\AppData\Local\Microsoft\Windows\Temporary Internet Files \Content.Outlook\ZY01YUI7\Bonanza Lease _LargeTract_NE4-21-5-61.docx (Revised 5/2013) ar May 23, 2013 Weld County Board of Commissioners 1150 O Street, P.O. Box 758 Greeley, CO 80632 Attn: Esther E. Gesick RE: Signed Oil and Gas Leases Section 21 and 22, T5N, R61 W Weld County, Colorado Esther, BonAnzA CREEK 410 17th Street, Suite 1400 Denver, CO 80202 (720) 440-6100 phone (720) 305-0804 fax 13onanricd COW RECEIVED MA 2S x'2':3 WELL COUNTY COMMISSIONERS Enclosed is Bonanza Creek Energy Operating Company LLC's signed oil and gas leases covering the above lands. Thank you for making this happen. Should you have any questions about this matter please feel free to call me at (720) 440-6180. Sincerely, Bonanza Creek Energy, Inc. Michael Meagher Associate Landman dP Boman CREEK CORPORATE OFFICE 41017" Street. Suite /500 Denver. CO 80202 Office: (720) 270.2330 Michael Meagher Associate Landman 410 17th Street Suite 1400 Denver, CO 80202 720-440-6180 Direct 303-501-4377 Cell 720-279-2331 Fax mmeagher@bonanzacrk.com www.bonanzacrk.coin MID-COIDINENT OFFICE 1331 Lamar Street. Suite 1/35 Houston, TX 770/0 Office: (7131 337-1250 WESTERNREGION OFF/CE 5601 Tnoaun Avenue. Suite 2/0 Bakersfield, CA 93309 Office: (661)638-2730 ar April 9, 2013 Weld County Board of Commissioners Attn: Esther E. Gesick 1150 O Street, P.O. Box 758 Greeley, CO 80632 RE: Oil and Gas Lease Extension Section 21 and 22, T5N, R61W Weld County, Colorado Dear Esther: sown CREEK 410 17th Street, Suite 1500 Denver, CO 80202 (720) 440-6100 phone (720) 305-0804 fax lion mid LSJII1 RECEIVED APR 1 I zuti COMMISSIONERS Enclosed are two (2) checks from Bonanza Creek Energy, Inc. for the Oil and Gas Lease extensions covering Section 21 NE/4 and Section 22 SE/4 all in 5N -61W. Check # 39597 is for 159.00 net mineral acres in the SE/4 of Sec. 22 and Check # 39596 is for 160.00 net mineral acres in the NE/4 of Sec. 21. Both checks were comprised of paying $1,500 per net mineral acre. Should you have any questions about this matter please feel free to call me at (303) 501-4377 Sincerely, Bonanza Creek Energy, Inc. Michael Meagher Associate Landman End. 0 CD -o o o ru c m O 0 r- O U ° o •1C Ca 15 �woE' N Co C CO CO RECEIPT DATE 5-3e)- c2_0r 3 RECEIVED FROM Bonanza ADDRESS /n '100 hp 'na -P,e1 4. -Au an d OO II t?O -- $ u L?4 cw FOR dal rGit CI.i F-0,2 NO.86997 C caadt Surate, �Q "lc . HOW PAID CASH CHECK aya, O3 - HONEY ORDER GVEcl, Sal TS -h, kt&w) # 3g59t BY &.ri vuei,/ Esther Gesick From: Michael Meagher [MMeagher@bonanzacrk.com) Sent: Friday, March 22, 2013 9:55 AM To: Esther Gesick Cc: Bruce Barker; Stephanie Arries Subject: RE: Pronghorn 34-22 and 31-21 Attachments: Pronghorn 34-22 Payments.pdf; Pronghorn 31-21 Payments.pdf Hey Esther, That sounds like great news. Attached are the payment records for both wells. These things are a little difficult to read. Your Owner Number in our system is 1041 and you will notice on the top of the statements that Bonanza Creek has two (2) company numbers, 2 and 10. Company 2 (Bonanza Creek Energy Operating) was paying from 12/06 to 9/10, then company 10 (Bonanza Creek Energy Inc.) started paying from 11/10 and 2/11 to present. The total amount paid was: Pronghorn 31-21: $39,611.06 (Co. 2) + $6,499.41 (Co. 10) = $46,110.47 Pronghorn 34-22: $39,022.02 (Co. 2) + $8,119.72 (Co. 10) = $47,141.74 The SALE DATE column shows the months we actually sold the Oil (O) and Gas (G). In 2012 the sale dates were sporadic and jumped several months but if you match