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Home My WebLink About20081218.tiff • SURFACE USE AGREEMENT This Surface Use Agreement ("Agreement") is dated and made effective this day of , 2007, and is between K.P. Kauffman Company, Inc. ("KPK") with an address of 1675 Broadway, 28th Floor, Denver, CO 80202-4628, and Zadel Family, LLLP with an address of 4200 WCR 19, Fort Lupton,Colorado 80621. Whereas: A. Zadel Family, LLLP is the current landowner or is the current lessee under one or more sand, gravel and aggregate mining leases covering certain tracts of land located in Weld County, more particularly described on Exhibit "A" attached hereto, being a portion of Section 24, T2N, R67W 6th P.M., Weld County,Colorado(hereinafter referred to as the"Property"); B Surface ownership of the Property is subject to the rights of the oil and gas mineral leasehold estate, a portion of which is now owned by KPK; C. Zadel Family, LLLP has received a mining permit from the State of Colorado Division of Reclamation, Mining and Safety, formerly known as the Division of Minerals & Geology ("DMG") for the purpose of open pit sand and gravel mining operations, known as NCCI Pit Number 1. Portions of the mined out Property are to be reclaimed for use as water storage reservoirs. • D. KPK currently operates the following wells on the property, (the "Well"or"Wells"): the 1415 Corp Unit C#1, located in the SW/4NE/4 of Section 24, T2N, R67W, the KPK Glenn Horton #1, located in the NE/4SE/4 of Section 24, T2N, R67W, and the KPK Glenn Horton #2, located in the SE/4SE/4 of Section 24, T2N, R67W; and E. KPK shall continue to have the right to exercise its oil and gas leasehold rights to drill an additional well or a twinned well on each OGOA in accordance with COGCC rules. F. This Agreement sets forth the parties' rights and obligations regarding the relationship between the operations and development of the Property by Zadel Family, LLLP and KPK's operation and development of its oil and gas leasehold estate underlying the Property, such rights and obligations to be binding upon the parties' successors and assigns. Now Therefore: In consideration of the mutual covenants contained herein,and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,the parties agree as follows: 1. AREAS RESERVED FOR THE WELLS; WELL LOCATIONS. Zadel Family, LLLP shall set aside and provide to KPK that portion of the Property hereinafter referred to as the, "Oil and Gas Operations Areas", such areas being depicted on Exhibit B attached hereto. The Oil and Gas Operations Areas are to be made available to KPK in their present condition for any operations conducted by KPK in connection with any Well, including,but not limited to, drilling new wells and production activities, workovers, well deepening, recompletion, fracturing and drilling • replacement wells. All Wells will be limited to the Oil and Gas Operations Areas shown on Exhibit B, unless this Agreement is amended by consent of Zadel Family, LLLP and KPK. Except for the Oil and Page 1 of 11 2008-1218 Gas Operations Areas, and the access roads and Petroleum Pipeline Easements (as defined below) as • provided in this Agreement, KPK shall not occupy the surface of the Property except in the event of an emergency or for reasonable incidental, temporary and non-damaging activities, for which KPK shall be strictly and solely responsible for any damages that may occur to the Property. 2. EXTRACTION IN VICINITY OF OIL AND GAS OPERATIONS AREAS; SETBACK REQUIREMENTS. Zadel Family, LLLP reserves the right, at its option, to mine the gravel within each of the Oil and Gas Operations Areas in accordance with the terms of this Agreement. In the event that Zadel Family, LLLP elects to mine the gravel in an Oil and Gas Operations Area, Zadel Family, LLLP shall notify KPK in writing 60 days prior to commencing mining operations within the Oil and Gas Operations Areas and shall first place temporary concrete bathers around the Wells as directed by KPK prior to commencing any mining operations on the Property. Zadel Family, LLLP shall conduct its mining operations in the Oil and Gas Operations Areas as quickly as reasonably practicable. Zadel Family, LLLP shall conduct its mining within the Oil and Gas Operations Area by excavating pie shaped wedges of gravel and aggregate and thereafter backfilling and compacting the area with overburden or other suitable material prior to excavating the next pie shaped area; provided, however, that in no event shall Zadel Family, LLLP mine within 90 feet of any Well or Production Facilities (defined below) and provided further that in no event shall more than one quarter circle segment of the pie shape be excavated at any one time. Excavation in the Oil and Gas Operations Areas will be reasonably coordinated with KPK in a mutually acceptable manner so as to avoid conflict with KPK's oil and gas operations and to ensure there is an appropriate safety plan and interim emergency procedures. Zadel Family, LLLP will bear all costs associated with the mining operation, including permanent or temporary rerouting and replacement of access roads, and flowlines and utility lines in order to prevent unnecessary interruption of production from any affected • Well. In addition, Zadel Family, LLLP and its successor and assigns shall indemnify and hold the KPK harmless from any and all damage, loss and liability, including attorney's fees, incurred by KPK as a result of Zadel Family, LLLP's operations in an Oil and Gas Operations Area. Zadel Family, LLLP will not locate any building, or structure within any Oil and Gas Operations Area. Zadel Family, LLLP understands and acknowledges that the COGCC has rules and regulations that apply to the distance between a wellhead and public roads, Production Facilities, building units and surface property lines, among other things. In order to give full effect to the purposes of this Agreement, Zadel Family, LLLP hereby waives its right to object to the location of any of KPK's facilities on the basis of setback requirements in the rules and regulations of the COGCC, as they may be amended from time to time. Zadel Family, LLLP further and similarly waives its right to object to any other state or local setback requirements or other requirements or regulations that are or become inconsistent with this Agreement or that would prohibit or interfere with the rights of KPK, its successors and assigns, to explore for and produce the oil and gas in accordance with this Agreement. KPK or its successors and assigns may cite the waiver in this paragraph in order to obtain a location exception or variance under COGCC rules or from any other state or local governmental body having jurisdiction; provided that Zadel Family, LLLP shall not be required to alter the agreed boundary of the Oil and Gas Operations Area to accommodate the location exception or variance. Zadel Family, LLLP agrees not to object to the use of the surface in the Oil and Gas Operations Areas so long as such use is consistent with this Agreement and Zadel Family, LLLP will reasonably cooperate at no material cost to Zadel Family, LLLP in any efforts of KPK or its successors and assigns to obtain permits from the COGCC or any local jurisdiction. 