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Home My WebLink About920116.tiff AR2277918 RESOLUTION RE: APPROVE RATIFICATION OF OIL AND GAS LEASE WITH ALBERTA PETROLEUM, INC. AND AUTHORIZE CHAIRMAN TO SIGN WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to Colorado statute and the Weld County Home Rule Charter, is vested with the authority of administering the affairs of Weld County, Colorado, and M O WHEREAS, Weld County, Colorado, has received a Ratification of Oil and Gas o o Lease with Alberta Petroleum, Inc. , and 0 r 0 WHEREAS, said Ratification of Oil and Gas Lease covers land more particularly described as follows: oW S Township 6 North, Range 66 West, 6th P.M. o w Section 26: SW} Weld County, Colorado O WHEREAS, by Resolution on December 6, 1982, the Board of County a, x Commissioners did approve the lease of said parcel to Alberta Petroleum, Inc. , .. 0 said lease being recorded in Book 984 at Reception No. 1912103, and v. —Ix N a WHEREAS, in order to receive said royalty interest, Weld County must a) 0 execute said Ratification of Oil and Gas Lease, a copy of which is attached (-.1z hereto and incorporated herein by reference, and i H O H O U7 a WHEREAS, said Ratification of Oil and Gas Lease has been reviewed by a m a member of the Weld County Attorney's staff and found to be in order, and .1 W 0144 r NZ WHEREAS, the Board deems it advisable to approve said Ratification of Oil No < and Gas Lease on the parcel of land described herein. >4 U W C NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld N County, Colorado, that the Ratification of Oil and Gas Lease to Albert Petroleum, M C71Inc. on the hereinabove described parcel of land be, and hereby is, approved. 4444 BE IT FURTHER RESOLVED by the Board that the Chairman be, and hereby is, authorized to sign said Ratification of Oil and Gas Lease. 920116 LE000 cc, ��► ��kn � r� et-613)02i , oJ RATIFICATION OF OIL & GAS LEASE PAGE 2 M 0 The above and foregoing Resolution was, on motion duly made and seconded, o adopted by the following vote onthe 10th day of February, A.D. , 1992. N U BOARD OF COUNTY COMMISSIONERS ATTEST: WELD COUNTY, COLORADO o 3 Weld County Cle_rk ,to the Board a � o a � Geor e Kennelly, Chairman 4414 W BY: 'w✓1 's . , /. ( ' �i.'?'.r�—.'">"�a"�`_`'`Y De a er4the Board Constance L. Harbert, Pro-Tem U N APPROVED A$ 1 -F0 ' ; y C. W. Kir /((7frU/�U1-- W a County Attorney Gor a y /�A/ H H.t� /A sd --�-- F W. H. Webst o % w W rn [� r r 2 Nz N ICC O c4 a W rh N 0\ M CI -1 HI M W 920116 FORM T3 F 7. 7 r. 1+: 1 RATIFICATION OF OIL AND GA 1,EASE CLEF TO THE BO IT: KNOW ALL MEN BY THESE PRESENTS: THAT,WHEREAS,Heretofore under date of the_ ar—day of NOVEMBER ,19 87,a certain oil and gas lease was made,executed,and delivered by WELD COUNTY, COLORADO, a political subdivision of the State of Colorado , acting by and through the Board of County Commissioners as Lessor_,to_ ALBERTA PRTROLRTTM TNf as Lessee,covering the following-described lands in WELD County,State of COLOR ADO ,to-wit: TOWNSHIP 6 NORTH, RANGE 66 WEST OF THE 6th P.M. Section 26 : southwest quarter (SW4) B 1325 REC 02277918 02/12/92 14 : 29 $0 . 00 3/003 F 1994 MARY ANN FEUERSTEIN CLERK & RECORDER WELD CO, CO Reception No. 1912103 said lease being recorded in Book 984 at K ___________—of the records in the office of the Register of Deeds in and for said County,reference to said lease and to the record thereof being hereby made for all purposes. NOW,THEREFORE, In consideration of the sum of One Dollar ($1.00) and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged,we,the undersigned,and each for himself and herself,as the case may be, do hereby ratify,adopt and confirm the hereinabove-described oil and gas lease in all of its terms and provisions and do hereby lease, demise and let said land and premises unto the said lessee hereinabove-named,his assigns and successors in interest,as fully and completely as if we had originally been named as lessor in said lease and had executed,acknowledged and delivered the