HomeMy WebLinkAbout20121281.tiff RESOLUTION
RE: AUTHORIZE CORRECTED OIL AND GAS LEASE COVERING CERTAIN PROPERTY
OWNED BY WELD COUNTY, COLORADO, AND AUTHORIZE CHAIR TO SIGN - E1/2
NE1/4, NW1/4 NE1/4, S1, T7N, R63W
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, the Department of Purchasing was authorized to solicit bids for lease of a
portion of said mineral acres not currently leased, and
WHEREAS, on March 14, 2012, the Board accepted the sole bid of Baseline Minerals,
Inc., 518 Seventeenth Street, Suite 1050, Denver, Colorado 80202, to lease 160.23 net mineral
acres, more or less, described to-wit:
E1/2 NE1/4, NW1/4 NE1/4 of Section 1, Township
7 North, Range 63 West of the 6th P.M., Weld
County, Colorado
WHEREAS, Baseline Minerals paid $2,300.00 per acre, for a total of $368,529.00, plus
the first year's annual rental, in the amount of$160.23, and
WHEREAS, the Board has been presented with a Corrected Lease reflecting the correct
acreage of 120.23 net mineral acres, more or less, as described above, resulting in a difference
of$92,040.00 ($2,300.00 X 40.0 acres + $40.00 rental), and
WHEREAS, the Board deems it advisable to approve said Corrected Lease, which shall
supersede the terms and conditions of the Lease originally approved on March 14, 2012, and
recorded at Reception #3833574, dated March 22, 2012, and
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of
Weld County, Colorado, that the Corrected Lease between the County of Weld, State of
Colorado, by and through the Board of County Commissioners of Weld County, and Baseline
Minerals, Inc., be, and hereby is, approved, with the term to expire on March 14, 2015, and
instruction to staff to issue a refund balance in the amount of$92,040.00.
BE IT FURTHER RESOLVED that the terms and conditions within the Corrected Lease
shall supersede the terms and conditions of the Lease originally approved on March 14, 2012,
and recorded at Reception #3833574, dated March 22, 2012
Ong ina.ted S"-. s/, 6e, e e
,s,t(A.< 2012-1281
LE0298
OIL AND GAS LEASE - E1/2 NE1/4, NW1/4 NE1/4, S1, T7N, R63W
PAGE 2
BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized
to sign said corrected lease.
The above and foregoing Resolution was, on motion duly made and seconded, adopted
by the following vote on the 21st day of May, A.D., 2012.
BOARD OF COUNTY COMMISSIONERS
WELD COUNTY, COLORADO
ATTEST:
Sean P Co a Chair
Weld County Clerk to the Board
f E Lestia‘IA
am F. Garcia, o-Tfin
BY:
Deputy CI k to the Board 1 ayya �
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•®( David E. Long
1 ��
out y Attorney A sit d 0 �4 Dougla a emacher
Date of signature: I - 6-/a
2012-1281
LE0298
WELD COUNTY LARGE-TRACT OIL AND GAS LEASE
(Corrected as to mineral acreage and annual rental amount noted in bold text)
Containing 120.23 acres, more or less:
Containing 120.23 net mineral acres, more or less:
THIS LEASE AGREEMENT, dated this 21st day of May, 2012, 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, c/o BOARD OF COUNTY COMMISSIONERS, 1150 O STREET, P.O. BOX 758,
GREELEY, CO 80632, hereinafter called Lessor, and:
Baseline Minerals, Inc.
518 Seventeenth Street, Suite 1050
Denver, CO 80202
(303) 534-3628
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 filing fee in the amount of$10.00, plus a bonus consideration of$2,300.00 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 $120.23, 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
E1/2 NE1/4, NW1/4 NE1/4 1 7N 63W
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 14th day of March, 2015, 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 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 sixty days upon cessation of
production for the purpose of re-establishing the same, and provided further that such production is
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 One Dollar ($1.00) 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 - Lessee shall account for any and all substances produced on the leased land and
Lessee shall pay to Lessor as royalty, in addition to the rentals provided, but except for products
1 of 80.00
2012-1281
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used on the leased land, unavoidably lost or flared on the leased land, with approval of Lessor,
the following:
A. On oil, 20% of the oil produced and saved from the leased land.
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, the royalty shall be
calculated upon the fair market value of the oil at the well which shall not be deemed to be
less than the price actually paid to Lessee at the well by the purchaser thereof; 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 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.
B. On gas, including casing head gas or other gaseous substance, 20% of the fair market
value at the well or of the price received by Lessee at the well, whichever is greater, of all gas
produced and sold from the leased land or utilized off the land by Lessee. A copy of all
contracts for sale of gas shall be furnished to Lessor. Where gas is sold under contract that
has been approved by Lessor, the fair market value of such gas for determining the royalties
payable hereunder shall be the price at which such gas is sold under such contract. No
approval by Lessor of the terms of any such agreement shall operate to make Lessor a party
thereto or obligate it thereunder in any way. At the option of Lessor, and with sixty (60) days'
notice to Lessee, Lessor may take its royalty in kind. With sixty (60) days' notice to Lessee,
Lessor may cease taking gas royalty in kind.
C. All costs of marketing the oil and/or gas produced shall be borne by Lessee and such costs
shall not directly or indirectly reduce the royalty payments to Lessor. Except that marketing
costs for Lessor's in-kind royalty shall be borne by Lessor.
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D. 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.
3. RECORDS - Lessee agrees to keep and to have in possession complete and accurate books and
records showing the production and disposition of any and all substances produced on the leased
land and to permit Lessor, at all reasonable hours, to 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 books and records shall be retained by Lessee and made
available in Colorado to Lessor for a period of not less than five years.
4. 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.
5. 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 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.
6. 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.
7. 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.
8. 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.
9. ASSIGNMENTS -
A. 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. 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.
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Moreno, Clerk aln
Steve d Recorder, Weld O County, C
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C. 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.