3. GATHERING LINES AND FLOWLINES. • Subject to the limitations hereinafter described, KPK has a continuing right and entitlement to own, operate, maintain, repair and replace all existing and future flowlines, gathering lines and other Page 2 of 11 pipelines that may be necessary to its operations on the Property ("Pipelines"). The construction and • burying of additional Pipelines shall be at the sole cost and expense of KPK or its gas purchaser. Although this Agreement is intended to confine the placement of the Pipelines to certain specified locations within the Property, nothing herein shall be construed as a limitation on KPK's ultimate right to make all necessary well connections to any Well. Specific locations have been designated on Exhibit B for the location of the Pipelines ("Petroleum Pipeline Easements"). Each Petroleum Pipeline Easement shall be fifty feet (50') in width during construction, installation or relocation operations and otherwise reduced to thirty feet (30') in width for post-construction usage. Each Petroleum Pipeline Easement may be expanded to accommodate new pipeline, but in no event will the Easement exceed sixty feet (60'), with ten feet(10')separating each pipeline. Zadel Family, LLLP's operating plans anticipate that roadways may cross over Existing and Future Pipelines. "Existing Pipelines" shall mean any Pipeline now existing or hereafter constructed within a Petroleum Pipeline Easement prior to Zadel Family, LLLP's construction of a road for its operations or Zadel Family, LLLP's extraction of sand and gravel and backfilling of the Petroleum Pipeline Easement. In particular, when crossing KPK Existing Pipelines with heavy equipment, like earth moving equipment,Zadel Family, LLLP will maintain a minimum of four feet and a maximum of six feet of dirt coverage in addition to the existing cover over the Pipeline. When crossing KPK Existing Pipelines with trucks and lighter equipment, Zadel Family, LLLP will maintain a minimum of two feet and a maximum of six feet of dirt coverage in addition to the existing cover over the Pipeline. KPK may install and maintain markers on its Petroleum Pipeline Easement. KPK shall mark its flowlines at all locations reasonably requested by Zadel Family, LLLP. Zadel Family, LLLP will not allow any extraction to occur, commencing at the surface of the • original ground, closer than 25 feet from any Existing Pipeline of KPK as shown on Exhibit B unless a soils stability report prepared by an engineer licensed in the state of Colorado indicates that a lesser set back will be adequate for preservation of the integrity of said pipeline and provided that upon completion of such extraction Zadel Family, LLLP shall back fill and level the area within 25 feet from any Existing Pipeline or within any Petroleum Pipeline Easement designated on Exhibit B. Notwithstanding anything herein to the contrary, in no event shall Zadel Family, LLLP allow any extraction to occur, commencing at the surface of the original ground, closer than 15 feet from any Existing Pipeline without KPK's prior written approval. Zadel Family, LLLP shall hold KPK harmless for any and all damages caused by Zadel Family, LLLP's actions under this paragraph. Zadel Family, LLLP shall not allow any stockpile of soil to be placed over any Existing Pipeline of KPK or in any Petroleum Pipeline Easement as shown on Exhibit B. After written notice of at least fifteen (15) days, Zadel Family, LLLP, shall have the right to cross any Pipeline Easement with roadways and other utilities, provided such crossing of any utilities is made with its acute angle being not less than 60° with respect to KPK's Pipelines, but in no event shall such utility cross above or run parallel above KPK's Lines, except as noted. KPK requires all subsurface utilities be not less than 18 inches below KPK's Pipelines. The depth of cover over the KPK Existing Pipelines shall not be reduced or drainage over KPK's Pipelines altered without KPK's written approval. Parallel utilities must maintain a minimum of ten-foot separation from KPK Pipelines, unless KPK grants a lesser distance of separation which grant shall not be unreasonably withheld. It would not be unreasonable to withhold such consent due to reasonable safety or operational concerns. Zadel Family, LLLP will request that all utility companies contact KPK prior to laying lines parallel to KPK Existing Pipelines or within Petroleum Pipeline Easements designated in Exhibit B hereto. • Page 3 of 1 I Construction of any permanent structure within KPK's Petroleum Pipeline Easement is not permitted. Planting of trees and shrubs is not permitted on KPK's Petroleum Pipeline Easement. 4. ACCESS. Zadel Family, LLLP shall provide KPK with continuous access to all of the Oil and Gas Operations Areas and the Petroleum Pipeline Easements. The access roads to be used by KPK will either be those roads that currently are in place or those that are subsequently constructed by Zadel Family, LLLP at its sole cost and expense as part of Zadel Family, LLLP's operations on the Property. If Zadel Family, LLLP relocates an existing road being used by KPK for access to any Oil and Gas Operations Area, such relocated road shall be built to at least the quality of the road it replaces. The easements for KPK's access roads for its Oil and Gas Operations Areas are shown on Exhibit B hereto and Zadel Family, LLLP hereby grants KPK the non-exclusive right to the use of such easements for so long as KPK or its successors or assigns has rights in and to the oil and gas estate in the Property. KPK agrees to access the Property according to the routes depicted and described on the attached Exhibit B. Access to the Oil and Gas Operations Areas may be changed by mutual agreement of Zadel Family, LLLP and KPK. Zadel Family, LLLP shall maintain and keep any access jointly used by Zadel Family, LLLP and KPK in a condition and state of repair that serves the needs of Zadel Family, LLLP or, in the case of relocated existing roads, to at least the standard such road was maintained prior to its relocation. In the event such joint access roads needs to be improved in order to serve the needs of KPK, the parties agree to coordinate any such improvements as may be required by KPK in order to conduct its operations, • provided that the cost and expense of any such improvements shall be shared equally by both parties. Neither KPK, nor Zadel Family, LLLP shall unreasonably interfere with the use by the other party of access roads. Zadel Family, LLLP agrees that it will not mine or extract any portion of areas designated as access roads set forth on Exhibit B or as mutually agreed to by the Parties without the written consent of KPK. 5. BATTERIES AND EQUIPMENT. KPK shall have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and other equipment ("Production Facilities") reasonably appropriate for the operation and production of the Wells at the locations depicted on Exhibit B. With respect to KPK's Production Facilities other than flowlines or pipelines: A. KPK shall install and maintain, at its sole cost and expense, all fences around the Wells and any other Production Facilities in compliance with the Rules and Regulations of the COGCC; B. KPK shall install and maintain, at its sole cost and expense, all gates and locks reasonably necessary for the security of any Wells or Production Facilities in the Oil and Gas Operations Areas. Such gates and locks shall be the standard gates and locks used by KPK; C. At KPK's discretion, KPK shall paint any Production Facilities for any Wells, including wellhead guards, with paint that is approved by the COGCC; and • Page 4 of 11 D. Zadel Family, LLLP shall not inhibit KPK's access to the Oil and Gas Operations Areas or • inhibit KPK's operations within the Oil and Gas Operations Areas or in the vicinity of the Production Facilities by landscaping or other improvements, unless otherwise agreed upon between Zadel Family, LLLP and KPK. Zadel Family, LLLP shall place temporary concrete barriers around all Production Facilities as directed by KPK before any mining operations commence within an Oil and Gas Operations Area for the Production Facilities. In no event shall Zadel Family, LLLP mine within 90 feet of any Production Facilities or stockpile mined materials within a radius of 50 feet of any Production Facilities. 