HomeMy WebLinkAbout900726.tiff AR22237A9
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RESOLUTION
RE : AUTHORIZATION OF OIL AND GAS LEASE COVERING CERTAIN PROPERTY
OWNED BY WELD COUNTY , COLORADO , LOCATED IN SECTION 35 ,
TOWNSHIP 8 NORTH , RANGE 63 WEST OF THE 6TH P . M . , WELD COUNTY ,
COLORADO
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r-f 0 WHEREAS , the Board of. County Commissioners of Weld County ,
v Colorado , pursuant to Colorado statute and the Weld County Home
Q Rule Charter , is vested with the authority of administering the
c) 41 affairs of Weld County , Colorado , and.
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h Q WHEREAS , Weld County , Colorado , is the owner of vast acres of
0 mineral lands located in Weld County , Colorado , and
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WHEREAS , a portion of said mineral acres not currently leased
was put up for bid to lease , and
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C WHEREAS , Patrick Petroleum Corporation of Michigan , P . O . Box
r-- z 747 , Jackson , Michigan 49204 , submitted the high bid to lease 160
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, net mineral acres more or less described to -wit :
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x Section 35 : NWi , Township 8 North , Range 63
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o, West of the 6th P . M . , Weld County , Colorado
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N Z WHEREAS , Weld County desires to accept the high bid offer
submitted by Patrick Petroleum Corporation of Michigan to lease
o �-+ the above described mineral acreage for $ 25 . 00 per net mineral
411 1 acre , for a total sum of $ 4 , 000 . 00 , together with a rental fee of
acre
ONE DOLLAR ( $ 1 . 00 ) per net mineral , which lease is to run for
Man a period of three ( 3 ) years , commencing August 8 , 1990 , and ending
CN M at 12 : 00 noon on August 8 , 1993 , unless otherwise held , as stated
o in the lease agreement which is attached hereto and incorporated
4-+ herein by reference .
NOW , THEREFORE , BE IT RESOLVED by the Board of County
Commissioners of Weld County , Colorado , that the high bid offer of
Patrick Petroleum Corporation of Michigan , P . O . Box 747 , Jackson ,
Michigan 49204 , be , and hereby is , accepted for a period of three
( 3 ) years with the total sum being as above listed .
900726
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RE : OIL AND GAS LEASE - PATRICK PETROLEUM CORPORATION
The above and foregoing Resolution was , on motion duly made
and seconded , adopted by the following vote on the 8th day of
August , A . D . , 1990 .
BOAR OF COUNTY COMMISSIONERS
o O ATTEST : ~, "` /f WEL UNTY , COLORADO
L7 w r � ,,r , � r,
Weld Co Cler 4 the Board
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O 3 BY : d . r i - , ,c e ycJe., Ke ed , Pro - Tem
o g teputy Clerk tO the Board
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APPROVED AS TO FORM : Constance L . Harbert
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primary term or any extension thereof, or while this lease is in force by reason o£ such drilling or
reworking operations or other production.
EXPLORATION - Lessor reserves the right to conduct exploration on the leased land provided such
exploration does not interfere with rights granted herein.
In consideration of the premises, the parties covenant and agree as follows:
1. RENTAL - If this lease is extended for an additional term as provided for in the EXTENSION
paragraph hereof, Lessee shall during such extended period pay to lessor an annual rental at double the rate
above specified for the land covered hereby. The rental in effect at the time production is established
shall not be increased due to the term of this lease being extended by such production. Rentals set at the
time of established production shall be paid during the remaining life of this lease, annually, in advance,
on or before each anniversary date hereof. There shall be no refund of unused rental.
2. ROYALTY - Lessee shall account for any and all substances produced on the leased land and L
▪ Ushall pay to Lessor as royalty, in addition to the rentals provided, but except for products used on the
o leased land, unavoidably lost or flared on the leased land, with approval of Lessor, the following:
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U (a) On oil, 1212% of the oil produced and saved from the leased land.
