HomeMy WebLinkAbout20151105.tiff RESOLUTION
RE: APPROVE RATIFICATION OF OIL AND GAS LEASE WITH AMOCO PRODUCTION
COMPANY AND AUTHORIZE CHAIR TO SIGN - S26, 28, AND 30, T2N, R64W
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
WHEREAS, the Board has been presented with a Ratification of an Oil and Gas Lease
from Anadarko E&P Onshore LLC, between the County of Weld, State of Colorado, by and
through the Board of County Commissioners of Weld County, and Amoco Production Company,
with terms and conditions being as stated in said ratification, and
WHEREAS, after review, the Board deems it advisable to approve said ratification, a copy
of which is attached hereto and incorporated herein by reference.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld
County, Colorado, that the Ratification of an Oil and Gas Lease from Anadarko E&P Onshore
LLC, between the County of Weld, State of Colorado, by and through the Board of County
Commissioners of Weld County, and Amoco Production Company be, and hereby is, approved.
BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized to
sign said ratification.
The above and foregoing Resolution was, on motion duly made and seconded, adopted
by the following vote on the 20th day of April, A.D., 2015, nunc pro tunc January 1, 2013.
BOARD OF COUNTY COMMISSIONERS
WELD 1CAOO�U(NGT'Y, COL RSA„DO
•
ATTEST: �� ;� ` pia" it ` e chair wJ.e�
arbara Kirkmeyer, hair
Weld County Clerk to the Board D n
0 .
_ � nn - Mike Freeman, Pro-Tem
BY. lA ASC(� �1�'��' �� C.
D ty Clerk to t•e Board
"Ida .nP. Con -y
APPROV D AS TO FORM: l� r� _s. ' A.
q
„MO A. Cozad
fir.
County Attorney Vit u��Em'AeXCUSED
Date of signature: 5h Steve Moreno
CC ca (RF)
5/11 2015-1105
LE0057-1
LE0057-2
LE0057-3
BOARD OF COUNTY COMMISSIONERS
PASS-AROUND REVIEW/ WORK SESSION REQUEST
RE: Proposed Ratification of 1977 Oil/Gas Lease
DEPARTMENT: County Attorney DATE: 04/01/2015
PERSON REQUESTING: Brad Yatabe, Assistant County Attorney
Brief description of the problem/issue:
Weld County leased its oil and gas interests related to a 15.68 acre County owned parcel to the Amoco Production •
•
Company. The lease initial tern was for two years which ended on April 21, 1979. On April 23, 1979,an amendment to
the lease was approved by the Board of Commissioners. The intent of the amendment was apparently to extend the 2 year
initial term by 120 days to allow for drilling operations to commence. The spud date of the Starks#1 well on the property
was May 25, 1979. Despite the apparent intent, the language of the amendment deleted the original two year term and
substituted the 120 day period which then ended the original lease on August 19, 1977. Royalty payments from the
Starks #1 well and other wells since producing have been made to Weld County pursuant to the terms of the lease. The
successor in interest to the lease, Anadarko E&P Onshore LLC noticed the issue and contacted the County requesting that
the County ratify the original lease and consider the terms in full force and effect. Because the County has received
payments pursuant to the lease and executed division orders, Anadarko has been advised by their attorney that a claim by
the County asserting that the lease is invalid is unlikely to succeed. Nonetheless, to clarify the issue as a matter of record,
Anadarko is requesting the ratification by the County.
Attached are Anadarko's letter making the request for ratification,the proposed document fbr the Board to sign to
ratify the lease, the original lease,the lease amendment,and relevant portions of Anadarko's legal opinion.
What options exist for the Board? (include consequences,impacts,costs,etc. of options)
I. Sign the ratification of the 1979 lease and continue receiving royalties pursuant to the terms of the lease.
2. Ignore the request to ratify the 1979 lease. It seems doubtful that Anadarko would stop paying royalties or assert that
the lease is invalid. It would remain an unsettled issue until one of the parties decides to address it legally.
3. Assert that the 1979 lease is invalid and renegotiate the 1979 lease to update the terms. Since the County has accepted
royalties and signed off on division orders for many years as if the lease were in effect, asserting that the lease is invalid
would likely tail.
Recommendation:
Because the amount of acreage involved is relatively small at 15.68 acres and because the County has received,
and continues to receive, royalties based upon the 1979 lease, my recommendation is for the Board to sign the ratification.
Ratifying the agreement benefits both the County and Anadarko by clarifying the issue for both parties. if ratification is
acceptable to the Board, I will place the item on the Board's agenda for consideration.
Approve Schedule
Recommendation Work Session Other/Comments:
Barbara Kirkmcyer,Chair
Mike Freeman W\C 1 I
Sean P. Conway
Julie Cozad
r 2015-1105
Steve!Moreno • _.._....___
LE 005-7
LE 0057 -a..