6. NOTICE OF FUTURE OPERATIONS. KPK shall provide at least seven(7)days prior notice to Zadel Family,LLLP of any operations in connection with the reworking, fracturing, deepening or recompletion operation on a Well or Wells. Regardless of the foregoing notice requirements, KPK shall have immediate access to any of its facilities in the event of an emergency. After receipt of the above notice, but not less than five (5) working days prior to KPK's mobilization on the applicable Oil and Gas Operations Areas, either KPK or Zadel Family, LLLP may request an on-site meeting. The purpose of the meeting shall be to inform Zadel Family, LLLP of the expected activity and to coordinate site access, hazards, barricades, restoration or any other issues that affect the use and safety of Zadel Family, LLLP operations. 7. DRILLING AND COMPLETION OPERATIONS. KPK shall endeavor to diligently pursue any drilling operations to minimize the total time period • and to avoid rig relocations or startup during the course of drilling. Zadel Family, LLLP waives any objections to continuous (i.e., 24-hour) drilling operations. 8. SHUT-IN OF WELLS. The parties recognize that the Pipelines now installed by KPK are made of fiberglass and/or metal and the running of Zadel Family, LLLP's earth moving equipment over said Pipelines tends to crack them, which can cause an oil and gas spill and environmental damage. KPK represents that in its opinion it is not safe to continue to use such Pipelines after heavy earth moving equipment is in use and there is no appropriate dirt coverage in place. If Zadel Family, LLLP begins to use heavy equipment on the property it shall maintain a minimum of four feet (4') and a maximum of six feet (6') of dirt coverage in addition to the existing cover over the Pipeline during Zadel Family, LLLP's operation of such equipment on the property. Zadel Family, LLP shall remove the four foot (4') to six foot (6') overburden upon completion of its operations involving heavy earthmoving equipment on the property. KPK will, for safety purposes, shut in any well that has had heavy earth moving equipment run over its Pipeline(s) without appropriate dirt coverage in place. Zadel Family, LLLP shall have the right to request that KPK shut in one or more of its wells during construction activity on the surface. KPK shall not unreasonably refuse to shut in its wells. a. Notification. Zadel Family, LLLP agrees to notify KPK at least twenty(20)days before Zadel Family, LLLP begins any activities on the property which will utilize any heavy equipment or other equipment likely to damage KPK's Pipeline(s)that are not covered appropriately. b. Payment. During the period of any shut in, Zadel Family, LLLP shall pay KPK for each shut • in the following amounts: Page 5 of 11 Shut In Duration Fee per Well per Day • 5 days or less None 6—29 days $150 30 days or more $200 Zadel Family, LLLP shall also pay KPK any costs to rework the well(s) in order to place the well(s) in production status after the shut in and costs to replace pipeline(s) and flowline(s)that are damaged by the surface construction activities of Zadel Family,LLLP. 9. GOVERNMENTAL PROCEEDINGS. Zadel Family, LLLP shall not oppose KPK in any agency or governmental proceedings, including but not limited to the COGCC, Weld County, or other governing body proceedings, related to KPK's operations on the Property, including but not limited to drilling, workovers, well deepenings and recompletions. However, Zadel Family, LLLP, may oppose KPK in proceedings if it reasonably believes that KPK's position in such proceedings violates or is inconsistent with this Agreement, or that the proposed operations violate or are not in accordance with applicable laws, COGCC regulations and lawful local ordinances,resolutions or permit conditions. 10. MINING PLAN. Zadel Family, LLLP has provided herewith copies to KPK of its Mining Permit, and the engineering structural report prepared in connection with the Mining Permit (the "Plans"). KPK acknowledges receipt of said Plans and has no objections to said Plans as approved by the DMG. This acceptance by KPK in no way waives KPK's rights in this Agreement or obligations of Zadel Family, • LLLP under the terms of this Agreement. Zadel Family, LLLP acknowledges that KPK may conduct oil and gas activities within the applicable Oil and Gas Operations Areas as provided herein and shall not oppose KPK before any agency or governmental proceeding if such oil and gas activities are proposed and carried out in accordance with the terms of this Agreement and applicable laws, COGCC regulations and lawful local ordinances, resolutions or permit conditions. 11. LIMITATION OF LIABILITY,RELEASE AND INDEMNITY. A. No party shall be liable for, or be required to pay for, special, punitive, exemplary, incidental, consequential or indirect damages to any other party for activities undertaken within the scope of this agreement; B. Except as to claims arising out of pollution or environmental damage (which claims are governed by Section 13 below), each party shall defend, indemnify and hold the other parties, their officers, directors, employees, successors and assigns, harmless against all losses, claims, damages, demands, suits, causes of action, fines, penalties, expenses and liabilities, including without limitation attorneys' fees and other costs associated therewith (all of the aforesaid herein referred to collectively as "Claims"), arising out of or connected with each such party's ownership or operations on the Property,no matter when asserted, subject to applicable statutes of limitations. This provision does not, and shall not be construed to, create any rights in persons or entities not a party to this Agreement, nor does it create any separate rights in parties to this Agreement other than the right to be indemnified for Claims as provided herein; • Page 6 of 11 C. Upon the assignment or conveyance of a party's entire interest in the Property, that party shall • be released from its indemnification in Sectionl 2.b. above, for all actions or occurrences happening after such assignment or conveyance. 