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old At the option of Lessor, and with sixty (60) days' notice to Lessee, Lessor may take its
royalty oil in kind, in which event L ball deliver such royalty oil to Lessor on the leased land,
h W free of cost or deduction, into the pipelines or storage tanks designated by Lessor, but Lessee shall
2 not in such use be required to provide free tankage for any such oil for a longer period than one
0 month after the same is run into tanks. With sixty (60) days' notice to Lessee, Lessor may cease
Wtaking oil royalty in kind. When paid in cash, the royalty shall be calculated upon the fair market
rl a value of the oil at the well which shall not be deemed to be less than the price actually paid to
•.• Lessee at the well by the purchaser thereof; and in no event shall the royalties be based upon a market
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value at the well less than the posted price in the field for such oil, or in the absence of a posted
nt price in the field for such oil, upon a market value at the well less than the prevailing price
o a received by other producers in the field for oil of like grade and gravity at the time such oil is run
O1 U into pipelines or storage tanks.
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'i H (b) On gas, including casinghead gas or other gaseous substance, 1206 of the fair market
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value at the well or of the price received by Lessee at the well, whichever is greater, of all gas
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Wproduced and sold from the leased land or utilised off the land by L . A copy of all contracts for
• A sale of gas shall be furnished to Lessor. Where gas is sold under contract that has been approved by
co hi Lessor, the fair market value of such gas for determining the royalties payable hereunder shall be the
M price at which such gas is sold under such contract. No approval by Lessor of the terms of any such
N agreement shall operate to make Lessor a party thereto or obligate it thereunder in any way. At the
N option of Lessor, and with sixty (60) days' notice to Lessee, Lessor may take its royalty in kind.
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With sixty (60) days' notice to Lessee, Lessor may cease taking gas royalty in kind.
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Q' (c) All costs of marketing the oil and/or gas produced shall be borne by Lessee and such coats
r: co shall not directly or indirectly reduce the royalty payments to Lessor. Except that marketing costs
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N M^ for Lessor's in-kind royalty shall be borne by Lessor.
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CD W (d) If Lessor owns a lesser interest in the oil and gas deposits of the above-described land than
the entire and undivided fee simple estate, then the royalties and rentals herein provided shall be
paid to Lessor only in the portion which its interest bears to the whole and undivided fee, but no
refund of any bonus consideration shall be made by Lessor hereunder.
(Rev. 11/s6)
3. RECORDS - Lessee agrees to keep and to have in possession complete and accurate books and records
shoving the production and disposition of any and all substances produced on the leased land and to permit
Lessor, at all reasonable hours, to examine the saw, or to furnish copies of same to Lessor upon request
along with purchaser's support documentation. Lessor will not be unreasonable with requests. All said
books and records shall be retained by Lessee and made available in Colorado to Lessor for a period of not
lees than five years.
4. MEASUREMENTS - All production shall be accurately measured using standards established by the
.ou U American Gas Association (AGA) and/or the American Petroleum Institute (API) and all measuring devices shall
be tamperproof as nearly as possible. Oil royalties due within the terns of this lease shall be calculated
ut U on actual and accurate measurements within APT standards unless a different means of measurement, subject to
Lessor's approval, is provided.
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co 5. PAYMENTS & REPORTS - All payments and reports due hereunder shall be made on or before the day
such payments and reports are due. Nothing in this paragraph shall be construed to extend the expiration of
h W the primary term hereof.
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p011 royalty payments and supporting documents shall be submitted prior to the last day of the
Wmonth following each march's sale of production, and gas royalty payments and supporting documents shall be
en W submitted prior to the last day of the second month following each month's sale of production.
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'n 111 payments shall be made by cash, check, certified cheek or money order. Payments having
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Gw restrictions, qualifications, or encumbrances of any kind whatsoever shall not he accepted by Lasaor.
o a penalty for a late payment shall be charges as set forth in the PENALTIES paragraph herein.
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NZ 6. PENALTIES - A penalty shall be imposed for, but not limited to late payments, improper payments,
E operational deficiencies, violation of any covenant of this lease, or false statements made to Lessor.
CI 0 Penalties shall be determined by Lessor unless otherwise provided for by law and may be in the form of, but
W not limited to, interest, fees, fines, and/or lease cancellation. A penalty schedule shall be prepared by
cn D Lessor and shall become effective immediately after public notice. Said schedule may be changed from time
co r- co to time after public notice.