same;provided,however, that this instrument shall cover and bind all interest of the undersigned which may have been acquired subsequent to the date of the aforesaid oil and gas lease and is intended further to cover and bind any interest which the undersigned may hereafter acquire by way of reversion or otherwise. It being provided further that the undersigned shall not be entitled to receive any portion of the rentals payable under said lease but such rentals shall be paid to the persons designated to receive such rentals in accordance with the terms and provisions of said oil and gas lease and their heirs,legal representatives,successors or assigns. We hereby agree and declare that said oil and gas lease in all of its terms and provisions is binding on us and each of us and is a valid and subsisting oil and gas lease and that this instrument shall be binding upon the respective heirs,executors,administrators, successors or assigns of the undersigned. EXZL' TED This 10TTHH day oof- FEBRUARY ,19 92 . ATTEST: / �Gd BY'WELD D"EPUT OCNE KCTO T E B1Ah�≥ WEP.L GE KEN DY, COUNTY8BOARD OF COMMISSIONERS 02/10/92 GREED CO 80632 84-6000813 STATE OF ss. ACKNOWLEDGMENT FOR INDIVIDUAL (Kans. Okla. and Colo.) COUNTY OF Before me, the undersigned, a Notary Public, within and for said County and State, on this day of , 19 , personally appeared and to me personally known to be the identical person—who executed the within and foregoing instrument and acknowledged to me that executed the same as free and voluntary act and deed for the uses and purposes therein set forth. IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year last above written. My commission expires Notary Public STATE OF ACKNOWLEDGMENT FOR CORPORATION COUNTY OF Be it remembered that on this day of , 19 , before me, the undersigned, a Notary Public, duly commissioned, in and for the county and state aforesaid, came president of a corporation of the State of personally known to me to be such officer, and to be the same person who executed as such officer the foregoing instrument of writing in behalf of said corporation, and he duly ac- knowledged the execution of the same for himself and for said corporation for the uses and purposes therein set forth. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year last above written. My commission expires Notary Public 920116 L Boor o WILLIAM M. FOSTER ATTORNEY AT LAW 6093 SOUTH QUEBEC SUITE 202 ENGLEWOOD. COLORADO 801114544 1303) 721.0495 January 8, 1992 Permian Operating Limited Partnership P.O. Box 1183 Houston, TX 77251-1183 Francis Energy, Inc. 1220 Eleventh Avenue, Suite 203 Greeley, CO 80631 Attn: Mr. Nicholas D. Francis Re: Payne No. 2-26 Well Permian Lease No. 75099 Irving No. 1-26 and Edith No. 1-26 Wells Permian Lease No. 76034 Rusty No. 1-26 Well Weld County, Colorado DIVISION ORDER TITLE OPINION Gentlemen: At your request I have examined the data described below. My Division Order Title Opinion as to the land described below follows: LAND DESCRIPTION Township 6 North. Range 66 West, 6th P.M. Section 26: SW% 92,0116 Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 2 DATA EXAMINED 1 . Acquisition and Drilling Title Opinion dated September 16, 1991, covering the subject lands, prepared by the undersigned and based upon an examination of abstracts of title and other material certified from inception of title to September 3, 1991, at 7:00 a.m. 2. Copies of all recorded instruments affecting title to the subject lands from the records of the Clerk and Recorder of Weld County, Colorado, for the period from September 3, 1991, at 7:00 a.m. , to December 13, 1991, at 7:00 a.m. , furnished by Colorado Land Services. 3. Copy of a Certificate of Acreage Calculations covering the subject lands dated December 2, 1991, prepared by Billy G. Holloway, Registered Land Surveyor. PATENTS 1. The EkSWk of Section 26, Township 6 North, Range 66 West, 6th P.M. , was conveyed to Andrew J. Wadlia by a United States Patent dated November 15, 1873. 