12. ENVIRONMENTAL INDEMNITY. The provisions of Section 12 above, except for Section 12.A. shall not apply to any environmental matters, which shall be governed exclusively by the following, subject to the limitations of Section 12.A. above: A. "Environmental Claims" shall mean all Claims asserted by governmental bodies or other third parties for pollution or environmental damage of any kind, arising from operations on or ownership of the Property or ownership of the oil and gas leasehold interest, whichever is applicable, and all cleanup and remediation costs, fines and penalties associated therewith, including but not limited to any Claims arising from Environmental Laws or relating to asbestos or to naturally occurring radioactive material. Environmental Claims shall not include the costs of any remediation undertaken voluntarily by any party, unless such remediation is performed under the imminent threat of a Claim by a governmental body or other third party; B. "Environmental Laws" shall mean any laws, regulations, rules, ordinances, or order of any governmental authority(ies), which relate to or otherwise impose liability, obligation, or standards with. respect to pollution or the protection of the environment, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.),the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Clean Water Act (33 U.S.C. §§ 466 et seq.), the Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous • Material Transportation Act (49 U.S.C. §§ 1801 et seq.), the Clean Air Act, and the Toxic Substances Control Act (15 U.S.C. §§ 2601-2629); and C. Environmental Indemnification. KPK shall protect, indemnify, and hold harmless Zadel Family, LLLP, its successors and assigns, from any Environmental Claims relating to the Property or oil and gas leasehold thereunder that arise out of KPK's ownership and operation of the Oil and Gas Operations Areas and it's ownership and operation of its Petroleum Pipeline Easements or rights-of-way on the Property unless such Environmental Claims are the result of Zadel Family, LLLP's conduct. Zadel Family, LLLP shall fully protect, defend, indemnify and hold harmless KPK from any and all Environmental Claims against ICPK, its successors and assigns, relating to the Property that arise out of Zadel Family, LLLP's operations on the Property. 13. EXCLUSION FROM INDEMNITIES. The indemnities of the parties herein shall not cover or include any amounts which the indemnified party is actually reimbursed by any third party. The indemnities in this Agreement shall not relieve any party from any obligations to third parties. 14. NOTICE OF CLAIM FOR INDEMNIFICATION. If a Claim is asserted against a party for which the other party would be liable under the provisions of Section 12 or 13 above, it is a condition precedent to the indemnifying party's obligations hereunder that the indemnified party give the indemnifying party written notice of such Claim setting forth all particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it • is a written Claim). The indemnified party shall make a good faith effort to notify the indemnifying party within five days of receipt of a Claim and shall effect such notice in all events within such time as will Page 7 of 11 allow the indemnifying party to defend against such Claim. An indemnifying party shall not be obligated • to reimburse an indemnified party for amounts paid in settlement of an indemnified claim unless the indemnifying party has agreed to the settlement, which agreement shall not be unreasonably withheld or delayed. 15. REPRESENTATIONS. Each party represents that it has the full right and authority to enter into this Agreement. ICI3K does not represent that it has rights to settle matters for all of the mineral owners or any other lessees in the Property and this Agreement shall only apply to and bind the KPK leasehold interest in the property. 16. SUCCESSORS. The terms, covenants, and conditions hereof shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns; provided, as to KPK, successors and assigns shall be deemed to be limited to lessees under the oil and gas leases which KPK owns. 17. TERM. This Agreement shall become effective when it is fully executed and shall remain in full force and effect until the earlier to occur of the following: (a) ICPK's leasehold estate expires or is terminated, and KPK has plugged and abandoned all wells and complied with the requirements of all applicable oil and gas leases pertaining to removal of equipment, reclamation, cleanup and all other applicable provisions of the leases and existing laws and regulations or (b) Zadel Family, LLLP's sand, gravel and aggregate mining lease expires or is terminated(as to the portion of the Property leased by Zadel Family, • LLLP) and Zadel Family,LLLP has complied with the requirements of it mining lease and Mining Permit pertaining to removal of equipment, reclamation, cleanup and all other applicable provisions of the lease, Mining Permit and existing laws and regulations. When this Agreement ceases to be in full force and effect, the Parties shall execute any and all releases necessary to evidence the fact that this Agreement shall no longer apply to the Property, except as to any indemnities set forth herein, which indemnities shall survive termination. 18. AMENDMENTS. This agreement may be amended by an instrument in writing signed by the parties hereto. 19. NOTICES. Any notice or other communication required or permitted under this Agreement shall be sufficient if deposited in U.S. Mail, postage prepaid,addressed to each of the following: K.P.Kauffman Company, Inc. Zadel Family, LLLP. 1675 Broadway,281h Floor 4200 WCR 19 Denver, Colorado 80202-4628 Fort Lupton, Colorado 80621 Attention: Land Department Attention: John W.Zadel Any party may, by written notice so delivered to the other parties, change the address or individual to which delivery shall thereafter be made. • Page 8 of 11 20. RECORDING. This Agreement, any amendment hereto shall be recorded by either party, which shall provide the other party with a copy showing the recording information as soon as practicable thereafter. 21. SURFACE DAMAGES. Zadel Family, LLLP hereby waives all surface damage payments pursuant to any COGCC or local regulation, state statute, common law or prior agreement, for each and every well that is drilled within the Oil and Gas Operations Areas and for any access road, flowline,or pipelines constructed on the Property. KPK may provide a copy of this Agreement to the COGCC as evidence of this waiver. 22. DISPUTES Any action(a) seeking damages for a violation of or arising from this Agreement or the actions of the parties related to the subject matter of this Agreement, (b) involving the meaning, construction, or intent of this Agreement or any provision thereof, or(c) to enforce the provisions of this Agreement, shall be brought in the District Court for Weld County, Colorado. The prevailing party in such action shall be entitled to recover its reasonable costs and attorneys' fees in the action from the other party. Such costs and fees shall be in addition to any other relief that may be awarded. 23. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of • Colorado,without reference to its conflict of laws provisions. 24. COMPLIANCE WITH COMMON LAW AND STATUTORY AND REGULATORY REQUIREMENTS. Zadel Family, LLLP expressly acknowledges that this Agreement satisfies the obligations and requirements of KPK pursuant to COGCC rules and regulations and Colorado statutes to consult in good faith with Zadel Family, LLLP regarding existing and proposed oil and gas operations on the Property. Zadel Family, LLLP further expressly acknowledges that this Agreement shall be deemed to be specifically applicable to, and to fully satisfy, the obligations of KPK to accommodate the use of the surface of the Property by Zadel Family, LLLP, existing and future, and Zadel Family, LLLP waives any statutory and common law claims to the contrary, including, but not limited to,any claims pursuant to C.R.S. 34-60-127. 25. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding among the parties hereto regarding the matters addressed herein, and supersedes any previous communications, representations or agreement, whether oral or written. This Agreement shall not be amended,except by written document signed by all parties. 