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7. LAW - The terms and conditions of this lease shall be performed and exercised subject to all lava,
o riles, regulations, orders, local ordinances or resolutions applicable to and binding upon the
administration of lands and minerals awned by the County of Weld, and to laws, rules and regulations
(Val governing oil and gas operations in Colorado. Violations shall result in penalties as provided for by law
a' or as set forth in the aforementioned schedule or shall, at the option of Lessor, result in default as
M rn provided hereinafter.
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'I 0 8. SURRENDER - Lessee may at any time, by paying to Lessor all amounts then due as provided herein,
W W surrender this lease insofar as the same covers all or any portion o£ the land herein leased and be relieved
from further obligations or liability hereunder with respect to the land 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 Lessee shall cease and become absolutely inoperative
immediately and concurrently with the institution of any suit in any court of law by Lessee, Lessor or any
assignee of either to enforce this lease, or any of its terms expressed or implied. In no case shall any
surrender be effective until Lessee shall have made full provision for conservation of the leased products
and protection of the surface rights of the leased land.
9C 0726
(Rev. 11/86)
9. ASSIGNMENTS -
(a) Lessee, with prior written consent of Lessor, shall have the right to assign the entire
leasehold interest of said Lessee in all or part of the land covered hereby, but not less, however,
than contiguous tracts of approximately forty (40) acres or Governmental lot corresponding to a
quarter-quarter section for any partial assignment, and for approval of such assignment Lessor shall
make an assignment charge in an amount to be determined by Lessor. Prior to written approval by Lessor
of assignment of this lease, L (assignor) shall not be relieved of its obligations under the terms
and conditions herein. An assignment shall not extend the term of this lease.
(b) I£ any assignment of a portion of the land covered hereby shall be approved, a new lease
shall be issued to the assignee covering the assigned land, containing the same terms and conditions as
o O this lease, and limited as to term as this lease is limited, and the assignor shall be released and
N U discharged from all further obligations and liabilities as to that portion se assigned.
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to U (c) Lessee shall notify Lessor of all assignments of undivided percentage or other interests.
Said interests will not be recognized or approved by Lessor, and the effect of any such assignments
qwill be strictly and only between the parties thereto, and outside the texas of this lease: and no
c k1 dispute between parties to any such assignment shall operate to relieve Lessee from performance of any
3 terns or conditions hereof or to postpone the time therefor. Lessor shall at all times be entitled to
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look solely to Lessee or his assignee shown on its books as being the sole owner hereof, and for the
asending of all notices required by this lease and for the performance of all terms and conditions
p hereof.
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en a (d) Although not binding on Lessor, all instruments of every kind and nature whatsoever affecting
w this lease should be filed with the Lessor.
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~ 50. OVERRIDING ROYALTY - Any and all reservations or assignments or overriding royalties shall be
o a subject to approval by Lessor. The total of said overriding royalties shall not exceed five percent (5%),
O1 U including any overriding royalty previously provided for unless production exceeds a monthly average of
Z fifteen (15) barrels per day or ninety thousand cubic feet of gas per day (90 MCF/D). In the event that
co production drops to this amount or less, any overriding royalties which exceed five percent (5%) may be
o v2� suspended. Lessor's approval of a reservation or assignment of an overriding royalty shall not bind Lessor
a for payment of said overriding royalty and shall not relieve Lessee of any of its obligations for payment of.
rn • royalties to Lessor as provided by ROYALTY paragraphs herein.
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11. OFFSET WELLS - Lessee agrees to protect the leased land from drainage by offset uells located on
ry z adjoining lands not owned by Lessor, when such drainage is not compensated for by counter-drainage. It
N shall be presumed that the production of oil and gas from offset wells results in drainage from the leased
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D+ land, unless Lessee demonstrates to Lessor's satisfaction, by engineering, geological, or other data, that
production from such offset well does not result in such drainage, or that the drilling of • well or wells
on the leased land would noc accomplish the purposes of protecting the deposits under the leased land.
en o Lessor's decision as to the existence of such drainage shall be final, and Lessee shall comply with Lessor's
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N el order thereon or surrender this lease as to any such undeveloped acreage as designated by Lessor.
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fA W 12. DEVELOPMENT - Upon discovery of oil and gas or either of them on the leased land, Lessee shall
proceed with reasonable diligence to develop said land at a rate and to an extent commensurate with the
economic development of the field in which the leased land lies.
