HomeMy WebLinkAbout650001.tiffTO SIGN UNIT AGREEMENT
CHEVRON OIL COMPANY
PIERCE-NEW--WI-NDSOR-Rf E Di
BE IT RESOLVED, by the Board of County Commissioners of Weld County,
Colorado, that the unit agreement for the development and operation of the Pierce -
Lyons Sand unit area, as required by the Chevron Oil Company, be and the same is
hereby approved, copy of consent is attached and made a part of this resolution.
The above and foregoing resolution was, on motion duly made and
seconded, adopted by the following vote:
DATED: DECEMBER 8, 1965
APPROVED:
County Attorney
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THE BOARD OF'"COUNTY COMMISSIONERS
WELD COUNTY, COLORADO
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CONSENT
In consideration of the execution by Chevron Oil Company of the Unit Agree-
ment for the Development and Operation of the Pierce -Lyons Sand Unit Area, Weld
County, Colorado, the undersigned owners of lands or interests in lands or
royalties or other interests in production covered by said Unit Agreement hereby
severally, each to the extent of his particular ownership or interest, consent
to the inclusion of said lands within the Unit Area therein defined, approve
and adopt the terms of said Unit Agreement as applicable to said several lands
and interests, agree that the drilling and development requirements of all leases
and other contracts in which their several rights and interests are created or
defined shall be deemed fully performed by performance of the provisions of
said Unit Agreement, and agree that payment for or delivery of (whichever may be
required under prior agreements) oil and gas duly made upon the basis of
production allocated under said Unit Agreement to the particular lands by tract
or lot number where applicable and as more fully set forth on Exhibits "A" and
"B" and supplements thereto attached to said Unit Agreement, to which such rights
or interests apply, regardless of actual production therefrom, shall constitute
full performance of all such obligations to the undersigned existing under such
leases or other contracts.
Date December 8, 1965
',
now Attest. :;
County C1ea •
By: . ( -t4 -/c.
Deputy County Clerk
WELD COUNTY, COLORADO, a political subdivision a
of the State of Colorado, by the Board of County
Commissioners:
Name ,
��4 THE BOA D OFCOUNTY COMMISSIONERS
WELD COUNTY, COLORADO
naoseedat
STATE OF COLORADO )
) SS
COUNTY OF WELD )
The foregoing instrument was acknowledged before me this 8th day
of December , 19 65 , by Elmer L. Shultz, Edward L. Dunbar and
MPrshall H. Anderson
Witness my hand and official seal.
(seal)
My commission expire
Tract(s) No.
-/In
ry P .lic
UNIT AGREEMENT FOR THE DEVELOPMENT AND OPERATION OF' THE
PIERCE - LYONS SAND UNIT AREA
COUNTY OF WELD
STATE OF COLORADO
No,
THIS AGREEMENT, entered into as of the first day of
by and between the parties subscribing, ratifying, or consenting hereto, and
herein referred to as the "parties hereto";
WITNESSET H:
WHEREAS, the parties hereto are the owners of working, royalty, or other
oil and gas interests with respect to that portion of the Lyons Sand which is
subject to this agreement; and
WHEREAS, the parties hereto hold sufficient interests in the Pierce -Lyons
Sand Unit Area, covering the land hereinafter described to give reasonably effec-
tive control of operations therein, and
WHEREAS, it is the purpose of the parties hereto to institute a secondary
recovery program to conserve natural resources, prevent waste, and secure other
benefits obtainable through development and operation of that portion of the Lyons
Sand which is subject to this agreement under the terms, conditions, and limitations
herein set forth.
NOW, THEREFORE, in consideration of the premises and the promises herein
contained, the parties hereto commit to this agreement their respective interests
in the Unit Area defined below and agree severally among themselves as follows:
1. CONDUCT OF UNIT OPERATIONS: The Pierce -Lyons Sand Unit Area, shall be
developed and operated as a unit by Unit Operator. All operations hereunder,
including the drilling of unit wells as provided for herein, shall be conducted
in accordance with sound and efficient oil field practices for the purpose of
properly conserving unitized substances and endeavoring to obtain ultimately the
maximum economic recovery of unitized substances without waste as defined by law.
2. UNIT AREA: The area specified on the map attached hereto, marked
Exhibit "A", and hereby made a part hereof is hereby designated and is recognized
as constituting the Pierce -Lyons Sand Unit Area, hereinafter referred to as
"Unit Area", containing 5051.93 acres, more or less.
Exhibit "A" shows, in addition to the boundary of the Unit Area, the
boundaries and identity of tracts and leases in said area to the extent known to
the Unit Operator. Exhibit "B", attached hereto and hereby made a part hereof,
is a schedule showing, to the extent known to Unit Operator, the acreage, per-
centage, and kind of ownership of oil and gas interests in all land in the Unit
Area. However, nothing herein or in said schedule or map shall be construed as
a representation by any party hereto as to the ownership of any interest other
than such interest or interests as are shown in said map or schedule as owned by
such party. Exhibits "A" and "B" shall be revised by Unit Operator whenever
changes in the Unit Area render such revision necessary, or when requested by
the Oil and Gas Supervisor (hereinafter called "Supervisor") and not less than
six copies of the revised exhibits shall be filed with the Supervisor.
