The URL can be used to link to this page

Browse Search

Home My WebLink About20141771.tiff RESOLUTION RE: APPROVE REQUEST TO WAIVE BID PROCEDURE CONCERNING SMALL TRACT OIL AND GAS LEASE, ACCEPT OFFER TO LEASE MINERAL ACRE, AND AUTHORIZE CHAIR TO SIGN - LAND ENERGY, INC. 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, Land Energy, Inc., 1615 California Street, Suite 702, Denver, CO 80202, has requested that the bidding procedure be waived according to the policy as set forth in the Weld County Code for parcels less than five acres, on the following described mineral acres: All that part and parcel of the SW1/4 SE1/4 of Section 25 as lies on the Southerly side of the South boundary line of the right-of-way of the Denver, Laramie and Northwestern Railroad Company and Westerly of a line drawn to run Northward and parallel with the West line of said SW1/4 SE1/4, which Northward line begins a point three hundred and eighty feet East of the Soutwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right-of-way line in Section 25, Township 6 North, Range 66 West of the 6th P.M, Weld County, Colorado WHEREAS, Land Energy, Inc., is offering to lease the above described mineral acres, containing 0.48 mineral acres, more or less, and WHEREAS, the Board finds that the lease offer from Land Energy, Inc., in the amount of FIVE HUNDRED SEVENTY SIX AND NO/100 DOLLARS ($576.00), is acceptable, with the further terms and conditions being as stated in said Small Tract Oil and Gas Lease, a copy being attached hereto and incorporated herein by reference. NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld County, Colorado, that the request of Land Energy, Inc., to waive the bidding procedure on an Oil and Gas Lease concerning the above described mineral acres, be, and hereby is, granted. I oninol• g et.. 63a,), Lam= ►eose.-\-oLEt /VI 2014-1771 on -1/4 LE0324 BE IT FURTHER RESOLVED by the Board that the offer of Land Energy, Inc., to lease mineral acres, as hereinabove stated, be, and hereby is, accepted. BE IT FURTHER RESOLVED by the Board that the Chair, be, and hereby is, authorized to sign said Small Tract Oil and Gas Lease. The above and foregoing Resolution was, on motion duly made and seconded, adopted by the following vote on the 11th day of June, A.D., 2014, nunc pro tunc May 27, 2014. BOARD OF COUNTY COMMISSIONERS WELD COUNTY, COLORADO ATTEST: wade/4144w EXCUSED Douglas Rademacher, Chair Weld County Clerk to the Board EXCUSED (1 Barbara Kirkmeyer, Pro-Tern BY. On . Q. 9-4 nh'lin a De t Clerk to the Board 3 Sean P. Conway �-- APPROV AST M: ]E Mike Fr , ting Pro-Tem ounty rney iui k dVHam F. Garcia Date of signature: 7- 7- Id 2014-1771 LE0324 • WELD COUNTY SMALL-TRACT OIL AND GAS LEASE THIS LEASE AGREEMENT, dated this 21th day offal , 2014, made and entered into by and between WELD COUNTY, COLORADO, a political subdivistibn of the STATE OF COLORADO, acting by and through the BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF WELD, for its respective interests, do BOARD OF COUNTY COMMISSIONERS, 1150 O STREET, P.O. BOX 758, GREELEY, CO 80632, hereinafter called Lessor, and: L OIrld vic. !WC" Co1jifp41101 street, al/lite 1O2. Denver, CD SO2oz m.a- hereinafter called Lessee: "wMG;3 y WITNESSETH o CO v "0-- WHEREAS, said Lessee has applied to Lessor for an oil and gas lease covering the land herein • �� described, and has paid a bonus consideration of$ I ,Z00. DO per mineral acre, fixed by Lessor as os- _3 an additional consideration for the granting of this lease, and the following consideration: �1 NN" (Line,` WHEREAS, all the requirements relative to said lease agreement have been duly complied with and m�31 said lease agreement has been approved and allowed by Lessor; NN o ti THEREFORE, in consideration of the agreements herein, on the part of Lessee to be paid, kept and viva performed, Lessor does lease exclusively to Lessee for the sole and only purpose of drilling for, >= development of and production of oil and gas, or either of them, thereon and therefrom with the right to own all oil and gas so produced and saved therefrom and not reserved as royalty by Lessor under the terms of this lease, together with rights-of-way, easements and servitudes for pipelines, telephone and Nma telegraph lines, tanks and fixtures for producing and caring for such product, and housing and boarding —" m employees, and any and all rights and privileges necessary for the exploration and operation of said land for oil and gas, the following described land situated in the County of Weld, State of Colorado, and more 73\ °ma, particularly described as follows: e 9 s SEE ATTACHED "EXHIBIT A"for legal description and acreage s ▪ MMil 3H ▪ o T TO HAVE AND TO HOLD said land, and all the rights and privileges granted hereunder to Lessee np w until the hour of twelve o'clock noon on the 11 to day of M 01 , 2017 . as primary term, and so long thereafter as oil and gas, or either of them, is produced in pa91hg quantities from said land or Lessee E• w is diligently engaged in bona fide drilling or reworking operations on said land, subject to the terms and y am conditions herein. Drilling or reworking operations shall be deemed to be diligently performed if there is F_ no delay or cessation thereof for a greater period than sixty (60)consecutive days, unless an extension in Fwriting is granted by Lessor; provided that such drilling or reworking operations are commenced during said primary term or any extension thereof, or while this lease is in force by reason of production of oil w•-g and gas or either of them, or that such reworking is commenced within (60) sixty days upon cessation of production for the purpose of re-establishing the same, and provided further that such production is commenced during such primary term or any extension thereof, or while this lease is in force by reason of such drilling or reworking operations or other production. EXPLORATION - Lessor reserves the right to conduct exploration on the leased land provided such exploration does not interfere with rights granted herein. 2014-1771 C:1Users*ford lAppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) LE03Aq Small-Tract Oil and Gas Lease Page 2 In consideration of the premises, the parties covenant and agree as follows: 1. RENTAL-This is a PAID-UP LEASE. In consideration of the down cash payment, Lessor agrees that Lessee shall not be obligated, except as otherwise provided herein, to commence or continue any operations during the primary term. Lessee may at any time or times during or after the primary term surrender this lease as to all or any portion of said land and as to any strata or stratum by delivering to Lessor or by filing for record a release or releases, and be relieved of all obligation thereafter accruing as to the acreage surrendered. 2. ROYALTY PROVISIONS: A. Lessee Responsible for All Costs/Expenses: Lessee shall account for any and all g substances produced on the leased land and shall pay to Lessor as royalty, in addition to the rentals provided, the royalties described in paragraphs B through E below, which shall be free § of all costs of any kind. In this regard, Lessee agrees to bear one hundred percent(100%) of OO"r all costs and expenses incurred in rendering hydrocarbons produced on or from the Leased ;f Premises marketable and delivering the same into the purchaser's pipeline for immediate m3 j transportation to an end user or storage facility. If a gas purchase contract makes any �w a~ deductions for the expenses of dehydrating, transporting, compressing, manufacturing, ud�3 processing, treating, gathering or marketing of such gas, then such deductions shall be LLB--- added to the price received by Lessee for such gas for the purpose of the payment of Nre� royalties to Lessor. Additionally, royalties payable to Lessor shall never bear, either directly nE2S or indirectly, under any circumstances, the costs or expenses (including depreciation) to ma'°?S construct, repair, renovate or operate any pipeline, plant, or other facilities or equipment used a ate+ in connection with the treating, separation, extraction, gathering, processing, refining, transporting, manufacturing or marketing of hydrocarbons produced from the Leased e 0er Premises or lands pooled therewith. It is the intent of the parties that the provisions of this NNE Paragraph 2 are to be fully effective and enforceable. a^"� B. Royalty Payment on Products: On products, Lessee shall pay Lessor a royalty payment of Lie IN eighteen and one-half percent(18.5%) of the gross market value or proceeds of sale thereof, whichever is higher. a C. Royalty Payment on Residue Gas: On residue gas or gas remaining after separation, = w extraction or processing operations, Lessee shall pay Lessor eighteen and one-half percent m (18.5%) of the proceeds of sale or of the market value thereof, whichever is higher. ti o — m D. Royalty Payment on Oil: At the option of Lessor, and with sixty (60) days' notice to Lessee, Lessor may take its royalty oil in kind, in which event Lessee shall deliver such royalty oil to in-13 Lessor on the leased land, free of cost or deduction, into the pipelines or storage tanks a designated by Lessor, but Lessee shall not in such case be required to provide free tankage for any such oil for a longer period than one month after the same is run into tanks. With sixty (60) days' notice to Lessee, Lessor may cease taking oil royalty in kind. When paid in o r cash, Lessee shall pay Lessor for oil produced and saved from the leased land, eighteen and A one-half percent (18.5%)the market value of the oil at the wellhead, or the price actually paid m", to Lessee at the well by the purchaser thereof, whichever is higher; and in no event shall the royalties be based upon a market value at the well less than the posted price in the field for `m such oil, or in the absence of a posted price in the field for such oil, upon a market value at the well less than the prevailing price received by other producers in the field for oil of like grade and gravity at the time such oil is run into pipelines or storage tanks. M o E. No Refund of Bonus: If Lessor owns a lesser interest in the oil and gas deposits of the above-described land than the entire and undivided fee simple estate, then the royalties and C:\Users\kford.AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 3 rentals herein provided shall be paid to Lessor only in the portion which its interest bears to the whole and undivided fee, but no refund of any bonus consideration shall be made by Lessor hereunder. F. Timing of Royalty Payments: All royalties payable under the terms of this lease shall be payable in cash (unless Lessor elects to take such royalty oil or gas in kind)to Lessor within one hundred twenty (120) days following the first commercial sale of production and thereafter no more than sixty (60) days after the end of the month following the month during which production takes place. Subject to the provisions of Paragraph 16 of this Lease concerning shut-in wells, royalties shall be paid to Lessor by Lessee and/or its assigns or by { the product purchaser for oil and/or gas. Upon the failure of any party to pay Lessor the royalty as provided in this paragraph, Lessor may, at Lessor's option, elect to terminate this 8 Lease by sending written notice to Lessee. Lessee shall then have forty-five (45) days from the date of service of such written notice in which to avoid termination of this Lease by making or causing to be made the proper royalty payment or payments that should have 81 been paid. If such royalty payment is not made on, or before, the expiration of the 45-day m9'-. period, or written approval is not obtained from Lessor to defer such payment, Lessor may r�m3 a elect to terminate this Lease by filing a Notice of Termination with the Weld County Clerk and " w Recorder. The effective date of said termination shall be the date said Notice of Termination a 'a;-O°'= is recorded. ova a'012 -. G. Effect of"Take or Pay Provision": In the event Lessee enters into a gas purchase contract Macron which contains what is commonly referred to as a "take or pay provision" (such provision ION v meaning that the gas purchaser agrees to take delivery of a specified minimum volume or quantity of gas over a specified term at a specified price or to make minimum periodic payments to the producer for gas not taken by the purchaser) and the purchaser under such c ay— gas purchase contract makes payment to Lessee by virtue of such purchasers failure to take NN o 1 delivery of such minimum volume or quantity of gas, then Lessor shall be entitled to eighteen ts and one-half percent (18.5%) of all such sums paid to Lessee or producer under the "pay" N�v= provisions of such gas purchase contract. Such royalty payments shall be due and owing to • Rminl♦ Lessor within sixty (60) days after the receipt of such payments by Lessee. If the gas purchaser"makes up" such gas within the period called for in the gas contract and Lessee is required to give such purchaser a credit for gas previously paid for but not taken, then Lessor _ a shall not be entitled to royalty on such "make up" gas. If Lessee is not producing any w quantities of gas from the Leased Premises but is receiving payments under the"pay"portion of such "take or pay" gas purchase contract provision, such payments shall not relieve Lessee of the duty to make shut-in royalty payments if Lessee desires to continue this Lease, - ° but such "take or pay" royalty payments shall be applied as a credit against any shut-in royalty obligation of the Lessee. Lessor shall be a third-party beneficiary of any gas purchase xo contract and/or transportation agreement entered into between Lessee and any purchaser m and/or transporter of Lessors gas, irrespective of any provision of said contracts to the contrary, and such gas purchase contract and/or transportation agreement will expressly so -m provide. Further, Lessor shall be entitled to eighteen and one-half percent (18.5%) of the 8ma value of any benefits obtained by, or granted to, Lessee from any gas purchaser and/or - a. transporter for the amendment, modification, extension, alteration, consolidation, transfer, £ w cancellation or settlement of any gas purchase contract and/or transportation agreement. mm m H. Recovery of Liquid Hydrocarbons: Lessee agrees that before any gas produced from the Leased Premises is used or sold off the Leased Premises, it will be run, free of cost to Lessor, through an adequate oil and gas separator of a conventional type or equipment at least as efficient, to the end that all liquid hydrocarbons recoverable from the gas by such $O means will be