D. Although not binding on Lessor, all instruments of every kind and nature whatsoever affecting
this lease should be filed with the Lessor.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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
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.
16. 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
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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 $2.00 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 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.
17. 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 Oil and Gas Conservation Commission of Colorado, 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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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
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Steve
`iMoreno,�LClerk and�tReccord�eyrr, �Wye�ld�County,
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Large-Tract Oil and Gas Lease
Page 6
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.
24. 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:
A. No lease term will be extended for more than six(6) months from the original expiration date.
B. That the Lessee shall pay to the Lessor the sum of one-third of the original bonus, with a
minimum bonus of Ten Dollars ($10.00) per acre.
C. The Lessee must pay to the Lessor the sum of One Dollar($1.00) per acre leased as delayed
rental for the term of the extension.
D. That the royalty will remain the same.
25. HOLD HARMLESS - Lessee shall indemnify Lessor against all liability and loss, and against all
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
with operations on this leased land or by conditions created thereby, or based upon any violation
of any statute, ordinance, or regulation.
26. 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 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.
27. 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.
28. 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.
29. DEFINITIONS -
A. "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.
B. "Oil and gas" as used herein shall include all substances produced as by-products therewith,
including But not limited to sulfur.
C. "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.
30. 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.
31. 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.
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Steve Moreno. Clerk and Recorder, Weld County, CO
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Large-Tract Oil and Gas Lease
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32. 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).
0547616 22/2012 11:18 Pages: 0
AM R Fee:$0.0
Steve Moreno, Clerk and Recorder. Weld Oountvi CO
1111 tlralr,,l�h' 1,I4aN I CI NRro4l it Ir vii ill
(Revised 1/2011)
Large-Tract Oil and Gas Lease
Page 8
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 hass sib d this agreement, the day and year first above written.
ATTEST: 5�" 1 ' - BOARD OF COUNTY COMMISSIONERS
Weld County Clerk to the Board ��� WELD COUNTY, COLORADO
By:/ -"�Jl [��,/'.G� 2 By: (T. \
Deputy Cler o the Board Chair, Board of County Commissas
MAY 2 120'°
LESSEE:
By: I _. . � �..� --
STATE OF (tie-rah ) ogck Theme-S - Preside t
ss
COUNTY OF 7r\ )1h ) (641'
flat-The foregoing instrument was acknowledged before me this day of Fla 1 - ,
20 I!� , by jtoi1li ( ) 1l et t 1 fird&dl IL! if &,e 1,,,, kt,A i,fpt.„ Lt _ -
Witne my hand and official j seal.
i.);)I
&tie/l/L
Notary Public
My Commission Expires:
ISTACIE L OWEN
SlateNotary of Colorado
My Commission Expires August 15, 2014
3847616 Pages: 8 of 8
05/22/2012 11 :18 AM R Fee:$0.00
Steve Moreno, Clerk and Recorder., Weld County, CO
■IMVYihiilrCIi IKLc'LWDLIihYlt4.INii11111
t O/cQ-42c?/
(Revised 1/2011)
Esther Gesick
From: Bruce Barker
Sent: Thursday, May 17, 2012 4:54 PM
To: Commissioners; Monica Mika; Don Warden
Cc: Esther Gesick
Subject: FW: Corrected O&G Lease
Attachments: Oil and Gas Lease LE0298.pdf
See the attached. Baseline Minerals is asking for a refund of$92,040 of the money they paid in as a bonus, because of a
discovered discrepancy in the total number of acres in the lease (should have been 120.23 acres instead of 160.23
acres). The explanation for the discrepancy is in the attached pdf. (Although the map on the Weld County mineral card
is hard to see on the pdf, we have confirmed that it does show 120.23.) They are correct in their assertion and I believe
the refund is appropriate. (I think the confusion is that this is a correction township, where the predecessor to the BLM
called the NE4NE4"Lot 1," which contains 40.06 acres, and the NW4NE4"Lot 2," which contains 40.17 acres—hence the
total of 120.23.) I have asked Esther to modify the reso to say that the corrected lease is to supersede the original.
Bruce T. Barker, Esq.
Weld County Attorney
P.O. Box 758
1150 "O" Street
Greeley, CO 80632
(970)356-4000,ext. 4390
Fax: (970) 352-0242
C
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 attorney privileged and 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: Tuesday, May 08, 2012 4:05 PM
To: Bruce Barker
Subject: Corrected O&G Lease
Bruce,
Attached is the Draft Reso,first page of corrected Lease, and supporting documents provided by Baseline to verify the
acreage discrepancy(specifically the cover letter and Examiner's Notes on the Ownership Report explain the situation). I
will be sending the Corrected Lease document to Baseline for signature this afternoon and anticipate having it back in
time to list on the 5/21/12 Agenda. Please let me know if you need anything else.
Thank you,
Esther E. Gesick
1
RA!FIINF MINFRAI S INI_
510 SEVENTEENTH STREIT,50111050 WELD COUNTY
DENVER,.3120IAX:230 COMMISSIONERS
\ PN:303.534.3i2H fAN:303.534.3142
www.haselioewioerals.con 1011 APR 25 A 3 58
April23, 2012
Board of County Commissioners of the County of Weld RECEIVED
1150 O Street
P.O. Box 758
Greeley, Colorado 80632
Re: Weld County Oil and Gas Lease Sale on March 14, 2012
Weld County Commissioners,
Baseline Minerals, Inc. ("Baseline") recently participated in the March 14, 2012 Weld County Oil and
Gas Lease sale. Baseline was the highest bidder on 18 different leases and spent a grand total of Four
Million, Eight Hundred and Four Thousand, Six Hundred One and 99/100 Dollars ($4,804,601.99) at the
sale.
It has come to our attention that the gross and net acreage amount originally represented by Weld
County on Lease #8, Map ID #22, covering the E2NE, NWNE of Section 1-7N-63W was incorrect and
should be adjusted from 160.23 Gross/Net acres to 120.23 Gross/Net acres.