The above described Unit Area shall when practicable be expanded to include
therein any additional tract or tracts regarded as reasonably necessary or ad-
visable for the purpose of this agreement whenever such expansion is necessary
to conform with the purpose of this agreement. Upon any such expansion, the
participation percentages of all committed tracts shall be adjusted as provided
in Section 11 hereof.
Such expansion of the Unit Area shall be effected in the following manner:
(a) The Working Interest Owner or Owners of a tract or tracts desiring
to bring such tract or tracts into this Unit, shall file an appli-
cation therefor with Unit Operator requesting such admission,
(b) Unit Operator shall circulate a notice to each Working Interest
Owner of the proposed expansion, setting out the basis for ad-
mission, the unit participation to be assigned to such tract or
tracts, and other pertinent data. After negotiation (at Working
Interest Owners' meeting or otherwise) if 90 per cent of the
Working Interest Owners (on the basis of unit participations)
have agreed to such tract or tracts being brought into the Unit,
then Unit Operator shall, after preliminary concurrence of the
Director of the Geological Survey (hereinafter referred to as
the"Director"), prepare a notice of proposed expansion describing
the contemplated changes in the boundaries of the Unit Area,
the reasons therefor, and the proposed effective date thereof,
preferably the first day of a month subsequent to the date of
notice.
(c) Said notice shall be delivered to the Supervisor, and copies
thereof mailed to the last known address of each Working Interest
Owner, Lessee, and Lessor whose interests are affected, advising
that thirty (30) days will be allowed for submission to Unit
Operator of any objections.
(d) Upon expiration of the 30 -day period provided in the preceding
item (c) hereof, Unit Operator shall file with the Supervisor
evidence of mailing of the notice of expansion and a copy of
any objections thereto which have been filed with Unit Opeator,
together with an application, in sufficient number for approval,
of such expansion and with appropriate joinders .
(e) After due consideration of all pertinent information, the
expansion shall, upon approval by the Director, become effective
as of the date prescribed in the notice thereof.
3. UNITIZED SUBSTANCES: UNITIZED LAND AND UNITIZED FORMATION: All oil,
gas, and associated hydrocarbons underlying the lands committed to this agree-
ment, as to the Lyons Sand, are unitized under the terms of this agreement and
herein are called "Unitized Substances", and said lands shall constitute lands
referred to herein as "Unitized Land" or "land subject to this Agreement". The
Lyons Sand, hereinafter referred to as the "Unitized Formation", shall be con-
strued to mean that heretofore established underground reservoir referred to as
the Lyons Sand Formation which includes those sands, shales, and other formations
within the Unit Area as found between the depths of 9164 feet (-4104) and 9233
feet (-4173) on the Schlumberger-Electric log for the California-U.P.R,R. No. 1
Priddy well located in the NW3/4SW' of Section 23, T -8-N, R -66-W, Weld County,
Colorado.
4. TRACTS QUALIFIED FOR PARTICIPATION: On and after the effective date
hereof, the tracts within the Unit Area which shall be entitled to participation
in the production of Unitized Substances therefrom shall be those tracts within
the Unit Area and more particularly described in Exhibit "B" that are qualified
as follows:
(a) Each Tract as to which Working Interest Owners owning one
hundred per cent (1007.) of the Working Interest have become
parties to this agreement and the Unit Operating Agreement
and as to which basic Royalty Owners owning seventy-five per
cent (757) or more of the Royalty Interest have become parties
to this agreement.
(b) Each Tract as to which Working Interest Owners owning one
hundred per cent (100%) of the Working Interest have become
parties to this agreement and the Unit Operating Agreement and
as to which basic Royalty Owners owning less than seventy-five
per cent (757.) of the basic Royalty Interest have become parties
to this agreement, and as to which (1) all Working Interest Owners
in such Tract have joined in a request for the inclusion of such
Tract in the Unit Participation upon the basis of such commitment
status, and as to which (2) seventy-five per cent (757) of the
combined voting interests of Working Interest Owners in all Tracts
that meet the requirements of Subparagraph (a) have voted in
favor of the inclusion of such Tract. For the purpose of this
Sub -paragraph (b), the voting interest of a Working Interest Owner
shall be equal to the ratio that its Unit Participation attribu-
table to Tracts that qualify under Subparagraph (a) bears to the
total Unit Participation of all Working Interest Owners attribu-
table to all Tracts that qualify under Subparagraph (a).