�� 00 5S7- 3
ANADARKO E&P ONSHORE t.LC 105013 ' z SU. ,. 80202
P.ti . , n }"=} LYI C: as i. 2 21/ 3r79
♦ ada
E&P Onshore LLC
March 4, 2015
Ms. Karla Ford
Weld County Office of the Commissioners
1150 O Street, Post Office Box 758
Greeley, Colorado 80632
Re: Ratification of Weld County, Colorado Oil and Gas Lease
Dear Ms. Ford,
Following up on today's phone conversation,please find enclosed with this letter a copy of the
Weld County, Colorado Oil and Gas Lease covering 15.68 acres in Sections 26, 28, and 30 of
Township 2 North, Range 64 West and recorded at Reception No. 1718197, along with a copy of
an Extension and Amendment of Oil and Gas Lease recorded at Reception No. 1817667.
When I reviewed these documents, I discovered that the language used in the extension and
amendment agreement was insufficient to accomplish its intent. Specifically, the extension
deleted this paragraph from the lease:
"Subject to the other provisions herein contained, this lease shall be for a
term of two years from this date (called "primary term") and as long
thereafter as oil, gas and other hydrocarbons arc produced from said land
hereunder or drilling or reworking operations are conducted thereon."
and replaced it with these paragraphs:
"Subject to the further provisions hereof, this lease shall remain in force for a
term ending 120 days from this date, called "Primary Term," and as long
thereafter as either (1) oil, gas or other minerals are produced (whether or not in
paying quantities) from the leased premises or on lands pooled therewith, or (2)
operations are conducted on the leased premises or on lands pooled therewith, or
(3) there is a well or wells on the leased premises or on lands pooled therewith
which, although capable of producing oil, gas or other minerals in paying
quantities hereunder is shut in for lack of a market or outlet.
"Operations as used herein means all operations for the drilling of a well for oil or
gas, including building of roads, preparation of the drill site, moving in for
Anadarko Lease Ratification
March 4,2015
Page 2
drilling, drilling, deepening, plugging back, reworking or recompleting and also
secondary recovery operations benefiting the lease premises."
In doing so, the extension changed the end of the lease's primary term from April 21, 1979,
which is two years from the date of the lease, to August 19, 1977, which is 120 days from the
date of the lease. Given that the document was called an "extension" and that the document
referred to the lease as "in full force and effect," I believe the intent of the extension was to
extend the primary term to allow for the drilling of the Starks #1 well, API 05-123-09716, which
was spud on May 25, 1979. Royalty payments from the Starks #1 well and other wells since
producing from the lands have been made to Weld County.
In order to clear up this issue in record title, I request Weld County execute the enclosed
Ratification of Oil and Gas Lease and return this document to me for recording. Once recorded,
I will send a copy to you for your records. Should you have any questions, please do not hesitate
to contact me by email to Gil.Gillespie@anadarko.com or phone call to (720) 929-6960. 1
greatly appreciate your time and attention to this matter.
Warm regards,
Gil Gillespie, Landman
Enclosures(3)
RATIFICATION OF OIL AND GAS LEASE
THIS RATIFICATION OF OIL AND GAS LEASE is made and delivered as of the 1"
day of January 2013, by Weld County, Colorado, a political subdivision of the State of
Colorado, by the Board of Commissioners,for its respective interests,as original "Lessor"under
that certain Oil and Gas Lease from Lessor to Amoco Production Company dated April 21, 1977,
recorded on May 4, 1977 at Reception No. 1718197 with the Weld County, Colorado Clerk and
Recorder's Office (the "Lease"), covering certain lands located in Sections 26, 28, and 30 of
Township 2 North, Range 64 West, Weld County, Colorado, which are more particularly
described in the Lease(the"Lands").
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Lessor hereby
ratifies, adopts, and affirms the Lease in all of its teens and provisions and declares that the
Lease is in full force and effect as to all of the Lands. To the extent necessary to give full force
and effect to this Ratification, Lessor hereby leases, demises,grants, and lets the Lands unto the
current lessee(s)of record on the same terms and conditions contained in the Lease.
This instrument shall be binding upon and inure to the benefit of Lessor, the successor
lessee(s),and their respective successors and assigns.
LESSOR: ATTEST:
Weld County,Colorado,a political Weld County Clerk to the Board
subdivision of the S ate of Colorado
askida Afehutte,L,
By: Barbara Kir eyer,Chair of the Board By: ' er is 4
of County Commissioners, for its respective
interest APR 2 0 2015 161 t V
jfi
ACKNOWLEDGME. ,::`-
STATE OF COLORADO
§
COUNTY OF WELD §
The foregoing instrument was acknowledged before me this�0 day of April 2O15 by
Barbara Kirkmeyer as Chair of the Board of County Commissioners for Weld County,Colorado,
a political subdivision of the State of Colorado,for its respective interest.
Witness my hand and official seal.