Accordingly, Baseline's original bonus payment was paid on the basis of Two Thousand, Three
Hundred Dollars ($2,300) per acre along with the first year annual rental of One Dollar($1.00) per acre
on the misrepresented acreage of 160.23 acres (proof of payments enclosed). This resulted in an
overpayment on 40 Gross/Net acres which amounts to Ninety-Two Thousand Dollars ($92,000.00) for
the upfront bonus portion and Forty Dollars ($40.00) for the first year rental portion.
Therefore, Baseline formally requests a refund in the amount of Ninety-Two Thousand, Forty Dollars
($92,040.00). We have also enclosed a report that details the acreage discrepancy with our findings on
the matter.
Please feel free to call or write us if you have any questions.
espec Ely,
seph W. Thames, President
Ba 'ne 'nerals, Inc.
303-534- 628, Ext. 202
Enclosures: 2
cc: Noble Energy, Inc
1625 Broadway #2200
Denver, CO 80202
r '
OWNERSHIP REPORT
DATE: March 22, 2012
PROSPECT: District 15 Infill AFE # 134138
LAST DOC: Rec. # 3833574
DESCRIPTION:
Weld County, Colorado
Township 7 North, Range 63 West, 6th P.M.
Section 1 : Lot 1 (40.06), SE/4NE/4; (also described as E/2NE/4)
Section 1 : Lot 2 (40. 17); (also described as NW/4NE/4)
GROSS ACRES: 120.23, more or less *** See Note 1 and attachments
SURFACE OWNER: Timothy R. Brough, Richard A. Beck, Allen R. Rechnagel in Joint Tenancy
41132 WCR 13
Ft. Collins, CO 80524
OIL AND GAS OWNER INTEREST NET ACRES LEASEHOLD STATUS
Weld County, a political subdivision of 100.00000% 120.230000 Lessor: Weld County, a political subdivision o
the State of Colorado, acting by and the State of Colorado, acting by and
through the Board of County through the Board of County
Commissioners of the County of Weld Commissioners of the County of Weld
Lessee: Baseline Minerals, Inc. — 100% WI
Vesting Deed - Bk. 1024, Pg. 416 Dated: March 14, 2012
Reservation Deed - Bk. 1114, Pg. 263 Term: 3 years
Royalty: 20%
Expires: March 14, 2015
Recorded: Reception No. 3833574
Description: Township 7 North, Range 63W, 6`h P.l\
Section 1 : E/2NE/4, NW/4NE/4
Containing _ acres, more or less
Totals 100.00000% 120.23000
EXAMINER'S NOTES:
Note 1 : There is a discrepancy in acreage on the Weld County lease that stems from an error on the Weld County mineral records card
The card for the subject lands (copy attached below) purports that the E/2NE/4 is also described as Lots 1 & 2, SE/4NE/4 and contains
120.23 acres, but Lot 2 does not fall within the E/2NE/4 and so the acreage for the E/2NE/4 should only be credited as 80.06 acres. The
card also appears to add an additional 40 acre for the NW/4NE/4 (which is Lot 2), and so this acreage was counted twice (first as 40. 17
acres in the total with the E/2NE/4 and then as 40 acres as the NW/4NE/4).
The whole description "E/2NE/4, NW/4NE/4" is also described as "Lots 1 & 2, SE/4NE/4". The total acreage for this tract is 120.23 aci
(not 160.23 acres) as confirmed by the attached BLM LR2000 Acreage Summary Report and a copy of the survey of the Oil and Gas Ph
provided by the BLM. Further, the map provided by Weld County also shows this tract as being shaped as a 120 acre parcel comprised
three quarter-quarters.
See the attached Weld County Card, LR2000 Acreage summary, BLM OG Plat, and Weld County lease map (as labeled ID 22).
CURRENT UNSATISFIED MORTGAGES AFFECTING MINERAL OWNERS:
None
UNSATISFIED JUDGMENTS OR LIENS:
Not checked
TAXES:
Not Checked
OTHER:
This report was prepared from a careful examination of the numerical indices of the Heritage Title Company in Greeley, Colorado, anc
of the records located in the County Clerk and Recorder's office of Weld County, Colorado. This report is made solely for the benefit c
Baseline Minerals, Inc. for the purpose of assisting in a determination of the apparent ownership of the mineral lands involved. The
instruments referred to have not been examined to determine their legal sufficiency. No warranty of title is expressed or implied and no
liability is assumed by the preparer of this report.
Prepared By:
Baseline Minerals, Inc.
518 17th Street, Suite 1050
Denver, CO 80202
303-534-3628
Page 1 of 6
7N-63W- 1 E2N E, N W1
LEGAL DESCRIPTION r f
j " LEASE NO.