(c) Each Tract as to which Working Interest Owners owning less
than one hundred per cent (1007) of the Working Interest have
become parties to this agreement and the Unit Operating Agree-
ment, regardless of the percentage of basic Royalty Interest
therein that is committed hereto; and as to which (1) the
Working Interest Owner who operates the Tract and all of the
other Working Interest Owners in such Tract who have become parties
to this agreement and the Unit Operating Agreement have joined in
a request for inclusion of such Tract in the Unit Participation
upon the basis of such commitment status, and have executed and
delivered an indemnity agreement indemnifying and agreeing to
hold harmless the other Working Interest Owners in the Unit
Area, their successors and assigns, against all claims and
demands that may be made by the owners of Working Interest in
such Tract who are not parties to this agreement, and which arise
out of the inclusion of the Tract in the Unit Participation;
and as to which (2) seventy-five per cent (757) of the com-
bined voting interest of Working Interest Owners in all
Tracts that meet the requirements of Subparagraphs (a) and (b)
have voted in favor of'the inclusion of such Tract and to accept
the indemnity agreement. For the purpose of this Subparagraph
(c), the voting interest of each Working Interest Owner shall be
equal to the ratio that its Unit Participation attributable to
Tracts that qualify under Subparagraphs (a) and (b) bears
to the total Unit Participation of all Working Interest Owners
attributable to all Tracts that qualify under Subparagraphs
(a) and (b). Upon the inclusion of such a Tract in Unit
Participation, the Unit Participation that would have been
attributed to the nonsubscribing owners of the Working Interest
in such Tract, had they become parties to this agreement and the
Unit Operating Agreement, shall be attributed to the Working
Interest Owners in such Tract who have become parties to such
agreements, in proportion to their respective Working Interests
in the Tract.
5. UNIT OPERATOR: CHEVRON OIL COMPANY is hereby designated as Unit
Operator and by signature hereto as Unit Operator agrees and consents to accept
the duties and obligations of Unit Operator for the development and production
of Unitized Substances as herein provided. Whenever reference is made herein
to "Unit Operator", such reference means the Unit Operator acting in that
capacity and not as an owner of interest in Unitized Substances, and the term
"Working Interest Owner" when used herein shall include or refer to Unit Operator
as the owner of a working interest when such an interest is owned by it.
The term "Working Interest Onwer", as used herein and in other contracts
relating to the Unitized Land, shall mean the owner of such an interest committed
and qualified hereto as may be obligated to bear or share either in cash or out
of production (other than by permitting the use of Unitized Substances for
development, production, pressure maintenance, or secondary recovery purposes)
a portion of all costs and expenses of drilling, developing, producing, and
operating the Unitized Land under this agreement and the Unit Operating Agreement.
Any interest in Unitized Substances which is a working interest as of the date
the owner thereof executes or ratifies this agreement shall thereafter be treated
as a Working Interest for all purposes of this agreement and the Unit Operating
Agreement.
6. RESIGNATION OR REMOVAL OF UNIT OPERATOR: Unit Operator shall have the
right to resign at any time, but such resignation shall not become effective
so as to release Unit Operator from the duties and obligations of Unit Operator
and terminate Unit Operator's rights as such for a period of six (6) months after'
written notice of intention to resign has been served by Unit Operator on all
Working Interest Owners and the Supervisor unless a new Unit Operator shall have
been selected and accepted and shall have taken over and assumed the duties and
obligations of Unit Operator prior to the expiration of said period.
The resignation of Unit Operator shall not release Unit Operator from
any liability for any default by it hereunder occurring prior to the effective
date of its resignation.
Unit Operator may, upon default or failure in the performance of its duties
or obligations hereunder, be subject to removal by the same percentage vote of
the Working Interest Owners determined in like manner as herein provided for
the selection of a new Unit Operator.
In all such instances of resignation or removal, until a successor Unit
Operator is selected and accepted, as hereinafter provided, the Working Interest
Owners shall be jointly responsible for the performance of the duties of Unit
Operator and shall, not later than thirty (30) days before such resignation or
removal becomes effective, appoint a common agent to represent them in any
action to be taken hereunder.
The resignation or removal of Unit Operator under this agreement shall not
terminate its right, title, or interest as the owner of a working interest or
other interest in Unitized Substances, but upon the resignation or removal of
Unit Operator becoming effective, Unit Operator shall deliver possession of all
equipment, materials., and appurtenances used in conducting unit operations and
owned by the Working Interest Owners to the new duly qualified successor Unit
Operator or to the owners thereof if no such new Unit Operator is elected, to
be used for the purpose of conducting unit operations hereunder. Nothing herein
shall be construed as authorizing removal of any material, equipment, or appur-
tenances needed for the preservation of any wells.
7. SUCCESSOR UNIT OPERATOR: Whenever Unit Operator shall tender his or
its resignation as Unit Operator, or shall be removed as hereinabove provided,
the Working Interest Owners shall, by affirmative vote of at least ninety per
cent (90%) of their voting interests as provided for in the Unit Operating Agree-
ment, select a successor Unit Operator; provided, however, that the negative
vote of any one Working Interest Owner, regardless of the size of the voting
interest which it owns, shall never serve to disapprove the selection of a new
Unit Operator approved by one hundered per
cent (100%) of the voting interests of
the remaining Working Interest Owners. Such selection shall not become effective
until a Unit Operator so selected shall accept in writing the duties and res-
ponsibilities of Unit Operator and the selection shall have been filed with the
Supervisor.
8. ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT: All costs and
expenses incurred by Unit Operator in conducting unit operations hereunder
shall be paid and
all in accordance
Unit Operator and
apportioned among and borne by the Working Interest Owners,
with the agreement or agreements entered into by and between
the Working Interest Owners, separately or collectively. Any
agreement or agreements entered into between the Working Interest Owners and
Unit Operator, as provided in this section, are herein referred to as the "Unit
Operating Agreement". Such Unit Operating Agreement shall also provide the manner
in which the Working Interest Owners shall be entitled to receive their respective
proportionate and allocated share of the benefits accruing thereto in conformity
with their underlying operating agreements, leases, or other independent contracts
and such other rights and obligations as between Unit Operator and the Working
Interest Owners as may be agreed upon by Unit Operator and the Working Interest
Owners; however, no such Unit Operating Agreement shall be deemed either to modify
any of the terms and conditions of this Unit Agreement or to relieve Unit Operator
of any right or obligation established under this Unit Agreement, and in case of
any inconsistency or conflict between the Unit Agreement and the Unit Operating
Agreement, this Unit Agreement shall prevail. Three true copies of any Unit
Operating Agreement executed pursuant to this section shall be filed with the
Supervisor.
9. RIGHTS AND OBLIGATIONS OF UNIT OPERATOR: Except as otherwise specifical-
ly provided herein, the exclusive right, privilege, and duty of exercising any
and all rights of the parties hereto, including surface rights, which are nec-
essary or convenient for prospecting for, producing, storing, allocating, and
distributing Unitized Substances are hereby granted and delegated to and shall
be exercised by Unit Operator as herein provided. Acceptable evidence of title
to said rights shall be deposited with Unit Operator and, together with this agree-
ment, shall constitute and define the rights, privileges, and obligations of
Unit Operator. Nothing herein, however, shall be construed to
any land, lease, royalty interest, working interest, operating
communitization agreement, it being understood that under this
Operator, in its capacity as Unit Operator, shall exercise the
transfer title
agreement, or
agreement Unit
rights of possession
to
and use vested in the parties hereto only for the purposes herein specified.
10, PLAN OF OPERATION: It is recognized and agreed by the parties hereto
that all land within the Unit Area is reasonably proved to be productive of oil
and gas
present
under a
in paying quantities and that no further development is necessary at the
time. However, it is contemplated that the Unitized Land will be operated
plan of pressure maintenance or some form of secondary recovery in order
to effect the greatest recovery of Unitized Substances, prevent waste, and conserve
natural resources, and to implement such plan additional wells may be drilled.
The parties hereto agree that Unit Operator may produce brine or water, or both,
from any formation underlying the Unitized Land for use in injecting into the
Unitized Formation and, further, that Unit Operator may inject brine, water, air,
gas, oil, and any one or more other substances, irrespective of whether produced
from the Unitized Formation, into the Unitized Formation through any well or
wells completed therein; provided, however, that the above operations may be
conducted by Unit Operator only in accordance with a plan of operation approved
by the Working Interest Owners, as provided for in the Unit Operating Agreement,
and by the Supervisor.
Unit Operator shall submit to the Supervisor, within ninety (90) days after
the effective date of this agreement, a plan of operation for the Unitized Land
and, upon approval thereof by the Supervisor, it shall constitute the operating
obligations of Unit Operator under this agreement for the period specified therein.
Thereafter, from time to time before the expiration of any existing plan, Unit
Operator shall submit for the approval of the Supervisor a plan for an additional
specified period for the operation of the Unitized Land. Said plan or plans shall
be modified or supplemented when necessary to meet changed conditions. Reasonable
diligence shall be exercised in complying with the obligations of any approved
plan of operation.
11. PARTICIPATION AND ALLOCATION OF PRODUCTION: The tract participation
set forth opposite each tract in Exhibit "B" represents the portion of Unitized
Substances which, if all tracts are qualified for unit participation, will be
allocated to each such tract as of the effective date of this agreement based
on the following formula:
Tract Participation
257. oil effective acre-feet Lyons Sand in tract
oil effective acre-feet Lyons Sand in unit area
+50% tract production during first 6 months of 1963
unit area production during first 6 months of 1965
+25% tract cumulative production to July 1, 1965
unit area cumulative production to July 1, 1965
Promptly after approval of the Unit Agreement, if all Tracts are not quali-
fied for participation hereunder, Unit Operator shall file an Exhibit "C" to
show all Tracts qualified for participation under this agreement by setting forth
opposite each Tract a revised tract participation therefore, which shall be cal-
culaed by using the same Tract factors and formula which were used to arrive
at the Tract Participation of each Tract as set out in the original Exhibit " B"
but applying the same only to those Tracts which are qualified for participation
as of the effective date of the Unit Agreement. Said Exhibit "C" shall be subject
to approval by the Supervisor.