13. POOLING CLAUSE - Lessee may at any time or times pool any part or all of said land and lease or
any stratum or strata with other lands and 1 , stratus or strata, in the same field so as to constitute
a spacing unit to facilitate an orderly or uniform well-spacing pattern or to comply with any order, rule,
or regulation of the State or Federal regulatory or conservation agency having jurisdiction. Such pooling
(Rev. 11/86)
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shall be accomplished or terminated by filing of record a declaration of pooliog, or declaration of
termination of pooling, and by ailing or tendering a copy to Lessor, or to the depository bank. Drilling
or reworking operations upon or production from any part of such spacing unit shall be considered for all
purposes of this lease as operations or productions from this lease. Lessee shall allocate to this lease
the proportionate share of production which the acreage in this lease included in any such spacing unit
Ubears to the total acreage in said spacing unit.
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n O 14. UNITIZATION - COMUNITIZATION - In the event Lessor permits the land herein leased to be included
U within a camunitizatfon or unitization agreement, the terms of this lease may be deemed to be modified to
aconform to such agreement. When only a portion of the land under this lease is committed by an agreement,
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ay ay segregate the land and issue a separate lease for each portion not committed thereunder; the term
of such separate lease shall be limited as to the original term of this lease. The terms of the lease on
o a that portion remaining in the unit shall be deemed to be modified to conform to such agreement.
./).03
p Nonproducing leases shall terminate on the first anniversary date o£ the lease following the termination
Odate of the unit or part thereof modifying the lease, but in no event prior to the end of the primary term
U of the lease or the extension term of the lease.
y 15. PRODUCTION - L shall, subject to applicable laws, regulations and orders, operate and produce
ul all wells upon the leased land so long as the same are capable of producing in paying quantities, and shall
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IZ operate the same so as to produce at a rate commensurate with the rate of production of wells on adjoining
o a lands within the same field and within the limits of good engineering practice, except for such times as
rn U there exist neither market nor storage therefor, and except for such limitations on or suspensions of
r- z production as may be approved in writing by Lessor. Lessee shall be responsible for adequate site security
Won all producing properties.
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F�5 16. SHPT-IN WELLS - If Lessee shall complete a well on the leased land productive of gas and Lessee is
• unable to produce such gas due to a lack of euftable market therefor, Lessor may grant Lessee suspension of
co w his obligations to produce hereunder until a suitable market for such gas can be found, and during any such
M suspension period, it shall be deemed that gas is being produced hereunder in paying quantities. Except,
N z however, that beginning on the anniversary date next of the year of an extension of the lease
N � , g g t9 , ye by reason of
N a shut-in well, Lessee shall pay to Lessor a shut-in royalty equal to $2 per acre of the lease per annum in
r addition to the annual rental. The minimum amount of such abut-in royalty payment shall be S240. Each
Wyear's shut-in royalty shall be forfeited to Lessor except for the shut-in royalty paid for the year during
r4 which the well begins production. The maxims extension of the lease, due to the existence of a shut-in
M e-i well, shall be five years beyond the extension term as described in the EXTENSION paragraph herein. The
N o granting of any further extensions shall be at the sole option of Lessor.
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M W 17. OPERATIONS - No exploration, drilling or production operation, including permanent installations,
shall be within 200 feet of any existing building or other improvement, including water well or reservoir,
without the written permission of the owner of said improvements. Lessee shall keep a correct log of each
well drilled hereunder, showing by name or description the formations passed through, the depth at which
oath formation was reached, the number of feet of each size easing set in each well, where set, and the
total depth of each well drilled. Lessee, within thirty (30) days after the completion or abandonment of
any well drilled hereunder, shall file in the office of Lessor a complete and correct log of such well,
together with a copy of the electric log and the radioactivity log of the well when such logs, or either of
them, are run; and also a copy of all drill stem test results, core records and analyses, record of
perforations end initial production tests, if any. If any of the information required by this paragraph is
contained in reports required to be filed with the Oil and Gas Conservation Commission of Colorado, the
requirements of this paragraph for such information may be satisfied by such filing with said Commission,
except for copies of the reports as are required by the following paragraph, and provided that all such
information is imediately available to Lessor. Any proprietary information so submitted shall not be
subject to public inspection under Colorado law.