it up with our production records you will see that even though we were selling Oil and Gas every 3 or 4 months, the wells were still producing during that lull. When the production started falling in 2012, we hired to trucks to come pick up our oil less regularly. We wanted to accumulate the oil in the tanks so that we weren't paying the trucking companies to come every month to pick up minimal amounts of oil. Please call me cell phone with any questions or concerns. Thanks again, Michael Meagher Associate Landman Bonanza Creek Energy 410 17th Street, Suite 1500 Denver, CO 80202 (720) 440-6180 office direct (303) 501-4377 cell (720) 305-0804 fax mmeagher@bonanzacrk.com www.bonanzacrk.com sauna CREEK From: Esther Gesick [mailto:egesick@co.weld.co.us] Sent: Friday, March 22, 2013 9:12 AM To: Michael Meagher Cc: Esther Gesick; Bruce Barker; Stephanie Arries Subject: RE: Pronghorn 34-22 and 31-21 Good Morning Michael, How about some good news to start your day? The County Attorney forwarded your request to the Board and at least three of the five responded favorably to your proposal! So, I will work with Assistant County Attorney, Stephanie Arries, to draft two Amended Leases with the following new provisions: 1 year primary term, 20% royalty, and $1,500 per acre extension bonus. Once we have it completed, I will forward it to you for company review and notarized signature. Upon receipt of the executed document and payment, we will list it on the Agenda for signature and recording. Additionally, in the mean time, have you had an opportunity to research the status of any potential royalty payments resulting following the 2006 and 2011 Division Orders? You submitted production records; however, I was unable to locate any evidence of royalty payments resulting from the two subject wells. That was one item the Board wished to verify prior to completion of the amendments. Thank you, Esther E. Gesick Deputy Clerk to the Board/Office Manager 1150 O Street)P.O. Box 758)Greeley, CO 80632 tel: (970) 336-7215 X4226 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, March 21, 2013 10:18 AM To: Bruce Barker; Stephanie Arries Cc: 'Michael Meagher' Subject: FW: Pronghorn 34-22 and 31-21 Bruce, Please see the request/proposal below. Is this something that could be presented to the Board for direction via e-mail pass around or work session prior to scheduling an auction? Esther E. Gesick Deputy Clerk to the Board/Office Manager 1150 O Street/ P.O. Box 758(Greeley, CO 80632 tel: (970) 336-7215 X4226 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: Michael Meagher[mailto:MMeagher©bonanzacrk.comj Sent: Thursday, March 21, 2013 10:11 AM To: Esther Gesick Subject: RE: Pronghorn 34-22 and 31-21 2 Esther, If possible, Bonanza Creek would like to be granted a one(1) year extension on the two (2) leases that cover: 5N -61W Section 21: NE/4 Section 22: SE/4 In exchange for the one(1) year extension, Bonanza would execute an amended lease(s) granting Weld County Commissioners an amended Royalty of 20%. Also Bonanza would pay $1,500.00 per acre for the one year extension. In summation, you would receive the new royalty rate of 20% for both leases and Bonanza would pay a total of $480,000.00, (320 net acres X $1,500.00 = $480,000.00) It's the last attempt of a desperate man but we are hoping that because we were forth coming and brought this mistake to your attention that you may consider our offer. We have a one mile horizontal well planned for the E/2 of Section 22 in July of this year and if granted an