, /p r /) *7 tl Cja G
R63 T7N N Se C. �y 1 21VEII& I* EXPIRES
(` 0 F` ___~\ CERTIFICATE
K.:1-otto.L4*,4;4'1411Ett. -- • ,2- ;;;, DEED ASSESSED NUMBER VALUATION
NUMBER YEAR _
45/586 7/1655 1928
621.72/2,„ 40--4) & ctti4 / I-) 1j,, RECORDED
BOOK G' PAGE DATE I Sold
f Gacc:.) � '�- o' /0 -7 / - - 1024 416 4/12/38 t 1 43-
MINERAL ® only PROPERTY t R/L 'i19p 076
r J`
DISPOSITION
LE02-4 '
r
DATE LESSEE - REMARKS PAID TO (DATE ) RECEIPT NO . AMOUNT
1951 Smith and Wickland Orig. Lease �t o � � AQA 4_1-4 -
1952 Superior Oil Co 195.8
•
1968 Rader , RT - LIIR 439 exps 6/19/73 (Lse 548)
S II l
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9119177 URANIUM LEASE POWER- RESOURCES EXP 9/ 30/ 87 LHR 339 9 `977 : 001
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-
March 14 , 2012 Oil and Gas Lease Oral Auction
19 Weld County
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Page 2 of 6
7N-63W- 1 E2NE, NIA,
BUREAU OF LAND MANAGEMENT Page 1 of 1
LLD ACREAGE REPORT
Admin State: CO
Geo State: CO
MTR: 06 0070N 0630W
Section: 001
NE NW SW SE
NNS .NNSS NNSS NNSS Dina ala
Sur Type Sur No Id Stiff EWW EWWE EWWE $WWI Sur Note ag Surf Acreage
A - -X - -XX XxxX XXXX 480,000
40.170
L 3 - - - - X - - - - - - - - 40290
L 4 _ _ - - _X- - - _ _ _ - - 40.400
Section 001 Total: 640.920
MTR Total Exluding Survey Notes C/D/R 640.920
and Sub Surf = Y
Grand Total Excluding Survey Notes C/D/R 640.920
and Sub Surf = Y:
NO WARRANTY IS MADE BY BLM FOR USE OF THE DATA FOR PURPOSES NOT INTENDED BY BLM
Page 3 of 6
7N-63W- 1 E2NE, NW
•
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j�c.t_ _ ?�.Q�`1srTrw. ifs titled'tBta.anttt{1rigi..tr..tre`Jtitl ._ - •r _ - -. • _ .t.. ."....tt•.i1-•—•4 . -,. •-. •... --_---•• --- - - I -•4 Ili lb1 Ctlunt- r•r • - .. • :.•- :I411 Slide of '.....k.*:-.:-;•-•--;7,--2:-;7:__*;•- - lad 1)1' fill of tlu• ,rote ttes!$lh/Ctl,
!• sip. r 1-�• the tnl, sal' • • - 4 - -• • ' :r. _ • It)olinr►t and rct+tA.
hying the .,a Ito... :.titre i t• my _i•t\ ,. 't •rl%Psi : ,tt nI%l' lien dtlr ;:enfl schwas' Mitrltlri ftpl)ts• nix) -prolw rt1' _for t)ttij�,,Par, ;uu) 1.11 : II
_ - - - •-- - - �. - . 1tuyi>iig►1fteiilii in bi;� asitl,Irirl-l61ice ptrirtetost ujrnhiiM ' t
',,i.t aunt At _lint I ita ai ',•'. • - R 1Rl rit,`iwkimfl% lnl GA' IItr• Iutit.niaf=/i1411thtlr•'l eul•111the ratt4ri of •F --,wrrciiZ iiiiriiiinttltt•fe;rtJ.t
t:r'.t i\ mold th'-;itiif l ifite:411 -,•at ;he rste.•af- '' Or relit. Pi'1• nirulint:iiuciethi ciid rate nr-itiiprrlt.bei ig Ike 10j6i4 tail;r;f:.k1111-ftyet ht• 1.
ar'ri•h it lei'r`t!u %'f hili to y thr. &!.!'Tart • int.(rct: :nal lard:: sit taue- igloo as id•tiniipe.kty fullihpl-}1••kr fur $'twt-4) Mil. uwld n(.tlte-sail 'ptile II
i-•Minxlu'l'u1U4;1bhyt:fit•!e, iluw.itiittTtwo-ttin.. lr% ".-tillpit') ruti' WA.itdowieW:tolu►n.45_Ihaltitwe; . •- . - - -
And.-Whefess. l{ht'.;trl ;.' - _
'mil 1. l'll Lllt . ;L '. t•: • - • " • - ',•.1, I). 19 ,'4111.4 s virtu t11R un1'titn?;ttu' of-(hr :-u lr' r,i tllii j
•
i•noitotlr a3 tfnrvtui Iil, milt a11 his rtclet;• ile.s 1`I 1m rC`1 ill wsid p'ap rly, to • - . - - . _ • ,•- -...: :, ....-.;•. ,
• . • - a! the c...;:Itli r of .. ' . - - soil .State' of. ' ' - - 1,
- _ _ .
Audi:Whereas, fL<• said _ . - - ' . . ;r..
- .lid, not its.; • _ dal :if - • . - .•_ A. D. IQ_-- '• . ,".holy...n.4:11(, IMIr c¢irdlieitle sit.(Ile stilt of dip -
Ii•n•14 .1.% % at4•!PC1:.t. 'l!:,1 :l' l•NtiSla'.'. -.4. dill rn••test•141 4.4141 j.rtiphrtt: to ' - _ . - -t - . - -
I
' •,. do; c .imt .of.'- -.- '- - test--- : t►il,l Slide ter..-•..- ::. , " '::,:;;:
- 'Anti Whereas,' t-tIa.-kale Li•!.c1.1 'w+fotoO.ti4 by I kr irretl•nersr, sin hidti ivitet.tfrrtsl tit in4iin,l►y siltj•jtt•rriill'otf:!,!Belli it,f ilfi a.ul litopt't t s•..1 ,
----,stir no tv- tat: et. pees.ms lar tigiJll't-ta-.1 bi-tctf i4.4`1t24lairs. intlate;t•:ind brill liti•tu• tk'nhl•prept'ily' ferr•tl►-t -Yenr'fnhve'rni rift!! Illttlialtll 7 ttn'
uir:. i
`▪ :h nitt;;,p1 'siteh'itc1 prnperty t•sair '.:: th, ;sate.;rifet itielkir j1•tit Ilin tx•Airgiut i. i 1nr$Rle•ties enixt ante :!niid a swh Miele:e sing r ity.aftutiil•inlr)•
_• h►it1 teat rft.asutnr hna•iva'e nu• intkriu itlia ti. 'aft:;:t lid ltfol gat}• reek'! 1i': inset.irrntafose.tllo HAW rr•t_larri •opus,'Lv•tlereiltrti.'J-rrseiir?I..of the- i
',•= xuN1 t'Vttttty, 31,14(4C-off t o.'he u1 t l.tllttF.•liCsi'tt ••hritrrlailta of ki na 'thrl\ lean aI (h.'w•fnr In the slid Count iii fjrr4fij;iare•Wit)i=ilw..ittutidO ilk !