26. EXECUTION AND BINDING EFFECT. This Agreement may be executed in any number of counterparts each of which shall be deemed an original instrument but all of which together shall constitute one and the same instrument, and shall be binding upon and inure to the benefit of the parties, and each of their respective successors and assigns and is executed by the parties as of the Effective Date set forth above. • Page 9 of 11 • The parties have executed this Agreement on the day and year first above written. ZADEL FAMILY,LLLP K.P.KAUFFMAN COMPANY,INC. BY: Gordon L.Allott,Jr. Executive Vice President • ACKNOWLEDGMENTS STATE OF COLORADO ) COUNTY OF DENVER ) The foregoing instrument of writing was acknowledged before me on this day of ,2007 by ,for and on behalf of the K.P.Kauffman Company,Inc.,a California corporation,for the uses and purposes stated herein. Witness my hand and seal: Notary Public Print Name: My Commission Expires: Address: • Page 10 of 11 STATE OF COLORADO ) • COUNTY OF DENVER ) The foregoing instrument was acknowledged before me this day of 2007,by ,as for Zadel Family,LLLP on behalf of such company. Witness my hand and official seal. Notary Public Print Name: My Commission Expires: Address: • Page 11 of 11 drvwrvrw-Dw.n3 LOS-icon. ei?66#8 - ` d or,•..,s-..wwi..uo.. r "UT'gunwale)i.f© �r ua DON -.w•.+.+w.+0.o.+wa...w..r '°^—°:««sue ` < i A k l j ell • ati e a 28 In 3 fg 3 rI II I 1 gel i ,I ; Le 7 -V64' \ \) i' ;3 t I i! I g I. I/ F it 1 .. iii g ii x➢:S �,i I e89 ! a: IIIs Zjil II [ I � I ¢ ��i ,LL2L., aS "`r"", r g4 Ill l i I ' I k • Iti v ? I I �ygJz�36 34 III al ! 11 ' r I I ail ^¢ ` A i 41 . yw ₹i '. l" 6I L 11 ili ll • i a ,If 11 SURFACE USE AGREEMENT This Surface Use Agreement ("Agreement") is dated and made effective this day of , 2006, and is between Kerr-McGee Oil & Gas Onshore LP ("KMG") with an address of 1999 Broadway, Suite 3700, Denver, CO 80202, and ZADEL FAMILY, LLLP (collectively hereinafter referred to as "Surface Owner") all with an address of 4200 WCR 19, Fort Lupton, Colorado 80621 A. OPTION ONE: Surface Owner owns the surface estate of that certain tract of land more particularly described on Exhibit "A" attached hereto, being the County, Colorado (hereinafter referred to as the "Property"); B. Surface ownership of the Property is subject to the rights of the oil and gas mineral leasehold estate, a portion of which is now owned by ICMG; C. Surface Owner plans to develop the surface of the Property as a gravel mining operation known as NCCI Pit Number 1. D. KMG currently operates well(s) on the Property, known as , (the "Existing Well(s)") generally located of Section , described above, and has the right to develop its oil and gas leasehold estate • by drilling additional wells (the"Future Well(s)") on the Property; and E. This Agreement sets forth the parties' rights and obligations regarding the relationship between the development of the Property by Surface Owner and KMG's operation and development of its oil and gas leasehold estate underlying the Property, such rights and obligations to be binding upon the parties' successors and assigns. In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. AREAS RESERVED FOR THE EXISTING WELL AND FUTURE WELLS. Surface Owner shall set aside and provide to KMG that portion of the Property hereinafter referred to as the, "Oil and Gas Operations Areas", such area(s) being depicted on Exhibit " " attached hereto. The Oil and Gas Operations Areas are to be made available to KMG in their present condition for any operations conducted by KMG in connection with the Existing Well or any Future Well, including, but not limited to, drilling and production activities, workovers, well deepenings, recompletions, fracturing and replacement wells. Except for the Oil and Gas Operations Areas, and the access roads and easements associated with flowlines, gathering lines and pipelines as provided in this Agreement, KMG shall not occupy the surface of the Property except in the event of an emergency or for reasonable incidental, temporary and non-damaging activities, for which KMG shall be strictly and solely responsible for any damages that may occur. 2. WELL LOCATIONS. • KMG shall have the right to drill Future Wells within the Oil and Gas Operations Areas, including horizontal and directional wells that produce from and drain lands other than the Property provided such lands are validly pooled with all or any portion of the lands included in KMG's oil and gas lease covering the Property, and so long as such locations are permitted locations under the then applicable well spacing regulations of the Colorado Oil and Gas Conservation Commission ("COGCC") or exceptions granted thereto by the Director of the COGCC. As part of the consideration for this Agreement, Surface Owner hereby waives its right to, and covenants that it shall not protest or object to any such exception location or application for same by KMG. KMG shall not otherwise have the right to drill new wells on the Property. Notwithstanding the foregoing, the wellhead location of any Future Well drilled from any Oil and Gas Operations Area shall not be closer than 150' from a residential lot line. 3. SETBACK REQUIREMENTS. Surface Owner will not locate any building or structure within any Oil and Gas Operations Area. Surface Owner understands and acknowledges that the COGCC has rules and regulations that apply to the distance between a wellhead and public roads, production facilities, building units and surface property lines, among other things. In order to give full effect to the purposes of this Agreement, Surface Owner hereby waives its right to object to the location of any of KMG's facilities on the basis of setback requirements in the rules and regulations of the COGCC, as they may be amended from time to time. Surface Owner further and similarly waives its right to object to any other state or local setback requirements. KMG or its successors • and assigns may cite the waiver in this paragraph in order to obtain a location exception or variance under COGCC rules or from any other state or local governmental body having jurisdiction. Surface Owner agrees not to object to the use of the surface in the Oil and Gas Operations Areas so long as such use is consistent with this Agreement and Surface Owner will provide KMG or its successors and assigns with whatever written support they may reasonably require to obtain permits from the COGCC or any local jurisdiction. 