extension, we will drill a horizontal well in the E/2 of Section 21 within one year. Thank you so much Esther, take care. Michael Meagher Associate Landman Bonanza Creek Energy 410 17th Street, Suite 1500 Denver, CO 80202 (720) 440-6180 office direct (303) 501-4377 cell (720) 305-0804 fax mmeagher@bonanzacrk.com www.bonanzacrk.com ,\ieonRnzR CREEK From: Esther Gesick(mailto:eoesick@alco.weld.co.us] Sent: Wednesday, March 20, 2013 8:26 AM To: Michael Meagher Cc: Bruce Barker; Stephanie Arries; Esther Gesick Subject: RE: Pronghorn 34-22 and 31-21 Michael, With a better understanding of the production statements you've provided, there is added concern with the lack of reporting the Shut -In status, recognizing that since 2010 the wells have really only been producing an average of one day "swabbing", if any. Additionally, in reviewing the royalties spreadsheet you provided in the attached e-mail, it does not appear to document royalties actually paid to Weld County, just sporadic production sales in 2010-Sept.2012 (please correct me if we're just not reading it right). However, I am unable to find evidence of royalty checks from either Pronghorn 34-22 or 31-21 in the County records. Having said all that, it is unfortunately my position to inform you that, unless documented otherwise, the Resolution completed on March 11, 2013, serves only to correct the County's paperwork errors in 2006 regarding the one-year extension, placement of the Division Order, and the lease not expiring in 2007. However, subsequent to that there have been repeated instances of non -production without extension or 3 Shut-in status, as required by the terms of the leases dated July 9, 2003, and both leases are, therefore, deemed to be expired and invalid. Understanding your pending production intentions for July, we will list these two parcels for auction as quickly as possible to afford you the opportunity to bid on current leases. Please let me know if you have any questions. Esther E. Gesick Deputy Clerk to the Board/Office Manager 1150 O Street P.O. Box 758'Greeley, CO 80632 tel: (970) 336-7215 X4226 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: Michael Meagher[mailto:MMeaoherebonanzacrk.com] Sent: Tuesday, March 19, 2013 9:01 AM To: Esther Gesick Subject: RE: Pronghorn 34-22 Hey Esther, I wanted to see if you had time later today to discuss one last lease we have with you that may be in trouble. Thanks, Michael Meagher Associate Landman Bonanza Creek Energy 410 17th Street, Suite 1500 Denver, CO 80202 (720) 440-6180 office direct (303) 501-4377 cell (720) 305-0804 fax mmeagher(abonanzacrk.com www.bonanzacrk.com dN BOf1RI1ZP '1 CREEK From: Esther Gesick [mailto:egesick@co.weld.co.us] Sent: Monday, March 11, 2013 3:19 PM To: Michael Meagher Subject: RE: Pronghorn 34-22 Hi Michael, I need to leave for a child's medical appointment in just a few minutes, so I'll give you a call tomorrow when I have adequate time to discuss. Thanks! 4 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 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: Michael Meagher[mailto:MMeaoher@abonanzacrk.com] Sent: Monday, March 11, 2013 3:10 PM To: Esther Gesick Subject: RE: Pronghorn 34-22 Thank you Esther!!!! We believe we may have a similar problem with a well in Section 21 of 5N -61W. the well is the Pronghorn 31-21. It's the very same issue, the well has produced sporadically, there have been a couple of times where it was shut in for two (2) months and one (1) case where it was shut in for three (3) months and did not