•
pc.:•..ili tl q«_+i`'Iflr►ilt`4\1111 irlrrnitil ;:a • • --
,r- .•:; Andayitietylras;'fhitilia: --. _ •`• _ -:.('r4tlrt•r:;tr.!ittt 1n :;rnt thrrttnirJD! f!itn,tv 'I'tryisut(•r: (_'anti in Prnslnrii•iity with thy-_ 0
-• -
-
.•fist!-t'.7'the 114.4i1 'o ('O t,tr :(`oatd►i� ;tioe"- .i C sad hrist •. Clitly untried of rvt- :(1 •:ii tltoe ' - ' dot- 8-1 - - ! t
.. - .t' I I.-tti '. , the' suitJsy 1;er-'4.4 the.fi-sg.nt;.. re nlar'4-ssiun 'if the Itt gird'af t '-tu11117 eru,fltiiisunurtx t f thud t n55n vi.-du 4ol • :is itu`11w
' i••,'- ‘1,%‘%' yt,'ofcti.tlilt'1v8 �:itr•tat,ct,4+ xt.•Mattiii (amait :`isins-.anrt •I% it'irilrbt';. titleand1, titriatiiyr4iii►, pl..itr•rt.vtitI_iI.. t ••filer ..f •millhell•
- -
_ tt:: . . . - (if the Comity of - - - - • _ - -
itud State of- liar''het tutu elf _ - - -• - i billion-
,- :r.- _ - Ct t s_ ' -
. IApd, Wheresa,-T1it::cxid . - - -
!Lys iotit'rut..'ciii.gut_tn es sit,' t:,l-lti::rrtr e.+ the rutoaet of . . -- - -; . : lioness•• Sod, Ahern,,, More titit► -arrt rent:irate i'talw•il:a:t4v4 Iki. elate iif flit. sli,l 5•dt' keel the timid jirnpertlt -,-
rog Orel Ia-e'n rrilrv'line,l.lhrr•frl►lu-i -• 1
I.!t•vide-1 lilt l:,tl -. • . - - '- - - . - - - -
- - - Atul,;H'here us, -I:luva..tt2-;►n'is'ei i'a.v Note- •••
that tit,• fist-i r►sr.:11 a -oin ..1 'L.«'iiftttr•rlitt. aunt Pitiful.eii •Ir.Iiare: .
- ' -Aa3.•Wherea s, •i%U ll:::,'.t i'i' t•4 .i t!' - :i;rtlttcs prt•gn using pnrr-f•iptiwitt:-. I . ••1•i:.mint_• 'Ng( *brit: hut F.-Pita folly-tom tl with, mad we fire
- rt-vor.i. MO rll\a.itt tl.e•:41i a`..f '!. •'ftii i-tt. '1Tt'S.'i9rw'rof said f'.ktn'Y; - - •
- a
Now;r,'hareflu*, t-' - -:izirc e i ',• ' '2 t E:'-r •' - - - .•rretiautt•r iii I lea ('•loin nktngt.►ll`
alit►1l•iynalte.r 1iWtd'fVlir Wt.: to:_tt' 'Cra:>:Ir+rr•t'aut as nion•s:riil. tine! by virtua•t'1 fjip'nlsttule- ill .uti•1t t;tiG-tau.leg nmil prntutt'tl. have grants II.
-'• .fl ti hl'nlul'a?hi. %itt!-lr, lilt :In ::i't:r rt.: :',1•l,.hlrg,.its aui) aril.tit• nluire and i'riir.lit1R eli'itiil•it.1.ti•u1 ietuui• gale, i�i" t'aitl
-r• ;te1<#:.Cotll:t::, eel s'-jt18 ] -Municipal Cie y h'a Lion-, let's auiccr:Isere; . his hoiksowl :4441 ?t:.4.
. - . tarr.'rr, Stt• .r� to all the riilili of tr:Ientpfinu_ley rsitinrs: Berrien trrur.anh s.r.1411,i0k, provided by Ina%—
- •. In Witness Whereof,_I.•• ' }iarvey . .tt:i Ewer, '
O1ttala1 •_ ; - -t'tti,•itrta•a• afore-ail!, IT vo1,4• •.i tlr.• 'tilth,ntit afar(•ia.id, jut vr irr•r••ilnly,r:•u lily limit: Intl •.•;.l•tki•. • 8t.h-
goal tiA s ' . :-ret1 • - -ti. !). ill at;. a •• . , .r -•r •
�.. - .. _ _ - - :� p.'C..:
' irk xf�rt -• _ l-
t'rri• `u,'-.4..116$= »14,10L $0. . ' i- -_ . ,T:.�c Sate ltr•h.rrl. I ire:unln•I ri ' ii.i r •
'.�:riL#;atu•tit ae• %u table with fst.' uintl�, <'i•{itr:aiu.
• n
"'n'usatitt i.►t peatYttheiiitni•b-ti�lecn ii;e' ,ripen',iul t-nt_}•.aloe, a.t.n111114Irlaltllt'nilvt'rtitrari n'iNlaif i'ttil (or_ on or t'cfari- s ww nrn.utl M ..uu. ay atf
. t)o•emt.rr'iit any year_- - '$ce Fit. f acPaitu►n-Ieaws of ?oho:nl 1tr'e'e i . -
c- .. -t ti:.m-,:r f'.'-- `.'S.T.-ri�_ _ __t1t • . _ .-:.+.. t .r�L -- ..- _-__ - . w'w - • -•r.. •.'1."r rarer,. tr = .
