HomeMy WebLinkAbout20063598.tiff PPlanningr4Weld Count Department
SOUTHWEST BUILDING
APR 5 2006
® ® e f100/14
kkENERGY COMPANY
P.O.BOX 467 GOLDEN, COLORADO 80402
March 24, 2006
Ms. Cheryl Jesser
City Clerk's Office
Keenesburg Town Hall
140 South Main
Keenesburg, Colorado 80643
Weld County Clerk&Recorder
P.O.Box 459
Greeley,Colorado 80632
Re:Technical Revision No.38
Change Approved Post-Mining Land Use-Partial
Keenesburg Mine
Keenesburg, Colorado
Ladies and Gentlemen:
In accordance with the rules and regulations governing coal mining and reclamation operations in
the State of Colorado,public notice and a public review period is to be provided when a
Technical Revision to an existing Permit is proposed. Coors Energy Company has submitted its
Technical Revision No. 38,requesting approval of a change in the post-mining land use for a
portion of the land at the Keenesburg Mine near Keenesburg, Colorado. This change is to
accommodate the drilling of an oil/gas well on a site within the Permit area. The change will
only impact the well site and the access corridor to the site. Notice has been placed in the
newspaper closest to the operations site(the South Weld Sun)and a copy of the proposed
Technical Revision is enclosed.
Could you please place this letter and the enclosed documents in a location where they can be
made available to members of the public who wish to review the contents. Thank you for your
assistance.
Sincerel
Donald W. MacDonald
Manager, Energy Services
enclosures /
uC.& 'C //att.) ( PL, A).
•
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*{•Gw; ; COLORADO DIVISION OF MINERALS AND GEOLOGY
r
9 e4 1313 Sherman Street,Room 215,Denver,Colorado 802Y)3,(303)866-3567
APPLICATION FORM FOR A REVISION
TO A COAL MINING AND RECLAMATION PERMIT
This form must be completed and submitted with all requests for minor revisions, as defined in Rule 1.04(73),
technical revisions, as defined in Rule 1.04(136), and permit revisions, as defined in Rule 1.04(90). All revisions
are to address the requirements of Rule 2.08.4. Three (3) copies of the revision, including maps, must be
submitted in order for it to be complete.
•
All revisions are to be formatted so they can be inserted into the permit to replace the revised sections, maps,
tables and/or figures,with a revised table of contents, if necessary. The revision submittal date should be printed
in the lower right corner of each revision page. A cover letter to the revision should explain the nature of the
revision and reference the specific permit sections being revised.
For federal mines, a copy of the revision application must be submitted to all agencies on the federal mailing list
(except OSM) at the same time the application is submitted to the Division, and proof of distribution must be
submitted to the Division along with the application. Copies of revision pages modified during the review process
must be distributed in the same manner, along with proof of distribution. Proof of distribution must be submitted
prior to implementation of the revision.
Permit No.: C- 1981 - 028 Date: 03 / 01 / 2006
Permittee: Coors Energy Company
Street: P.O. Box 467
city: Golden
State: CO Zip Code: 80402 - 0467
Brief Description of Revision: Change approved Post-Mining Land
Use - Partial
Public Notice Attached: Yes ✓ No . (Required for PRs and TRs)
Bond Increase: Yes_ No ✓ Federal Non-Federal ✓ Mine
Proposed Change in:
Permit Area - Surface Ownership-
Disturbed (+/-)— 0 .0 Acres Private Land ,(+/-)_ o . 0 Acres
Permit (+/-)_ _ o . o Acres Federal Land (+/-)_ o . 0 Acres
Affected (+1-)_ _ 0 . 0 Acres State Land +/-
( ) 0_ _ . 0_Acres
Mineral Ownership-
Mineral Private (+/-) _ 0 . Acres Mineral State (+/-)_ _ 0 Acres
Mineral Federal (+/-) _ 0 . 0 Acres
WELL SITE LOCATION
Township 3 North. Range 64 West. 6th P.M.
Section 36: NE1/4 .qr 11Er
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Access
PUBLIC NOTICE
Coors Energy Company, P.O. Box 467, Golden, CO 80402, (303) 277-
3455, has applied to the Colorado Division of Minerals and Geology
(CDMG) for a technical revision to change the approved post-mining
land use for certain portions of the presently permitted Keenesburg
Mine site. The affected land parcel will subsequently become an oil/gas
well site with access road. Coors Energy Company owns and operates
the Keenesburg Mine under the current CDMG Permit C-1981-028.