recovered on the lease and Lessor properly compensated therefor. _ C:\Users\kford\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLeaseSmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 4 I. Excess Payments to Lessor: Any payment of royalty or shut-in gas royalty hereunder paid to Lessor in excess of the amount actually due to the Lessor shall nevertheless become the property of the Lessor if Lessee does not make written request to Lessor for reimbursement within one (1) year from the date that Lessor received the erroneous payment, it being agreed and expressly understood between the parties hereto that Lessor is not the collecting agent for any other royalty owner under the lands covered hereby, and a determination of the name, interest ownership and whereabouts of any person entitled to any payment whatsoever under the terms hereof shall be the sole responsibility of Lessee. It is further expressly agreed and understood that: (i) this provision shall in no way diminish the obligation of Lessee to make full and punctual payments of all amounts due to Lessor or to any other person under the terms and provisions of this Lease, and (ii) any overpayments made to the Lessor under any provisions of this Lease shall not be entitled to be offset 0 against future amounts payable to parties hereunder. J. Effect of Division Order: The terms of this Lease may not be amended by any division order c and the signing of a division order by any mineral owner may not be made a prerequisite to a a payment of royalty hereunder. ED tv .w K. Limitation of Sale to Subsidiaries and/or Affiliates: Oil, gas or products may not be sold to a 4- dam subsidiary or affiliate of Lessee as defined herein without the Lessor's prior written °ao permission. ▪ CtEt e 2 X L. Royalty Payable on All Gas Produced: Lessee shall pay Lessor royalty on all gas produced ma from a well on the Leased Premises and sold or used off the Leased Premises, regardless of ar4Cal whether or not such gas is produced to the credit of Lessee or sold under a contract executed aNm_ mz by or binding on Lessee. Should gas be sold under a sales contract not binding on Lessee, Lessor's royalty will be calculated based on the highest price paid for any of the gas 0 m m fie produced from the well from which such gas is produced. In no event will the price paid NS° no Lessor for Lessor's share of gas be less than the price paid Lessee for Lessee's share of nr ma- gas. N�>=_ .7'''AN 3. LESSOR'S ACCESS TO LEASED PROPERTY AND RECORDS A. Records Generally: Lessee agrees to keep and to have in its possession complete and cast. —"ms accurate books and records showing the production and disposition of any and all substances produced on the leased land and to permit Lessor, at all reasonable hours, to .. examine the same, or to furnish copies of same to Lessor upon request along with T' purchaser's support documentation. Lessor will not be unreasonable with requests. All said o books and records shall be retained by Lessee and made available in Colorado to Lessor for a period of not less than five (5) years. - x3 B. Access to Premises: Lessor shall have free access, at all times, to all wells, tanks, and other equipment on the Leased Premises, including drilling wells, and Lessee agrees to furnish -� Lessor, or Lessor's nominee, currently and promptly, upon written request, with full well - °m information including cores, cuttings, samples, logs (including Schlumberger and other electrical logs), copies and results of deviation tests and directional and seismic surveys, and the results of all drill stem tests and other tests of other kind or character that may be made of - m wells on the Leased Premises. Lessor or Lessor's nominee shall be furnished with, and have free access at all times to, Lessee's books and records relative to the production and sale of o oil, gas or other minerals from the Leased Premises, including reports of every kind and character to local, State or Federal governmental authorities. Lessor shall have the right, at its election, to employ gaugers or install meters to gauge or measure the production of all minerals produced from the premises, and Lessee agrees to prepare and deliver to Lessor or C:\Users\kfordWppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 5 Lessor's gauger or nominee duplicate run or gauge tickets for all minerals removed from the premises. Lessee shall furnish to Lessor daily drilling reports on each well drilled upon request. C. Gas Purchase Agreements/Gas Contracts: At least thirty (30) days prior to the delivery or the execution of any contract for the sale, delivery, transporting or processing of gas produced from the Leased Premises, Lessee shall provide Lessor with a complete copy of each proposed contract for the purchase, transportation and/or processing of such gas that Lessee intends to execute (each a "Gas Contract"), whereupon, Lessor may object if the terms of said Gas Contract conflict with the terms and conditions of this Lease. Lessee shall furnish to Lessor, within a reasonable time after its execution, a copy of any Gas Contract or transportation agreement entered into in connection with the Leased Premises, or if there is a already a Gas Contract or transportation agreement in effect due to Lessee's operations in the field, then a copy of that contract. Furthermore, a copy of any amendments to the gas ; purchase contract or transportation agreement shall be furnished said Lessor within �M thirty(30) days after execution thereof; and on request of Lessor and without cost to the m= Lessor, Lessee shall furnish Lessor a copy of the following reports: core record, core mm M •m=e analysis, well completion, bottom hole pressure measurement, directional survey records, .4%j% electrical and induction surveys and logs, gas and oil ratio reports, paleontological reports c d9 pertaining to the paleontology of the formations encountered in the drilling of any wells on the ,n v 3 Leased Premises, and all other reports which pertain to the drilling, completing or operating free of the wells located on the Leased Premises. Such information shall be solely for Lessor's yam use, and Lessor shall attempt to keep same confidential for twelve (months after receipt, IS N cri subject to its obligation to comply with the Public Records requirements under Colorado law. a N v Lessee agrees that it will not enter into any contract for the sale, delivery, transporting or processing of gas produced from the Leased Premises which shall extend more than two (2) pc years from the effective date of such sales contract unless such contract has adequate NN° • provisions for redetermination of price at intervals of no less frequency than one (1) year to ar„x ensure that production from this Lease is not being sold for less than the then current market oom— value. vm?. D. Lessee to Advise Regarding Well Status: Lessee shall advise Lessor, in writing, of the location of all wells drilled upon the Leased Premises on or before thirty (30) days prior to . commencement of operations, and shall advise Lessor, in writing, the date of completion and/or abandonment of each well drilled within thirty (30) days after completion or L 3 abandonment. N s — 4. MEASUREMENTS: All production shall be accurately measured using standards established by m the American Gas Association (AGA) and/or the American Petroleum Institute (API) and all a v measuring devices shall be tamper proof as nearly as possible. Oil royalties due within the terms of this lease shall be calculated on actual and accurate measurements within API standards • a unless a different means of measurement, subject to Lessor's approval, is provided. a �„ 5. PAYMENTS AND REPORTS: All payments and reports due hereunder shall be made on or before the day such payments and reports are due. Nothing in this paragraph shall be construed �v. to extend the expiration of the primary term hereof. Oil royalty payments and supporting m m documents shall be submitted prior to the last day of the month following each month's sale of a production, and gas royalty payments and supporting documents shall be submitted prior to the last day of the second month following each month's sale of production. All payments shall be made by cash, check, certified check, or money order. Payment having restrictions, qualifications, or encumbrances of any kind whatsoever shall not be accepted by Lessor. A penalty for a late payment shall be charged as set forth in the PENALTIES paragraph herein. C:\Users\kford\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 6 6. PENALTIES: A penalty shall be imposed for, but not limited to, late payments, improper payments, operational deficiencies, violation of any covenant of this lease, or false statements made to Lessor. Penalties shall be determined by Lessor, unless otherwise provided for by law, and may be in the form of, but not limited to, interest, fees, fines, and/or lease cancellation. A penalty schedule shall be prepared by Lessor and shall become effective immediately after public notice. Said schedule may be changed from time to time after public notice. OM 7. LAW: The terms and conditions of this lease shall be performed and exercised subject to all laws, rules, regulations, orders, local ordinances or resolutions applicable to, and binding upon, aiil the administration of lands and minerals owned by the County of Weld, and to laws, rules and 8-Ns regulations goveming oil and gas operations in Colorado. Violations shall result in penalties as provided for by law or as set forth in the aforementioned schedule or shall, at the option of r Lessor, result in default as provided hereinafter. 8. SURRENDER: Lessee may at any time, by paying to Lessor all amounts then due as provided man' herein, surrender this lease insofar as the same covers all or any portion of the land herein 4:1wL leased and be relieved from further obligations or liability hereunder with respect to the land so ,a-'a;-?8-°- surrendered; provided that this surrender clause and the option herein reserved to Lessee shall °U.o Y cease and become absolutely inoperative immediately and concurrently with the institution of any i°a suit in any court of law by Lessee, Lessor or any assignee of either to enforce this lease, or any of ea E7 its terms expressed or implied. In no case shall any surrender be effective until Lessee shall 401a 41it have made full provision for conservation of the leased products and protection of the surface row rights of the leased land. dN m•- BU` e6IF: 9. ASSIGNMENTS: N��~ A. Fee for Assignments: Lessee, upon payment of a $100.00 fee and prior written consent of Or-m Lessor (which shall not be unreasonably withheld), shall have the right to assign the entire FPS � leasehold interest of said Lessee in all or part of the land covered hereby. Prior to written � approval by Lessor of assignment of this lease, Lessee (assignor) shall not be relieved of its obligations under the terms and conditions herein. An assignment shall not extend the term m a of this lease. m 3 B. Partial Assignment: If any assignment of a portion of the land covered hereby shall be L\m m approved, a new lease shall be issued to the assignee covering the assigned land, containing the same terms and conditions as this lease, and limited as to term as this lease is limited, F_ and the assignor shall be released and discharged from all further obligations and liabilities - as to that portion so assigned. s' 10 a3 C. Lessee to Notify: Lessee shall notify Lessor of all assignments of undivided percentage or -_ , ' other interests. Said interests will not be recognized or approved by Lessor, and the effect of a„ any such assignments will be strictly and only between the parties thereto, and outside the terms of this lease, and no dispute between parties to any such assignment shall operate to relieve Lessee from performance of any terms or conditions hereof or to postpone the time therefore. Lessor shall at all times be entitled to look solely to Lessee or his assignee shown on its books as being the sole owner hereof, and for the sending of all notices required by this lease and for the performance of all terms and conditions hereof. D. Filing with Lessor: Although not binding on Lessor, all instruments of every kind and nature whatsoever affecting this lease should be filed with the Lessor. a \\ C:\Users\kford\AppOata\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 7 10. OVERRIDING ROYALTY: Any and all reservations or assignments or overriding royalties shall be subject to approval by Lessor. The total of said overriding royalties shall not exceed five percent (5%), including any overriding royalty previously provided for unless production exceeds a monthly average of fifteen (15) barrels per day or ninety thousand cubic feet of gas per day (90 MCF/D). In the event production drops to this amount or less, any overriding royalties which exceed five percent (5%) may be suspended. Lessor's approval of a reservation or assignment of an overriding royalty shall not bind Lessor for payment of said overriding royalty and shall not relieve Lessee of any of its obligations for payment of royalties to Lessor as provided by ROYALTY paragraphs herein. SI 11. OFFSET WELLS: Lessee agrees to protect the leased land from drainage by offset wells o located on adjoining lands not owned by Lessor, when such drainage is not compensated for by j counter-drainage. It shall be presumed that the production of oil and gas from offset wells results in drainage from the leased land, unless Lessee demonstrates to Lessors satisfaction, by uy engineering, geological, or other data, that production from such offset well does not result in such drainage, or that the drilling of a well or wells on the leased land would not accomplish the 3 purposes of protecting the deposits under the leased land. Lessor's decision as to the existence wL of such drainage shall be final, and Lessee shall comply with Lessors order thereon or surrender this lease as to any such undeveloped acreage as designated by Lessor. 