2. The WkSW3/4 of Section 26, Township 6 North, Range 66 West, 6th P.M. , was conveyed to Jennie M. Gladston by a United States Patent dated November 16, 1895. FEE TITLE OWNERSHIP Tract 1 Township 6 North. Range 66 West. 6th P.M. Section 26: A 60-foot strip of land in the SE%SW%, the centerline of which is described as follows: Beginning 1,937 feet South 44° 30' East of the W. corner of Section 26, thence South 530 feet to the old county road, and, Another 60-foot strip of land in the SE%SW%, the centerline of which is described as follows: Beginning at a point 1,937 feet South 44° 30' East and 231 feet South of the W; corner of Section 26, thence North 72° 15' East 275 feet to the old county road. 920116 Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 3 Surface and Minerals: Weld County, Colorado All Oil and Gas Leasehold All Estate: FEI-1991 Joint Venture Overriding Royalty: Adam C. Buna 1/3 of 9.5% Nicholas D. Francis 1/3 of 9.5% Robert L. Childers 1/3 of 9.5% Tract 2 Township 6 North, Range 66 West, 6th P.M. Section 26: SE%SW%, less Tract 1 above Surface and Minerals: Irving Payne and Edith Payne,(Except oil and gas) as tenants in common All Oil and Gas: Payne Inc. , a Colorado corporation All • Oil and Gas Leasehold All Estate: FEI-1991 Joint Venture Overriding Royalty: Adam C. Buna 1% Nicholas D. Francis 1% Robert L. Childers 1% Tract 3 Township 6 North. Range 66 West, 6th P.M. Section 26: NESSWk Surface and Minerals: Irving Payne and Edith Payne, All (Except oil and gas) as tenants in common Oil and Gas: Payne Inc. , a Colorado corporation All Oil and Gas Leasehold All Estate: FEI-Payne Joint Venture Overriding Royalty: Adam C. Buna 1% Nicholas D. Francis 1% Robert L. Childers 1% Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 4 Tract 4 Township 6 North. Range 66 West. 6th P.M. Section 26: W4SW1/4 Surface and Minerals: Irving Payne and Edith Payne,(Except oil and gas) as tenants in common All Oil and Gas: Payne Inc. , a Colorado corporation All Oil and Gas Leasehold All Estate: FEI-1991 Joint Venture Overriding Royalty: Adam C. Buna 1% Nicholas D. Francis 1% Robert L. Childers 1% TAXES Colorado Land Services advised that the records in the office of the Treasurer of Weld County, Colorado, reflect that the taxes assessed against the subject lands are paid for 1990 and all prior years. ENCUMBRANCES Huck Associates, Inc. , recorded a Statement of Lien on August 23, 1983, in Book 1005 under Reception No. 1937961 of the records of Weld County, Colorado, for services performed and materials supplied to KCF Oil , Inc. , on the Payne No. 2-26 Well in the amount of $1,467.00. Since foreclosure proceedings of this lien was not commenced within six months after the date that the Statement of Lien was recorded, the lien has expired and may be safely disregarded. EASEMENTS AND RIGHTS-OF-WAY 1. Weld County, Colorado, apparently acquired rights-of-way for the "old county road" mentioned in the description of Tract 1 above prior to the time that the homestead patents covering the subject lands were issued. These rights-of- way would not affect the mineral estate in the subject lands. Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 5 2. Frank S. Smith conveyed a 14-foot right-of-way for an access road along the West side of the E%SW; of Section 26, Township 6 North, Range 66 West, 6th P.M. , to George Emerson by an instrument dated December 5, 1922, and recorded in Book 622 at Page 571 of the records of Weld County, Colorado. 3. Irving Payne conveyed a 30-foot easement for a water pipeline across the subject lands to the North Weld County Water District by an instrument dated August 31, 1966, and recorded in Book 573 under Reception No. 1494710 of the records of Weld County, Colorado. 4. Irving Payne and Edith Payne conveyed a pipeline easement across the subject lands to Associated Natural Gas, Inc. , by an instrument dated March 28, 1983, and recorded in Book 992 under Reception No. 1922061 of the records of Weld County, Colorado. 