The Keenesburg Mine is located 7 miles north of Keenesburg, Colorado,
and is accessed by Weld County Road 59. The USGS 7.5-minute
quadrangle maps "Klug Ranch" and "Tampa" contain the described
operation. The permitted area is portions of Sections 25 and 36, T3N-
R64W, 6th Principal Meridian, Weld County, Colorado. A more exact
description of the permit boundary, included herein by reference, may
be found in the Permit Application Package under Legal Description.
Copies of the application may be viewed at the Town Hall, 140 S. Main,
Keenesburg, Colorado; at the Weld County Clerk and,Recorder's
Office, 1402 N. 17th Ave., Greeley, Colorado; and at the Colorado
Division of Minerals and Geology, 1313 Sherman Street,Room 215,
Denver, Colorado 80203, (303) 866-3567. Copies of the Permit
Application Package are on file at the Keenesburg Mine Site and at the
Colorado Division of Minerals and Geology.
All comments, objections, and requests must be submitted in writing to
the Colorado Division of Minerals and Geology at the above address. .
The public comment period extends for ten days following the date of
publication of this notice.
Published in The South Weld Sun (formerly the New News), on March
, 2006.
,
`' G E R R I T Y
OIL & G A S
CORPORATION
January 11, 1993
Gerrity Oil & Gas Corporation
ATTN: David W. Siple
4100 E. Mississippi Ave., #1200
Denver, CO 80222
Re: Supplemental Drilling and Division Order Title Opinion, Spike State D 36 Wells, All of
Section 36, Township 3 North, Range 64 West, 6th P.M., Weld County, Colorado
Ladies and Gentlemen:
LANDS COVERED BY OPINION
Township 3 North, Range 64 West. 6th P.M.
Section 36: All
Weld County, Colorado
TITLE DATA EXAMINED
1. A copy of my previous Drilling and Division Order Title Opinion dated September
8, 1992 (sometimes referred to as the "Prior Opinion").
2. Assignment dated September 6, 1989, effective September 1, 1989, by and
between Graig International, Inc. and Main Energy, Inc. covering the lands under search and
other lands.
3. A Farmout and Farmout Option Agreement dated July 27, 1992, by and among
Main Energy, Inc., et al. and Gerrity Oil & Gas Corporation covering the lands under search
and other lands.
4. A Farmout and Farmout Option Agreement dated September 18, 1992, by and
among James F. Richardson and Gerrity Oil & Gas Corporation covering the lands under search
and other lands.
5. Operating Agreement dated June 7, 1983, by and among Coors Energy Company
and Terra Resources, Inc., et al.
ilia) F.,,t \Ii„i„ihhi \%enuc•
Suite I!uu
Denser Cnlc,r.idu 80.222
F.i\ i) —;' 119—
TeIehhtmr ,t)i '5' 1110
;
Gerrity Oil & Gas Corporation
January 11, 1993
Page 2
TABULATION OF LEASE
FORM: Colorado State Assignment Lease Form 236-2 (Rev. 8/27/69)
Serial No. 70/7887-S
DATED: April 6, 1970
RECORDED: April 12, 1970, in Book 665, Reception No. 1587454
LESSOR: State of Colorado, acting by and through the State Board of Land
Commissioners
LESSEE: Terra Resources, Inc.
LAND
DESCRIPTION: Township 3 North. Range 64 West. 6th P.M.
Section 36: All
Weld County, Colorado
and containing 640 acres, more or less
TERM: November 20, 1973, and so long thereafter as oil and gas, or either of
them, is produced in paying quantities from said land or the Lessee is
diligently engaged in bona fide drilling or reworking operations on said
land
ROYALTY: 12.5% of the oil and gas on the basis set forth in the lease
DELAY RENTAL: During the term of the lease, Lessee is to pay Lessor an annual rental of
$320 computed at the rate of$.50 per acre or fraction thereof of the lands
covered by the lease. Rentals are to be paid on or before November 20
of each year.
DEPOSITORY: None set forth in the Lease
•
POOLING
CLAUSE: None
SPECIAL
PROVISIONS: State of Colorado oil and gas leases contain many provisions that are
unusual for leases on privately owned land and you should refer to the
lease for the nature of such special provisions.