0E oa0� rz g 12. DEVELOPMENT: Upon discovery of oil and gas or either of them on the leased land, Lessee NEa shall proceed with reasonable diligence to develop said land at a rate, and to an extent, w a:m; commensurate with the economic development of the field in which the leased land lies. qN a 0_o• v GU 13. POOLING CLAUSE: Lessee may at any time or times pool any part or all of said land or lease ran GIFT. or any stratum or strata with other lands and leases, stratum or strata, in the same field so as to es;` constitute a spacing unit to facilitate an orderly or uniform well-spacing pattern or to comply with NN£oti any order, rule, or regulation of the State or Federal regulatory or conservation agency having e m f jurisdiction. Such pooling shall be accomplished or terminated by filing of record a declaration of ?Oa. pooling, or declaration of termination of pooling, and by mailing or tendering a copy to Lessor, or to the depository bank. Drilling or reworking operations upon or production from any part of such spacing unit shall be considered for all purposes of this lease as operations or productions from wmA this lease. Lessee shall allocate to this lease the proportionate share of production which the _�`° acreage in this lease included in any such spacing unit bears to the total acreage in said spacing unit. "pi 14. UNITIZATION—COMMUNITIZATION: In the event Lessor permits the land herein leased to be included within a communitization or unitization agreement, the terms of this lease may be deemed to be modified to conform to such agreement. When only a portion of the land under this m lease is committed by an agreement, Lessor may segregate the land and issue a separate lease for each portion not committed thereunder; the term of such separate lease shall be limited as to • the original term of this lease. The terms of the lease on that portion remaining in the unit shall be deemed to be modified to conform to such agreement. Non-producing leases shall terminate on the first anniversary date of the lease following the termination date of the unit or part thereof modifying the lease, but in no event prior to the end of the primary term of the lease or the !\ w extension term of the lease. !; 15. PRODUCTION: Lessee shall, subject to applicable laws, regulations and orders, operate and produce all wells upon the leased land so long as the same are capable of producing in paying quantities, and shall operate the same so as to produce at a rate commensurate with the rate of \ production of wells on adjoining lands within the same field and within the limits of good engineering practice, except for such times as there exist neither market nor storage therefore, �\\ C:\Users\kford\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 0512014) Small-Tract Oil and Gas Lease Page 8 and except for such limitations on, or suspensions of, production as may be approved in writing by Lessor. Lessee shall be responsible for adequate site security on all producing properties. 16. SHUT-IN WELLS: If Lessee shall complete a well on the leased land productive of gas and Lessee is unable to produce such gas due to a lack of suitable market therefore, Lessor may grant Lessee suspension of his obligations to produce hereunder until a suitable market for such gas can be found, and during any such suspension period, it shall be deemed that gas is being produced hereunder in paying quantities. Except, however, that beginning on the anniversary date next, of the year of an extension of the lease by reason of a shut-in well, Lessee shall pay to Lessor a shut-in royalty equal to$2.50 per acre of the lease per annum. The minimum amount of such shut-in royalty payment shall be $240. Each year's shut-in royalty shall be forfeited to 2 Lessor except for the shut-in royalty paid for the year during which the well begins production. The maximum extension of the lease, due to the existence of a shut-in well, shall be five (5) years u_I- beyond the extension term as described in the EXTENSION paragraph herein. The granting of any further extensions shall be at the sole option of Lessor. 17. OPERATIONS: Exploration, drilling or production operation, including permanent installations, mm} shall be in compliance with all Colorado Oil and Gas Conservation Commission and State of �m=a Colorado Regulations. Reports required to be filed with the Colorado Oil and Gas Conservation --- Commission shall be made immediately available to Lessor upon request. vi_a CO _m 18. NOTIFICATION: Lessee shall notify Lessor and the surface lessee or surface owner of the location of each drill site at least two weeks prior to commencing drilling operations thereon. da Lessee shall notify Lessor before commencing to plug and abandon any well by copy of Lessee's max request for approval or sundry notice of intent to plug and abandon. con c„ mr-c 19. BONDS: Lessee shall be liable for all damages to the surface of the land, livestock, growing -15•5 1 crops, water wells, reservoirs, or improvements caused by Lessee's operations on said land. No °D N o ti operations shall be commenced on the land hereinabove described unless and until Lessee shall �� have filed a good and sufficient bond with Lessor, in an amount to be fixed by Lessor, to secure mom= the payment for such damages as may be caused by Lessee's operations on said land and to assure compliance with all the terms and provisions of this lease, the laws of the State of Colorado, and the rules and regulations thereto appertaining. A bond may be held in effect for the life of production of any well. ma mw` 20. SETTLEMENT: Lessee shall not remove any machinery, equipment or fixtures placed on said o land, other than drilling equipment, nor draw the casing from any well unless and until all co _ i . payments and obligations currently due Lessor under the terms of this lease shall have been paid or satisfied. Any machinery, equipment or fixtures left on this land for a period of more than six(6) months after the expiration hereof, shall automatically become the property of Lessor. 21. OTHER DISCOVERY: Should Lessee discover any valuable products other than oil and gas, on or within the leased land, Lessee shall within seven (7) days report such discovery to Lessor, in which event Lessee and Lessor may negotiate a provision for production of such discovery. a 22. WATER: This lease does not grant permission, express or implied, to Lessee for water exploration, drilling, or establishing water wells without the written permission of the surface owner. If Lessor is the surface owner, said permission shall not be unreasonably withheld. If Lessee desires to establish or adjudicate any water right for beneficial use on the leased land, any such adjudication or application shall be in the name of Lessor if Lessor is the surface owner. The same shall apply to any non-tributary water rights established on the leased land which may - be put to beneficial use off said land. C1UsersVcfordWppData\Local\Microsofl\WindowslTemporary Internet Files\Content.Outlook\TBPT5DNY\FOLeaseSmallTract2014-C►ean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 9 23. DEFAULT: Upon failure or default of Lessee to comply with any of the terms and provisions hereof including, but not limited to, the failure to comply with laws, rules and regulations governing Colorado oil and gas operations, Lessor is hereby authorized upon notice and hearing, as hereinafter provided, to cancel this lease as to all of the leased land so claimed or possessed by lessee hereunder. In the event of any such default or failure, Lessor shall, before making any such cancellation, send to Lessee by certified mail, to the post office address of said lessee as shown by the records of Lessor, a notice of intention to cancel for such failure or default, specifying the same, stating that if within forty-five (45) days from the date of mailing said notice, Lessee shall correct such failure or default, no cancellation will be made. If such failure or default is not corrected within forty-five (45) days after the mailing of such notice, and if Lessee does not request a hearing on such notice within forty-five (45) days, this lease will terminate and be canceled by operation of this paragraph without further action by Lessor, or further notice to Lessee. 8 s 24. EXTENSION: If Lessee fails to make discovery of oil and gas, or either of them, in paying quantities during the primary term hereof, or during drilling operations commenced during the ;.y primary term hereof, Lessee may make written application to Lessor for an extension of this 8 lease. The granting of such extension shall be at the sole option of Lessor, according to the mr X following conditions: mv� cgs A. Extension Limit: No lease term will be extended for more than six (6) months from the m_ c 0-c,1 original expiration date. LLpi� ma* B. Extension Payment: The Lessee shall pay to the Lessor the sum of one-third of the original ya;� bonus. It N"j a o V C. No Change in Royalty: The royalty will remain the same. °Vi 25. HOLD HARMLESS: Lessee shall indemnify Lessor against all liability and loss, and against all co N o ti claims and actions, including the defense of such claims or actions, based upon, or arising out of, vY v We damage or injury, including death, to persons or property caused by, or sustained in connection o m = with, operations on this leased land or by conditions created thereby, or based upon any violation cr S of any statute, ordinance, or regulation. INImet; 26. CONDEMNATION: If the leased land shall be taken in any condemnation proceeding, this lease ^' shall automatically terminate as of the date of taking. The award for such condemnation shall be paid to Lessor, except for any specific award(s) paid to Lessee for severed oil and gas reserves, _ m in which event 50% of such specific award(s) shall be paid to Lessor in lieu of royalty lost by virtue of the condemnation. Improvements shall be removed by Lessee per terms in the SETTLEMENT paragraph herein. If only a portion of the leased land is taken by condemnation, o, Lessor may, at its option, terminate this lease or terminate only that portion of the lease so taken. `a m 27. ERRORS: Every effort is made by Lessor to avoid errors in all procedures including, but not limited to, auction listings and lease preparation. Lessor shall not be liable for any inconvenience o or loss caused by errors which may occur. Lessee shall notify Lessor immediately upon discovery of any errors or discrepancy whatsoever. mw 28. ARCHAEOLOGY: Lessee shall not destroy, disturb, mar, collect, remove or alter any prehistoric a_, or historic resources of any kind on Weld County lands as provided by law. These resources include, but are not limited to, all artifacts of stone, wood or metal, pictographs, structures, and bones. A discovery of anything of prehistoric or historic nature shall be reported to Lessor or the State of Colorado Archaeologist immediately. o_ C:1Users*ford WppData\Local\Microsoft\WindowslTemporary Internet Files\Content.Outlook\TBPT5DNY\FOLeaseSmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 10 29. DEFINITIONS: For purposes of this Lease, the following definitions apply: A. "Products"refers to any and all substances produced on the leased property, including all oil and gas,found on or under the leased property. B. "Market Value"shall mean for gas and products therefrom (i) the gross price at which gas or products therefrom are sold pursuant to a Gas Contract, as defined in paragraph 2C, or(ii) if not sold pursuant to a Gas Contract, as defined in paragraph 2C, the highest gross price reasonably obtainable for the quantity of gas or products available for sale, through good faith negotiations for gas or products produced from the Leased Premises at the place where such gas or product is available for sale on the date of such a contract with adequate provisions for redetermination of price at intervals of no less frequency than two (2) years to ensure that the production is being sold for no less than the current market price. Included within the definition of "Market Value" as used herein is the presumption that Gas Contracts are 8y-. arms-length contracts with purchasers who are not subsidiaries or affiliates of Lessee. Et "Market Value"shall never be less than the amount actually received by the Lessee for the ;,r sale of hydrocarbons. 32 a13 C. "Affiliate"is defined as the parent company or a subsidiary of Lessee, a corporation or other er si g entity having common ownership with Lessee, a partner or joint venturer of Lessee with !A m s respect to the ownership or operation of the processing plant, a corporation or other entity in o v9 which Lessee owns a ten percent or greater interest, or any individual, corporation or other "mactg, entity that owns a ten percent or greater interest in Lessee. yR D. "Costs" and/or "Expenses" shall mean all costs of gathering, production, transportation, aN v treating, compression, dehydration, processing, marketing, trucking or other expense, directly or indirectly incurred by Lessee, whether as a direct charge or a reduced price or otherwise, mu- including fuel use attributable to any of the services listed above. "Costs" or"Expenses" also OOP; am include depreciation, construction, repair, renovation or operation of any pipeline, plant, or cos,o ti other facilities or equipment used in connection with the treating, separation, extraction, cre;v gathering, processing, refining, transporting, manufacturing or marketing of hydrocarbons am = produced from the Leased Premises or lands pooled therewith. vsu e E. "Gas"as used herein shall mean all gases (combustible and noncombustible) including, but (f).• not limited to, all gaseous hydrocarbons, gaseous compounds, carbon dioxide, and helium. ti o, F. "Oil and gas"as used herein shall include all substances produced as by-products therewith, including, but not limited to, sulfur. ,0 g Ea �•• G. "Paying quantities" as used herein shall mean and refer to quantities of oil and gas or of either of them sufficient to pay for the current cost of producing same. Mr tn 30. HEIRS AND ASSIGNS: The benefits and obligations of this lease shall inure to, and be binding upon, the heirs, legal representatives, successors or assigns of Lessee; but no sublease or O assignment hereof, or of any interest herein, shall be binding upon Lessor until the same has { m , been approved by Lessor as explained in the ASSIGNMENTS paragraph provided above. 31. WARRANTY OF TITLE: Lessor does not warrant title to the leased premises, but it shall, upon request, allow Lessee access to such abstracts and other title papers as it has in its files. There o shall be no obligation on Lessor's part to purchase new or supplemental or other title papers, nor to do any curative work in connection with title to the subject lands. All abstracts of title, whether new or supplementary, obtained by Lessee and covering the subject lands shall become the C:\Users\Jcford\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 11 property of, and be delivered to, Lessor after Lessee has completed its title examination and curative work, subject, however, to the right of Lessee to use such abstracts upon request at any time during the term of the lease. 