5. Irving Payne and Edith Payne conveyed another pipeline easement across the subject lands to Northern Natural Gas Company by an instrument dated June 2, 1983, and recorded in Book 1003 under Reception No. 1935179 of the records of Weld County, Colorado. OIL AND GAS LEASES Lease A Date: September 3, 1982 Form: Not shown Lessor: Payne Inc. , a Colorado corporation Lessee: Alliance Energy Company Land Description: Township 6 North. Range 66 West, 6th P.M. Section 26: SW; Containing 160 acres, more or less Term: Six months and as long thereafter as oil or gas is produced Royalty: 20% for oil and gas, plus a 1% overriding royalty until November 1, 1991, and a total of 19% for oil and gas after November 1, 1991, pursuant to an Amendment of Oil and Gas Lease dated October 3, 1991, and recorded in Book 1313 under Reception No. 2265552 and a Stipulation of Interests dated November 22, 1991, and recorded Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 6 in Book 1318 under Reception No. 2270100 of the records of Weld County, Colorado. Shut-In Gas Well Royalty: An amount equal to the delay rental , payable annually Delay Rental : None Depository: None Lesser Interest Clause: Yes Pooling Clause: Yes Entireties Clause: No Special Provisions: The lease is subject to an unrecorded Supplemental Agreement dated September 3, 1982, with special provisions for surface operations, royalty, and the primary term of the lease, and the lease contains a provision that copies of assignments of the Lessee's interest shall be furnished to the Lessor, and subject further to a Receipt, Surface Use and Damage Agreement dated October 1, 1991, and recorded in Book 1313 under Reception No. 2265553 of the records of Weld County, Colorado, providing for surface damages and operations on the subject lands. Recorded: November 4, 1982, in Book 981 under Reception No. 1908131 of the records of Weld County, Colorado Lease B Date: November 21, 1982 Form: The lease is a special form prepared for Weld County Lessor: Weld County, Colorado, acting by and through the Board of County Commissioners Lessee: Alberta Petroleum, Inc. each Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 7 Land Description: Township 6 North. Range 66 West. 6th P.M. Section 26: SW% Containing 7 acres, more or less Term: Three years and as long thereafter as oil or gas is produced Royalty: 1/8 for oil and gas Shut-In Gas Well Royalty: $100.00 per well per year Rental : $7.00 per year Depository: Board of County Commissioners Weld County Centennial Center 915 Tenth Street Greeley, CO 80631 Lesser Interest Clause: Yes Pooling Clause: Yes, not to exceed 40 acres for oil or 640 acres for gas, or any larger unit prescribed by governmental authorities having jurisdiction. Entireties Clause: No Special Provisions: No operations shall be conducted on the leased premises without the written consent of the Lessor. Recorded: December 21, 1982, in Book 984 under Reception No. 1912103 of the records of Weld County, Colorado ASSIGNMENTS 1. Alliance Energy Company assigned all of its right, title, and interest in Lease A to Alberta Petroleum, Inc. , by an assignment dated September 7, 1982, and recorded November 4, 1982, in Book 981 under Reception No. 1908132 of the records of Weld County, Colorado. 2. Alberta Petroleum, Inc. , assigned an undivided 77.5% interest in Lease B to Joe Kerst, reserving a 10% overriding royalty interest, by an assignment dated December 15, 1982, and recorded December 17, 1982, in Book 984 under Reception No. 1911866 of the records of Weld County, Colorado. Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 8 3. Joe Kerst assigned an undivided 70% interest in Lease B to Jim Clifton by an assignment dated December 16, 1982, and recorded December 17, 1982, in Book . 984 under Reception No. 1911867 of the records of Weld County, Colorado. 4. Alberta Petroleum, Inc. , assigned an undivided 77.5% interest in Lease A to Joe E. Kerst, reserving a 2.5% overriding royalty interest, by an assignment dated December 2, 1982, and recorded December 17, 1982, in Book 984 under Reception No. 1911868 of the records of Weld County, Colorado. 