- STILTS OF COI.OB S.: .• : . - - -
I. - .
tbnat�'ot ' . ..• Yee ld :--- - •. -
• - . ' . • r
-- The foregoing ittitruateut was iarlauowtetlitetl licinm nu. tlkl> . . real_ chili of-
. . t• •.. - 16rve • E• _ . - W1t_wer -. r ..
: Npri] : ' i4 ►' y
Ii : .y as.C.;unl) Tit•�surrr in and_for.the Couuty'W—• - -Weld -_•in the Stead nf.('t1otaa4o.. I
firs • '°q''°q'!!Qlt • • -
Ij _ • , Well qty.halal alai otheist ieal'tliin t _ 1 -
- 12th r . dtcyvt- hu3'11yi. = �
a
• il
•St y. . ✓ �L r' v £. •wi{.�f.C 4e-• ,
C.1erk• of the-. Vetr o Court ` .+i '"':
11 ► -- ,c} .,:..; _: _� . . �1l� 1t �.Go ty ' C4lrado : _ i
' '_ 3 - - -- - - ter• 'r '--
' -
Page 5 of 6
•
7N-63W-1 E2NE, NW
4 I
Y
;444.4. 'L.:.: .staid '�-`tire,.:re.:ist..(iwl'n.r.a'oWS u.ea*,-..k .%••••....--,. ..as ..it.,,,,,f,.,.._ , , _ +r yT..- .....-.�.'titDtti>tD >Rtt1� COII>!I'TYiyy�� • ,,. i rr-� `sof
1 �L'__I r ' . ��..•r...►i •.If.��VM1r�oT c ' . , Sn 5
I
`• �' ` �_f'..i :K ,,' a,k4�"S,tp*'-t, _7..,,•xt 1/1 - r • '. F -1- !",r=i-r4- lrr i -'• r7�+."1 -.- p .' .r ,t r• •k•'/�v- " 7�- � •r
Mini Au y i , iii t i " t� u i!• .
�i •.. j^ ^j{?y 's �• .,r d_ P -f . (`r11' ti—•i r . .y ,. v' .
4 ,t t'r -"ft 1 a • l ., 411S.
gyp•a lawfully .coostf of . .county of the Staff *""olorado, aad t� , ` a✓ ' r ,� i L t �• � ` L�� f
at Page 4941.ti worth of the Cotner Clerk sad Reco der 'a, C ' t •r ,r ..' f. ,
AND WHEREAS County the if::l •f. * r..r 7� v3✓ 'k,, I,s>IL y • }S4.5
by law, and did a.; R : '
: sage notice sale at pub�le�auctioe o� •ttiell ' ' aY� , : �` " t• • x • tt;�a r
n - -- L mac• r. *4 4 , '' :r r3q. !,S . ac." i..J,.;t�. ;t r S!1-
The recjny _noon tcc ,` atrca t - if 1 . 3,
the first notice advertised not ger
�/��/�� �7����� more than thirty days nor Iuei.� i� } _ 11.
• .`' '�second no is ad nubs d not t� fift� days nm 1eo tlielt lilt rg
t '' :ilk
it -r^ _S "' 1 r a t-sin a public pace in the County C m n xaze fit arl thidk t i rd' R ! ti r'
offer such real estate for sale at public auction p, Si '.r` i �`�` ` ;r.?w 1 §+ " 1„` _c. i�t,
(at the One and place as stated in said advtrtbr nati e,) . �• "i e .. 3
s:
'+r tie/
AND WHEREAS, e.rA 7r no ` r't 17s ti
state of _ aQ QrC tt0 .. _ , bid for said property the gas of t d iun a.. tncy _ ..... DOLLARS
and _ ..no _ CENTS, wllc` bid b blabs and best bid for ash is bend (and being more than
one-third of the latest appraisal of •the fall atib Mudo by the Comity *saSor of said property) was accepted
by the Board of County Commissioners of the said County of Weld,
AND WHEREAS, the said -_ F P.L,y..j.Qhnor. .._ __.... .... _ .. ...... .. has paid the sum of
Three i ter' ' r'e inn t,r _ ._ .._._ _ .. -- _ DOLLARS and — 2'.p __ CENTS
in full payment of said bid for said property
NOW THEREFORE, Weld County, by 7--al t _ to WC '•.. its Commissioner appointed to execute
this deed being the same person as .?aizultt_L._GS „"_u , the duly qualified Mei," County Treasurer of
Weld County, acting upon the direction of the Board of County Conn hidoners of Weld County and as )
County'Treasurer, in executing this deed, for and in consideration of the sum of rarer: ,1?tir_d?rtd 'I''re- t:
DOLLARS and -'n _..CENTS, paid as aforesaid, and by virtue of the statutes in such case made and
,
provided, by these presents does grant, bargain and sell the following described real estate, to-wit:
r
• • ( ..e •!Ci , - i, F , ` f 1 , Tylli. _ . 12' 7 Nortyi , 7nnee 53 . est♦
•
except re=ervations in favor of the Union Pacific Railroad Company and except reservations in the United States
patent and reserving existing reservoir sites and existing rights of way for roads and irrigation ditches and subject
to existing leases: and reserving therefrom, to grantor, the oil, gas or other minerals therein.
situate, lying and being in the County of Weld. State of Colorado, unto the said
• (her) =Ms heirs and assigns, without any covenants of warranty whatsoever and subject to all the rights of redemption
. by minors, insane persons or idiots as provided by law. I
This deed is made pursuant to resolution of the Board of County Commissioners of Weld County, Colorado,
duly made and entered of record in its proceedings the day of .._...�::_ :.............._._...._ A. D., 19 ,
appointing ::....... "• _ Commissioner aforesaid, to execute this deed in behalf of Weld County,
' and to affix the seal of Vliele County. Colorado, conveying said real estate to second party hereto.