Signature•
t�
SEAL CHERYL LYNN HEWITT /z._ L • AL� l�
NOTARY PUBLIC Name(Print)
STATE OF COLORADO My Commission Expires oL �d
NOTARY ID 20144048044 �r/� �1 /// n
MY COMMISSION EXPIRES DECEMBER 19,2018 ./ 64 c7Y ( L eke -J7 i'oAt 2
Title of Officer
4102954 Pages: 1 of 1
04/29/2015 12:57 PM R Fee:$0.00
Carly Koppes, Clerk and Recorder. Weld County. CO //� s!�
■III M��.rIL'4�'I r411�<<f�i{rl{i� f'�+�Rr�, N'Mk h�,�l Yl�, �l 111 o�o�T
JCD J Q ru-I v:J •
BOOK Recorded at� o'clock g) M MAY 4 1
977
171819'7
7 96 Rec. No. ..........._.._.._.._ _...Mary •Ann Feuerstem
, Recorder
!J' WELD COUNTY. COLORADO OIL AND CAS LEASE
THIS AGREEMENT made this day of April . 19 77 between Weld County, Colorado, a political subdivision of
the State of Colorado, by the Board of County Commissioners, for its respective interests, C/0 Board of County Commis-
sioners, Weld County Centennial Center, 915 10th Street, Greeley, Colorado 80631, Lessor (whether one or more), and
AMOCO PRODUCTION COMPANY Lessee, WITNESSETH:
1. Lessor in consideration of Ten and More Dollars (1 10.00+ ),
co in hand paid, of the royalties herein provided, and of the agreement of Lessee herein contained, hereby grants, leases
,—
and lets exclusively unto Lessee for the purpose of investigating, exploring, prospecting, drilling and mining for and
.—i structure oil, gas and other hydrocarbons, laying pipe lines, building tanks, power stations, telephone lines and other
structures thereon to produce, save, take care of, treat, transport and own said products, arid housing its employees.,(subject to all applicable Weld County Zoning Regulations),
SEE ATTACHED LEGAL DESCRIPTION
en
o In addition to the land above described, Lessor hereby grants, leases and lets exclusively unto Lessee to the same
ff' extent as if specifically described herein all lands owned or claimed by Lessor which are adjacent, contiguous to or
form a part of the lands above particularly described, Including all oil, gas and other hydrocarbons underlying lakes,
rivers, streams, roads, easements and rights-of-way which traverse or adjoin any of said lands. For rental payment
purposes, the land included within this lease shall be deemed to contain 15.68 acres, whether it actually
,-.r comprises more or less. (2)
2. Subject to the other provisions herein contained, this lease shall be for a prod of brio years i fland this e date
_- (called "primary term") and as long thereafter as oil, gas or other hydrocarbons, is produced from said land hereunder,
or drilling or reworking operations are conducted thereon.
3. The royalties to be paid by Lessee are: (a) on oil, one-eighth of that produced and saved from said land, the
same to be delivered at the wells, or to the credit of Lessor into the pipe line to which the wells may be connected;
Lessee may from time to time purchase any royalty oil in its possession, paying the market price therefor prevailing
for the field where produced on the date of purchase; (b) on gas, including casinghead gas or other hydrocarbon sub-
stance, produced from said land and sold or used off the premises or in the manufacture of gasoline or other products
therefrom, the market value at the well of one-eighth of the gas so sold or used, provided that on gas sold at the
wells the royalty shall be one-eighth of the amount realized from such sale; on sulfur the royalty shall be fifty
cents (50Q) per long ton. Lessee shall have free use of oil, gas, coal, wood and water from said land, except water
from Lessor's wells. for all operations hereunder, and the royalty on oil and gas shall be computed after deducting
any so used. If a well capable of producing gas in paying quantities is completed on the above described land and is
shut in, this lease shall continue in effect for a period of one year from the date such well is shut in. Lessee or
any assignee may thereafter, in the manner provided herein for the payment or tender of delay rentals, pay or tender
to Lessor as royalty, on or before one year from the date such well is shut in, the sum of $100.00 per well, and, if
such payment or tender is made, this lease shall continue in effect for a further period of one year. In like manner
and upon like payments or tenders annually, made on or before each anniversary of the shut-in date of such well, this
lease shall continue in effect for successive periods of twelve (12) months each.
4. If operations for drilling are not commenced on said land as hereinafter provided, on or before one year from
this date, the lease shall then terminate as to both parties, unless on or before such anniversary date Lessee shall
nay or tender to Lessor, and shall continue as the depository for all rentals payable hereunder regardless of changes
in ownership of said land or the rentals either by conveyance or by the death or incapacity of Lessor, the sum of
Fifteen and 68/100 Dollars (S 15.68 ), (herein called rental), which shall
cover the privilege of deferring commencement of operations for drilling for a period of twelve (12) months. In like
manner and upon like payments or tenders annually the commencement of operations for drilling may be further deferred
for successive periods of twelve (12) months each during the primary term. The payment or tender of rental herein
referred to may be made in currency, or check at the option of the Lessee; and the depositing of such currency, or
check in any post office, properly addressed to the Lessor, on or before the rental paying date, shall be deemed pay-
ment as herein provided. The down cash payment is consideration for the lease according to its terms and shall not
he allocated as mere rental for a period. Lessee may at any time execute and deliver to Lessor or place of record
a release or releases covering any portion or portions of the above described premises and thereby surrender this
lease as to such portion or portions and be relieved of all obligations as to the acreage surrendered, and thereafter
the rentals payable hereunder shall be reduced in the proportion that the acreage covered hereby is reduced by said.
release or releases.