Gerrity Oil & Gas Corporation
January 11, 1993
Page 3
OWNERSHIP
SURFACE:
State of Colorado - 100%
MINERALS. OIL AND GAS ONLY:
State of Colorado - 100%
LANDOWNER'S ROYALTY PAYABLE TO:
I
State of Colorado - 100%
WORKING INTEREST:
From the surface of the earth to the top of the "J" Sand formation
Gerrity Oil & Gas Corporation - 100%
}
As to the "J" Sand formation and as to gas and condensate only
Gerrity Oil & Gas Corporation - 100%
As to the "J" Sand formation and as to the oil and associated hydrocarbons
Gerrity Oil & Gas Corporation - 50.00000%
Marathon Oil Company - 24.37500%
Pacific Enterprises Oil Co. (U.S.A.) - 13.1257()%
James F. Richardson - 6.25000%
Main Energy, Inc. - 3.. %
Laneer Resources, Ltd. - 1 %
Graig International, Inc. - 1.093-5%
Gerrity Oil & Gas Corporation
January 11, 1993
Page 4
As to below the "J" Sand formation
Marathon Oil Company - 48.75000%
Pacific Enterprises Oil Co. (U.S.A.) - 26.25000%
James F. Richardson - 1250000%
Main Energy, Inc. - 7.50000%
Laneer Resources, Inc. - 2.8250%
Graig International, Inc. - 2.18750%
The working interest of Gerrity Oil & Gas Corporation in and to the tabulated lease is subject
to a proportionate burden of a 5% overriding royalty interest by Main Energy, Inc., et al and
James F. Richardson respectively, pursuant to the Farmout and Farmout Option Agreements
referred to in Requirement 1 below.
DIVISION OF INTERESTS FOR DIVISION ORDER PURPOSES
As to those formations from the surface of the earth to the top of the "J" Sand formation and
assuming 80-acre drilling and spacing units for production from the Codell and Niobrara
formations
State of Colorado - 0.125000000 LOR
James F. Richardson* 6.25% of 5%, or - 0.003125000 ORRI
Main Energy, Inc.* 60% of 6.25% of 5%, or - 0.001875000 ORRI
Laneer Resources, Ltd.* 22.5% of 6.25% of 5%, or - 0.000703125 ORRI
Graig International, Inc.* 17.5% of 6.25% of 5%, or - 0.000546875 ORRI
Gerrity Oil & Gas Corporation - 0.868750000 WI
1.000000000 Total
* See Requirements 1 and 2 below
I can express no opinion as to the following: railroad and/or other rights of way or
claims not reflected by the title data examined, the existence of which may be determined by a
physical inspection of the lands under search; possessory rights and discrepancies of survey or
location that might be reflected by a physical examination of the lands; zoning or other enacted
land use controls or restrictions; mechanic's liens and other statutory liens not reflected by the
data examined; bankruptcy and fraudulent conveyance laws and any other matters not disclosed
by the title data examined.
COMMENTS
1. All Comments recited in the "Prior Opinion" dated September 8, 1992 remain the
same.
Gerrity Oil & Gas Corporation
January 11, 1993
Page 5
REQUIREMENTS
1. In connection with the preparation of this Supplemental Drilling and Division
Order Title Opinion, I have reviewed a Farmout and Farmout Option Agreement dated July 27,
1992, by and among Main Energy, Inc., Graig International, Inc. and Laneer Resources, Ltd.,
on the one hand, and Gerrity Oil & Gas Corporation on the other. I have also reviewed a
Farmout and Farmout Option Agreement dated September 18, 1992, by and between James F.
Richardson, on the one hand, and Gerrity Oil & Gas Corporation on the other hand. The
overriding royalty interests tabulated above for those entities is based upon paragraph 6 and
paragraph 7 of the Farmout Agreements.
Paragraph 5 of the Farmout Agreements provides that Main Energy, Inc., et al. and
James F. Richardson, agreed to deliver an assignment to Gerrity of all of their right, title and
interest in and to the drillsite spacing unit designated by Gerrity for the wells that make up a
portion of the lands subject to the Farmout Agreements for all formations from the surface of
the earth down to the base of the Codell formation or to the base of the "J" Sandstone formation
if a "J" well is drilled.
REQUIREMENT: Upon the successful completion of the wells drilled on the
lands under search as wells capable of producing oil and/or gas in paying quantities, you
should request an assignment in writing from Main Energy, Inc., et al. and James F.
Richardson for their interests in the tabulated lease insofar as they cover the lands under
search from the surface to the appropriate depth.
2. In connection with the preparation of this Supplemental Drilling and Division
Order Title Opinion, I have also reviewed a copy of an Operating Agreement dated June 7,
1983, by and among Coors Energy Company and Terra Resources, Inc., et al. The Operating
Agreement covers oil, gas and associated hydrocarbons as to all depths from the surface to the
top of the "J" Sand and oil and associated hydrocarbons other than gas and condensate in the "J"
Sand. The Operating Agreement does not cover gas and condensate from the "J" Sand and oil,
gas and other hydrocarbons below the "J" Sand.