If after the effective date of this agreement any Tract or Tracts are sub-
sequently qualified for participation hereunder because of expansion of the unit
under Section 2 , Unit Area, or any Tract or Tracts within the Unit Area not
qualified for participation as of the effective date hereof are subsequently
qualified for participation under the provisions of Section 26, Subsequent Joinder,
and Section 4, Tracts Qualified for Unit Participation, or if any Tract is
eliminated from participation as provided in Section 25, Loss of Title, the
schedule of participation as shown in Exhibit "C" shall be revised by the Unit
Operator to show the new Tract Participations of all the then qualified Tracts,
and the revised Exhibit "C", upon approval by the Supervisor under Section 25 and
by the Director under Sections 2 and 26 hereof, shall govern the allocation of
production from and after the effective date thereof until a new schedule is so
approved. In any such revised Exhibit "C", pursuant to this paragraph, the Tract
Participation of the previously qualified Tracts shall remain in the same ratio
one to the other.
No tract committed and qualified under this agreement shall be subsequently
excluded from participation hereunder on account of depletion of Unitized Substances,
and nothing herein contained shall be construed as requiring any retroactive
adjustment for production obtained prior to the effective date of this agreement.
For the purpose of determining any and all benefits accruing under this
agreement, each tract committed and qualified hereto shall have allocated to it
a proportion, equal to its percentage participation, of all Unitized Substances
produced from the Unitized Land (except any part thereof used in conformity with
good operating practices within the Unit Area for drilling, operating, camp, and
other production or development purposes, for pressure maintenance or secondary
recovery operations in accordance with a plan of operation approved by the Super-
visor, or unavoidably lost). The amount of Unitized Substances allocated to
each tract shall be deemed to be produced from such tract. It is hereby agreed
that production of Unitized Substances from any part of the Unitized Land shall
be allocated as provided herein regardless of whether oil or gas is being produced
from any particular tract committed hereto and qualified. If the working interests
or the royalty interests in any tract are divided with respect to separate par-
cels or portions of such tract and owned severally by different persons, the
percentage participation assigned to such tract may, in the absence of a record-
able instrument among all owners fixing the division of ownership, be divided
among such parcels or portions in proportion to the number of surface acres in
each.
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12. ROYALTY SETTLEMENT: The United States and all other royalty owners
who, under any existing contract, are entitled to take in kind a share of the
substances now unitized hereunder produced from any tract shall hereafter be
entitled to the right to take in kind their share of the Unitized Substances
allocated to such tract, and Unit Operator is hereby authorized and shall make
deliveries of such royalty share taken in kind in conformity with the applicable
contracts, laws, and regulations. Settlement for royalty interests not taken
in kind shall be madet7 the Working Interest Owners responsible therefor under
existing contracts, laws, and regulations on or before the last day of each month
for Unitized Substances produced during the preceding calendar month; provided,
however, that nothing herein contained shall operate to relieve the lessees of
any land from their respective lease obligations for the payment of any royalties
due under their leases except that said royalties shall be computed in accordance
with the terms of this agreement.
The Working Interest Owners in each tract shall settle with royalty
owners in such tract on the basis of the amounts of Unitized Substances allo-
cated to such tract and at the rates specified in the leases and other contracts
covering such tract.
If gas or any other substance obtained from lands or formations not subject
to this agreement is introduced into the Unitized formation for use in pressure
maintenance, stimulation of production, or increasing ultimate recovery, which
shall be in conformity with a plan first approved by the Supervisor, a like amount
of gas or other substances, with due allowance for loss or depletion from any
cause, may be withdrawn from the formation into which the gas or other substance
was introduced, royalty free; provided, however, that in the event dry gas is
the outside substance which has been introduced, royalty shall be payable on the
products extracted therefrom. Such withdrawal shall be at such time as may be
provided in the plan of operation or as may otherwise be consented to by the
Supervisor as conforming to good petroleum engineering practice; provided,
however, that such right of withdrawal shall terminate on the termination of
this agreement.
Royalty due the United States under the Federal lease committed and qualified
shall be computed as provided in the operating regulations and paid in value
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or delivered in kind as to all. Unitized Substances on the basis of the amounts
thereof allocated to the Federal land as provided herein at the rates specified
in said Federal lease, or at such lower rate or rates as may be authorized by
law or regulation.
13. RENTAL SETTLEMENT: Rentals or minimum royalties due on leases
committed and qualified shall be paid by Working Interest Owners responsible
therefor under existing contracts, laws, and regulations, provided that nothing
herein contained shall operate to relieve the lessees of any land from their
respective lease obligations for the payment of any rental or minimum royalty in
lieu thereof due under their leases. Rental or minimum royalty for lands of the
United States subject to this agreement shall be paid at the rate specified in
the lease from the United States covering said lands, unless such rental or
minimum royalty is waived, suspended, or reduced by law or by approval of the
Secretary of the Interior (hereinafter called "Secretary") or his duly authorized
representative.