IN WITNESS WHEREOF, I. r•' • :..: .__:�::. II_.._ _..._ , Commi-sioner appointed to execute this
deed, on behalf of said County and by virtue of the authority contained in the order made by said Board of ounty
�U � . iii .. Commissioners on the :i%•'.1....___.._ day of - �: ' _ Sve
;.ci • ��. •• ` i ': hereunto set my hand and affixed the seal of said Cam "-•. j ''r J
it f -i ;. : •,r - - -� ,.a . :11 f.aj° +> .-k\• ''[j �l�jj��,�� - , 19�'- , to[ the � , -� ,.BRAT. ' if 4
� r j ;: , ' .• t �{.. G L�' C . . ., �vU Its Comneissio��to :.,. '.. � : . . j. ►-
U ft as f Deputy) County Tre/at*,'' c e 11
sitSTATE OF COLORADO. cs , I j� • 1' , , " -� ,
Cif ,lijty Or WELD }' i.f; ' 1'
,
%\ 'Diegoi'H 'r.sera nt was acknowledged before me this _�yQ day of . Qch4r4eiW , A D 19W
Eby 6 :_,ett . -a-sci , Commissioner appointed to execute this deed
a i
, . WITNESS my Hand and Official al /)
-
I-L.Lt$.Di...DISIkir i t.it!nl
'•'i ' t, t Y .
t }IOW ' ajnti, CNrva y f e iaty Path,. . .
•
Page 6 of 6
7N-63W- 1 E?NE, NW
S.
tv, 861
s
1
T
I A r ; Date: March 14, 2012
■ m�r Receipt # [86344]
VT I1 '
'::. G0 +LP, _
It&
Weld County Government JOB: Oil and Gas Lease Auction - TO: BASELINE MINERALS, INC.
Clerk to the Board 3/14/2012 518 17TH STREET, SUITE 1050
1150 O Street DENVER CO 80202
P.O. Box 758
Greeley CO 80632
970-336-7215 X4226
Fax 970-352-0242
CHECK # • DESCRIPTION UNIT PRICE LINE TOTAL
Cash Filing Fee (X18) 180.00 180.00
5334502867 Bonus Amount (NW4NE4, S8, T9N, R59W) 92,000.00 92,000.00
5334502868 Bonus Amount (E2, S2, T8N, R60W) 750,651.00 750,651.00
5334502869 Bonus Amount (SW4SE4, Si, T7N, R63W) 92,000.00 92,000.00
5334502870 Bonus Amount (E2NE4, NW4NE4, Si, T7N, R63W) 368,529.00 368,529.00
5334502871 Bonus Amount (LOT 4, SW4NW4, S4, T8N, R59W) 195,661.00 195,661.00
5334502872 Bonus Amount (W2SW4, S35, T9N, R59W) 122,659.00 122,659.00
5334502873 Bonus Amount (NW4, S13, T7N, R63W) 368,000.00 368,000.00
5334502874 Bonus Amount (W2, 523, T8N, R63W) 129,600.00 129,600.00
5334502875 Bonus Amount (SW4, 525, T9N, R59W) 368,000.00 368,000.00
5334502876 Bonus Amount (NW4, S35, T8N, R63W) 368,000.00 368,000.00
5334502877 Bonus Amount (SW4, S24, T7N, R63W) 368,000.00 368,000.00
5334502878 Bonus Amount (S2NE4, 534, T9N, R59W) 122,659.00 122,659.00
5334502879 Bonus Amount (SE4, 525, T8N, R63W) 368,000.00 368,000.00
5334502880 Bonus Amount (NE4, S13, T7N, R63W) 368,000.00 368,000.00
5334502881 Bonus Amount (SW4, S25, T8N, R63W) 64,800.00 64,800.00
5334502882 Bonus Amount (SE4, S34, T9N, R59W) 245,318.00 - 245,318.00
5334502883 Bonus Amount (SW4, S35, T8N, R63W) 368,000.00 368,000.00
5334502884 Bonus Amount (NW4, S25, T8N, R60W) 32,400.00 32,400.00
Check #30582 - Additional from Auction and 1st Year Rentals Paid 12,144.99 12,144.99
Subtotal $4,804,962.99
To t a I $4,804,962.99
• Make all checks payable to:
Weld County Government
Attention: Clerk to the Board
THANK YOU FOR YOUR BUSINESS!
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•
BASELINE MINERALS, INC. TTZ3bank. AIIo(I lservingyou` . • • • f^; j �j
518 17TH STREET, SUITE 1050 J ..
DENVER, CO 80202 23-2-1020
(303) 534-3628 • _ .
F
THE .Gv �! ,. t� HisiT*51—‘,! o ni ai r g 6 i vy),.,- , ilk t�[� i
PAYER i $ 11 1 o
ORDER OF - l' d a
• Pot,.., 4h /co OLLi
/ jt, ' .&nd . -)e . -0.' Aciti k i G/ . ..� 2ct�l
Fir ., renhk. f°f lase nos, 1, 21 .r - '
MEMO AUTHORIZED SGNP,n3RF
Ej j r/, 1z, l3, Iy `, IJ j � 20 ZI Z3, z% zc t ..