produce. I was hoping to go through this with you again, this is the last lease with you we have questions about. Attached is the production history for the well, could you please call me when you get a moment to discuss further. Thanks again, Michael Meagher Associate Landman Bonanza Creek Energy 410 17th Street, Suite 1500 Denver, CO 80202 (720) 440-6180 office direct (303) 501-4377 cell (720) 305-0804 fax mmeagher@bonanzacrk.com www.bonanzacrk.com ih "122 Zf V1' CREEK From: Esther Gesick [mailto:eciesickCaco.weld.co.us] Sent: Monday, March 11, 2013 2:11 PM To: Michael Meagher Cc: Tammy Waters; Esther Gesick Subject: RE: Pronghorn 34-22 Michael, 5 The Commissioners approved the attached Resolution this morning; we'll send you a signed/recorded copy when it is ready. If production and royalties continue I don't think anything else needs to be done; however, if not, please contact me to discuss doing a Shut-in to avoid termination of the lease in the future. Thank you, Esther E. Gesick Deputy Clerk to the Board/Office Manager 1150 O Street( P.O. Box 758(Greeley, CO 80632 tel: (970) 336-7215 X4226 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: Michael Meagher[mailto:MMeagher@bonanzacrk.com] Sent: Wednesday, February 27, 2013 8:47 AM To: Esther Gesick Subject: Pronghorn 34-22 Esther, Sorry for the delay, attached is a report on royalty payments to Weld County for the above well in 5N -61W-22 SE/4. I will call you to follow up and see what else I can provide, thanks. Michael Meagher Associate Landman Bonanza Creek Energy 410 17th Street, Suite 1500 Denver, CO 80202 (720) 440-6180 office direct (303) 501-4377 cell (720) 305-0804 fax mmeagher@bonanzacrk.com www.bonanzacrk.com V\ eannnza CREEK This email has been scanned for spam and viruses by Maildistiller cloud email security - click here to report this email as spam. 6 mm aNm~~2. 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WWOHMMNNMNNONNMMNMNM 00000000000.N nn..y.10 Cl NNNNNNNNryHHHH 0 0 N N N- nm0VNNPmmtw0nmOO00nn MOMHOMONHMNVOWOMMMMO mPme 000 ulO VV1 Nbm tO 000 P 0000„. „ V 00P00N00 mNryNNN 0m000H 00000000000000000000 0000000000'00'00000000 \OHHNH(N .iHH H000000H 0 0000 0 .a 000000 0000 000 \\ \MNH` N V1 ON 0000000000H H H HO 00000 ££ 00 00 00 N 00000000000000000000 £ O £ O H 22 ££ 00 IA LA rcu 0400010c'10rc0azzzzzarcz 39,022.02 N 6 0 m 0 C 4 0 u q F og > O Y a mmmmmmmmmmmmmmmm m e KEmmmC# K0oo 0 oo00oo mCmNo wnn,y.a N -4 -.1.1'4N ., .�rvrvN z b a a N X 0. 6� co Rm X U O M 0 V a m YU UY 44 48 U aNu HP 1,4 3.4 NNNH OOOOO Hnn N0PPOOSNlHtNVNrmltaPm N00N NNNNNNNNNNNNNNNNP•mm0 0000W0M000MMMOMMfIVVO HHSSHSHHSSSSSSHSWWNWS MMMMMMTMMMMMMMMMNMOMM NY HNNHAMHHHSryNN HSSSSSHSSHSSSSHSSSNSS NNNIV NNm NNNNNNONMNNNNNNNNSMNM nnnn0Pn0NN0Pn0Pn 1INN N 000 La 000 0000,0 000 r1 0 0 ao MMMMO NHMSM MNMWM OMPNC 00000000000000000TCmi� NNN N 000000000000000000000 N N .Ni N .aN \\\\\\\\\\\\\\\\\\\\\ N NN N.nNNN.4r1N r1N ., 00 PPP PPNP PPO.� S e4 P Oa\ EEE EE E r ££i S> en o no 0.0 NN N 0 La to NN N N NS ti S SS 000000.00000000000000 z aazaazawaaaarc rc'�aaaa �w ON Report totals 9 B V I U w Y 6 0 M LI Cost Center: CO001027 PRONOROPN 31-]1 a aaammmmmmaPaaamaammaaammmaaaaamamamaaaaa aam 000 0 0 00r 0000 0 00000 0000000 000000 00 00 00 00 >000000000000 NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN Na ONO mmb m1000Np r4N OHO N Np AAHN NNNNOmNNNONNmmNNnnNnm00.n N mmmbbr rrmPP A AA HMaMrrWOrrmb rr0Pmn, 0N0NN 0000-010000 AA NNn M000m NrrrrrrrrrNrrnrnrrNNNNNAN ▪ \\\\ MAAMMvvO00M0aWbOorro00000000ArrAHOmmmv00Wr>0000ANA PPH PNN WNNN NNP MMAWAV p,aN P V O m ry o 00 - H H N H H m H H N .i .