32. FORCE MAJEURE: Neither party shall be responsible for delays or failures in performance resulting from acts or occurrences beyond the reasonable control of such party, including, without limitation:fire, explosion, power failure, flood, earthquake or other act of God; war, revolution, civil commotion, terrorism, or acts of public enemies; any law, order, regulation, ordinance, or requirement of any government or legal body or any representative of any such government or legal body; or labor unrest, including without limitation, strikes, slowdowns, picketing or boycotts. In such event, the party affected shall be excused from such performance (other than any NI obligation to pay money) on a day-to-day basis to the extent of such interference (and the other party shall likewise be excused from performance of its obligations on a day-to-day basis to the extent such party's obligations relate to the performance so interfered with). o V=I' 33. SURVEYS,ABSTRACTS, TITLE OPINIONS AND CURATIVE WORK: ;a S x A. If Lessee shall cause any of the exterior or interior lines of the property covered by this lease r99 to be surveyed, Lessee shall furnish Lessor a copy of such survey. Lessee shall furnish 'nm=� Lessor, within a reasonable time, with a copy of all maps submitted to the Corps of Engineers of the United States Army, Railroad, or other governmental or official agency or department o coo a v%g having jurisdiction, showing the proposed location of all roads, pipelines, canals and drill sites c3.Illy on the Leased Premises. yQ B. In the event Lessee causes an abstract of title to be prepared covering the property herein mNY leased, or any portion thereof, Lessor shall have access to said abstract at any reasonable coo m s time. In the event Lessee shall cause the title to be examined or should obtain a title opinion 0 or title certificate upon the property herein leased, Lessee agrees to furnish Lessor a copy or •@ d photostatic copy thereof within a reasonable time of receipt of the same by Lessee with the N N o ti understanding that neither Lessee nor the attorney or firm of attorneys rendering the opinion t or certificate shall be responsible to Lessor for its correctness, the said opinion or certificate a�v� P P Nm= being furnished to Lessor simply for its own convenience, information and personal use. vm3. Similarly, if any curative material is obtained by Lessee, a copy thereof shall immediately be furnished Lessor under the same conditions of non-liability on the part of the Lessee or the truss. persons who may have obtained or prepared the same. m N IN WITNESS WHEREOF, Lessor has hereunto signed and caused its name to be signed by the Z!. CHAIR, BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF WELD, with the seal of the office affixed, and Lessee has signed this agreement, the day and year first above written. LESSOR: • ' ATTESStifel) K 'IL4) OARD OF COUNTY COMMISSIONERS � Weld County Clerk the and LD COUNTY,TCAS of COLORADO : / Gv Qn g m ° BY: uur l P Deputy Cle c to e Board tg t hair, Bard of County Commissioners a, \ JUN 11 2014 C:\Users kforthAppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmallTract2014-Clean (2).docx (Revised 05/2014) Ace/Fr./7 r. Small-Tract Oil and Gas Lease Page 12 LESSEE: LOUD E &r6 , I rice Company Name Signature LGlrie M. JUncje(s, President Printed Name and Title STATE OF LO(OraWo )SI COUNTY OF J)QALRJ )) ss 14, The foregoing instrument was acknowledged before me this c& f day ofMA 201`1 , by (--(Ant_.- M. :�u ¢r. m=& _ Witness my hand and official seal. HALEY MARIE HANSON NOTARY PUBLIC a ,, i�Gf�JJ i�a�, (61Gr ti STATE OF COLORADO aLL° Notary NOTARY ID 20144018861 ,-. w s rY MY COMMISSION pU1APRIL 21,2018 ma m My domm sion Expires: / C N oci BU ore LESSEE: (second signature if applicable) Ne v Company Name t BN we O1 O Signature N o A Printed Name and Title Ei► STATE OF n. _ ) ss m COUNTY OF 01 The foregoing instrument was acknowledged before me this day of w Y A 20 , by £ Witness my hand and official seal. Notary Public My Commission Expires: C:\Users\kford\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DNY\FOLease_SmalITract2014-Clean (2).docx (Revised 05/2014) Small-Tract Oil and Gas Lease Page 13 "EXHIBIT A" Township 6 North, Range 66 West, 6th P.M. Section 25: All that part and parcel of the SW%SE%of Section 25 as lies on the Southerly side of the South boundary line of the right of way of the Denver, Laramie and Northwestern Railroad Company, and Westerly of a line drawn to run Northward and parallel with the West line of said SW'/4SE'%, which Northward line begins a point three hundred and eighty feet East of the Southwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right of way line County of Weld, State of Colorado and containing 0.48 acres, more or less. 4024028 Pages: 13 of 13 06/17/2014 10:52 AM R Fee: $0.00 VIII k(M111llttiiiii.V.1 1,I I f!i rikku fl#4 kJ, III c 40 31 6 st / 4 es• e or 3 k n 0, un II C:\Users\kford\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\TBPT5DBY\FOLease SmallTract2014-Clean (2).docx (Revised 05/2014) LAND ENERGY. INC. 1615 California Street,Suite 702, Denver,Colorado 80202 T: 303-825-5263 I F: 303-825-6629 I lane@landenergyinc.com May 27, 2014 Weld County,Colorado Attn: Karla Ford 1150 O St. P.O. Box 758 Greeley, CO 80632 Re: Oil and Gas Lease covering lands in: Township 6 North, Range 66 West, 6th P.M. Section 25: All that part and parcel of the SW/SPA of Section 25 as lies on the Southerly side of the South boundary line of the right of way of the Denver, Laramie and Northwestern Railroad Company, and Westerly of a line drawn to run Northward and parallel with the West line of said SW'/SE'/, which Northward line begins a point three hundred and eighty feet East of the Southwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right of way line County of Weld, State of Colorado Net Acres: 0.480000 Gross Acres: 0.480000 Dear Karla Ford, Please find enclosed for your review the following: 1. Land Energy, Inc. Check#3896 in the amount of$576.00($1,200.00 x 0.48=$576.00) 2. Original Executed Small Tract Oil and Gas Lease 3. Copy of Warranty Deed and Order for Default Judgment for the above referenced property After reviewing, please have the appropriate parties execute the Oil and Gas Lease by signing where indicated. Once executed, please have the original document recorded and returned to Land Energy, Inc. at the address above. Please advise if you would prefer for Land Energy, Inc. to cover recording costs as we would be pleased to do so. The additional documents are for your records in support of title. If you have any questions at all, please do not hesitate to call Land Energy, Inc. toll free at(800)873-3054 or at(303) 825-5263. Thank you for your time and consideration in this matter. Sincerely, LAND ENERGY, INC. 4e eL Alicia Beal Land Assistant 2021/ab CO 0) 03 0 Cr) VI r--9 6.9 ON i > o c L N t In ' � - 2 > N. 00 c . 0 3 c amc CO (� ' Y ,) I!cn z '= 2 O c 6-10 • O C ?y, o a > 0 41-' 2 3 o ro = Ca - _ ❑ by �. o ro N co, 9 .. V1 •L-. 4. N CtS O O I W. � 'b N 0 0 4.. -o d O W J N CJ O T�` O a rj « I II 1/43 Aj = . Nc � Go O >,•ro oL3 H 49 O � .�•o ds 0 0 m c U o \ ‘ >:5 « 5 o O 3 cu . 30g cot (�I, .c �' ti v 01_0 .c o ti 0 ti x o. 4. U Z, A HO O L. C) +-. V.; N C N `C A " O W O in o ,id N CZ 4. c, Q c o _• 0 r � v � _ o v 3 0 0 a ° O '0 .d o.s v -lo m v .� c 0 0 0 3 7, o0o m o wT a � L a = ..o O a' s- 77 L 0 = = o V t - L 0 0 0 j C 0 a C) p LL 0 y C - 'O 0 0 0 0 '0 O O U_ — 0 is y O ¢ y Z 4 Zit aU U W o o w .. 4" in O U) in W •Q t H c .. C) O co u) O N O N V ≥ W c Wcr LL, - O P .? .Da y w U � � s i o f Lj w O O y O 0 O u so Et o CO WW Fcn 3Z5 4 ZE909 O0 Aajaa)O oavaoeoo 3 8SL X08 Od W1 cr p)eo8 ow of >I)ap No ope)o�o0 '/�uno0 Ram �/ tJ N 161 °. `/n�, / 6 expe OOyt'P AD I�' G101J.(F WARRANTY Whig year MI,tZ :uo! . de this-t 7111 DEED RECORD.--The Oat West Printing luta 1P'r lmdred nn Springs,Culo. b onWAHHANTY DEED. _ etween• of the � ...._.. ,bidState of Colorado, of the first part,and._. - _ i of the e —County oft L.Zirede�� -,and State of Colorado, -"- of the second part: v _ WIDER�SETH,�That� th said par __of the fiJr t part,for and in consideration of the sum of STATE OF COLORADO,frs �yG4.7Lxw'ycvt - ,s v�C/�/!00 DOLLARS, COUNTY OF Wean. This Warranty red coos filed for record at to the said pat _ the 'C part m and paid y the said part .of the second part,the receipt 9. ---• whereof is heeeb confessed� and acknowledged, has? granted, 'gained, sold and conveyed, and /ta ek- .al..- lst0. by,these pres9ts dnie ___gi alt,.bargain, sell, convey and confirm unto the said part-of the o �LGI/. _- second part,- heirs and assigns forever, all the following described lot —o parcel—_of kR. BB r./. . - rr land, situate, lying and being in the__�____.____...._� - -County of Weld, y - :__ _. n=wn and State of Colorado,to-aril All of t?st._psrt end_parcel_of-the-Southwest quarter--of.-the-Southeast--Quarter of Section—twenty-five-in-Township--Six-North-range-sixty-six, neat of the 6th Pat. as lies on•Lhe --southerly-side.-of-the south boundary line of the right of way of the•Denver , laramie_and - ---Northwestern--Pailroed-Company, and Westerly of a line drawn to run Northward-and parallel- -with the- nest-line of said Southwest quarter of the Southeast-quarter,-which-.Northward-line- -begins at a point Three Hundred and Eighty feet east of.the southwest corner-of—said---- '-- tract upon the south_line thereof_and.-runs-north to the point-of intersection-with-said-south _ bourdery.. Of the...right COnta-ining Forty—eight one hundredth& of'•one acre, ..more_or_less. .. .-- • • TOGETHER with all and singular the hereditaments and appurtenances thereunto belonging, or in anywise appertaining,and the reversion and reversions, remainder and remainders, rents, issues and profits thereof; and all the estate,right,title,interest,claim and demand whatsoever of the said part_£.f/--of the first part,either in law or equity,of,in and to the above bargained premises,with the hereditaments and appurtenances. TO II V AND TO HOLD the said premises above bargained and described,with the appurtenances,unto ' the sai I part of the second part lens and assi mover. And the said_ - • ( ��S/( prat_ of 1110 h19t pert, for. --heirs,s and ass and hat administrate t dN2✓_covenant, rant, bargain and agree is and ._.the 'd ellAiz...of the premises part, __ e heirs and assigns,,pr that of the a of the ble est to and delivery e, these,inseam �¢ wag mrig right,, um premises above conveyed,as of good,burg,perfect,nd cone and indefeasible anner of inheritance,fa lam,in fee simple,and h�___gole rrofull power and lawful authority to grant, bargain,sell and convey the same in manner and form aforesaid,a J.that a same ms free and clear from all former and other grants,bargains,sales,liens,taxes, assessments and incumbrances of whatever kind ..--naturee soever; • and the above bargained premises,in the quiet and peaceable possession of the said par of the second partp'a=!-emo heirs and assigns,against all and every person or persons lawfully claiming or to claim the whole py any part thereof,the said pamj. ___of the first part shall and will WARRANT AND FOREVER DEFEND. V , , / 0 IN WITNESS WHEREOF, The said pat_of the first part h,d_.-hereunto set .< t-t/ hand rand.seal—the day and year first above written. Signed,Sealed and Delivered in Presence of 1 -- -` m4� ______________________ _-_... �omr.�. STATE OF COLORADO, �,r � ss r COUNTY oe_'Sd� I, L,aL4LGsr4a'r„-r! (eLdaimQ a Not Ynh in and for • said .4.=_---_Cowety, in the State aforesaid,do hereby certify that..- !f , _ - who is personally known to me t a the peisonr._w a me-rf.o_._ scribed to the -.Deed,appeared before me this ay in person and acknowledged that signed,se ed and delivered the said instrument • • of writing as free and voluntary act _. ,._ -for the uses and purposes therein set forth. Given under my hand and-. _._seal his ..77.7" day of -- A.D.1010.-. �GG il' My Commission rapiers.__ _ -._�-!7.thi _/.C�li /' •/ p/J ._._. Pekin Publ i. AR207d893 B 1131 REC 02072898 10/10/86 11:34 $0.00 1/002 F 0604 MARY ANN FEUERSTEIN CLERK & RECORDER WELD CO, CO DISTRICT COURT, COUNTY OF WELD, COLORADO Case No. 86-CV-879, Division II • ORDER FOR DEFAULT JUDGMENT THE COUNTY OF WELD, STATE OF COLORADO, a body politic and corporate, by and through THE BOARD OF COUNTY COMMISSIONERS OF TEE COUNTY OF WELD, Plaintiff, v. C. R. SKINNER, Trustee, and all unknown persons who claim any interest in the subject matter of this action, Defendants. The Court, having considered the Plaintiff' s Motion for Default Judgment previously filed in this matter, and otherwise being fully advised in the premises , DOTE FIND: 1. That this Court has personal and subject matter jurisdiction. 2. That venue is proper in this Court. 3. That the Defendants have failed to set forth the nature of their claims in the subject matter of this action. • 4. That the Defendants and each of them have no interest, estate, or claim of any kind whatsoever in the real property described as follows: All that part of the southwest Quarter of the Southeast Quarter of Section 25 , Township 6 North, Range 66 West of the 6th Principal Meridian, Weld County, Colorado, lying south of County Road 64 , being more particularly described as follows: Beginning at the northwest corner of the Spanish Colony, thence north 0°20 '7" east 128.00 feet to a point in the south line of County Road 64; thence along the south line of County Road 64 north 85°35' 25" west, 758.93 B 1131 REC 02072898 10/10/86 11:34 $0.00 2/002 F 0605 MARY ANN FEUERSTEIN CLERK & RECORDER WELD CO, CO feet; thence south 0°20' 19" west, 195.72 feet; thence north 89°17' 28" east, 757. 15 feet to the point of beginning; Said parcel contains 2. 813 acres more or less. WHEREFORE, this Court enters judgment in favor of the Plaintiff, The County of Weld, State of Colorado, a body politic and corporate, by and through the Board of County Commissioners of the County of Weld, and against the Defendants, C. R. Skinner, Trustee, and all unknown persons who claim any interest in the subject matter of this action, and: 5. Forever bars and enjoins the Defendants from asserting any claim or title to the above described real property. 6 . Quiets the title of the Plaintiff in and to the above described real property and adjudges that the Plaintiff is the owner in fee simple and entitled to possession of said real property. DONE THIS tQ day of 4f,t-4e , 1986. • ;'• BY THE COURT: C°rtlfled l 1::CS3•L+,4;'tr•d lOr!� c?rte copy of ahp•i,.;Cl In my c Mr- + Cei:\ of Ahct Court. JO J. HOFF ti d county ccl°rado n: � C: Di trict Court Judge QI (I I __ 3 ,; F; E1 f1 !1 I!! : „ .! 