5. Should any well drilled on the above described land during the primary term before production is obtained be
a dry hole, or should production be obtained during the primary term and thereafter cease, then and in either event.
if operations for drilling an additional well are not commenced or operations for reworking an old well are not pur-
sued on said land on or before the first rental paying date next succeeding the cessation of production or drilling.
or reworking an said well or wells, then this lease shall terminate unless Lessee. on or before said date, shall re-
sume the payment of rentals. Upon resumption of the payment of rental, Section 4 governing the. payment of rentals,
shall continue in force just as though there had been no interruption in the rental payments. If during the last year
of the primary term and prior to the discovery of oil, gas, or other hydrocarbons on said land Lessee should drill a
dry hole thereon, or if after discovery of oil, gas or other hydrocarbons before or during the last year of the
primary term the production thereof should cease during the last year of said term from any cause, no rental payment
or operations are necessary in order to keep the lease in force during the remainder of the primary term. If, at
he
expiration of the primary term, Lessee is conducting operations for drilling a new well or reworking an old well, this
lease neverthelessshall continue in force as long as such drilling or reworking operations continue, or if, after the
expiration of the primary term, production on this lease shall cease, this lease nevertheless shall continue in force
If drilling or reworking operations are commenced within sixty (60) days after such cessation of production; if pro-
duction is restored or additional production is discovered as a result of any such drilling or reworking operations,
conducted without cessation of more than sixty (60) days, this lease shall continue as long thereafter as oil, gas,
other hydrocarbons or other mineral is produced and as long as additional drilling or reworking operations are had
without cessation of such drilling or reworking operations for more than sixty (60) consecutive days.
6. Lessee,et its option, is hereby given the right and power to pool or combine the land covered by this lease,
or any portion thereof, as to oil and gas, or either of them, with, any other land lease or leases when in Lessee's
judgment it is necessary or advisable to do so in order to properly develop and operate said premises, such pooling to
be into a well unit or units not exceeding forty (40) acres, plus an acreage tolerance of ten per cent (10%) of forty
(40) acres, for oil, and not exceeding six hundred and forty (640) acres, plus an acreage tolerance of ten per cent
(10%) of six hundred and forty (640) acres, for gas, except that larger units may be created to conform to any spacing
or well unit pattern that may be prescribed by governmental authorities having jurisdiction. Lessee may pool or com-
bine acreage covered by this lease, or any portion thereof, as above provided, as to oil or gas in any one or more
strata, and units so formed need not conform in size or area with the unit or units into which the lease is pooled or
combined as to any other stratum or strata, and oil units need not conform as to area with gas units. The pooling in
•
BOOK 1'718197
996 a ,
one or more instances shall not exhaust the rights of the Lessee hereunder to pool this lease or portions thereof Into
other units, Lessee shall execute in writing and place of record an instrument or instruments identifying and describ-
ing the pooled acreage. The entire acreage so pooled into a unit shall be treated for all purposes, except the payment
of royalties, as if it were included in this lease, and drilling or reworking operations thereon or production of oil
or gas therefrom, or the completion thereon of a well as a shut-in gas well, shall be considered for all purposes, -
except the payment of royalties, as if such operations were on or such production were from or such completion were
on the land covered by this lease, whether or not the well or wells be located on the premises covered by this lease.
In lieu of the royalties elsewhere herein specified, Lessor shall receive from a unit so formed, only such portion of
the royalty stipulated herein as the amount of his acreage placed in the unit or his royalty interest therein bears
to the total acreage so pooled in the particular unit involved. Should any unit as originally created hereunder con-
tain less than the maximum number of acres hereinabove specified, then Lessee may at any time thereafter, whether
before or after production is obtained on the unit, enlarge such unit by adding additional acreage thereto, but the
enlarged unit shall in no event exceed the acreage content hereinabove specified. In the event an existing unit is
so enlarged. Lessee shall execute and place of record a supplemental declaration of unitization identifying and
describing the land added to the existing unit; provided, that if such supplemental declaration of unitization is not
filed until after production is obtained on the unit as originally created, then and in such event the supplemental
declaration of unitization shall not become effective until the first day of the calendar month next following the
filing thereof. In the absence of production Lessee may terminate any unitized area by filing of record notice of
termination.
7. Lessee also shall have the right to unitize, pool, or combine all or any part of the above described lands
with other lands in the same general area by entering into a cooperative or unit plan of development or operation
approved by any governmental authority and, from time to time, with like approval, to modify, change or terminate
any such plan or agreement and, in such event, the terms, conditions, and provisions of this lease shall be deemed
modified to conform to the terms, conditions, and provisions of such approved cooperative or unit plan of development
or operation and, particularly, all drilling and development requirements of this lease, express or implied, shall
be satisfied by compliance with the drilling and development requirements of such plan or agreement, and this lease
shall not terminate or expire during the life of such plan or agreement. In the event that said above described
lands or any part thereof, shall hereafter be operated under any such cooperative or unit plan of development or
operation whereby the production therefrom is allocated to different portions of the land covered by said plan, then
the production allocated to any particular tract of land shall, for the purpose of computing the royalties to be
paid hereunder to Lessor, be regarded as having been produced from the particular tract of land to which it is al-
located and not to any other tract of land and the royalty payments to be made hereunder to Lessor shall be based
upon production only as so allocated. Lessor shall formally express Lessor's consent to any cooperative or unit
plan of development or operation adopted by Lessee and approved by any governmental agency by executing the same
upon request of Lessee.