5. Joe Kerst assigned an undivided 70% interest in Lease A to Jim Clifton by an assignment dated December 3, 1982, and recorded December 17, 1982, in Book 904 under Reception No. 1911869 of the records of Weld County, Colorado. 6. Alberta Petroleum, Inc. , assigned all of its right, title, and interest in Leases A and B to Alpine Energy, Inc. , by a "Royalty Deed" dated January 31, 1983, and recorded February 1, 1983, in Book 987 under Reception No. 1916127 of the records of Weld County, Colorado. 7. Jimmy D. Clifton a/k/a Jim Clifton assigned an undivided 70% interest in Lease A to KCF Oil , Inc. , by an assignment dated February 20, 1983, and recorded March 4, 1983, in Book 990 under Reception No. 1919346 of the records of Weld County, Colorado. 8. Jimmy D. Clifton a/k/a Jim Clifton assigned an undivided 70% interest in Lease B to KCF Oil , Inc. , by an assignment dated February 20, 1983, and recorded March 4, 1983, in Book 990 under Reception No. 1919347 of the records of Weld County, Colorado. 9. Joe Kerst assigned an undivided 7.5% interest in Lease A to KCF Oil , Inc. , by an assignment dated February 20, 1983, and recorded March 4, 1983, in Book 990 under Reception No. 1919348 of the records of Weld County, Colorado. 10. Joe Kerst assigned an undivided 7.5% interest in Lease B to KCF Oil , Inc. , by an assignment dated February 20, 1983, and recorded March 4, 1983, in Book 990 under Reception No. 1919349 of the records of Weld County, Colorado. 11. Alpine Energy, Inc. , assigned all of its right, title, and interest in Leases A and B to Francis Energy, Inc. , by a Conveyance, Assignment, and Bill of Sale dated August 1, 1991, effective at 12:01 a.m. , Mountain Time, and recorded September 4, 1991, in Book 1310 under Reception No. 2261951 of the records of Weld County, Colorado. 12. KCF Oil , Inc. , assigned all of its right, title, and interest in Leases A and B to Francis Energy, Inc. , by a Conveyance, Assignment, and Bill of Sale dated September 18, 1991, effective August 1, 1991, at 12:01 a.m. , Mountain Time, and recorded September 18, 1991, in Book 1311 under Reception No. 2263490 of the records of Weld County, Colorado. S , O113 Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 9 13. Francis Energy, Inc. , assigned all of its right, title, and interest in Leases A and B to FEI-Payne Joint Venture, reserving a 22% overriding royalty interest inclusive of all leasehold burdens, by an assignment dated November 26, 1991, effective August 1, 1991, at 12:01 a.m. , Mountain Time, and recorded November 27, 1991, in Book 1318 under Reception No. 2270509 of the records of Weld County, Colorado. This assignment contains a statement that it is the intention of the Assignor that all of the overriding royalty interest acquired in Paragraph No. 11 above be merged into its working interest as of August 1, 1991, at 12:01 a.m. , Mountain Time. 14. Francis Energy, Inc. , assigned all of its overriding royalty interest in Leases A and B to Adam C. Buna, Nicholas D. Francis, and Robert L. Childers in equal proportions by an assignment of overriding royalty dated November 26, 1991, effective August 1, 1991, at 12:01 a.m. , Mountain Time, and recorded November 27, 1991, in Book 1318 under Reception No. 2270510 of the records of Weld County, Colorado. 15. FEI-Payne Joint Venture assigned all of its right, title, and interest in Leases A and B as to the SE;SWk and W%SW% of Section 26, Township 6 North, Range 66 West, 6th P.M. to FEI-1991 Joint Venture by an assignment dated November 26, 1991, and recorded November 27, 1991, in Book 1318 under Reception No. 2270511 of the records of Weld County, Colorado. This assignment contained an agreement that the Declaration of Pooling dated October 8, 1991, and recorded in Book 1313 under Reception No. 2265550 of the records of Weld County, Colorado, would remain in force and effect as to the existing royalty and overriding royalty interests in the E%SWk of Section 26, Township 6 North, Range 