222- gat :; z Q ,„ • ILLW�g Ee= p LL p 2 et3 et X a°_ U. p g a22 c N m`�K 4 F a " 4-, 3a I II MEI ca otmoatuiaa IT J V UCID = :in°°z $ oc 3 !! :t : tS :S :ILi. a S9 +-.O CDO RS igsF�°3Wc .2C ert CD rr� zVUz o Iii w . .. Et U A. t! 4t R. a: s! III re �..J -- 0 to O O g c lei-ercnui0°W 2 dE Z CD cn a i _ rn I ?] 41 it R] t3 R1 h 41 J1 1.1 ,^ "} L Vw v �� c 3 . U U L Rc U a` dr d? y rII- w (� i glitg 3 !! 4 s �� `"1 It AZ Ri � 31a N ` 22iww11LLza ct Ca rr zOWNU $ >y . oL8 O aQccaWWOOrez . ,3 ! Et U If f! {t R` 5! Ld a C x xze nt'v) I r gg � l�z��W ; gC = j ; Lis 1g 5yrQcQ? W 2gQ c • F O !l O ti W V i a ; t • . ..Y1 . II.. f. - ' 'i "7. .".•,. , tot-f-- - -- •- - .. , I re... _ a Al w• - • W al, . 451Z ':LI (inN CA:) ! -' (,r)a (4:) ' J1. 4 c4. �a O oes ... ... _ ,. ._ . ...... i ..___ ._ • • _ _ o , _ z . ,, „ . . .... .• . . lit , ii, . ..•• ,, •‘. ..„ ae; A1 u i, • . : .,„,. ,,,,,4 ,,. ii . • 4 +., . - . ... _ ..'1 *a 4 -1)- t.- ' , 'et, L. w .i,: _ , _foiv,„, - - -- . ,, , - .. ,- - — - ._ - - j-.."-y-„:. t. , .s. "ark c sr.!•,.a- . . , ii .. t 1r yw 1'7. fir, ^ . a `It l d l 3 di a fz 61 'i H E ' Pa m it i. S E ?: ;al 311 di ff 3 ,4 N31 aft Eel 2 • °<t,pzW ;li � /� f� d# a ././i 2 • •" 00 N JZC C �1 S •y•y�WWsp LZt /, • a h.• • tr • Pi 3: icr I c) +p`yZj J� E a -! f! L. f! :U M f! #! I P A V W ! : CID CD ^` _ EE y • E — U H B -N W W<1 • J x3004 •-g� ga .8 CD cn Q 213-§0042i °=Do . s . .44 : CD r4- CD Y/ UI V— fnilt_trmsop?_,° ? gw W C U O106a0wgr! R# f! #< r, f! h. #! ! f# '; co of 2 u 2 iii•U 'ae. 12.11 - P' g ,, q aa /S gill #S a 5 a N L y }�� Gs•W,tIWLL= Ocono6C �Y.. C iZa( a I ' j: f: f_ !' it # #f d' s. w _ 28a3�ao'togt W / • . tut: CJ xixzee E 3 �_ ++ Sp �• Z e_ a JL V z We, ? • 31 6! iiii aGTTo,— gN =ptp>2W • 6 v G 6 S t w O< : ? Ili 1 rialliMr I _i tl . . sil , ise4 i A .i` it . • ,i ! • 1 T r s b I t _ 4 , ' i . . /: ; �. et 154e 'Iv 51 . , ( , . . - _ i ill Mir' ..... y u. .�• Q • - . W V I (1) I ( ri Or) M . - `I G) J 01 . ? • O E omm O z COT H44 $ 1. q � •�, t, .# + • ' a 7 - 44 ' ` R t L \` • 'y��` F.I- Tom-. '� 't ,.. daL • s 1 N lip , . �. • 1 .. 4 • • . '•ka Karla Ford From: Ellen Vandervoort Sent: Thursday, June 05,2014 8:17 AM To: Karla Ford Subject: RE:Small Tract Lease Maps(2) Attachments: LE0324.pdf; LE0324_1.pdf; LE0325.pdf Karla, Please find the maps attached. I was not able to determine what area the first lease covered exactly, since I could not find a railroad right-of-way as sdescribed in the lease. I attached two maps for the lease, the first covering the SW4 of the SE4 and the second covering the parcel of land that was described in the warranty deed. Let me know if we need to look into it further and I can try to get more help on it. LEO 342 Thank you, V Ellen Vandervoort Geographic Information Systems Analyst Weld County Office of Information Technology 1400 N. 17th Ave. Greeley, CO 80631 (970)356-4000 x2526 eyanderyoort@weldqoy.com www.co.weld.co.us/Departments/GIS/index.html A err Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e-mail and destroy the communication. Any disclosure,copying, distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Karla Ford Sent: Friday, May 30, 2014 12:15 PM To: Ellen Vandervoort Subject: RE: Small Tract Lease Maps (2) I just put down what they have in the lease, but I have attached the actual deed/paperwork that the company provided to me to show we own the minerals. Some of it may be more helpful to you. Let me know if this does not work. Thanks! Karla Ford K Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 1 r , .__ � brie x.. 41 Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Ellen Vandervoort Sent: Friday, May 30, 2014 11:47 AM To: Karla Ford Subject: RE: Small Tract Lease Maps (2) I was trying to check that area but I'm not sure I could find the railroad right-of-way that is referenced in the lease. Could it be in S25 T6N R67W or possibly S25 T7N R66W? Thanks, Ellen Vandervoort Geographic Information Systems Analyst Weld County Office of Information Technology 1400 N. 17th Ave. Greeley, CO 80631 (970)356-4000 x2526 evandervoort@weldqov.com www.co.weld.co.us/Departments/GIVindex.html Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e-mail and destroy the communication. Any disclosure, copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Karla Ford Sent: Friday, May 30, 2014 10:58 AM To: Ellen Vandervoort Subject: RE: Small Tract Lease Maps (2) Sorry about that...525,T6N, R66W Karla Ford X Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 2 44 sr > 7 ! r g rr Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Ellen Vandervoort Sent: Friday, May 30, 2014 10:24 AM To: Karla Ford Subject: RE: Small Tract Lease Maps (2) Karla, Does the first lease, LE0324, have information for what Township and Range it falls in? Thanks, Ellen Vandervoort Geographic Information Systems Analyst Weld County Office of Information Technology 1400 N. 17th Ave. Greeley, CO 80631 (970)356-4000 x2526 eyandervoort@weldqov.com www.co.weld.co.us/Departments/Glgindex.html • rj Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e-mail and destroy the communication. Any disclosure, copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Karla Ford Sent: Friday, May 30, 2014 7:55 AM To: Ellen Vandervoort Cc: Karla Ford Subject: Small Tract Lease Maps (2) Could you get me a map of the two following land descriptions? I would like to have them by next Thursday(6/5) if possible. Thanks! 1 -All that part and parcel of the SW4 SE4 of Section 25 as lies on the Southerly side of the South boundary line of the right of way of the Denver, Laramie and Northwestern Railroad Company and Westerly of a line drawn to run Northward and parallel with the West line of said SW4 SE4, which Northward line begins a point three hundred and eighty feet East 3 of the Southwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right of way line. (LE0324) 2-All that part of the following described tract of land which lies in the NW4 SW4:A strip of land eighty feet in width lying immediately North parallel and adjacent to the right-of-way of Colorado Southern Railway Company commencing at a point where said right-of-way intersects the North line of the SW4 SW4 of 536,T 6N, R 66 W of the 6th P.M. in Weld County, Colorado, running thence Northwesterly to the West line of the SE4 NE4 of 534,T6N, R66W(LE0325) Karla Ford R Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 Tar _ Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. 4 qr U ry/ Karla Ford 1,6714 To: Lane Jungers W 423/7C—( Subject: RE:Weld County Small Tract Oil and Gas Lease-Update Attachments: FOLease_SmallTract2014-Clean (2).pdf Thank you for your patience. Attached is the revised lease. If you would like to proceed, please submit the following for each tract: *Title Opinion, or such, showing that Weld County owns the mineral interests. *The attached lease agreement signed and notarized. You will need to complete the acres, amounts, legal description, etc. *Check made payable to Weld County Karla Ford A Deputy Clerk to the Board 1150 0 Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 ... ..186•1 r1' Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Lane Jungers [mailto:lane@landenergvinc.com] Sent: Wednesday, May 07, 2014 12:55 PM To: Karla Ford Subject: RE: Weld County Small Tract Oil and Gas Lease - Update Hi Ms. Ford, We look forward to receiving the revised form and moving forward towards leasing Weld County's interest. Sincerely, LAND ENERGY, INC. Lane M. Jungers President From: Karla Ford [mailto:kford@co.weld.co.us] Sent: Wednesday, May 07, 2014 12:43 PM To: Esther Gesick; Stephanie Arries Cc: Alicia Beal; lane@landenergyinc.com; Amy Boyd; Scott Bally; Iandmantom@hotmail.com; will@ihresllc.com Subject: Weld County Small Tract Oil and Gas Lease - Update In reference to Weld County Small Tract Oil and Gas Leases, we wanted to inform you that the first reading of the pending Ordinance update passed today. The revisions include the following: 1 Bonus$1,200 per mineral acre 18.5% Royalties Lease will be paid up and no rentals We plan to have the revised small tract lease fill-able form updated and emailed out to each of you the week of May 19th. Thank you for your patience. Karla Ford Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 ism 11 r -- Pi I -• r ' ♦ Y�y Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. Information from ESET Smart Security, version of virus signature database 9769 (20140507) The message was checked by ESET Smart Security. http://www.eset.com Information from ESET Smart Security, version of virus signature database 9769 (20140507) The message was checked by ESET Smart Security. http://www.eset.com 2 BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO IN THE MATTER OF THE APPLICATION OF ) CAUSE NO. 407 EXTRACTION OIL & GAS, LLC FOR AN ORDER ) TO POOL ALL INTERESTS IN AN APPROXIMATE ) DOCKET NO. 1403-UP-87 320-ACRE DESIGNATED WELLBORE SPACING ) UNIT ESTABLISHED FOR SECTION 36, TOWNSHIP ) ORDER NO. 407-989 6 NORTH, RANGE 66 WEST, 6T" P.M., FOR THE ) CODELL FORMATION, BRACEWELL FIELD, WELD ) COUNTY, COLORADO REPORT OF THE COMMISSION The Commission heard this matter on March 17, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon an application for an order to pool all interests within an approximate 320-acre designated wellbore spacing unit established for Section 36, Township 6 North, Range 66 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S. for the Hiner 36C-24W Well, for the development and operation of the Codell Formation. FINDINGS The Commission finds as follows: 1. Extraction Oil & Gas, LLC ("Extraction"or"Applicant"), as applicant herein, is an interested party in the subject matter of the above-referenced hearing. 2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law. 3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act. 4. On June 27, 1983, the Commission entered Order No. 381-1 which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Codell Formation underlying certain lands in the Bracewell Field. Section 36, Township 6 North, Range 66 West, 6`h P.M. is subject to this Order for the Codell Formation. 5. On April 27, 1988 (As of February 1, 2014), the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Section 36, Township 6 North, Range 66 West, 6m P.M. is subject to this Order for the Codell Formation. 6. On January 16, 2014, Extraction, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application ("Application") for an order to pool all interests in an approximate 320-acre designated wellbore spacing unit established for the below-described lands ("Application Lands"), for the development and operation of the Codell Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7Xb), C.R.S. were first incurred for the drilling of the Hiner 36C- 24W Well ("Well"), and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S.: Township 6 North, Range 66 West, 6th P.M. Section 36: SY2 N%:, N% S''/2 7. On March 4, 2014, Extraction, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application. 8. Land testimony and exhibits submitted in support of the Application by Lane M. Jungers, President of Land Energy, Inc., showed that all nonconsenting interest owners were notified of the Application and received an Authority for Expenditure ("AFE") and offer to participate in the Well. Further testimony concluded that the AFE sent by the Applicant to the interest owners was a fair and reasonable estimate of the costs of the proposed drilling operation and was received at least 30 days prior to the March 17, 2014 hearing date. 9. Land testimony showed the Applicant complied with the requirements of Rule 530, and is entitled to the cost recovery provisions pursuant to §34-60-116(7), C.R.S., for the Hiner 36C-24W Well. 10. Extraction has previously forfeited the 400 foot by 400 foot drilling window established pursuant to Rule 318A.a.(1) located in the center of the NW% NE% of Section 36, Township 6 North, Range 66 West, 6th P.M. 11. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights. 12. Extraction agreed to be bound by oral order of the Commission. 13. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to pool all interests within an approximate 320-acre designated wellbore spacing unit established for Section 36, Township 6 North, Range 66 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of§34-60-116(7), C.R.S. for the Hiner 36C-24W Well, for the development and operation of the Codell Formation. ORDER IT IS HEREBY ORDERED: 1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests in an approximate 320-acre designated wellbore spacing unit established for the below-described lands, are hereby pooled, for the development and operation of the Codell Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S. are first incurred for the drilling of the Hiner 36C-24W Well: Page 2 of 4 (1403-UP-87/407-989) Township 6 North, Range 66 West, 6th P.M. Section 36: SY2 N%, N% S% 2. The production obtained from the wellbore spacing unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within the wellbore spacing unit; each owner of an interest in the wellbore spacing unit shall be entitled to receive its share of the production of the Well located on the wellbore spacing unit applicable to its interest in the wellbore spacing unit. 3. The nonconsenting leased (working interest) owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Well (including penalties as provided by §34-60-116(7Xb), C.R.S.) out of production from the wellbore spacing unit representing the cost-bearing interests of the nonconsenting working interest owners as provided by§34-60-116(7Xa), C.R.S. 4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by §34-60-116(7), C.R.S. Any party seeking the cost recovery provisions of §34- 60-116(7), C.R.S., shall first comply with subsection (d)for any subsequent well(s). 5. Each nonconsenting unleased owner within the wellbore spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, only out of each nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116(7)(b), C.R.S. as amended. After recovery of such costs, each unleased nonconsenting mineral owner shall then own its proportionate 8/8ths share of the Well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the Well as if it had originally agreed to the drilling. 6. The operator of the well drilled on the above-described wellbore spacing unit shall furnish the nonconsenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month. 7. Nothing in this order is intended to conflict with §34-60-116, C.R.S., as amended. Any conflict that may arise shall be resolved in favor of the statute. 8. The wellbore spacing unit described above, shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a. IT IS FURTHER ORDERED: 1. The provisions contained in the above order shall become effective immediately. 