It is my understanding that Marathon Oil Company and Pacific Enterprises Oil Company
(U.S.A.) have each been sent AFEs for the drilling of Codell/Niobrara wells on Section 36
above described and that Gerrity Oil & Gas Corporation has not received an election to
participate by either of those entities.
Pursuant to the terms of the Operating Agreement, those entities should be considered
as Non-consenting Parties as to the drilling of the wells covered by the AFEs sent to those
parties. Further, the Operating Agreement provides that each Non-consenting Party shall be
deemed to have relinquished to the Consenting Parties and the Consenting Parties shall be
I
Gerrity Oil & Gas Corporation
January 11, 1993
Page 6
entitled to receive all of such Non-consenting Party's interest in the well and share of production
therefrom until the proceeds of the sale of such share calculated at the well, or the market value
thereof, if such share is not sold, equal the total of the following: (a) 100% of each Non-
consenting Party's share of the cost of newly acquired surface equipment beyond the wellhead
connections plus 100% of each Non-consenting Party's share of the cost of operation of the well
commencing with first production and continuing until each such Non-consenting Party's
relinquished interest shall revert to it under the provisions of the Operating Agreement; and (b)
300% of that portion of the costs and expenses of drilling, reworking, deepening, plugging back,
testing and completing and 300% of that portion of the cost of newly acquired equipment in the
well which would have been chargeable to the Non-consenting Party if it had participated.
REQUIREMENT: You should comply strictly with the terms of the Operating
Agreement with respect to the relinquished interests of Marathon Oil Company and
Pacific Enterprises Oil Company (U.S.A.). Since Marathon and Pacific Enterprises were
only sent AFEs for Codell/Niobrara wells, the relinquished interests of these companies
is limited to these formations.
3. All other requirements cited in the "Prior Opinion" dated September 8, 1992
remain the same.
REQUIREMENT: None; advisory only.
CONCLUSION
Upon satisfaction of the requirements as set forth herein and subject to the comments set
forth herein, title to the tabulated leases and lands under search should be adequate to support
drilling operations thereon and for division order purposes as of August 12, 1992, at 7:00 a.m.,
the effective date of the title updates supplied to me by Mr. Campbell.
Very truly yours,
GERRITY OIL & GAS CORPORATION
•
''2\.....c,__,I.,_ -_ \k\-,__--\ \_,\•!_-‘,------
•
Keith M. Crouch
Attorney at Law
KMC/slm
c:1wp51 Ucmc\+pacest1d36-.do.opn
• " • • - -
State of Delaware PAGE 1
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"GERRITY OIL &F GAS CORPORAT,ION", A•',,DELAWARE CORPORATION,
WITH AND�,INTOJ ,�!.1'��,P�ATINA ''OIL'& GAS,"CORPORATION" UNDER THE NAME
OF "PATINA OIL 7& GAS CORPORATION", 7A^YnCORPORATION, ORGANIZED AND
.� % e ;1
I'r '•h'• ; •:7 .1 " '��tv, h\ ek e.
EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED
,47` ..+'.,.,, / ,.n�,.n. "4-4-- .41 �..m, \',i' '"' x�,
AND FILED IN THIS g :OFFICE THE" TWENTY-SIXTH;`DAY 'OF MARCH, A.D.
% •, • :a+, •45 i• r+T,A •.....:21:6:....—i+/.tea 9 �r„1,'`v :,S ;�
1997, AT 4 : 30 O' CLOCK;,P.M. •• '•'% •s :, • ,r.• y
h :: 1. :`y '1'fit'! ';.b.j "
.1 tt \.��lu dj.—. ;.X5.3,
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n ,r�� ;v144/114.,{A-//
e'
''� Edward J.Freel,Secretary of State
AUTHENTICATION:
2582358 8100M 8400685
DATE:
04-01-97
971106058
.. ... Delaware
PAGE 1
The First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF MERGER, WHICH MERGES:
"PATINA OIL & GAS CORPORATION", A DELAWARE CORPORATION,
WITH AND INTO "NOBLE ENERGY PRODUCTION, INC. " UNDER THE NAME
OF "NOBLE ENERGY PRODUCTION, INC. ", A CORPORATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED
AND FILED IN THIS OFFICE THE SIXTEENTH DAY OF MAY, A.D. 2005, AT
4:09 O 'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS.