9( v '
(Rev. 11/86)
Lessee shall bury pipelines below plow depth. Lessee shall set and cement sufficient surface
casing to protect the fresh water wells of the area.
18. NOTIFICATION - Lessee shall notify Lessor and the surface lessee or surface owner of the location
of each drill site at least two weeks prior to commencing drilling operations thereon. Lessee shall notify
Lessor before coercing to plug and abandon any well by copy of Lessee's request for approval or sundry
notice of intent to plug and abandon.
1-4 o O 19. BONDS - Lessee shall be liable for all damages to the surface of the land, livestock, growing
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� crops, water wells, reservoirs, or improvements caused by Lessee's operations on said land. No operations
co U shall be commenced on the land hereinabove described unless and until Lessee shall have filed a good and
sufficient bond with Lessor, in an amount to be fixed by Lessor, to secure the payment for such damages as
amay be caused by Lessee's operations on said land and to assure compliance with all the terms and provisions
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3 of this lease, the laws of the State of Colorado, and the rules and regulations thereto appertaining. A
o a bond may be held in effect for the life of production of any well.
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0 20. S81TLENENT - Lessee shall not remove any machinery, equipment or fixtures placed on said land,
Uother than drilling equipment, nor draw the using from any well unless and until all payments and
cal obligations currently due Lessor under the terms of this lease shall have been paid or satisfied. Any
M W machinery, equipment or fixtures left on this land for a period of more than six (6) months after the
.1 Le expiration hereof, shall automatically become the property of Lessor.
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NaW 21. OTHER DISCOVERY - Shand Lessee discover any valuable products other than oil and gas, on or
U within the leased land, Lessee shall within seven (7) days report such discovery to Lessor, In which event
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Lessee and Lessor may negotiate a provision for production of such discovery.
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W 22. DATER - This lease does not grant permission, express or implied, to Lessee for water exploration,
co O y drilling, or establishing water wells without the written permission of the surface owner. If Lessor is the
a surface owner, said permission shall not be unreasonably withheld. If Lessee desires to establish or
W adjudicate any water right for beneficial use on the leased land, any such adjudication or application shall
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p, be in the name of Lessor if Lessor is the surface owner. The same shall apply to any nontributary water
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•I Z rights established on the leased land which may be put to beneficial use off said land.
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23. DBFAL'LT - Upon failure or default of Lessee to comply with any of the terms and provisions hereof
U PG including but not limited to the failure to comply with laws, rules and regulations governing Colorado oil
W and gas operations, Lessor is hereby authorized upon notice and hearing, as hereinafter provided, to cancel
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this lease as to all of the leased land so claimed or possessed by Lessee hereunder. In the event of any
el N such default or failure, Lessor shall, before making any such cancellation, send to Lessee by certified
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N en mail, to the post office address of said lessee as sham by the records of Lessor, a notice of intention to
~ o cancel for such failure or default, specifying the same, stating that if within thirty (30) days from the
III W date of mailing said notice, Lessee shall correct such failure or default, no cancellation will be made. If
such failure or default is not corrected within thirty (30) days after the mailing of such notice, and if
Lessee does not request a hearing on such notice within thirty (30) days, this lease will terminate and be
cancelled by operation of this paragraph without further action by Lessor, or further notice to Lessee.
24. ETIENSION - If Lessee fails to make discovery of oil and gas, or either of them, in paying
quantities during the primary term hereof, or during drilling operations coseenced during the primary term
hereof, Lessee may make written application to Lessor for m extension of this lease for a term equal to the
primary term as to all of the mineral acres covered hereby (excluding any mineral acres theretofore
surrendered as in the SURRENDER Paragraph provided, or assigned as in the ASSIGNMENTS Paragraph provided).
The granting of such extension shall be at the sole option of Lessor at double the rental for the primary
term hereof.
art':rKin
(Rev. 11/86)
25. BOLD HARMLESS - Lessee shall indemnify Lessor against all liability and loss, and against all
claims and actions, including the defense of such claims or actions, based upon or arising out of damage or
Uinjury, including death, to persona or property caused by or sustained in connection with operations on this
leased land or by conditions created thereby, or based upon any violation of any statute, ordinance, or
- regulation.