� N N H H N N H ONm Nmr 0,o m00m NNNN m0N brSr WA H PO 0 0 p^pm 00001 0000 Ormular MOOMMOM0>MMOMAMMMVMMMAVvv>VMmMm0MOWAOMAm000WANWaMM m00rW00,00bbr000.000MMMMMNMMNMmr mNmNNNNN,,N,.,,N 0'000000000'00'0000'0000000000000000000000'00'0000'000000 00000 00000 0 00000 00000000 000�OONN0000��NNN bNN��N NOD o H 0000000H H00. A00.Oi� ...5 Np 0000HHS Nmr 000000 00000 000000000 0 00000000 ��rn• • 00 N,00000001000.1 ri00000000000000000 NA ANT(' U0kot0OM0r1 m 000p 00000 0 r1 SEEEE SEEEE££ ££55 SS£E E E£E£ Z EE E£E£5555££ 0000000 0000 0 0000 0000000000 0000000 000 0000 0 0000 0000000000 0000000 0000 0000 0000000000 0000000 0000 0000 0000 0000000000 00000 0000 00000 0000 PO 0 0 000 0 00 00 N 01NN0 0000 ul NNNNN NNMMNNN MrrN N NNNN NNNN AHAAAHAAHA crcaaaaaazaa7P1HH5HHrcrcrczzrc'H zaaHHH �a �aamu'HzaaarcaaaHHHH Check Number 0 N 1.00 MO 9 0 mmm 10 ,Z 4 N uuo MM� 9 Y ryy C30 H MHO UVM VOO 088 Ego >N0 " w ONVOV VVOMM MNOWN VNNNW MMMAH aaaaaa aaaaaa as aaa aaaa 4;000M 00000M MM M;000M 00 000000000o.1.4.1.4 0000000.4 m000000000000000000000 0000000000000000000000 C-mmMONONN aOP4Nmmoemm ao MOMMMOMMMNMVVNOOMMHHVN NNNNOINNNNMMMMMM NNNmmmmmmm 00 OVNNmNmmW mm0000 mm mmSNNNN000NNm0101 < mapp.40mmmmmm01 • O NNNVVV rynry O OMMO ONOOMMOVNMOMMVVMWVMMMmOM POPO >m VNVVN•VVVVVVVV ON000 mmmmmmmmmm oommm VWWWMONWOMMWOMMNM0MMON OONeO VOmNNMMHNNOmm0mmmmmmlMH VOr1.-IT m0NN'V000LNm.4mo o.4.4..NO MOM COO OONVO NO000 NOOMM MONNM M MM ONMWOMMMNOVNONONOMONVN VW0VMONWOMNMOMMVMMMMNO MOMMOMMMMVVNOWONNNNNNM VOWNOMNNNNOMOMMWMMMNMH o1NIONoo ON,N1NaNNNNrrm O N 0ON 0 0 00 0 0mm5500000-- 000'00 0000000000000000000000 MOMMM oc000 H▪ NNHN MMMOO £ ££ 0 00 00 00 00000 0101010101 0,0,0,0iMthM 0) ONMMMO•MO 0000000 00000000000000.H MMMM MM 0000000000 oapipm \oM 000 00� H0000000 0 SESST TEE£EE£ 00000 0000000 00000 0000000 00000 0 00 0000000000000000000000 NON Ul Ln u, 0 0 SETE 0000 000 0000 0000 000mm0 NNN KKKKC0KK0CKCKKKKK%KKKK 39,611.06 39,611.06 Cost center totals: Paid 39,611.06 k N as a ! Y OI 0 0 gS e U 00% 5O 4 0 0 0 0. PO UY R4 .0. V mM T W[f S Contract: Cost Center: 000000000 0�! snc 0..0. 0000000 . NN el el el el el el ~ n ...... NNNN m+0+0n00n 0NN0nWNnNN+n NNNONNCnn 00000NNmNNNq bamp 1.Yna 00000000000000WeltitlittiWri N..H.... N.. e... NN NNNNNN 0 N NNNNNN NCleitlearlelelNelNNNNNN N N NN NN \\\\\\\\\\\\\\\\\\\\\ NNNNNNNNN m m m mmm m m mmmmmm !000 NN N N NN 0 0.- co to N.00 0000000000000 Nn N wconle in* 0000 0000000000,100ni.WNO 00000000000000 N.W0,0030 0000000000aoo0 Ne 0 CD 0 N 000000000000000 thinN N HN 00'0'00000'0'0'0'0'000 000000 NH. NO. „N el el el el el el N NNN 000000000000\000000000N\\\\\\ el el el el el el .ar. r. 000. . N0 N 01 0 \N 00000000000....000..0 EFE£E EE£ SZEEEE 00000 0000 000000 moo CI 0 0000 000000 0000o 0000 000000 00 ul ul 0 00NON NNN el N NtliNN N N Nei el 01 el r4.-0.4 a KK4GW amcazzzarcrcrczaarcu • 1.0 Cost center totals: Paid 01 Report totals: Paid 0 0 O F Component summary: NWNE 21 5N 61W 6 3 U LL 05-123-29990 NORTH RIVERSIDE PRONGHORN A oz 6 2 O U 0 Si. n $ 3 m U a 0 n a 0 co U H `m c Ti 0 a u a.o 0 O a 2 m m m E o `a m e E 21 s a U W a J On 3 v c' Q a f O m N t7 CO S ',---. a m M A 0 m o m n - o �n o 0 M N o o 2,2ry :'-`2 OS e2 r2r2 a' mN1$2:`r 51 mm 'm$,;N o Ago m r a 2 V, v"'i` L N n n - ry ._ .- _ _ _ 2 LL o `° r 2, m e m -o a` a n ry n n ',II ry ry ry ry n m' Q a n n O( n n O o n O 0 n O o O o n O A O o O o O o n O 0 n O o n O, ' O 0 O O n O O n O 0 n O 0 n O 0 n O 0 O a O a n O< T = Oa c+ n n n n n n .� ry n M �. 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