Harriet Smith Windsor,Secreary of State
3897024 8100M AUTHENTICATION: 3882670
050398177 DATE: 05-16-05
• State of Delaware
Secretary of State
Division of Corporations
Delivered 04:09 PM 05/I6/2005
=LED 04:09 PM 05/16/2005
SW 050398177 - 3897024 FIZZ
I
I
CERTIFICATE OF MERGER
OF
PATINA OIL & GAS CORPORATION
WITH AND INTO
NOBLE ENERGY PRODUCTION, INC.
UNDER SECTION 251 OF THE
GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Pursuant to Section 251(c)of the General Corporation Law of the State of
Delaware(the"DGCL"),Noble Energy Production, Inc. ("NEPI"),a Delaware
corporation,hereby certifies the following information relating to the merger(the
"Merger")of Patina Oil &Gas Corporation,a Delaware corporation("Patina") with and
into NEPI.
1. The name and state of incorporation of each of the constituent
corporations in the Merger(the"Constituent Corporations') is as follows:
Name State of Incorporation
Noble Energy Production,Inc. Delaware
Patina Oil & Gas Corporation Delaware
2. The Agreement and Plan of Merger(the"Merger Agreement") dated as
of December 15,2004, by and among Noble Energy, Inc.,a Delaware corporation
("Noble Energy"),NEPI, a wholly owned subsidiary of Noble Energy,and Patina,setting
forth the terms and conditions of the Merger,has been approved, adopted,certified,
executed and acknowledged by each of the Constituent Corporations in accordance with
Section 251 of the DGCL.
3. The name of the corporation surviving the Merger is Noble Energy
Production, Inc. (the"Surviving Corporation").
4 The certificate of incorporation of the Surviving Corporation shall be
its certificate of incorporation.
•
5. The executed Merger Agreement is on file at the principal place of
business of the Surviving Corporation at the following address:
Noble Energy Production,Inc.
100 Glenborough,Suite 100
Houston,Texas 77067-3610 i
Attention: General Counsel
6. A copy of the Merger Agreement will be furnished by the Surviving
Corporation,on request and without cost,to any stockholder of either of the Constituent
Corporations.
This Certificate of Merger has been executed on this 16th day of May,
2005.
NOBLE ENERGY PRODUCTION, INC.
By; /s/Charles D.Davidson
Name: Charles D.Davidson
Title: President
[Remainder of Page Intentionally Left Blank)
T ` 219i2
• , RR.. .
Record,,d et_.. —__.._.ncic�k... .........M. / .� V r� .a A .
Form 236-2
Re.. 8/27/691 117br�-jJ� //
Rec. N1 _� �_�_nnn Spomer, RecordM
1.- COLORADO OIL AND GAS LEASE
ASSIGNMENT LEASE No. OG ,?' '�'C't.I "'
O-• Full Assignment from Lease No. 6ii001-S
to
Assignor: _GRA, Inc_
THIS LEASE AGREEMENT, Dated this. . . 6 0.1 . •day of. APO-1 A.D. 19.7.Q. .,
co made and entered into by and between the STATE OF COLORADO, acting by and through the STATE BOARD OF
to
T—{ LAND COMMISSIONERS, party of the first part and hereinafter called the "lessor", and . .. .... .
TER1;A. REST.:IURCES, INC. . a Delaware corporation .
eir 1410 Four Ill Nat.ioua1 Bank Building, Tulsa, . uklahoma 74.119 . ... .. ..... . . . . .
party of the second part, hereinafter called the "lessee":
N
W ITNESSETII
O THAT WHEREAS, There has been filed in the office of the lessor a request for an assignment lease covering acre-
age formerly included in Colorado Oil and Gas Lease No.. 68/6001—S , and
O WHEREAS, All of the regulations relative to issuance of assignment leases have been complied with and said as-
signment has been allowed by the State Board of Land Commissioners:
THEREFORE, For and in consideration of the premises, as well as the payment of rentals hereinafter provided for,
and of the covenants and agreements hereinafter contained, on the part of the lessee to be paid, kept and performed,
the said lessor has granted and demised, leased and let, and by these presents does grant, demise, lease and let exclu-
sively unto the said lessee for the sole and only purpose of exploration, development 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 the lessor under the terms of this lease, together with rights of way, easements and servitudes for
pipe lines, telephone and telegraph lines, tanks and fixtures for producing and caring for such products, and housing and
boarding employees, and any and all rights and privileges necessary for the economical operation of said land for oil and
gas, with right to the use of all otherwise unappropriated water from said lands, but not from lessor's water wells or
reservoirs, and with the right of removing either during or within six (6) months after the term hereof, all and any im-
provements placed or erected on the premises by the lessee, including the right to pull all casing, subject, however, to the
conditions hereinafter set out, 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
All 36 3-North 64-West
•
Surface Patents. None
Land Fund• Sie.hgo.l
containing 64.Q...QQ.... .acres, more or less.