•
WELD COUNTY LARGE-TRACT OIL AND GAS LEASE
Containing 160.23 acres, more or less:
Containing 160.23 net mineral acres, more or less:
THIS LEASE AGREEMENT, dated this 14th day of March, 2012, 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, c/o BOARD OF COUNTY COMMISSIONERS, 1150 O STREET, P.O. BOX 758,
GREELEY, CO 80632, hereinafter called Lessor, and :
BASELINE MINERALS, INC
516 SEVENTEENTH STREET, SUITE 1050
hereinafter called Lessee: DENVER, CO 80202
(303) 534-3628
WITNESSETH
WHEREAS, said Lessee has applied to Lessor for an oil and gas lease covering the land herein
described, and has paid a filing fee in the amount of $10.00, plus a bonus consideration of
$ 2 , tjtj . ou 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 $ 160.23 , 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
E1 /2 NE1/4, NW1 /4 NE1 /4 1 7N 63W
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 14th day of March, 2015, 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 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 sixty days upon cessation of
production for the purpose of re-establishing the same, and provided further that such production is
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Ste'1e Moreno Clerk and Recorder Weld County CO
■I11 ��r t� �c�t,���t������ti��� ���.� � � !I � ��� ��c����,� B II I
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 One Dollar($1.00)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 - Lessee shall account for any and all substances produced on the leased land and
Lessee shall pay to Lessor as royalty, in addition to the rentals provided, but except for products
used on the leased land, unavoidably lost or flared on the leased land, with approval of Lessor,
the following:
A. On oil, 20% of the oil produced and saved from the leased land.
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, the royalty shall be
calculated upon the fair market value of the oil at the well which shall not be deemed to be
less than the price actually paid to Lessee at the well by the purchaser thereof; 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 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.
B. On gas, including casing head gas or other gaseous substance, 20% of the fair market
value at the well or of the price received by Lessee at the well, whichever is greater, of all gas
produced and sold from the leased land or utilized off the land by Lessee. A copy of all
contracts for sale of gas shall be furnished to Lessor. Where gas is sold under contract that
has been approved by Lessor, the fair market value of such gas for determining the royalties
payable hereunder shall be the price at which such gas is sold under such contract. No
approval by Lessor of the terms of any such agreement shall operate to make Lessor a party
thereto or obligate it thereunder in any way. At the option of Lessor, and with sixty(60)days'
notice to Lessee, Lessor may take its royalty in kind. With sixty(60) days' notice to Lessee,
Lessor may cease taking gas royalty in kind.
C. All costs of marketing the oil and/or gas produced shall be borne by Lessee and such costs
shall not directly or indirectly reduce the royalty payments to Lessor. Except that marketing
costs for Lessor's in-kind royalty shall be borne by Lessor.
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Steve Moreno. Clerk and Recorder. Weld County, CO
/III hY pIIIIIO?tiDthii.VVIRr4ILlili 'i NN 11 III
Large-Tract Oil and Gas Lease
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D. 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.
3. RECORDS- Lessee agrees to keep and to have in possession complete and accurate books and
records showing the production and disposition of any and all substances produced on the leased
land and to permit Lessor, at all reasonable hours, to 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 books and records shall be retained by Lessee and made
available in Colorado to Lessor for a period of not less than five years.
4. 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.
5. 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 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.
6. 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.
7. 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.
8. 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
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d County CO
����Ifi1P�Ild+lrV'W4 'IS, drlry�r�4r1�7 Willi II III
Large-Tract Oil and Gas Lease
Page 4
have made full provision for conservation of the leased products and protection of the surface
rights of the leased land.
9. ASSIGNMENTS-
A. 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. 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 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.
D. Although not binding on Lessor, all instruments of every kind and nature whatsoever affecting
this lease should be filed with the Lessor.
10. 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.
11. 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.
12. 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.
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Steve Moreno, Clerk and Recorder, Weld County. CO
VIII Ki iY�II Gil'11�71'��4�4 LNd(rt+�Lt44r1�+�II' IN 11111
Large-Tract Oil and Gas Lease
Page 5
13. 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.
14. 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.
15. 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
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.
16. 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 $2.00 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 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.
17. 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
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Steve Moreno. Clerk and Recorder, Welld county.
ounlY C�
Large-Tract OH and Gas Lease
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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 Oil and Gas Conservation Commission of Colorado, 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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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
•
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Large-Tract Oil and Gas Lease
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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.
24. 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:
A. No lease term will be extended for more than six(6)months from the original expiration date.
B. That the Lessee shall pay to the Lessor the sum of one-third of the original bonus, with a
minimum bonus of Ten Dollars($10.00)per acre.
C. The Lessee must pay to the Lessor the sum of One Dollar($1.00) per acre leased as delayed
rental for the term of the extension.
D. That the royalty will remain the same.
25. HOLD HARMLESS - Lessee shall indemnify Lessor against all liability and loss, and against all
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
with operations on this leased land or by conditions created thereby, or based upon any violation
of any statute, ordinance,or regulation.
26. 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 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.
27. 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.
28. 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.
29. DEFINITIONS-
A. "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.
B. "Oil and gas"as used herein shall include all substances produced as by-products therewith,
including But not limited to sulfur.
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Steve Moreno. Clerk and Retarder Weld County. CO
VIII Ilk �4� 4, 611� (�14h�tl��Ni"1 B ill
•
Large-Tract Oil and Gas Lease
Page 8
C. "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.
30. 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.
31. 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.
32. 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).
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Steve Moreno Clerk and Recorder Weltl Countv GO
VIIIh�'•Y�ItG�h,l�tti�t'��da11+ 41+�1�141���+►N.t�hr��l"15111
Large-Tract Oil and Gas Lease
Page 9
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.
ATTEST: - BOARD OF COUNTY COMMISSIONERS
Weld County Clerk to the Board de • _> ELD COUNTY,COLORADO
By: ✓d�b12X� 4JaJ •
Deputy Clerk fait a Board Chair, Board of County Commissioners
MAR 1 4 2012
LESSEE:
11/4/1 t1 n
By:
STATE OF (1UA(,tieac)f ) St
ss
COUNTY OF bs Yl' e r' )
h
The foregoing instrument was acknowledged before me this , > day of ti's (L, ( ) I
20 , by )-,SC A'L •ThLt4vu PL"C <,(.1_.cJAI
Win ss my hand and lc' al.
STACIE L KERBER
Notary Public
N t Public State of Colorado
My Commission Expires: \'I I rj 12 a 14 My Commission Expires August 15,2011
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Steve Moreno. Clerk and Recorder. Weld County GO
VIII iI ILI�R,G+J+,I�l�,iM I�� Nit W'I? JLliti+ L4'P'l III III
Hello