66 West, 6th P.M. , but that as between the parties and their successors and assigns, all production attributable to the working interests and subsequently created overriding royalty interests in the E%SW3/4 of Section 26 will not be subject to the Declaration of Pooling. POOLING Francis Energy, Inc. , executed a Declaration of Pooling dated October 8, 1991, effective as of the date of first production from the Payne No. 2-26 Well , and recorded in Book 1313 under Reception No. 2265550 of the records of Weld County, Colorado, which pools all rights as to the oil and gas produced from all depths in the E%SWk of Section 26, Township 6 North, Range 66 West, 6th P.M. Under the terms of the pooling clauses in the subject oil and gas leases, the production of oil and gas from the EkSW' of Section 26, Township 6 North, Range 66 West, 6th P.M. , is allocated as follows: 27, 1. Z3 Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 10 Tract 1 1 .11 acres 1.34611% of production Tracts 2 and 3 81.35 acres 98.65389% of production DIVISION OF INTEREST - PAYNE NO. 2-26 WELL - PHASE I The assignments in Paragraph Nos. 11, 12, 13, and 14 under Assignments above are effective August 1, 1991, at 12:01 a.m. , Mountain Time, and the above- mentioned Amendment to Oil and Gas Lease and Stipulation of Interests provides that the total royalty and overriding royalty payable under Lease A will change from 21% to 19% on November 1, 1991, at 12:00 a.m. , Mountain Time. Based upon the material examined and subject to the Title Comments and Requirements below, it is my opinion that the division of production of oil and gas from the Payne No. 2-26 Well between August 1, 1991, at 12:01 a.m. , Mountain Time, and November 1, 1991, at 12:00 a.m. , Mountain Time, is as follows: Owners Net Revenue Interests FEI-Payne Joint Venture c/o Francis Energy, Inc. P.O. Box 2331 Greeley, CO 80632 .7800000 W.I. Adam C. Buna 5411 Gunbarrel Circle Longmont, CO 80503 (1/3 x 98.65389% x .01) + (1/3 x 1.34611% x .095) .0037147 O.R.R. I . Nicholas D. Francis 1357 43rd Avenue, No. 63 Greeley, CO 80634 (1/3 x 98.65389% x .01) + (1/3 x 1.34611% x .095) .0037147 O.R.R. I. Robert L. Childers 1220 11th Avenue, Suite 300 Greeley, CO 80631 (1/3 x 98.65389% x .01) + (1/3 x 1.34611% x .095) .0037148 O.R.R. I. Payne Inc. 2118 N. 47th Avenue Greeley, CO 80631 (98.65389% x .21) .2071732 R. I. 07011,3 Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 11 Weld County, Colorado c/o Board of County Commissioners Weld County Centennial Center 915 Tenth Street Greeley, CO 80631 (1 .34611% x .125) .0016826 R. I. DIVISION OF INTEREST - PAYNE NO. 2-26 WELL - PHASE II The above division of interest applies only until November 1, 1991, at 12:00 a.m. , Mountain Time. Based upon the material examined and subject to the Title Comments and Requirements below, it is my opinion that the division of production of oil and gas from the Payne No. 2-26 Well after November 1, 1991, at 12:00 a.m. , Mountain Time, is as follows: Owners Net Revenue Interests FEI-Payne Joint Venture c/o Francis Energy, Inc. P.O. Box 2331 Greeley, CO 80632 .7800000 W. I . Adam C. Buna 5411 Gunbarrel Circle Longmont, CO 80503 (1/3 x 98.65389% x .03) + (1/3 x 1 .34611% x .095) .0102917 O.R.R. I. Nicholas D. Francis 1357 43rd Avenue, No. 63 Greeley, CO 80634 (1/3 x 98.65389% x .03) + (1/3 x 1.34611% x .095) .0102917 O.R.R. I. Robert L. Childers 1220 11th Avenue, Suite 300 Greeley, CO 80631 (1/3 x 98.65389% x .03) + (1/3 x 1.34611% x .095) .0102917 O.R.R. I. Payne Inc. 2118 N. 47th Avenue Greeley, CO 80631 (98.65389% x .19) . 1874423 R. I. Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 12 Weld County, Colorado c/o Board of County Commissioners Weld County Centennial Center 915 Tenth Street Greeley, CO 80631 .0016826 R. I. (1.34611% x .125) DIVISION OF INTEREST - RUSTY NO. 1-26 WELL The Rusty No. 1-26 Well is an undrilled location on the SE'SW; of Section 26, Township 6 North, Range 66 West, 6th P.M. Based upon the material examined and subject to the Title Comments and Requirements below, it is my opinion that the division of production of oil and gas from the SE;SWk of Section 26, Township 6 North, Range 66 West, 6th P.M. , is as follows: Owners Net Revenue Interests FEI-1991 Joint Venture c/o Francis Energy, Inc. P.O. Box 2331 .7800000 W.I. Greeley, CO 80632 Adam C. Buna 5411 Gunbarrel Circle Longmont, CO 80503 .0102917 O.R.R. I . (1/3 x 98.65389% x .03) + (1/3 x 1.34611% x .095) Nicholas D. Francis 1357 43rd Avenue, No. 63 Greeley, CO 80634 (1/3 x 98.65389% x .03) + (1/3 x 1.34611% x .095) .0102917 O.R.R. I. Robert L. Childers 1220 11th Avenue, Suite 300 Greeley, CO 80631 (1/3 x 98.65389% x .03) + (1/3 x 1.34611% x .095) .0102917 O.R.R.I . Payne Inc. 2118 N. 47th Avenue Greeley, CO 80631 .1874423 R. I. (98.65389% x .19) M1a Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 13 Weld County, Colorado c/o Board of County Commissioners Weld County Centennial Center 915 Tenth Street Greeley, CO 80631 (1.34611% x .125) .0016826 R. I. DIVISION OF INTEREST - IRVING NO. 1-26 AND EDITH NO. 1-26 WELLS Based upon the material examined and subject to the Title Comments and Requirements below, it is my opinion that the division of production of oil and gas from the Irving No. 1-26 in the NW;SW; of Section 26 and the Edith 1-26 Well in the SWkSW3/4 of Section 26, Township 6 North, Range 66 West, 6th P.M. , is as follows: Owners Net Revenue Interests FEI-1991 Joint Venture c/o Francis Energy, Inc. P.O. Box 2331 Greeley, CO 80632 .7800000 W. I. Adam C. Buna 5411 Gunbarrel Circle Longmont, CO 80503 .0100000 O.R.R. I. Nicholas D. Francis 1357 43rd Avenue, No. 63 Greeley, CO 80634 .0100000 O.R.R. I. Robert L. Childers 1220 11th Avenue, Suite 300 Greeley, CO 80631 .0100000 O.R.R. I. Payne Inc. 2118 N. 47th Avenue Greeley, CO 80631 .1900000 R. I. ) Permian Operating L.P./Francis Energy, Inc. - DOTO Payne No. 2-26, Irving No. 1-26, Edith No. 1-26, and Rusty No. 1-26 Wells - January 8, 1992 - Page 14 TITLE COMMENTS AND REQUIREMENTS 1. All of the requirements contained in the above-mentioned Acquisition and Drilling Title Opinion dated September 16, 1991, are either satisfied or advisory in nature or they are reimposed below. Requirement: None, advisory only. 2. The primary terms of the subject oil and gas leases have expired, but Francis Energy, Inc. , recorded an Affidavit of Production dated October 8, 1991, for the Payne No. 2-26 Well , and FEI-1991 Joint Venture recorded an Affidavit of Production dated December 11, 1991, for the Irving No. 1-26 Well and the Edith No. 1-26 Well . However, none of these wells were drilled on lands covered by Lease B. Although the above-mentioned Declaration of Pooling dated October 8, 1991, states that it is effective as of the date of first production from the Payne No. 2-26 Well , it would appear that Lease B expired in 1985 in absence of a ratification from the Lessor of Lease B. Requirement: A ratification of Lease B should be obtained from the Board of County Commissioners of Weld County, Colorado, and recorded in the records of Weld County, Colorado. This opinion is limited to matters reflected by the data examined, as described above. Colorado Land Services advised that the Payne No. 2-26 Well was drilled prior to the expiration of the primary term of Lease A, and that first production from Irving No. 1-26 and Edith No. 1-26 Wells commenced on December 11, 1991. Upon satisfaction of Requirement No. 2 above, in my opinion, title to the E%SW} of Section 26, Township 6 North, Range 66 West, 6th P.M. , will be adequate to support payments made under division orders prepared in accordance with the division of interest set forth above as of August 1, 1991. Title to the W3/4SW3/4 of Section 26, Township 6 North, Range 66 West, 6th P.M. , in my opinion, is adequate to support payments made under division orders prepared in accordance with the division of interest set forth above as of the date of first production. Very truly yours, T,� * � vrv` . ` 5vL William M. Foster WMF/gmb cc: Colorado Land Services Hello