TO HAVE AND TO HOLD Said land, and all the rights and privileges granted hereunder, to and into the lessee
to date of . November 20, 1973 , and so long thereafter as oil and gas, or either of them, is produced In pay-
ing quantities from said land or the lessee is diligently engaged in bona fide drilling or reworking operations on said
land. Drilling or reworking operations shall be deemed to be diligently performed if there is no delay or cessation therof
for a greater period than thirty (30) consecutive days unless an extension in writing is granted by lessor. Provided that
such drilling or reworking operations are commenced during the term of this lease 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 imme-
diately upon cessation of production for the purpose of re-establishing the same, and provided further that such pro-
duction is commenced during the term of this lease or any extension thereof, or while this lease is in force by reason of
such drilling or reworking operations or other production.
In consideration of the premises, the parties covenant and agree as follows:
1. During the term of this lease, lessee shall pay to lessor an annual rental of $ 320.00 , computed at
the rate of $. ... 0.SO , •, . per acre or fraction thereof of the lands covered hereby. In the event that this lease Is
extended for an additional term as provided in Paragraph ij-hereof, lessee shall during said extended period pay to the
lessor an annual rental at double the rate above specified for the lands covered hereby. Extension of the term of this
lease solely by discovery and production of oil or gas as In the preceding paragraph provided, shall not operate to increase
the rentals payable under this paragraph; that. is to say, the rental in effect at the time of discovery and production
shall not be increased by reason of extension of the term of this lease by reason only of such production, but annual
rentals in such amount shall be paid (luring the remaining life of this lease. The rentals as above provided shall be paid
annually in advance on or before each November 20 •
2. Except for oil and gas used on the leased premises for development and production or that unavoidably lost, the
lessee shall pay the lessor as royalty, in addition to the rentals provided in this lease, the following:
(a) On oil, one-eighth of the oil produced and saved from the leased premises
At the option of the lessor, lessor may take its royalty oil in kind, In which event lessee shall deliver
such royalty oil to lessor on the leased premises, free of cost or deduction, into the pipe lines 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 the tanks.
BOOK 665 F 15b7454 3.-g.
When paid in cash, the royalty shall be calculated upon the reasonable market value of the oil nt the
well which shall not be deemed to be less than the price actually paid or agreed to be paid to the 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 n posted pr ice 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 casinghead gas or other gaseous substance, one-eighth of the reasonable amuket value at
the well or of the price received by lessee at the well, whichever Is greater• of all gas produced from the
leased premises and sold or utilized by lessee Where gas is sold under a contract that has been approved
by lessor, the reasonable market value of such gas for determining the royalties payable hereunder shall be
the price at which such gas is sold under such contract; provided, however, that no approval by lessor of the
terms of any such agreement shall operate to make lessor a party thereto or obligate IL in any way except
as herein provided, and lessee agrees to save lessor harmless from any such obligation
(c) All costs of marketing the oil and/or gas produced shall he borne by the lessee and such costs shall not
directly or Indirectly reduce the royalty payments to the lessor.
3. Lessee agrees to make a monthly production report of the production on the leased premises covering the preced-
ing month, which report shall be filed with lessor on or before the last day of each month, and shall be accompanied
by full settlement for all royalties clue the lessor for such preceding month under this lease; lessee further agrees to
keep and to have In possession, books and records showing the production and disposition of all oil and gas produced
from the leased premises and to permit the lessor or its agents, at all reasonable hours, to examine the same. Royalties
due under this lease shall be calculated on actual tankage measurements, unless the sane are shown to be incorrect, or
a more accurate means of measurement Is provided.
4. The lessee may at any thne, by paying to the State of Colorado, acting by its State Board of Land Commissioners,
all amounts then due as provided herein, surrender and cancel this lease insofar as the same covers all or any pot lion of
the lands herein leased and be relieved from further obligations or liability hereunder with respect to the lands so
surrendered; provided that no partial surrender or cancellation of this lease shall be for less than contiguous tracts of
approximately forty (40) acres or Governmental lot corresponding to a quarter-quarter section; provided further that
this surrender clause and the option herein reserved to the lessee shall cease and become absolutely inoperative imme-
diately and concurrently with the institution of any suit in any court of law by the lessee, lessor, or any assignee of either,
to enforce this lease or any of its terms express or implied, but in no case shall surrender be effective until lessee shall
have made full provision for conservation of the minerals and protection of the surface rights of the leased premises.