2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders. 3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission. Page 3 of 4 (1403-UP-87/407.989) 4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review. ENTERED this 11th day of April, 2014, as of March 17, 2014. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO By AgqZ= Robert J. Frick, Secretary Page 4 of 4 (1403-UP-87/407-989) BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO IN THE MATTER OF THE APPLICATION OF ) CAUSE NO. 407 EXTRACTION OIL & GAS, LLC FOR AN ORDER ) TO POOL ALL INTERESTS iN AN APPROXIMATE ) DOCKET NO. 1403-UP-87 320-ACRE DESIGNATED WELLBORE SPACING ) UNIT ESTABLISHED FOR SECTION 36, ) TOWNSHIP 6 NORTH, RANGE 66 WEST, 6TH ) P.M., FOR THE CODELL FORMATION, ) BRACEWELL FIELD, WELD COUNTY, COLORADO ) NOTICE OF HEARING TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN: On June 27, 1983, the Commission entered Order No. 381-1 which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Codell Formation underlying certain lands in the Bracewell Field. Section 36, Township 6 North, Range 66 West, 6'h P.M. is subject to this Order for the Codell Formation. On April 27, 1988 (As of February 1, 2014), the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Section 36, Township 6 North, Range 66 West, 6th P.M. is subject to this Order for the Codell Formation. On January 16, 2014, Extraction Oil & Gas, LLC ("Extraction" or "Applicant"), by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application ("Application") for an order to pool all interests in an approximate 320-acre designated wellbore spacing unit established for the below-described lands ("Application Lands"), for the development and operation of the Codell Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S. were first incurred for the drilling of the Hiner 36C-24W Well ("Well"), and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S.: Township 6 North. Range 66 West, 6`h P.M. Section 36: S1/2 NIA, N'/z S1 NOTICE IS HEREBY GIVEN, pursuant to: 1) the general jurisdiction granted to the Oil and Gas Conservation Commission of the State of Colorado under §34-60-105, C.R.S.; 2) specific powers granted pursuant to §34-60-106, C.R.S.; 3) the State Administrative Procedures Act at §24-4-105, C.R.S.; and 4) the Commission's Series 500 Rules at 2 CCR 404-1, that the Commission has scheduled the above-entitled matter for hearing on: Date: Monday, March 17, 2014 Tuesday, March 18, 2014 Time: 9:00 a.m. Place: Colorado Oil and Gas Conservation Commission 1120 Lincoln Street, Suite 801 Denver, Colorado 80203 In accordance with the Americans with Disabilities Act, if any party requires special accommodations as a result of a disability for this hearing, please contact Margaret Humecki at (303) 894-2100 ext. 5139, prior to the hearing and arrangements will be made. Pursuant to said hearing in the above-entitled matter at the time and place aforesaid, or at any adjourned meeting, the Commission will enter such orders as it deems appropriate to protect the health, safety and welfare of the public and to prevent the waste of oil and gas, either or both, in the operations of said field, and to carry out the purposes of the statute. In accordance with Rule 509., any interested party desiring to protest the granting of the application or to intervene on the application should file with the Commission a written protest or intervention no later than March 3, 2014, briefly stating the basis of the protest or intervention. Such interested party shall, at the same time, serve a copy of the protest or intervention to the person filing the application. One electronic (cogcc.hearings_unit@state.co.us), one original and two copies shall be filed with the Commission. Anyone who files a protest or intervention must be able to participate in a prehearing conference during the week of March 3, 2014. Pursuant to Rule 503.g., if a party who has received notice under Rule 503.b. wishes to receive further pleadings in the above- referenced matter, that party must file a protest or intervention in accordance with these rules. In accordance with the practices of the Commission, should no protests or interventions be filed in this matter by March 3, 2014, the Applicant may request that an administrative hearing be scheduled beginning March 4, 2014. In the alternative, pursuant to Rule 511., if the matter is uncontested, the applicant may request, and the Director may recommend approval on the basis of the merits of the verified application and the supporting exhibits. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO By Robert J. Frick, Secretary Dated: February 7, 2014 Colorado Oil and Gas Conservation Commission Attorneys for Extraction: 1120 Lincoln Street, Suite 801 Gretchen VanderWerf Denver, Colorado 80203 Gretchen VanderWerf, PC Website: http://cogcc.state.co.us 1525 17th Street Phone: (303) 894-2100 Denver, Colorado 80202 Fax: (303)894-2109 Phone: 303-298-9939 GVW@gvanderwerflaw.com Page 2 of 2 (1403-UP-87) • BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO IN THE MATTER OF THE APPLICATION OF EXTRACTION OIL & GAS, LLC FOR AN CAUSE NO. ORDER TO POOL ALL INTERESTS IN AN APPROXIMATE 320-ACRE DESIGNATED DOCKET NO. WELLBORE SPACING UNIT ESTABLISHED FOR SECTION 36, TOWNSHIP 6 NORTH, RANGE 66 WEST, 6TH P.M., FOR THE CODELL FORMATION, BRACEWELL FIELD, WELD COUNTY, COLORADO APPLICATION Extraction Oil & Gas, LLC ("Applicant"), by its attorney, Gretchen VanderWerf, PC, submits this Application to the Oil and Gas Conservation Commission of the State of Colorado ("Commission"), pursuant to C.R.S. §34-60-116, for an order pooling all interests in an approximate 320-acre designated wellbore spacing unit to accommodate the drilling of the Hiner 36C-24W Well ("Well") for the development and operation of the Codell Formation underlying the following described lands: Township 6 North, Rance 66 West. 6th P.M. Section 36: S34N%z, N%SY Weld County, Colorado ("Application Lands") 1. Applicant is a limited liability company duly authorized to conduct business in the State of Colorado and is a registered operator in.good standing with the Commission. 2. Applicant owns certain leasehold interests in the Application Lands. 3. On June 27. 1983, the Commission entered Order No. 381-1, which, among other things, established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the Codell Formation underlying certain lands in the Bracewell Field. Section 36, Township 6 North, Range 66 West, 6th P.M. is subject to this Order for the Codell Formation. 4. On April 27, 1998, Commission things, allowed certain drilling ocations to beutili utilized to addrillopted Rule or twin awell, among deepen l a w other well recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface. Rule 318A supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells. On December 5, 2005, Rule 318A was amended, among other things, to allow interior infill and boundary wells to be drilled and wellbore spacing units to be established. On August 8, 2011, Rule 318A was again amended, among other things, to address drilling of horizontal wells. Section 36, Township 6 North, Range 66 West, 6th P.M. is subject to Rule 318A for the Codell Formation. 5. Applicant designated an approximate 320-acre wellbore spacing unft as described below, for the production of oil, gas, and associated hydrocarbons from the Codell Formation pursuant to Rule 318A. 6. Applicant, pursuant to Commission Rule 530 and the provisions of C.R.S. §34-60- 116 (6) and (7), hereby requests an order to pool all Interests, including but not limited to, any nonconsenting interests, in the Application Lands for the dev eloment and Codell Formation underlying the following designated 320-acre wellbore spacing operation unit: of the Township 6 North. Ranee 66 West. 6th P.M. Section 36: S%N'F, N1/2S% ("Wellbore Spacing Unit) 7. Applicant requests that the Commission's pooling order be made effective as of the earlier of the date of this Application, or the date that the costs specified in C.R.S. §34-60- 116(7)(b)(II) are first incurred for the drilling of the Well in the Codell Formation underlying the Application Lands. 8. Applicant certifies that copies of this Application will be served on all persons owning an interest in the mineral estate of the tracts to be pooled within seven days of the date hereof, as required by Rule 507.b.(2), and that at least 30 days prior to the hearing on this matter, each such interest owner not already leased or voluntarily pooled will be offered the opportunity to lease, or to participate in the drilling of the Well, and will be provided with the information required by Rule 530, as applicable. The list of such interested parties is attached hereto as Exhibit A. 9. That in order to prevent waste and to protect correlative rights, all interests in the Wellbore Spacing Unit should be pooled for the orderly development of the Codell Formation, including any nonconsenting interests therein. WHEREFORE, Applicant requests that this matter be set for hearing at the next available opportunity, that notice be given as required by law, and that upon such hearing, the Commission enter its order. A. Pooling all interests in the Application Lands and the Wellbore Spacing Unit for the development of the Codell Formation; B. Providing that the Commission's pooling order is made effective as of the earlier of the date of this Application, or the date that any of the costs specified in C.R.S. 34-60-116 (7)(b)(II) are first incurred for the drilling of the Well to the Codell Formation underlying the Application Lands; C. Providing that the interests of any owners with whom the Applicant has been unable to secure a lease or other agreement to participate in the drilling of the Well are pooled by operation of statute, pursuant to C.R.S. §34-60-116(6)and (7), and made subject to the cost recovery provisions thereof with respect to the Well drilled to develop the Codell Formation in the Wellbore Spacing Unit comprising the Application Lands; and 2 WHEREFORE, Applicant respectfully requests that this matter be set for hearing in March, 2014, that notice be given as required by law, and that upon such hearing, the Commission enter its order consistent with Applicant's request as set forth above. Dated: January 16, 2014. Respectfully submitted, Extraction ti Oil&Gass,LLC/l By: ��Gtetchen en U de-oZZG' VanderWerf Gretchen VanderWerf, PC Attorney for Applicant 1525 17th Street Denver, Colorado 80202 Phone: 303-298-9939 Applicant's Address: Extraction Oil&Gas, LLC Attn: Allyson Vistica 1888 Sherman Street, Suite 200 Denver, Colorado 80203 3 VERIFICATION STATE OF COLORADO ) ) ss. CITY AND COUNTY OF DENVER ) Allyson Vistica, of lawful age, being first duly sworn upon oath, deposes and says that she is the Senior Landman for Extraction Oil & Gas, LLC, and that she has read the foregoing Application and that the matters therein contained are true to the best of her knowledge, information and belief. By: Allyson i tica Subscribed and sworn to before me this /5-- day of January, 2014. Witness my hand and official seal. My commission expires: Oag2 7/)0/o REBECCA EVAN BLARIC0M /a��GGritideas Notory PuDlta w sute al Colorado Notary Public 4 EXHIBIT A LIST OF INTERESTED PARTIES Kerr-McGee Oil&Gas Onshore, LP Wellstar Corporation 1099 18th Street, Suite 1800 11990 Grant Street Suite 550 Denver, CO 80202 Northglenn, CO 80233 Estate of Ronald A. Pickering Estate of Ronald A. Pickering Go Kerri Kowalski Go Rick Pickering P. O. Box 130 P.O. Box 415 Midwest,WY 82643 Edgerton,WY 82635 Estate of Ronald A. Pickering Extraction Oil&Gas, LLC Go Lori Folkers 1888 Sherman Street, Suite 200 1007 N. Broadway Denver, CO 80203 Crookston,MN 56716 Sunshine Valley Petroleum Corporation Estate of H.I Willett,Go Louise P.O. Box 51208 Wrllett Curtis and Boyd Ryan Willett,Jr. Casper,WY 82605-1208 518 17x'Street Denver, CO 80202 Noble Energy Production,Inc. Saturn Energy Company 1625 Broadway, Suite 2200 6100 Western Place Denver, CO 80202 P.O. Box 186 Fort Worth,TX 76101 David Bauer F Street Property, LLC Weld County 1639 35"'Avenue Ct. 1111 H Street Greeley,CO 80634 Greeley,CO 80632 Escobar Energy, Inc. Weld County,Colorado 2805 Coral Brooke Drive • 1150 O Street Sierra Vista,AZ 85650 P.O. Box 758 Greeley,CO 80632 BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO IN THE MATTER OF THE APPLICATION OF CAUSE NO. EXTRACTION OIL & GAS, LLC FOR AN ORDER TO POOL ALL INTERESTS IN AN DOCKET NO. APPROXIMATE 320-ACRE DESIGNATED WELLBORE SPACING UNIT ESTABLISHED FOR SECTION 36, TOWNSHIP 6 NORTH, RANGE 66 WEST, 6TH P.M., FOR THE CODELL FORMATION, BRACEWELL FIELD, WELD COUNTY, COLORADO CERTIFICATE OF MAILING I hereby certify that a true and correct copy of the Application in the above-referenced docket was deposited in the U.S. mail on January 21, 2014, postage pre-paid, to the interested parties listed in the application regarding the above-referenced docket. DATED this 21st day of January, 2014. By: /s/Gretchen VanderWerf Gretchen VanderWerf Gretchen VanderWerf, PC Attorney for Applicant 1525 17th Street Denver, Colorado 80202 1861 - 2011 WELD COUNTY ATTORNEY'S OFFICE P.O. BOX 758 GREELEY, CO 80632 WEBSITE: www.co.weld.co.us PHONE: (970) 336-7235 WE L u € O N T Y FM: (970) 352-0242 April 18,2014 Land Energy, Inc (LEI) Lane M. Jungers,President 1615 California Street, suite 702 Denver,Colorado 80202 RE: Hiner 36C-24W Well T 6N,R 66 W 6th P.M., S36 NEl/4 NE1/4 (2.09 A) Hiner 36C-1724W Well T 6N, R 66 W 6th P.M., S36 NE1/4 NE1/4 (0.48 A) Dear Mr. Jungers: This letter is written as a follow-up to the letter I wrote to you on March 17, 2014, which was written in response your letters of February 11 and February 25, 2014, concerning the above- referenced wells. Weld County has continued to look at this issue and has conducted some research of the Colorado Constitution and the statutes governing the County's rights and obligation related to its management of its oil and gas interests. We have preliminarily determined that any attempt by your company to subject the County to treatment as a nonconsenting owner to the provisions of C.R.S. 34-60-116 would violate at least the following: a. Involuntary/forced pooling of the County by an oil company violates Art. XI, Section 1, of the Colorado Constitution, (Pledging credit of state, county, city, town or school district forbidden); b. Involuntary/forced pooling of the County by an oil company violates Art. XI, Section 2, of the Colorado Constitution, (No aid to corporations—no joint ownership by state, county, city,town or school district); c. Involuntary/forced pooling of the County by any oil company violates Art. XI, Section 6, (hereinafter "§ 2 of the Colorado Constitution, (Local government debt); d. The involuntary/forced pooling of the County violates the legislative duty of the County to lease its mineral interests "for the best interests of the county". (Colorado Revised Statutes (C.R.S.) §30-11-304(1)) April 18, 2014 Page 2 e. An oil company violates the provisions of the Weld County Code by failing to enter into a lease which the County has determined fulfill its statutory obligations to enter into leases which are in the best interests of its citizens. If LEI forces the issue by attempting to get an Order from the COGCC, Weld County will file an objection and will appear at that hearing to contest the matter. If necessary, the matter will be appealed. If you wish to discuss this further, please do not hesitate to contact me. Yours truly, Step ie . A es Assistant Weld County Attorney. 