4. GATHERING LINES AND FLOWLINES. Subject to the limitations hereinafter described, KMG has a continuing right and entitlement to own, operate, maintain, repair and replace all flowlines, gathering lines and other pipelines that may be necessary to its operations on the Property. The current development plans for may anticipate the relocation of certain existing gathering lines or flowlines ("Existing Pipelines") to a designated easement corridor shown on Exhibit " " as the "Petroleum Pipeline Easement." All relocated Existing Pipelines shall be located within the Petroleum Pipeline Easement. unless otherwise agreed upon in writing between Surface Owner and KMG. All such relocations shall be at Surface Owner's cost and expense. Any additional pipelines, flowlines and gathering lines that may be required in the future ("Future Pipelines") shall also be placed within, or relocated to the Petroleum Pipeline Easement, unless otherwise agreed upon in writing between Surface Owner and KMG.. The costs and expenses of constructing and maintaining any Future Pipelines shall be borne by KMG. • At such time as Surface Owner desires to have any Existing Pipelines relocated to the Petroleum Pipeline Easement, it shall give written notice to KMG who shall promptly prepare, or • commission the preparation of, a cost estimate to accomplish the relocation. As soon as available, KMG will then provide the cost estimate to Surface Owner who will then have the opportunity to review same and make a final determination about whether it wishes to proceed with the relocation. If Surface Owner elects to have KMG effectuate the pipeline relocation, it shall tender the estimated costs of such to KMG together with its written request to commence the project as soon as reasonably practicable, or as otherwise requested by Surface Owner. If it has not already done so, Surface Owner shall also deliver to KMG an executed and acknowledged Pipeline Right of Way Grant on the form that is attached hereto as Exhibit "_" in order to convey the Petroleum Pipeline Easement lands as shown on Exhibit " ". The Petroleum Pipeline Easement shall be fifty feet (50') in width during construction, installation or relocation operations and otherwise reduced to thirty feet (30') in width for post-construction usage. KMG acknowledges that the Petroleum Pipeline Easement will be non-exclusive and agrees that it will not object to its concurrent use by other oil and gas operators or utilities, as Surface Owner may grant from time to time, so long as such other parties comply with KMG's pipeline guidelines, attached hereto as Exhibit "_". Notwithstanding the foregoing, Surface Owner shall not permit, nor shall it place any other utility or structure within ten feet horizontally or two feet vertically of any KMG pipeline. The Petroleum Pipeline Easement and Oil and Gas Operations Areas shall be depicted and labeled on all subdivision plats submitted to Weld County. If Surface Owner's development plans anticipate that roadways will or may in the future • cross over Existing Pipelines. Surface Owner agrees to pay for the cost to have KMG sleeve any Existing Pipeline that is to be crossed by such roadways, such payment to be made in advance of the work and Surface Owner shall not permit any roadway crossing of any Existing Pipeline until the sleeving of the affected line has been completed. KMG shall not, without the prior written consent of Surface Owner, have the right to lay additional flowlines or pipelines on the Property, outside the Petroleum Pipeline Easement. All flowlines and pipelines shall be buried to a depth of approximately 48 inches from the surface. Surface Owner shall maintain a minimum of 48 inches and not more than 72 inches of cover over all pipelines and flowlines during any of Surface Owner's operations on the Property. The construction and burying of additional flowlines, gathering lines and pipelines shall be at the sole cost and expense of KMG or its gas purchaser. 5. ACCESS. Surface Owner shall allow KMG to use the access roads that currently are in place or any additional roads constructed by Surface Owner as part of Surface Owner's development of the Property. KMG agrees to access the Property according to the routes depicted and described on the attached Exhibit " " once the roads are constructed by Surface Owner and Surface Owner provides KMG notice of such but KMG may continue to use its present access routes until that time and until receipt of such notice from Surface Owner. In the event that it is reasonably necessary for KMG to have one or more additonal roads to to access the Oil and Gas Operations • Areas or the Petroleum Pipeline Easement, such roads shall be constructed at KMG's sole expense on such routes as are mutually agreed-upon by the parties. 6. BATTERIES AND EQUIPMENT. • KMG shall have the right to locate, build, repair and maintain tanks, separators, dehydrators, compressors and other equipment reasonably appropriate for the operation and production of the Existing Well or any Future Wells only within the Oil and Gas Operations Areas. With respect to KMG's equipment and facilities other than flowlines or pipelines: a. KMG shall install and maintain, at its sole cost and expense, all fences around the Existing Well and any Future Wells in compliance with the Rules and Regulations of the COGCC; b. KMG shall install and maintain, at its sole cost and expense, all gates and locks reasonably necessary for the security of any wells or facilities in the Oil and Gas Operations Areas. Such gates and locks shall be the standard gates and locks used by KMG; c. KMG shall paint any production facilities for any wells, including wellhead guards, with paint that is approved by the COGCC; and d. Surface Owner shall not inhibit KMG's access to the Oil and Gas Operations Areas or inhibit KMG's operations within the Oil and Gas Operations Areas by landscaping or other improvements, unless otherwise agreed upon between Surface Owner and KMG. 7. NOTICE OF FUTURE OPERATIONS. KMG shall provide at least seven (7) days prior written notice to Surface Owner of any operations in connection with the reworking, fracturing, deepening or recompletion operation on the Existing Well or any Future Wells; provided, however, that KMG shall provide at least thirty (30) days prior written notice to Surface Owner and/or any homeowner's association formed by Surface Owner that is associated with the Property upon the drilling of any Future Wells. Regardless of the foregoing notice requirements, KMG shall have immediate access to any of its facilities in the event of an emergency. After receipt of the above notice, but not less than five (5) working days prior to ICMG's mobilization on the applicable Oil and Gas Operations Areas, either KMG or Surface Owner may request an on-site meeting. The purpose of the meeting shall be to inform Surface Owner of the expected activity and to coordinate site access, hazards, barricades, restoration or any other issues that affect the use and safety of Surface Owner's development. 8. NOTICES TO HOMEOWNERS AND BUILDERS. Surface Owner shall furnish all buyers of the Property from Surface Owner with a plat or map showing the Oil and Gas Operations Areas and the Easement. In addition, Surface Owner shall provide notice to all builders, homeowners, homeowner associations and other buyers of • the Property from Surface Owner that: • a. There may be ongoing oil and gas operations and production in the Oil and Gas Operations Areas on the surface of the Property; b. There are likely to be additional Future Wells drilled and oil and gas operations and production from the Oil and Gas Operations Areas that affect the surface of the Property; c. Heavy equipment may be used by KMG from time to time for oil and gas production operations and that such operations nay be conducted on a 24 hour basis; d. Future purchasers of all or a portion of the Property, as successors in interest to Surface Owner, will be acquiring a proportionate interest in Surface Owner's rights under this Agreement; and e. Homeowner associations and buyers of individual lots or homes, as successors in interest to Surface Owner, will be acquiring a proportionate interest in Surface Owner's rights under this Agreement, and will be subject to the waivers contained in Sections 3, 9, and the covenants contained in Section 3 prohibiting the location of any building or structure within the Oil and Gas Operations Areas or the Easement and waiving objection to any setback rules of the COGCC or any local jurisdiction. 