COO
U
26. CONDEMNATION - If the leased land shall be taken in any condemnation proceeding, this lease shall
4 automatically terminate as of the date of taking. The award for such condemnation shall be paid to Lessor,
OW except for any specific swards) paid to Lessee for severed oil and gas reserves, in which event
XXXXXXXXXX of such specific award(s) shall be paid to Lessor in lieu of royalty lost by virtue of the
.4 W condemnation. Improvements shall be removed by Lessee per terms in the SETTLEMENT Paragraph herein. If
only a portion of the leased land is taken by condemnation, Lessor may, at its option, terminate this lease
Uor terminate only that portion of the lease so taken.
W
• a 27. ERRORS - Every effort is made by Lessor to avoid errors in all procedures including but not
,y limited to auction listings and lease preparation. Lessor shall not be liable for any inconvenience or loss
,•y caused by errors which may occur. Lessee shall notify Lessor immediately upon discovery of any errors or
W discrepancy whatever.
o .7
ON V 28. ARCHAEOLOGY - Lessee shall not destroy, disturb, mar, collect, remove or alter any prehistoric or
r- Z historic resources of any kind on Wald County lands as provided by law. These resources include but are not
E limited to all artifacts of stone, wood or metal, pictographs, structures, and bones. A discovery of
co
e y anything of prehistoric or historic nature shall be reported to Lessor or the State of Colorado
WArchaeologist immediately.
cnO
�
w29. DEFINITIONS -
M
N ,T.
N Z(a)"Gas"as used herein shall mean all gases(combustible and noncombustible),including but not
e limited to all gaseous hydrocarbons, gaseous compounds, carbon dioxide, and helium.
rd
C.)
(b) "011 and gas" as used herein shall include all substances produced as by-products therewith,
including but not limited to sulfur.
M M
N M (c) "Paying quantities" as used herein shall man and refer to quantities of oil and gas or of
.r either of them sufficient to pay for the current cost of producing same.
Gq W
30. HEIRS AND ASSIGNS - The benefits and obligations of this lease shall inure to and be binding upon
the heirs, legal representatives, successors or assigns of Lessee; but no sublease or assignment hereof, or
of any interest herein, shall be binding upon Lessor until the same has been approved by Lessor as explained
in the ASSIGNMENTS' paragraph provided.
31. WARRANTY OF TITLE - Lessor does not warrant title to the leased premises, but it shall, upon
request, allow Lessee access to such abstracts and other title papers as it has in its files. There shall
be no obligation on Lessor's part to purchase new or supplemental or other title papers nor to do any
curative work in connection with title to the subject lands. All abstracts of title, whether new or
supplementary, obtained by L and covering the subject lands shall become the property of and be
delivered to Lessor after Lessee has completed its title examination and curative work, subject, however, to
the right of Lessee to use such abstracts upon request at any time during the term of the Luse.
Mier. 11/86) Se itnirD
0.
N
R MIIN WITNESS WHEREOF, lessor has hereunto sig
ned and caused its name to be signed by the HOARD OF COUNTY
COSSIONERS OF THE COUNTY OF WELD, with the seal of the office affixed, and Lessee has signed this
agreement, the day and year first above written.
BOARD OF COUNTY COMICSSIONERS
, COLORADO
e
:crf) , •
oO._4O « ' 5
o ATTEST:
--. .
oo U Weld Coon^ e .gTh *�" :;'. '. it-It...- -, ko /� e-
.A7 a 'Hoard / C t
0111 ----- _ .'�`a ifsen r .evict_
0.Z gyr\
i
'CI
a
U
LEss ATRICK ET OLE ORPORATION OF MICHIGAN
Ma k
/
'."• ,a BV:' C1C1 LI (aJ,
in Charles D. Robinson
ei
Executive Vice President
o a STATE OF COLORADO )
a U ) SS.
h z COLDiTY OF WELD )
N H
�W
CO a 172 by
foregoing instrument was acknowledged before me this � day of 4...„,,z- ,
W 1917
CO W Witneak lia� •^ ^ �'
W n' .qn{�)o .f'fftal seal.
N
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M N
2 My Commission es: : * 4'' _ .5e-9V
o
77/2
W ` •
3 n
W' O ,weo"O, Notary Public
me
h CO
N M
r-I O
CO W
/nT0";4
(Rev. 11/86)
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