1150"O" Street P.O. Box Greeley, Colorado 80632 970-35-4000 Ext. 4394 sarries@co.weld.co.us A‘fLf',114\ LAND ENERGY. INS C� 1615 California Street,Suite 702,Denver,Colorado 80202 T: 303-825-5263 I F: 303-825-6629 I lane@landenergyinc.com February 25,2014 Weld County Attorney's Office c/o Stephanie Arries P.O.Box 758 Greeley,CO 806312 Re: Oil and Gas Lease Offer covering lands in: Township 6 North, Range 66 West..6th P.M. Section 25: All that part and parcel of the SW%SE'/4 of Section 25 as lies on the Southerly side of the South boundary line of the right of way of the Denver,Laramie and Northwestern Railroad Company,and Westerly of a line drawn to run Northward and parallel with the West line of said SW'ASE'/,which Northward line begins a point three hundred and eighty feet East of the Southwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right of way line County of Weld,State of Colorado Containing 0.48 acres, m/1. Section 36: All that part of the following described tract of land which lies in the NW'/4SW'/: A strip of land eighty(80)feet in width lying immediately North parallel and adjacent to the right of way of Colorado Southern Railway Company commencing at a point where said right of way intersects the North line of the Southwest quarter of the Southwest quarter (SW'/SW'/)of Section Thirty-six(36),Township Six(6)North,of Range Sixty-six(66) West of the Sixth P.M. in Weld County,Colorado, running thence Northwesterly to the West line of the Southeast quarter of the Northeast quarter(SE'/4NE'/)of Section Thirty-four(34), Township Six(6),North,of Range Sixty-six(66)West of the Sixth P.M.,in Weld County, Colorado County of Weld,State of Colorado Containing 2.093664 acres, ma. Weld County,Colorado Net Acres: 2.573664 Gross Acres: 2.573664 Dear Stephanie Arries, Land Energy,Inc. recently offered to lease the above described mineral interest based on a bonus payment of $1,000.00 per net mineral acre for a Paid-Up Oil and Gas Lease with a term of three(3)years and royalty interest of twenty percent(20%)to be paid in the event of production. We are in receipt of a response from Karla Ford regarding our offer. Ms. Ford brought it to our attention that the Board of County Commissioners has recently altered its leasing policy. It appears that the revised policy includes a substantial change in royalty rate on production; increasing royalties from twenty percent(20%)to twenty-five percent(25%). With the immoderate increase in royalty rate, it is believed that the consequences of such a change have not truly been considered and that further consideration for all parties involved should have been given prior to the decision. In my 33 years of being a Landman and Land Broker in the Oil and Gas business,I have never given more than a 20% royalty. One of the issues with delivering anything more than a 20%royalty is the lack of consideration for the economics of the well and the production therefrom,especially as production decreases. The other issue is that most financial advocates are unwilling to support the drilling of wells with less than an 80%Net Revenue Interest (NRI). Land Energy, Inc. considers a 25%royalty interest to be excessive and unattainable. Most small tract or lot leases are offered a 1/8 royalty due to their smaller size. There are additional expenses when running title for smaller tracts and this is taken into consideration when making lease offers. Not all lot owners end up leasing their interest for varied reasons. In these cases,we are often required to force pool the non-leased parties. In the event of force pooling, unleased lot owners are forced into the unit. They do not receive a bonus and their royalties will be penalized until the operator receives a 100%return on investment for tangible expenses and a 200%return on investment on non-tangible expenses. After which point,the non-leased owners are able to `back- in'to the well and participate for their interest. Land Energy, Inc. requests that you reconsider its offer to lease Weld County's mineral interest under the initial terms seen above. We believe a 20%royalty rate to be more than fair. The minimum required bonus of$600.00 per acre has been surpassed by our offer of$1,000.00 per acre and the three year lease term is congruous with the policy. Upon commencement of the drilling of the Hiner 36C-17W Well, Weld County has the following options,to wit: 1)consent to unit operations,participate in the Hiner 36C-17W Well,and pay its proportionate share of the drilling and completion costs,2) lease its mineral interest,or 3)go non-consent to proposed unit operations, not participate in in the well,and agree that its interest will be subject to non-consent penalties. Should you have any questions,or if you would like to discuss the matter further,please do not hesitate to call me at(303)825-5263. Your time and consideration is much appreciated. Sincerely, LANZERGYfY, INC. Lane M.Jungers (/ President 2021/ab II PRODUCERS 88-PAID UP OIL AND GAS LEASE AGREEMENT is made and entered into on the day of 2013 by whose address is hereinafter called Lessor, (whether one or more), and Extraction Oil & Gas, LLC, a Delaware limited liability company whose address is 1888 Sherman Street,Suite 500,Denver,CO 80203 hereinafter called Lessee; WITNESSETH, That the Lessor,for and in consideration of TEN AND MORE DOLLARS cash in hand paid,the receipt of which is hereby acknowledged, and the covenants and agreements hereinafter contained, has granted, demised, leased and let, and by these presents does grant,demise, lease and let exclusively unto the said Lessee,the land hereinafter described,with the exclusive right for the purpose of drilling, mining, exploring by geophysical and other methods, and operating for and producing therefrom oil and all gas of whatsoever nature or kind, specifically including helium, carbon dioxide, and coalbed methane and any and all substances produced in association therewith from coal-bearing formations, dewatering of coalbed methane and any and all substances produced in association therewith from coal-bearing formations, dewatering of coalbed methane with ingress and egress for rights of way and easements for roads,laying pipe lines,water wells,disposal wells,injections wells,pits,electric and telephone lines and erection of structures and other facilities thereon to produce, save and take care of said products, all that certain tract of land situated in the County of,_State of Colorado described as follows,to-wit: See Exhibit"1"Legal Description attached hereto and incorporated herein by reference. Together with any reversionary rights therein, and together with all riparian rights and strips or parcels of land, (not, however, to be construed to include parcels comprising a regular 40-acre legal subdivision or lot of approximately corresponding size) adjoining or contiguous to the above described land and owned or claimed by Lessor,and containing acres,more or less("Leased Premises"); 1. It is agreed that this lease shall remain in force for a term of Three(3)years from this date and as long thereafter as oil or gas of whatsoever nature or kind is produced from said leased premises or on acreage pooled, communitized or unitized therewith, or drilling operations are continued as hereinafter provided.If,at the expiration of the primary term of this lease,oil or gas is not being produced on the leased premises or on acreage pooled, communitized or unitized therewith but Lessee is then engaged in drilling, re-working or dewatering operations thereon, then this lease shall continue in force so long as operations are being continuously prosecuted on the leased premises or on acreage pooled, communitized or unitized therewith; and operations shall be considered to be continuously - prosecuted if not more than one hundred and twenty(120)days shall elapse between the completion or abandonment of one well and the beginning of operations for the drilling of a subsequent well. If after discovery of oil or gas on said land or on acreage pooled, communitized or unitized therewith,the production or de-watering thereof should cease from any cause after the primary term,this lease shall not terminate if Lessee commences additional drilling,re-working or dewatering operations within one hundred and twenty(120) days from date of cessation of production, dewatering or from date of completion of dry hole. If oil or gas shall be discovered and produced as a result of such operations or dewatering operations are continued at or after the expiration of the primary term of this lease, this lease shall continue in force so long as oil or gas is produced or dewatering operations are continued from the leased premises or on acreage pooled,communitized or unitized therewith. In the event a well or wells is drilled and completed on the Leased Premises,or on the lands pooled,communitized or unitized therewith,for the purpose of developing coalbed gas,the words"operations"and"capable of producing gas"shall mean,in addition to those matters covered in the preceding paragraph:(I)operations of said wells to remove water or other substances from the coalbed, or to dispose of such water or other substances, even though such operations do not result in the production of hydrocarbons in paying quantities, or(2) shutting-in or otherwise discontinuing production from said wells to allow for surface or underground mining affecting the drill site or wellbore. 2. This is a PAID-UP LEASE. In consideration of the down cash payment,Lessor agrees that Lessee shall not be obligated,except as otherwise provided herein,to commence or continue any operations during the primary term. Lessee may at any time or times during or after the primary term surrender this lease as to all or any portion of said land and as to any strata or stratum by delivering to Lessor or by filing for record a release or releases,and be relieved of all obligations thereafter accruing as to the acreage surrendered. 3. In consideration of the leased premises the said Lessee covenants and agrees: 1'. To deliver to the credit of Lessor, free of cost, in the pipeline to which Lessee may connect wells on the leased premise,the equal part of all oil produced and saved from the leased premises. 2n° To pay Lessor on gas and casinghead gas produced from the leased Premises(1)when sold by Lessee, of the net proceeds realized by Lessee from such sale or (2) when used by Lessee off the leased premises or in the in the manufacture of gasoline or other products,the market value,at the wellhead,of of such gas and casinghead gas. - 1 - 3`a. To pay Lessor for gas produced from any oil well and used off the premises or in the manufacture of gasoline or any other product a royalty of of the proceeds,at the wellhead,payable monthly at the prevailing market rate. 4c°.In calculating royalties on production hereunder,Lessee may deduct Lessor's proportionate part of any ad valorem, production and excise taxes. 4. If after the primary term one or more wells on the Leased Premises or lands pooled, communitized or unitized therewith are capable of producing oil or gas or other substances covered hereby,but such well or wells are either shut in or production therefrom is not being sold by Lessee, including dewatering of coalbed gas, such well or wells shall nevertheless be deemed to be producing for the purpose of maintaining this lease.If for a period of ninety(90)consecutive days such well or wells are shut in or production therefrom is not sold by Lessee, including dewatering of coalbed gas, the Lessee shall pay an aggregate shut-in royalty of one dollar per acre then covered by this lease,such payment to be made to Lessor on or before the anniversary date of this lease next ensuing after the expiration of the said ninety(90)day period and thereafter on or before each anniversary of date of this lease while the well or wells are shut in or production therefrom is not being sold by Lessee; provided that if this lease in in its primary term or otherwise being maintained by operations,or if production is being sold by Lessee form another well on the Leased Premises or lands pooled,communitized or unitized therewith,no shut-in royalty shall be due until end of the next following anniversary date of this lease that cessation of such operation or production occurs, as the case may be. Lessee's failure to properly pay shut-in royalty shall render Lessee liable for the amount due,but shall not operate to terminate this lease. 5. If said Lessor owns a less interest in the Leased Premises than the entire and undivided fee simple estate therein, then the royalties(including any shut-in royalty)herein provided for shall be paid the Lessor only in the proportion which Lessor's interest bears to the whole and undivided fee. 6. Lessee shall have the right to use,free of cost,gas,oil and water produced on the Leased Premises for Lessee's operation thereon. 7. When requested by Lessor,Lessee shall bury Lessee's pipeline below plow depth. 8. No well shall be drilled nearer than 500 feet to the house or barn now on the Leased Premises without written consent of Lessor. 9. Lessee shall only pay for damages caused by Lessee's operations to growing crops on the Leased Premises. 