9. DRILLING AND COMPLETION OPERATIONS. • KMG shall endeavor to diligently pursue any drilling operations to minimize the total time period and to avoid rig relocations or startup during the course of drilling. Surface Owner waives any objections to continuous (i.e., 24-hour) drilling operations. 10. GOVERNMENTAL PROCEEDINGS. Surface Owner shall not oppose KMG in any agency or governmental proceedings, including but not limited to the COGCC, the City of or other governing body proceedings, related to KMG's operations on the Property, including but not limited to drilling, workovers, well deepenings and recompletions. However, Surface Owner may oppose KMG in proceedings if it reasonably believes that KMG's position in such proceedings violates or is inconsistent with this Agreement, or that the proposed operations violate or are not in accordance with applicable laws,COGCC regulations and lawful local ordinances,resolutions or permit conditions. 11. LIMITATION OF LIABILITY, RELEASE AND INDEMNITY. a. No party shall be liable for, or be required to pay for, special, punitive, exemplary, incidental, consequential or indirect damages to any other party for activities undertaken within the scope of this agreement; b. Except as to claims arising out of pollution or environmental damage (which claims are governed by Section 12 below), each party shall defend, indemnify and hold the other parties, their officers, directors, employees, successors and assigns, • harmless against all losses, claims, damages, demands, suits, causes of action, fines, penalties, expenses and liabilities, including without limitation attorneys' fees and other . costs associated therewith (all of the aforesaid herein referred to collectively as "Claims"), arising out of or connected with each such party's ownership or operations on the Property, no matter when asserted, subject to applicable statutes of limitations. This provision does not, and shall not be construed to, create any rights in persons or entities not a party to this Agreement, nor does it create any separate rights in parties to this Agreement other than the right to be indemnified for Claims as provided herein; c. Upon the assignment or conveyance of a party's entire interest in the Property, that party shall be released from its indemnification in Sectionl I.b. above, for all actions or occurrences happening after such assignment or conveyance. 12. ENVIRONMENTAL INDEMNITY. The provisions of Section 11 above, except for Section 11.a., shall not apply to any environmental matters, which shall be governed exclusively by the following, subject to the limitations of Section 11.a. above: a. "Environmental Claims" shall mean all Claims asserted by governmental bodies or other third parties for pollution or environmental damage of any kind, arising from operations on or ownership of the Property or ownership of the oil and gas leasehold interest, whichever is applicable, and all cleanup and remediation costs, fines and penalties associated therewith, including but not limited to any Claims arising from Environmental Laws or relating to asbestos or to naturally occurring radioactive material. • Environmental Claims shall not include the costs of any remediation undertaken voluntarily by any party, unless such remediation is performed under the imminent threat of a Claim by a governmental body or other third party; b. "Environmental Laws" shall mean any laws, regulations, rules, ordinances, or order of any governmental authority(ies), which relate to or otherwise impose liability, obligation, or standards with respect to pollution or the protection of the environment, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Clean Water Act (33 U.S.C. §§ 466 et seq.), the Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous Material Transportation Act (49 U.S.C. §§ 1801 et seq.), the Clean Air Act, and the Toxic Substances Control Act (15 U.S.C. §§ 2601-2629); and c. Environmental Indemnification. KMG shall protect, indemnify, and hold harmless Surface Owner, homeowners association and any lot owner who purchases a lot from Surface Owner from any Environmental Claims relating to the Property or oil and gas leasehold thereunder that arise out of KMG's ownership and operation of the Oil and Gas Operations Areas and its ownership and operation of its pipeline easement or rights- of-way on the Property. Surface Owner shall fully protect, defend, indemnify and hold harmless KMG from any and all Environmental Claims relating to the Property that arise out of Surface Owner's development of the Property. • 13. EXCLUSION FROM INDEMNITIES. • The indemnities of the parties herein shall not cover or include any amounts which the indemnified party is actually reimbursed by any third party. The indemnities in this Agreement shall not relieve any party from any obligations to third parties. 14. NOTICE OF CLAIM FOR INDEMNIFICATION. If a Claim is asserted against a party for which the other party would be liable under the provisions of Section 11 or 12 above, it is a condition precedent to the indemnifying party's obligations hereunder that the indemnified party give the indemnifying party written notice of such Claim setting forth all particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it is a written Claim). The indemnified party shall make a good faith effort to notify the indemnifying party within five days of receipt of a Claim and shall affect such notice in all events within such time as will allow the indemnifying party to defend against such Claim. 15. REPRESENTATIONS. Each party represents that it has the full right and authority to enter into this Agreement. KMG does not represent that it has rights to settle matters for all of the mineral owners or any other lessees in the Property and this Agreement shall only apply to and bind the KMG leasehold interest in the property. • 16. SUCCESSORS. The terms, covenants, and conditions hereof shall be binding upon and shall inure to the benefit of the parties and their respective heirs, devises, executors, administrators, successors and assigns; provided, as to KMG, successors and assigns shall be deemed to be limited to lessees under the oil and gas leases which KMG owns. 17. TERM. This Agreement shall become effective when it is fully executed and shall remain in full force and effect until KMG's leasehold estate expires or is terminated, and KMG has plugged and abandoned all wells owned all or in part by KMG and complied with the requirements of all applicable oil and gas leases pertaining to removal of equipment, reclamation, cleanup and all other applicable provisions of the leases and existing laws and regulations. 18. NOTICES. Any notice or other communication required or permitted under this Agreement shall be sufficient if deposited in U.S. Mail, postage prepaid, addressed to each of the following: If to KMG: • Kerr McGee Oil & Gas Onshore LP • 1999 Broadway, Suite 3700 Denver, Colorado 80202 Attention: Director of Land Denver Basin If to Surface Owner: Zadel Family, LLLP 4200 WCR 19 Fort Lupton,Colorado 80621 Attention: John W. Zadel, Managing Partner Any party may, by written notice so delivered to the other parties, change the address or individual to which delivery shall thereafter be made. 19. RECORDING. This Agreement, any amendment hereto shall be recorded by ICMG, which shall provide the other parties with a copy showing the recording information as soon as practicable thereafter. • 20. SURFACE DAMAGES. Surface Owner hereby waives all surface damage payments pursuant to any COGCC or local regulation, state statute, common law or prior agreement, for each and every well that is drilled, tank battery and emissions control device located on the Property within the Oil and Gas Operations Areas and also including but not limited to any access road, flowline, or pipeline constructed within the Easement. KMG may provide a copy of this Agreement to the COGCC as evidence of this waiver. 