B. Lessee shall have the right at any time without Lessor's consent to surrender all or any portion of the
leased premises and be relieved of all obligation as to the acreage surrendered. Lessee shall have the right at
any time during or after the expiration of this lease to remove all property'and fixtures placed by Lessee on said
land, including the right to draw and remove all casing. When required by Lessor, Lessee will bury all pipe lines
below ordinary plow depth, and no well shall be drilled within two hundred (200) feet of any residence or barn now
on said land without Lessor's consent. The Lessee agrees to promptly pay to the owner thereof any damages to crops,
or improvements, caused by or resulting from any operations of Lessee. All disturbed portions of surface land are
to be returned to original condition within time designated by Lessor.
O. The rights of either party hereunder may be assigned, in whole or in part, and the provisions hereof shall
extend to the heirs, successors and assigns of the parties hereto, but no change or division in ownership of the land,
rentals, or royalties, however accomplished, shall operate to enlarge the obligations or diminish the rights of Lessee.
No change in the ownership of the land or any interest therein, shall be binding on Lessee until Lessee shall be
furnished with a certified copy of all recorded instruments, all court proceedings and all other necessary evidence
of any transfer, inheritance, or sale of said rights. In event of the assignment of this lease as to a segregated
portion of said land, the rentals payable hereunder shall be apportionable among the several leasehold owners ratably
according to the surface area of each, and default in rental payment by one shall not affect the rights of other lease-
hold owners hereunder. In case Lessee assigns this lease, in whole or in part, Lessee shall be relieved of all obli-
gations with respect to the assigned portion or portions arising subsequent to the date of assignment.
10. All express or implied covenants of this lease shall be subject to all Federal and State Laws, Executive
Orders, Rules or Regulations, and this lease shall not be terminated, in whole or in part, nor Lessee held liable in
damages, for failure to comply therewith, if compliance is prevented by, or if such failure is the result of. any
such Law, Order. Rule or Regulation, or if prevented by an act of God, of the public enemy, labor disputes, inability
to obtain material, failure of transportation, or other cause beyond the control of Lessee.
If during the term of this lease, oil or gas or other hydrocarbons is discovered upon the leased premises, but
Lessee is prevented from producing the same by reason of any of the causes set out in this Section, this lease shall
nevertheless be considered as producing and shall continue in full force and effect until Lessee is permitted to pro-
duce the oil, gas and other hydrocarbons, and as long thereafter as such production continues in paying quantities
or drill ing or reworking operations are continued as elsewhere herein provided.
11. Lessor does not warrant title to said real estate or to the mineral interests in said real estate, however,
it is agreed that if Lessor owns less than 100% of the minerals, then, and in that event, the royalties and rentals to
be paid Lessor shall be reduced proportionately.
12. Not withstanding in a provision of this lease to the contrary, no operations shall be conducted on the above
described land without the written consent of the Lessor.
13. Upon the termination of this lease in whole or in part by election or by failure to make payments as afore-
said, Lessee or its assigns shall within thirty (30) days release by written instrument the land or portion thereof
which said lease terminates, and said notice shall also be sent to Lessor giving the book and page number of said
lease. It is expressly understood that this lease is subject to and controlled by any law of the State of Colorado
now in effect restricting or limiting the powers of counties or boards of county commissioners, and any provision
herein in conflict therewith shall be inoperative and void.
14. All of the provisions of this lease shall inure to the benefit of and be binding upon the parties hereto,
their heirs, administrators, successors and assigns.
191819'7
BOOK •
796 `A -3
15. This agreement shall be binding on each of the above named parties who sign the same, regardless of whether
it is signed by any of the other parties.
IN WITNESS WHEREOF, this instrument is executed on the date first above written.
BOARD OF COUNTY COMMISSIONERS
W COUNTY, COLO A 0
'1 Q Lx.
ATTEST:
County Clerk and Reco er ' /_J
and Clerk to the Board wea+-.mss. R
�. By/I. I,7 a
\J �2 LESSE � ��iON,COMPANY
• .. Att•rney ' 't 77g,
\ L L..1 --,_
COLORADO
STATE OF COLORADO
SS.
COUNTY OF DENVER
h fore 0 oing instrument was acknowledged before me thisc t$ day of
7 19 , , by CARL L.OAIN Attorney
,••iris ,�orAM CO PRODUCTION COMPANY. I t
t;• • ti-gi S my hand and official seal.
`/.' NOTARr CI
,�•. puBLIG
:,y ?: t• Notary Public
,, pp `oP U
v'•7J,y,,8prym3sion expires: Security Life Building
Denver, Colorado 80202
My Commission Expires Jwie 3,797A
BOOK1718197
y -H
796
Township 2 North, Range 64 West
Section 26: That part of the NW/4 SE/4 of said section beginning 745' South and 30'
East of Center of section; thence South 125'; thence East 140'; thence North 125';
thence West 140' to place of beginning, containing 2.5 acres more or less.