14. CONSERVATION: Operations hereunder and production of Unitized Sub-
stances shall be conducted to provide for the most economical and efficient
recovery of said substances without waste, as defined by or pursuant to State or
Federal law or regulation.
15. DRAINAGE: The Unit Operator shall take appropriate and adequate
measures to prevent drainage of unitized substances from unitized land by wells
on land not subject to this agreement.
16. LEASES AND CONTRACTS CONFORMED AND EXTENDED: The terms, conditions
and provisions of all leases, subleases and other contracts relating to
exploration, drilling, development or operation, for oil or gas of lands
committed and qualified under this agreement are hereby expressly modified and
amended to the extent necessary to make the same conform to the provisions
hereof, but otherwise to remain in full force and effect, and the parties hereby
consent that the Secretary shall and by his approval hereof, or by the approval
hereof by his duly authorized representative, does hereby establish, alter,
change, or revoke the drilling, producing, rental, minimum royalty and roy-
alty requirements of Federal leases committed and qualified and the regulations
in respect thereto, to conform said requirements to the provisions of this agree-
ment, and, without limiting the generality of the foregoing, all leases, subleases,
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and contracts are particularly modified in accordance with the following:
(a) The development and operation of the Unitized Land under the
terms hereof shall be deemed full performance of all obligations
for development and operation with respect to each and every
part or separately owned tract subject to this agreement, regard-
less of whether there is any development of any particular part
or tract of the Unit Area, notwithstanding anything to the contrary
in any lease, operating agreement, or other contract by and between
the parties hereto, or their respective predecessors in interest,
or any of them.
(b) Drilling and producing operations performed hereunder upon any
tract of Unitized Land will be accepted and deemed to be performed
upon and for the benefit of each and every tract of Unitized Land,
and no lease shall be deemed to expire by reason of failure to
drill or produce wells situated on the land therein embraced,
(c) Suspension of drilling or producing operations on all Unitized Land
pursuant to direction or consent of the Secretary or his duly
authorized representative shall be deemed to constitute such sus-
pension pursuant to such direction or consent as to each and
every tract of Unitized Land.
(d) Each lease, sublease, or contract relating to the exploration,
drilling, development, or operation for oil or gas of lands other
than those of the United States committed and qualified under this agree-
ment, which, by its terms, might expire prior to the termination of
this agreement is hereby extended beyond any such term so provided
therein so that it shall be continued in full force and effect for
and during the term of this agreement
17, COVENANTS RUN WITH LAND The covenants herein shall be construed
to be covenants running with the land with respect to the intanst of the
parties hereto and their successors in interest until this agreement terminates,
and any grant, transfer, or conveyance of interest in land or leases subject
hereto shall be and hereby is conditioned upon the assumption of all privileges
and obligations hereunder by the grantee, transferee, or other successor in
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interest. No assignment or transfer of any working interest subject hereto
shall be binding upon Unit Operator until the first day of the calendar month
after Unit Operator is furnished with the original, photostatic, or certified
copy of the instrument of transfer; and no assignment or transfer of any royalty
interest subject hereto shall be binding upon the Working Interest Owner re-
sponsible therefor until the first day of the calendar month after said Work-
ing Interest Owner is furnished with the original, photostatic, or certified
copy of the instrument of transfer,
18. EFFECTIVE DATE AND TERN This agreement shall become effective on the
first day of the month following approval by the Secretary or his duly authorized
representative and shall remain in effect so long as Unitized Substances can be
produced from the Unitized Land in paying quantities, i.e., in quantities suf-
ficient to pay for the cost of producing same, and so long thereafter as diligent
operations (including secondary recovery operations) are in progress widlrout cessa-
tion of more than ninety (90) consecutive days and so long thereafter as
Unitized Substances can be produced as aforesaid. This agreement shall remain in
effect during any period of suspension approved by the Director as provided for
in Section 16 (c), Leases and Contracts Conformed and Extended. Termination
under this paragraph shall be effective as of the first day of the month after
the Unit Operator determines, on confirmatory data satisfactory to the Director,
that the unit is no longer paying.
This agreement may be terminated at any time by the Working Interest Owners
whose voting interests, as specified in the Unit Operating Agreement, aggregate
not less than ninety per cent (90%), subject to the approval of the Director;
notice of any such approval shall be given by Unit Operator to all parties hereto.
19. RATE OF PROSPECTING, DEVELOPMENT AND PRODUCTION a The Director is hereby
vested with the authority to alter or modify from time to time, at his discretion,
the quantity and rate of production under this agreement when such quantity and
rate are not fixed pursuant to Federal or State law or do not conform to any state-
wide voluntary conservation or allocation program which is established, recognized
and generally adhered to by the majority of operators in such State, such authority
being hereby limited to alteration or modification in the public interest, the
purpose thereof, and the public interest to be served thereby to be stated in the
order of alteration or modification. Without regard to the foregoing, the Director
-14-
is also hereby vested with authority to alter or modify from time to time, in his
discretion, the rate of prospecting and development and the quantity and rate of
production under this agreement when such alteration or modification is in the
interest of attaining the conservation objectives stated in this agreement and is
not in violation of any applicable Federal or State law.