5. All payments due hereunder shall he made on or before the day such payment is due, and this lease shall not be
in effect until lessor has received for the initial rental, the cash or cash proceeds of any checks therefor regardless of
the date of this lease. Nothing in this paragraph shall be construed to extend the expiration of the primary term hereof
beyond five (5) years from the date hereof.
6. The lessee, with the written consent of the lessor, shall have the right to assign this lease as to the entire lease-
hold interest of such lessee in all or part of the lands covered hereby, not less, however, than contiguous tracts of ap-
proximately forty (40) acres or Governmental lot corresponding to a quarter-quarter section for any partial assignment,
and for approval of such assignment the lessor may make nn assignment charge in the amount set forth in the current
regulations issued by the Board. No assignment of undivided interests or retention or reservation of overriding royalties
will be recognized or approved by lessor; and the effect, if any, of any such assignments or reservations will be strictly
and only as between the parties thereto, and outside the terms of this lease, and no dispute between parties to any such
assignment or reservation shall operate to relieve the lessee from performance of any terms or conditions hereof or to
postpone the time therefor. Lessor will and shall at all times he entitled to look solely to the 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 perform-
ance of all terms and conditions hereof. If any assignment of a portion of the lands covered hereby shall be approved, a
new lease shall be issued to the assignee covering the assigned lands, containing the same terms and conditions as tills
lease, and limited as to term as this lease is limited, and the assignor shall be released and discharged from nil further
obligations and liabilities, and shall be held to have released all rights and benefits thereafter accruing with respect to
the assigned land, as if the same had never been a part of the subject matter of this lease Although not binding on
the State Board of Land Commissioners as heretofore stated, all instruments of every kind and nature whatsoever
affecting this lease should be filed In the records of the Mineral Department of the State Land Board.
7.
(a) Lessee agrees to reasonably protect the leased premises from drainage by offset wells located on adjoining
lands not owned by lessor, when such drainage is not reasonably compensated for by counter-drainage. It
shall be presumed, for the purpose of this lease, that the production of oil and gas from offset wells results
in drainage from the leased premises, 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 leased premises would not accomplish the purposes of protecting the de-
posits under leased premises. The Board's decision as to the existence of such drainage shall be final, and
lessee shall comply with the Board's order thereon or, in lieu thereof, surrender this lease as to any such
undeveloped acreage as designated by the Board.
(b) Upon discovery of oil and gas on the leased lands, lessee shall with reasonable diligence proceed to develop
said premises at a rate and to an extent commensurate with the economic development of the field In which
the leased lands lie.
(c) The terms and conditions of this Paragraph 7 and of this lease shall be performed and exercised subject to
all laws, regulations, orders, local ordinances or resolutions applicable to and binding upon the administra-
tion of grant lands owned by Lhe State of Colorado.
(d) In the event lessor permits any of the lands herein leased to be included within a unitization agreement, the
terms of this lease and the operation of this Paragraph 7 shall be deemed to be modified to conform to such
unitization agreement. When only a portion of the lands under this lease is committed to a unit, the lessor
may segregate the lands and issue a separate lease for each portion and the terms of the lease on that
portion included in the unit shall be deemed to be modified to conform to such unit agreement.
8. Lessee shall, subject to applicable laws, regulations and orders binding upon the administration of State lands,
operate and produce all wells upon the leased premises so long as the same are carable 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 therefor, and except for such limitations on or suspensions of production as may be approved in writ-
ing by lessor. If lessee shall complete a well on the leased lands productive of gas only and lessee is unable to produce
such gas due to lack of suitable market therefor, lessor may grant lessee suspension of his obligations to produce here-
under until a suitable market for such gas can he found and during any such suspension period, it shall be deemed that
gas is being produced hereunder in paying quantities.
nor
9. The lessee agrees to notif;, ,e lessor of the location of each well before c .nencing drilling thereon. No expiora-
f
lion, drilling or production operation, including permanent installations, shall be within 200 feet of any building or other
improvements, 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 (tilled. Lessee, within thirty (30) days after the completion or abandonment of any
well drilled hereunder, shall file in the office of the State Board of Land Commissioners, at Denver, Colorado, 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 Lest 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 in-
formation will be satisfied by the filing, with the Oil and Gas Conservation Commission, of copies of such reports as is
required by Paragraph 15 hereof.