Section 28: A tract of land lying within the boundaries of the NW/4 and adjacent to
South Right of Way line of State Highway No. 81, and more particularly described as
follows: Commencing at the West Quarter corner of Section 28; thence Easterly along
half section line for a distance of 450' to the point of beginning; thence Northerly and
perpendicular to the half section line for a distance of 100' ; thence South 81° 01' East
for a distance of 385'; thence Southerly and perpendicular to the half section line for
a distance of 60' to a point on said half section line; thence Westerly along said half
section line for a distance of 380' more or less, to the point of beginning, containing
0.7 acre, more or less.
Section 28: A tract of land commencing at the West Quarter corner of Section 28; thence
Easterly along half section line for a distance of 480' to the point of beginning; thence
Northerly and perpendicular to half section line for a distance of 100'; thence South
81' 01' East for a distance of 355' ; thence Southerly and perpendicular to half section
line for a distance of 60' to a point on said half section line; thence Westerly along
said half section line for a distance of 350' more or less, to the point of beginning,
containing 0.64 acres.
Section 30: All that part of the SW/4 lying South of the Chicago, Burlington 6 Quincy
Railroad, containing 12 acres more or less.
in all containing 15.68 acres, more or less.
896 Recorded at..._—„too.., o'clock __P..M .FEB 2, 1980
181'766'7.." -'," . ",
Rec.No.
U-I C�
State o£ Colorado, Weld County Clerk Cr Recorder.
EXTENSION AND AMENDMENT OF OIL AND GAS LEASE
0
THIS AGREEMENT AND AMENDMENT, made and entered into this
o 23rd day of April, 197,9, by and between Weld County, a
political subdivision of the State of Colorado, by the Board
of County Commissioners, for its respective interest, herein
referred to as "Lessor," whether one or more, and Amoco
c
Production Company, Security Life Building, Denver,
CD
Colorado 80202 herein referred to as "Lessee," whether one
or more;
w
WITNESSETH:
WHEREAS, Lessor and Lessee each own an interest under
and subject to the following described oil and gas lease
(herein called "said lease") , insofar as said lease covers
the following described lands (herein called "said lands" )
in the County of Weld, State of Colorado, to-wit:
Lessor: Weld County
Lessee: Amoco Production Company
Dated: April 21, 1977
Recorded: Book 796, Reception No. 1718197
Lands: T. 2N. , R. 64 Wet 6th P.M.
Section 26: That part of the NW/4 SE/4 of said
Section beginning 745 feet South and30 feet
East of center of Section; thence South 125
• feet; thence East 140 feet; thence North 125
feet; thence west 140 feet to place of begin-
• ning, containing 2.5 acres, more or less.
Section 28: A tract of land lying within the
boundaries of the NW/4 and adjacent to South
right of way line of State Highway No. 81, and
more particularly described as follows:
Commencing at the West quarter corner of Section
28; thence Easterly along half section line for
a distance of 450 feet to the point of begin-
ning; thence Northerly and perpendicular to the
half section line for a distance of 100 feet;
thence South 81°O1 ' East for a distance of 385
feet; hence Southerly and perpendicular to the
half section line for a distance of 60 feet to a
point on, said half section line; thence Westerly
along said half section line for a distance of
380 feet more or less, to the point of begin-
ning, containing 0.7 acre, more or less.
(`26969
#O14-896 1817667
Section 4-z-
Section 28: A tract of land commencing at the
West quarter corner of Section 28; thence
Easterly along half section line for a distance
of 480 feet to the point of beginning; thence
Northerly and perpendicular to half section line
for a distance of 100 feet; then South 81°01'
East for a distance of 355 feet; thence Southerly
and perpendicular to half section line for a
distance of 60 feet to a point on said half
section line; thence Westerly along said half
section line for a distance of 350 feet more
or less, to the point of beginning, containing
0.64 acres.
Section 30 : All that part of the SW/4 lying
South of the Chicago, Burlington & Quincy
Railroad, containing 17.53 acres, more or less.
and
WHEREAS, Lessor and Lessee desire to amend said lease as
herein provided;
NOW, THEREFORE, in consideration of the sum of Ten
Dollars ($10.00) and other valuable consideration paid to
Lessor by Lessee, the receipt, adequacy and sufficiency of
which are hereby acknowledged, Lessor and Lessee hereby
agree that said lease, which covers a total of 21.37 acres,
more or less, shall be and is hereby amended by deleting
therefrom in its entirety the following:
"Subject to the other provisions herein contained,
this lease shall be for a term of two years from
this date (called "primary term") and as long
thereafter as oil, gas and other hydrocarbons are
produced from said land hereunder or drilling or
reworking operations are conducted thereon."
and hereby substitute therefor the following:
"Subject to the further provisions hereof, this lease
shall remain in force for a term ending 120 days from
this date, called "Primary Term," and as long thereafter as
either (1) oil, gas or other minerals are produced (whether
or not in paying quantities) from the leased premises or on
lands pooled therewith, or (2) operations are conducted on
the leased premises or on lands pooled therewith, or (3) there
is a well or wells on the leased premises or on lands pooled
therewith which, although capable of producing oil, gas or
other minerals in paying quantities hereunder is shut in for
lack of a market or outlet.