Powers in this section vested in the Director shall be exercised only
after notice to Unit Operator and to Union Pacific Railroad Company and oppor-
tunity for hearing to be held not less than fifteen (15) days from notice. Never-
theless, if Union Pacific Railroad Company shall object to any such order of
alteration or modification, it shall notify the Director in writing, spec1iying
its objections. If within thirty (30) days the Director and Union Pacific Rail-
road Company do not agree with respect to such objections, then each may appoint
a representative to serve as a member of a committee to arbitrate the ,:.attcc,
If the two members are unable to agree as to what steps should be taken, they
shall select a third member to meet with them for consideration of the matter
in dispute. They shall meet as a committee of three and the concurring vote
of any two shall determine what steps, if any, shall be taken in the premises.
Unit Operator and the other owners of working interests shall be given an oppor-
tunity to have a representative present and voice any objections to the proposed
alteration or modification, The third member to be selected must be an impartial,
qualified petroleum engineer by education and occupation and with not less than
five years° experience in the field of petroleum engineering involved in the
matter under dispute, and upon termination of the matter, pursuant to final vote,
his functions shall cease and he shall be paid for his services, and the cost
thereof, together with any other costs incurred by the other two members in the
determination of the matter, shall be charged as an operating expense under this
agreement, The decision of the committee, arrived at as aforesaid, shall be
promptly communicated to Unit Operator, whose duty it shall be to enforce the
order as soon as that can be reasonably accomplished.
20, APPEARANCES: Unit Operator shall, after notice to other parties
affected, have the right to appear for or on behalf of any and all interests
affected hereby before the Department of the Interior and to appeal from orders
issued under the regulations of said Department or to apply for relief from any
of said regulations or in any proceeding relative to operations before the
-15-
Department of the Interior or any other legally constituted authority; provided,
however, that any ocher interested party shall also have the right, at his own
expense, to be heard in any such proceeding.
21. NOTICES: All notices, demands, or statements required hereunder to
be given or rendered to the parties hereto shall be deemed fully given if given
in writing and personally delivered to the party or sent by postpaid registered
or certified mail, addressed to such party or parties at their respective addresses
set forth in connection with the signatures hereto or the ratifications or
consents hereof or to such other address as any such party may have furnished
in writing to the party sending the notice,
iemand, or statement.
22. NO WAIVER OF CERTAIN RIGHTS: Nothing in
shall be construed as a waiver by any party hereto
legal or constitutional right or defense as to the
this agreement contained
of the right to assert any
validity or invalidity of any
law of the State of Colorado, or of the United States or regulations issued
thereunder in any way affecting such party or as a waiver by any such party of
any right beyond his or its authority to waive.
23. UNAVOIDABLE DELAY: All obligations under this agreement requiring
Unit Operator to commence or continue drilling or to operate on or produce Unitized
Substances from any of the lands covered by this agreement shall be suspended while,
but only so long as, Unit Operator despite the exercise of due care and diligence
is prevented from complying with such obligations, in whole or in part, by strikes,
acts of God, Federal, State, or municipal law or agencies, unavoidable
uncontrollable delays in transportation, inability to obtain necessary
in open market, or other matters beyond the reasonable control of Unit
whether similar to matters herein enumerated or not.
24. NON-DISCRIMINATION: In connection with the performance of work under
this agreement, the operator agrees to comply wish all of the provisions of
Section 202 (1) to (7) inclusive, of Executive Order 11246 (30 F.R. 12319), which
are hereby incorporated by reference in this agreement
25. LOSS OF TITLE: In the event title to any tract of Unitized Land shall
fail and the true owner cannot be induced to join in this Unit Agreement, such
tract shall automatically be regarded as not committed hereto. In the event
of a dispute as to title as to any royalty, working interest, or other interests
subject hereto, payment or delivery on account thereof may be withheld without
-16-
accidents,
materials
Operator
liability for interest until the dispute is finally settled; provided that, as
to Federal land or leases, no payment of funds due the United States should be
withheld, but such funds shall be deposited as directed by the Supervisor to be
held as unearned money pending final settlement of the title dispute and then
applied as earned or returned in accordance with such final settlement.
Unit Operator, as such, is relieved from any responsibility for any defect
or failure of any title hereunder.
26. NON -JOINDER AND SUBSEQUENT JOINDER; If the owner of any substantial
interest in a tract within the Unit Area fails or refuses to subscribe or consent
to this agreement, the owner of the working interest in that tract may withdrad
said tract from this agreement by written notice to the Director and the Unit
Operator prior to the approval of this agreement by the Director. Any oil or
gas interests in lands within the Unit Area not committed hereto prior to sub-
mission of this agreement for final approval may thereafter be committed hereto
by the owner or owners thereof subscribing or consenting to this agreement, and,
if the interest is a working interest, by the owner of such interest also subscri-
bing to the Unit Operating Agreement.