10. Lessee shall be liable and agrees to pay for all damages to the surface of the land, livestock, growing crops,
water wells, reservoirs, or improvements caused by lessee's operations on said lands It is agreed and understood that
no operations shall be commenced on the lands hereinabove described unless and until the lessee or his assignee shall
have filed a good and sufficient bond with the lessor in an amount to be fixed by lessor, to secure the payment for such
damage to the surface of the land, livestock, growing crops, water or improvements as may be caused by lessee or his
assignee's operations of said lands and also compliance with all the provisions, conditions, covenants and obligations of
this lease and the statutes of the State of Colorado, and rules and regulations thereto appertaining When requested by
lessor, lessee shall bury pipe lines below plow depth. Lessee shall set and cement sufficient surface casing to protect
the fresh water wells of the area.
11. The lessee shall not remove any machinery or fixtures placed on said premises, other than drilling equipment,
nor draw the casing from any well unless and until all payments and obligations currently due the lessor under the
terms of this agreement shall have been paid or satisfied.
12. Should lessee discover any valuable products other than oil, gas, gasoline, casinghead gas or other hydrocarbons
on or within the leased premises, lessee shall within seven (7) days report such discovery to lessor, and lessee shall
have no right thereto because of such discovery; provided, that the terms—oil, gas, or gasoline—shall not be deemed
to include any substance over which the United States Government assumes exclusive control.
13. If lessee shall initiate or establish any water right for the leased premises, the point of surface diversion or
ground water withdrawal of which is on the lensed premises, such right. shall, if the surface rights of said premises are
owned by lessor, become property of lessor, without cost, at the termination of the lease.
14. Upon failure or default of the lessee, or any assignee, to comply with any of the provisions or covenants hereof,
the lessor is hereby authorized to cancel this lease and such cancellation shall extend to and include all rights hereunder
as to the whole of the tract so claimed, or possessed, by the lessee or assignee so defaulting. but shall not extend to nor
affect the rights of any lessee or approved assignee claiming lands segregated by assignment from this lease; provided,
that in the event of any such default or failure to comply with any of the terms and conditions hereof, lessor shall, before
any such cancellation shall be made, send by certified mall to the lessee or assignee so defaulting, to the postoffice ad-
dress of said lessee or assignee, as shown by the records of lessor, a notice of intention to cancel for such default, spec-
ifying the same, and if within thirty (30) days from the date of mailing said notice, the said lessee or assignee shall have
paid all rents or royalties in default, and shall have begun in good faith to correct such other default as may have been
specified, and shall thereafter diligently prosecute the correction of such default, there shall not be a cancellation there-
for. If such default is not corrected, or correction thereof is not begun in good faith as hereinabove required, within
thirty (30) days after the mailing of such notice, this lease will terminate and be cancelled by operation of this para-
graph without further action by lessor, or further notice to lessee
15. If the lessee shall have failed to make a discovery of oil and gas or either of them in paying quantities during
the term hereof, or during drilling operations commenced during the term hereof, the lessee mny make written applica-
tion to lessor to extend this lease for an additional Lerm of five years as to all of the lands coyered hereby (excluding any
lands theretofore surrendered as in Paragraph 4 provided, or assigned as in Parnginph 6 provided) and the making of
such extension shall be at the option of lessor. In no instance'will this lease be permitted to exist nor be extended
beyond the term of the base lease from which it was issued except by special order of the Board.
16. Lessee will comply with all statutory requirements, and all rules and regulations of the Oil and Gas Conservation
Commission of Colorado applicable to the administration of State owned lands, or to the development and production
of oil and gas thereon, and will furnish to the Oil and Gas Conservation Commission extra copies of all reports of any
kind or nature that are required by said laws, rules and regulations to be furnished to the said Oil and Gas Conserva-
tion Commission of Colorado.
17. "Paying quantities" as used herein shall mean and refer to quantities of oil and gas or of either of them suffi-
cient to pay for the current cost of producing same.
18. If lessor owns a lesser interest in the oil and gas deposits of the above described land than the entire and un-
divided fee simple estate, then the royalties and rcintaJs herein provided shall be paid the lessor only in the proportion
which its Interest bears to the whole and undivided fee.
19. The benefits and obligations of this lease shall inure to and be binding upon the heirs, legal representatives,
successors or assigns of the lessee; but no sub-lease or assignment hereof, or of any interest herein, shall be binding
upon lessor until the same has been approved by it ats provided for in Paragraph 6 hereof.
IN WITNESS WHEREOF, The party of the first part has hereunto signed and caused its name to be signed by the
STATE BOARD OF LAND COMMISSIONERS, with the seal of the office affixed, and the lessee has signed this agree-
ment, the day and year first above written. , I v •,
' I r •' `- 0% ......... ..
,i STA E BOA4 Oi+ LAND COMMIS LONERS
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Recom ;' tor -
BY
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