"Operations as used herein means all operations for the
_2_
33D°K 896 . . 181766'7
(4=3
drilling of a well for oil or gas, including building of roads, pre-
paration of the drill site, moving in for drilling, drilling, deepening,
plugging back, reworking or recompleting and also secondary recovery
operations benefiting the lease premises."
Lessee further agrees that should no operations for the drilling
of a well for oil and gas be commenced within the Primary Term, to
pay Lessor the sum of $25.00 per acre ($534.25) as liquidated damages.
The Lessor and Lessee do hereby expressly join in, ratify and con-
firm said lease, insofar as said lease covers said land and acknowledge
that said lease, as herein amended, is valid and in full force and
effect, and the Lessor does hereby grant, lease and let unto the Lessee
the entire interest of the Lessor in said lands upon the terms, condi-
tions and provisions contained in said lease as herein amended, and for
the purpose of this instrument and said lease, the Lessor hereby
releases all rights of dower and/or homestead in said lands.
EXECUTED as of the day and year first above set forth.
LESSOR Weld County, a political sub-
/) y �.. rado sub-
division of the State Colo-
ATTEST: (�snn�'l' ��r`/ rado by the Chairman of the
Board of County Commissioners,
Weld County. Clerk and Recorder for its respective interest.
a Clerk to the B
By: By:
e, uty County Cleric Norman Carlson, Chairman
LESSEE
z')s3( C OLORADO -'
STATE OF COLORADO )
. SS.
COUNTY OF DENVER )
Th .oregoing instrument was acknowledged before me this c2 day of
, 1977 , by F. N. MIRF , Attorney
in Fact forii/4OC0 PRODUCTION COMPANY.
-.WITNESS my hand and official seal.
s} : kii
Notary Public
' UQL\C
"s lly.,commission':expires: Security Life Building
Denver, Colorado 80202
',My Commission Expires June 3,1962
-,.,,.,• '�'-`,•131
•
•
�4 Lgli5:Li%:.
•
•
•
•
•
TsO0 (396 • • 181'7G6
•
Amoco Produuc,tion Company
By: ��n.L2a21 Lt1
1/ to Aucrwy m6. r:n
ci f� wied
Th� foregoing instrument was ackno Bed before me this
day of r 1979, by Norman Carlson Chairman of the Board of County
cmquagsionors of Weld County, colorad°
comMission expires _ 7`? • 19 12
• Pt+U ; witneng my hand and official seal'
Th
N tY • u lie
The foregoing instrument was acKnpwledgod before me th's
day of , 1979, by
yy commission expires _- �----' 19
Nlrnaas my hand and official seal.
Notary Pu c
•
-3- .
Received SLITE 1660 INDE?F_ADENCC PLAZA
10 BARRY W. SPECTOR / 50 5EVENTtENT1-!STREET
I* 1 i DENVER COLORADO 80265
Attorney 2013 TFLEP 4ONE f303)623.0717
s� Fax 1303}623.0940
Wattenberg - Land BARRYSPEC TOR@MSN.04M
April 10,2013
-It is distinctly understood and agreed as
evidenced by your acceptance of this opinion
that Anadarko Petroleum Corporation and its
Kerr-McGee Oil & Gas Onshore LP subsia Aries are in no way Ilabfe to any
person,firm or corporation for any loss or
1099— 18th St., Ste. 1800 nconvenience occasioned by tha use of or
Denver,CO 80202 rellance upon this opinion.'
Attn: Hannah Becker
Re: First Revised Drilling and Division Order Title Opinion (WALT#5192)
Greer 13-28
Greer 14-28
Greer 23-28
Greer 24-28
Township 2 North. Range 64 West. 6th P.M.
Section 28: W/2
Weld County, Colorado
Spacing Unit for Production from the Greer 13-28 and Greer 14-28 Wells:
Section 28: W/2SW/4
As to production from the Code!!and Niobrara Formations
Spacing Unit for Production from the Greer 23-28 and Greer 24-28 Wells:
Section 28: E/2SW/4
As to production from the Code!'and Niobrara Formations
Spacing Unit for Production from the Greer 13-28,Greer 14-28, Greer 23-28 and
Greer 24-28 Wells:
Section 28: W/2
As to production from the J-Sand Formation
Weld County, Colorado
Based on examination of title to November 6, 2012
Ladies and Gentlemen:
At your request,this revises the Drilling and Division Order Title Opinion dated February
20, 2013, covering the captioned lands and wells. It is revised based on a request by Kerr-
McGee Oil & Gas Onshore, LP, dated March 28, 2013, requesting that Lease No. 13, as
tabulated, herein be considered a valid and subsisting oil and gas lease.
MATERIALS EXAMINED
1. Drilling Title Opinion prepared by Hal S. Dishier, Attorney and Counselor At
Law, dated May 19, 1994, covering the W/2 of Section 28, Township 2 North, Range 64 West,
and based on examination of title to November 12, 1993,at 7:00 a.m. (the"Dishier Opinion").
2. Supplemental Transcript of Title prepared by Pensar Petroleum, LLC, covering
the W/2 of Section 28, Township 2 North, Range 64 West, for the period from November 12,
1993,to November 6,2012.