It is understood and agreed that after the effective date hereof there also
shall be the right of subsequent joinder, but only on such terms and conditions
as may be negotiated between the owner or owners of oil or gas interests within
the Unit Area whose interests are not committed to this agreement and Unit
Operator, acting on behalf of the Working Interest Owners after being duly author-
ized by them as provided for in the Unit Operating Agreement in Article 4.3,
Voting Procedures. Such joinder by a Working Interest Owner must be evidenced
by his executing or ratifying this Unit Agreement and the Unit Operating Agreement.
Such joinder by a non -working interest owner mustbe evidenced by his executing
or ratifying this Unit Agreement and must be consented to in writing by the Working
Interest Owner committed and qualified and responsible for the payment of any
benefits that may accrue hereunder in behalf of ruch non -working interest owner.
Except as may otherwise herein be provided, subsequent joinders to this agreement
shall be effective as of the first day of the month following the filing thereof
with the Supervisor, unless objection to such joinder is duly made within sixty
(60) days by the Director.
-17-
27. EXECUTION: This agreement may be executed in any number of counter-
parts, no one of which needs to be executed by all parties, or may be ratified
or consented to by separate instrument in writing specifically referring hereto
and shall be binding upon all those parties who have executed such a counterpart,
ratification, or consent hereto with the same force and effect as if all such
parties had signed the same document and regardless of whether or not it is
executed by all other parties owning or claiming an interest in the lands within
the Unit Area.
28. TAXES: Each party hereto shall, for its own account, render and pay
its share of any taxes levied against or measured by the amount or value of the
Unitized Substances produced from the Unitized Land; provided, however, that if
it is required or if it be determined that Unit Operator or the Working Interest
Owners must pay or advance said taxes for the account of the parties hereto,
it is hereby expressly agreed that the parties so paying or advancing said taxes
shall be reimbursed therefor by the parties hereto, including royalty owners, who
may be responsible for the taxes on their respective allocated share of said
Unitized Substances. No such taxes shall be charged to the United States or
to any lessor who has a contract with his lessee which requires the lessee to
pay such taxes.
29. NO PARTNERSHIP: It is expressly agreed that the relation of the parties
hereto is that of independent contractors and nothing in this agreement contained,
express or implied, or any operations conducted hereunler, shall create or be
deemed to have created a partnership or association between the parties hereto
or any of them.
30. CORRECTION OF ERRORS: It is hereby agreed by all parties to this
agreement that Unit Operator is empowered to correct any mathematical or clerical
errors which may exist in the pertinent exhibits to this agreement; provided,
however, that correction of any error other than mathematical or clerical shall
be made by Unit Operator only after first having obtained approval of Working
Interest Owners and the Supervisor.
-18-
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed and have set opposite their respective names the date of execution.
UNIT OPERATOR AND WORKING INTEREST OWNER
CHEVRON OIL COMPANY
Date:
By
Its Contract Agent, Western Division
By
Its Assistant Secretary
Date UNION PACIFIC RAILROAD COMPANY
Attest By
Chief Executive Officer
Natural Resources Division
Date MONSANTO COMPANY
Attest By
Its
STATE OF )
COUNTY OF )
SS
On this day of , 19 , before me
, a Notary Public in and for said
county, personally appeared and
to me personally known, who being by me duly sworn, did say that they are the
Contract Agent, Western Division and Assistant Secretary respectively of Chevron
Oil Company, a corporation organized and existing under and by virtue of the laws
of the State of California, and that they as such Contract Agent, Western Division
and Assistant Secretary, being authorized by its bylaws and/or Board of Directors
so to do, signed, sealed, executed and acknowledged the foregoing instrument on
behalf of said corporation as their voluntary act and deed and the voluntary act
and deed of said corporation for the purposes and consideration therein contained
by signing the name of the corporation by themselves as Contract Agent, Western
Division and Assistant Secretary and that the seal affixed to said instrument is
the corporate seal of said corporation, and the above named officers acknowledged
to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my official signature and affixed
my notarial seal the day and year first above written.
(Seal) Signature of Notary Public
-19-
STATE OF CALIFORNIA )
) SS
COUNTY OF LOS ANGELES )
The foregoing instrument was acknowledged before me this day
of , 19 , by Lee S. Osborne as Chief Executive Officer -
Natural Resources Division, UNION PACIFIC RAILROAD COMPANY, a corporation.
Witness my hand and official seal.
Notary Public
My Commission Expires
Corporation:
STATE OF )
COUNTY OF )
ss.
The foregoing instrument was acknowledged before me this day
of , 19 , by as
of , a corporation.
Witness my hand and official seal.
My commission expires
Notary Public
-20-
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