21. DISPUTES. Any action (a) seeking damages for a violation of or arising from this Agreement or the actions of the parties related to the subject matter of this Agreement, (b) involving the meaning, construction, or intent of this Agreement or any provision thereof, or (c) to enforce the provisions of this Agreement, shall be brought in the District Court for Weld County, Colorado. The prevailing party in such action shall be entitled to recover its reasonable costs and attorneys' fees in the action from the other party. Such costs and fees shall be in addition to any other relief that may be awarded.. 22. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to its conflicts of law provisions. • 23. ENTIRE AGREEMENT. • This Agreement sets forth the entire understanding among the parties hereto regarding the matters addressed herein, and supersedes any previous communications, representations or agreement, whether oral or written. This Agreement shall not be amended, except by written document signed by all parties. 25. EXECUTION AND BINDING EFFECT This Agreement may be executed in any number of counterparts each of which shall be deemed an original instrument but all of which together shall constitute one and the same instrument, and shall be binding upon and inure to the benefit of the parties, and each of their respective heirs, executors, administrators, successors and assigns and is executed by the parties as of the Effective Date set forth above. The parties have executed this Agreement on the day and year first above written. KERR-McGEE OIL & GAS ONSHORE LP By: Joseph H. Lorenzo • Attorney-in-fact SURFACE OWNERS BY: JOHN W. ZADEL, MANAGING PARTNER ACKNOWLEDGMENTS • STATE OF COLORADO ) CITY AND ) ss. • COUNTY OF DENVER ) The foregoing instrument was acknowledged before me this_ day of 2006,by Joseph H. Lorenzo, as Attorney-in-Fact of Kerr-McGee Oil &Gas Onshore LP, on behalf of such corporation. Witness my hand and official seal. Notary Public My Commission Expires: STATE OF COLORADO ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2006, by Witness my hand and official seal. Notary Public My Commission Expires: • • • Exhibit " " Attached hereto and made a part of that certain Agreement Surface Use Agreement between Zadel Family, LLLP and Kerr-McGee Oil & Gas Onshore LP, dated of 2006 RIGHT-OF-WAY GRANT THIS RIGHT-OF-WAY GRANT ("Grant) is made this day of , 2006, from Zadel Family, LLP, whose address is, WCR 19, Fort Lupton, Colorado 80621 ("Grantor"), to Kerr-McGee , a Colorado limited liability company, whose address is 1999 Broadway, Suite 3700, Denver, Colorado 80202 ("Grantee"). The parties agree as follows: For and in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby grants, conveys and warrants unto Grantee, its successors and assigns, a perpetual right-of- way(s) and easement(s) to survey, construct, maintain, inspect, operate, repair, replace, modify, change the size of, reconstruct, mark, monitor, abandon or remove, at Grantee's election, pipelines and all appurtenances, below and/or above wound, including but not limited to launchers and receivers, convenient for the transportation or transmission of oil, gas, petroleum products, water, hydrocarbons and any other substances, whether fluid, solid or gaseous, and any • products, derivatives, combinations or mixtures of any of the foregoing, in, on, over, under, or through the lands situated in County, State of Colorado, being described as follows: TOWNSHIP NORTH, RANGE WEST, 6TH PM Section : The specific route and course of the right-of-way(s) and easement(s) conveyed hereby ("Right-of-Way Lands") is more particularly described on Exhibit "A" attached hereto and made a part hereof. The width of the Right-of-Way Lands during construction shall be fifty feet (50'), and subsequent to construction shall be thirty feet (30'). Grantors represent and warrant to Grantee that Grantors are the sole owner in fee simple of the Right-of-Way Lands and have full right, power and authority to make this Grant. Grantee shall lay all pipe at a depth of not less than 48 inches. Grantee shall repair and/or restore any fence on or adjacent to the Right-of-Way Lands removed or severed by Grantee in the course of the operations provided for in this Grant. If necessary to prevent the escape of Grantor's livestock, Grantee shall construct temporary gates or fences. Grantee shall have all rights, privileges and benefits necessary or convenient for the full use and enjoyment of this Grant, including but not limited to, the right of ingress and egress over and across Grantor's lands lying adjacent to the Right-of-Way Lands for any and all purposes necessary and incidental to exercising Grantee's rights hereunder. Grantors agree not to build, • create, construct or permit to be built, created or constructed, any obstruction, building, fence, landscaping, reservoir, engineering works or other structures or improvements over, under, on or . across the Right-of-Way Lands without prior written consent of Grantee. Grantee shall be obligated to pay for, repair, replace or otherwise compensate Grantors for any damages resulting from Grantee's activities and operations on the Right-of-Way Lands; and, Grantors shall pay for, reimburse, indemnify and hold Grantee harmless from any and all claims or damages resulting from Grantor's activities on the Right-of-Way Lands. Grantors shall have the right to use and enjoy the Right-of Way Lands, subject to the rights herein granted. This Grant cannot be modified, except in writing signed by all parties hereto. The rights granted herein may be assigned in whole or in part, and the terms, conditions, and provisions of this Grant are a covenant miming with the land and shall extend to and be binding upon the successors, and assigns of Grantors and Grantee. Grantee agrees to level and restore any lands that may have excessive settling and sufficiently compact the soil within a reasonable period of time after completion of construction. This Grant may be executed in counterparts each of which shall be considered one and the same agreement. IN WITNESS WHEREOF, the parties have executed this Grant as of the date first above written. • Grantors: Grantee: Ken-McGee By its Manager, Ken-McGee Oil & Gas Onshore LP, By: By: Joseph H. Lorenzo, Attorney-in-Fact • STATE OF COLORADO ) • ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2006,by , as • Witness my hand and official Seal. My Commission Expires: Notary Public • STATE OF COLORADO ) CITY AND ) ss. COUNTY OF DENVER ) The foregoing instrument was acknowledged before me this day of , 2006, by Joseph H. Lorenzo, as Attorney-in-Fact of Kerr-McGee a , in its capacity as Manager of Ken-McGee Gathering LLC, a Colorado limited liability company, on behalf of such company. Witness my hand and official Seal. 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