3. Certain portions of a Drilling and Division Order Title Opinion prepared by
Jonathan D. Tjornehoj, LLC, dated May 15, 2002, covering the W/2 of Section 30,Township 2
North, Range 64 West, among other lands (the "Tjornehoj Opinion"). The W/2 of Section 30 is
subject to Lease No. 13 as tabulated herein.
2
Requirement: Investigation should be undertaken to determine whether or
not the intent of that assignment was to limit the portion of
the leases assigned to the NW/4NW/4 of Section 28 or not.
Based on your findings, additional requirements may be
made,including a correction assignment if the intent was to
assign all interests in those leases. If the intent was to limit
the assignment to the portions in the NW/4NW/4, then
please inform the undersigned so that appropriate changes
in the leasehold ownership in the NW/4 of Section 28 may
be made.
10. With respect to production from the J-Sand formation from each of the captioned
wells, the designated Unit is the W/2 of Section 28. At Reception No. 3273973 is a Segregation
Agreement between Blue and Gray Resources, Inc., and Petroleum Development Corporation.
This recognizes that the W/2 of Section 28 has been designated as a single Spacing Unit for
production of oil and gas from the J-Sand formation. It states that the leasehold and overriding
royalty owners wish to segregate the NW/4 and the SW/4 into two separate working interest
Units. In doing so, the parties do not wish to affect the right of any lessor to receive its
appropriate share of proceeds from i-Sand production obtained anywhere in the 320-acre Unit.
They do wish to insure that the working interest owners receive J-Sand production only from
their respective 160-acre area. It goes on to provide that all existing lessor royalties on 3-Sand
production from each 160-acre tract shall be apportioned, allocated and paid on the basis of the
full 320-acre designated Unit.
Based on the language in the Segregation Agreement, it appears that only the lessor
royalties are to be apportioned on the basis of 320 acres and not overriding royalty interests.
Although Blue & Gray Resources, Inc., owns overriding royalty interests under leases covering
the NW/4 of Section 28, it is not credited with those overriding royalty interests in the Division
of Interests attached hereto. This is based on the foregoing interpretation of the Segregation
Agreement.
Requirement: None unless the interpretation of the Segregation
Agreement and the Division of Interests set forth herein do
not conform to your understanding.
11. The Tjornehoj Opinion referred to in the Materials Examined considered the
Weld County Lease (Lease No. 13 in this Opinion) as being in force and effect. That lease was
not included in the Dishier Opinion referred to above.
The Tjornehoj Opinion referred to what was called the 1980 Poulson Opinion. In that
Opinion, it addressed the Weld County Lease (Lease No. 13) indicating that it was dated April
21, 1977, with a primary term of two years. The authors of the 1980 Poulson Opinion stated that
in a meeting on April 23, 1979, the Board of County Commissioners modified the lease
intending to extend the primary term of the lease to cover a spud date of May 1, 1979. However,
the actual language inserted into the extension limited the primary term to 120 days after the
original lease date of April 21, 1977. The 1980 Poulson Opinion required the lessees of Lease
23
No. 13 to obtain a corrective document from the Commissioners of Weld County which clearly
extended the lease's primary term to include the spud date of May 1, 1979. and contain present
words of grant. No such instrument is in the Materials Examined.
The Tjornehoj Opinion also refers to the 2003 Kuhn.Opinion, also addressing the validity
of Lease No. 13 and indicating that the amendment provided for a primary term of 120 days from
April 2I, 1977. The 2003 Kuhn Opinion stated that the County Commissioners executed a
Division Order of record and an Order of the Board of County Commissioners approving the
execution of the Division Order for production from the lease. The author of the 2003 Kuhn
Opinion concluded that a claim against the validity of Lease No. 13 by virtue of the incorrect
primary term in the amendment could not be sustained.
Requirement: You should obtain a ratification of Lease No, 13 from the
Board of County Commissioners of Weld County ratifying
that lease with present words of leasing.
12. The acreage amounts allocated to the various Tracts within the W12 of Section 35
are based on acreage amounts stated in deeds or as shown on recorded exemptions.
Requirement: None unless any particular owner disputes the amount of
acreage allocated to it, in which event a survey by a
licensed surveyor may be required in order to determine the
appropriate acreage amounts.
13. In addition to the easements described in the Dishier Opinion, there is an
additional easement granted to Public Service Company of Colorado at Reception No. 3075674.
Requirement: Be certain to familiarize yourself with the location of this
right-of-way and to conduct your operations so as to not
interfere with the owner thereof.
14. As indicated above, the Materials Examined do not include inspection for
judgments and liens against the owners tabulated above.
Requirement: Undertake an examination to determine if there are any
judgments or liens against the owners tabulated above.
15. Persons dealing with real property are subject to the rights of parties in actual
possession.
Requirement: Conduct a surface inspection to determine the actual facts
of possession and to determine the presence of any other
mineral activities.
16. 1 call your attention to the Deed of Trust tabulated above. Prior to distributing
proceeds attributable to the mineral interest encumbered by the Deed of Trust, you should obtain
24
Hello