10. Lessee shall have the right at any time to remove all machinery and fixtures placed on the Leased Premises,including the right to draw and remove casing. II. The rights of Lessor and Lessee hereunder may be assigned in whole or part, by area and/or depth or zone and the rights and obligations of the parties hereunder shall extend to their respective heirs,devisees,executors,administrator, successors and assigns.No change in ownership of Lessor's interest (by assignment or otherwise) shall have the effect of reducing the rights or enlarging the obligations of Lessee hereunder, and no change in ownership shall be binding on Lessee until sixty (60) days after Lessee has been furnished with notice from Lessor and then only with respect to payments thereafter made. No other kind of notice, whether actual or constructive, shall be binding on Lessee. No present or future division of Lessor's ownership as to different portions or parcels of the Leased Premises shall operate to enlarge the obligations or diminish the rights of Lessee, and all Lessee's operations may be conducted without regard to any such division.In the event of death of any person entitled to shut-in royalties hereunder,Lessee may pay or tender such shut-in royalties to the credit of the decedent or the decedent's estate. If at any time two or more persons are entitled to shut-in royalties hereunder, Lessee may pay or tender such shut-in royalties to such persons either jointly, or separately in proportion to the interest which each owns. If Lessee transfers or assigns its interest hereunder in whole or in part Lessee shall be relieved of all obligations thereafter arising with respect to the transferred interest, and failure of the transferee to satisfy such obligations with respect to the transferred interest shall not affect the rights of the Lessee with respect to any interest not so transferred. If Lessee transfers a full or undivided interest in all or any portion of the Lease Premises, the obligation to pay or tender shut-in royalties hereunder shall be divided between Lessee and transferee in proportion to the net acreage interest in this lease then held by each. 12. Lessee, at its option is hereby given the right and power at any time and from time to time as a recurring right,either before or after production, as to all or any part of the Leased Premises and as to anyone or more of the formations hereunder to pool, communitized or unitize the leasehold estate and the mineral estate covered by this lease with other land,lease or leases in the immediate vicinity for the production of oil and gas, or separately for the production of either, when in Lessee's judgment it is necessary or advisable to do so, and irrespective of whether authority similar to this exists with respect to such other land, lease or leases.Likewise, units previously formed to include formations not producing oil or gas,may be reformed to exclude such non-producing formations.The forming or reforming of any unit, pooled area or communitized area shall be accomplished by Lessee executing and filing of record a declaration of such unitization, pooling or communitization or reformation, which declaration shall describe the unit, pooled area or communitized area.Any unit,pooled area or communitized area may include land upon which a well has theretofore been completed or upon which operations for drilling have theretofore been commenced.Production,drilling,dewatering or reworking operations or a well shut in for want of a market anywhere on a unit, pooled area or communitized area which includes all or a part of this lease shall be treated as if it were production,drilling, dewatering or reworking operations or a well shut in for want of a market under this lease. In - 2 - lieu of the royalties elsewhere herein specified, including shut-in gas royalties,Lessor shall receive on production from the unit, area or communitized area,royalties only on the portion of such production allocated to this lease;such allocation shall be that proportion of the unit, pooled area or communitized area production that the total number of surface acres covered by this lease and included in the unit, pooled area or communitized area bears to the total number of surface acres in such unit, pooled area or communitized area or as prescribed in such unit, pooled area or communitized area. In addition to the foregoing, Lessee shall have the right to unitize, communitized,pool,or combine all or any part of the Leased Premises as to one or more of the formations hereunder 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. If parts of the land covered by this lease are not included in a unit or units, then at the end of the primary term, such parts of the lands shall be released from this lease unless otherwise held as set forth herein. 13. Anything in this lease to the contrary notwithstanding, Lessee's obligations under this lease shall be subject to all applicable laws,rules,regulations and orders of any government authority having jurisdiction, including restrictions on the drilling and production of wells,and regulation of the price or transportation of oil,gas or other substance covered hereby.When drilling,reworking,production or other operations or obligations under this lease are prevented or delayed by such laws, rules,regulations or orders, or by inability to obtain necessary permits,equipment, services material,water, electricity, fuel,access or easements or by an act of God, strike, lockout, or other industrial disturbance, act of the public enemy, war, blockade, public riot, lightening, fire, storm, flood or other act of nature, explosion, fracking bans, governmental action, governmental delay, restraint or inaction, or by inability to obtain a satisfactory market for production, or failure of purchasers or carriers to take or transport such production, or by any other cause, whether of the kind specifically enumerated above or otherwise,which is not reasonably within control of the Lessee,this lease shall not terminate because of such prevention or delay, and, at Lessee's option, the period of such prevention or delay shall be added to the term hereof. Lessee shall not be liable for breach of any provision or implied covenants of this lease when drilling, production, or other operations are so prevented or delayed. 14. No litigation shall be initiated by Lessor for damages, forfeiture or cancellation with respect to any breach or default by Lessee hereunder, for a period of at least 90 days after Lessor has given Lessee written notice fully describing the breach or default, and then only if Lessee fails to remedy the breach or default within such time period. In the event the matter is litigated and there is final judicial determination that a breach or default has occurred,this lease shall not be forfeited or cancelled in whole or in part unless Lessee is given reasonable time after said judicial determination to remedy the breach or default and lessee fails to do so. 15. Lessor hereby warrants and agrees to defend the title to the Leased Premises, and agrees that the Lessee shall have the right at any time to redeem for Lessor, by payment, any mortgages, taxes, or other liens, on the Leased Premises, in the event of defaults of payments by Lessor, and be subrogated to the rights of the holder thereof, and the undersigned Lessors,for themselves and their heirs, successors and assigns, hereby surrender and release all right of dower and homestead in the Leased Premises described herein, insofar as said right of dower and homestead may in any way affect the purposes for which this lease is made, as recited herein. If Lessee redeems any such lien,Lessee may recover any amount expended out of Lessor royalties or shut-in royalties. 16. Should any one or more of the parties hereinabove named as Lessor fail to execute this lease, it shall nevertheless be binding upon all such parties who do execute it as Lessor. The word "Lessor", as used in this lease shall mean any one or more or all of the parties who execute this lease as Lessor. All the provisions of this lease shall be binding on the heirs,successors and assigns of Lessor and Lessee. 17. Lessor and Lessee herby agree that Lessee shall have the option but not the obligation to extend the primary term of this lease for an additional Two(2)years from expiration of the primary term of this Lease,by tendering to Lessor a payment of 100%of the original bonus paid hereunder.Payment shall be deemed made upon Lessee's tendering of such payment by certified mail to Lessor at Lessor's address shown on this lease on or before the last date of the initial Two(2)Year term.Nothing contained herein nor any separate implied agreement between parties shall serve to bind Lessee to exercise this option and it shall be at Lessee's sole discretion to do so. - 3 - IN WITNESS WHEREOF,this instrument is executed as the date first above written. *************************************************************************************************** STATE OF § § ACKNOWLEDGEMENT COUNTY OF § The foregoing instrument was acknowledged before me this day of 2013, by to me known to be the identical person(s) described herein, and who executed the within and foregoing instrument of writing and acknowledgment to me that he duly executed the same as his free and voluntary act and deed for the uses and purposes therein set forth. Witness my hand and official seal. Notary Public My commission expires: - 4 - Exhibit"1" Legal Description - 5 - 2/1E1119�.'[j�� Karla Ford La ate', From: Alicia Beal[alicia@landenergyinc.comj �� __ Sent: Monday,February 17,2014 9:26 AM To: Karla Ford Cc: Esther Gesick Subject: Re: FW:T6N R66W Sec.25&36 Small Tract Oil&Gas Lease Karla, It is now my turn to apologize for my delayed response. We have been reviewing the requirements for the small tract lease and noticed that Weld County's leasing policy has changed. When we obtained a lease from Weld County last February, the royalty was at 20%. The new leasing policy has the royalty as 25%. Is this the case for all leases now? With the amount of net acreage at stake, we are not prepared to pay a 25%royalty. Thank you, Alicia Beal Land Energy, Inc. 1615 California St. Ste 702 Denver, CO 80202 303.825.5263 alicia@landenergyinc.com On 2/4/2014 4:32 PM, Karla Ford wrote: I apologize for the delay. However, I did not find that we have any lease for either of the legals listed below. We are in need of more information to process this request. Please submit the following for EACH TRACT: *Title Opinion, or such, showing that Weld County owns the mineral interests. *The attached lease agreement signed and notarized. You will need to complete the acres, amounts, legal description, etc. *Check made payable to Weld County- it is $600.00 per acre. (Small Tract-you would take the acres x$600 to get the correct amount. Example .287 acres x$600 = $172.20). Please let me know if you have any other questions! Karla Ford X Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 Confidentiality Notice:This electronic transmission and any attached documents or other writings ore intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying, 1 Aiwa i • Lana amen • Inc. Karla Ford To: Alicia Beal f;Cnlni Smalls Cc: Rsther N TnAte Subject: RE:F F W::T6 T6N R66W Sec.25&36 Small Tract Oil&Gas Lease Attachments: FOLease_SmallTract2013.pdf;FOLease_Policy_2013 New.pdf I apologize for the delay. However,I did not find that we have any lease for either of the legals listed below. We are in need of more information to process this request. Please submit the following for EACH TRACT: *Title Opinion, or such, showing that Weld County owns the mineral interests. *The attached lease agreement signed and notarized. You will need to complete the acres, amounts,legal description, etc. *Check made payable to Weld County- it is $600.00 per acre. (Small Tract-you would take the acres x$600 to get the correct amount. Example .287 acres x$600 = $172.20). Please let me know if you have any other questions! Karla Ford X Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 r p • Confidentiality Notice:This electronic transmission and any attached documents or other writings ore intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure.If you hove received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. From: Alicia Beal [mailto:alicia@landenergyinc.com] Sent: Thursday, January 30, 2014 7:44 AM To: Karla Ford Subject: Re: FW: T6N R66W Sec. 25 &36 Small Tract Oil &Gas Lease Karla, Of course. The legal descriptions are exact. The acreage for the tract in Section 25 is 0.48 net and gross acres and the acreage for the tract in Section 36 is 2.093664 net and gross. Please see the legal descriptions and rounded acreage for each tract below: Section 25 Township 6 North, Range 66 West of the 6th P.M., Weld County, Colorado: All that part and parcel of the SW%SE% of Section 25 as lies on the Southerly side of the South boundary line of the right of way of the Denver, Laramie and Northwestern Railroad Company, and Westerly of a line drawn to run Northward and parallel with the West line of said SWY4SE%, which Northward line begins a point three hundred 1 and eighty feet East of the Southwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right of way line County of Weld, State of Colorado and containing 0.48 acres, more or less. Section 36 Township 6 North, Range 66 West of the 6th P.M., Weld County, Colorado: All that part of the following described tract of land which lies in the NW'%SW%: A strip of land eighty(80)feet in width lying immediately North parallel and adjacent to the right of way of Colorado Southern Railway Company commencing at a point where said right of way intersects the North line of the Southwest quarter of the Southwest quarter(SW%SW%) of Section Thirty-six(36), Township Six(6) North, of Range Sixty-six(66)West of the Sixth P.M. in Weld County, Colorado, running thence Northwesterly to the West line of the Southeast quarter of the Northeast quarter(SE%NE%)of Section Thirty-four(34), Township Six(6), North, of Range Sixty-six (66)West of the Sixth P.M., in Weld County, Colorado and containing 2.10 acres, more or less. Please let me know if you have any other questions. Thank you for your assistance. Alicia Beal Land Energy, Inc. 1615 California St. Ste 702 Denver, CO 80202 303.825.5263 alicia@landenergyinc.com On 1/29/2014 3:36 PM, Karla Ford wrote: Alicia, Could you break down the net acres per each section for me? Are these the exact legal descriptions also? Please advise. Thanks ! Karla Ford— Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970) 336-7215 X4228 2 Confidentiality Notice: This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential or otherwise protected from disclosure. If you have received this communication in error, please immediately notify sender by return e- mail and destroy the communication. Any disclosure, copying, distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. Original Message From: Alicia Beal [mailto:alicia@landenergyinc.com] Sent: Wednesday, January 29, 2014 12:25 PM To: Esther Gesick Subject: T6N R66W Sec. 25 & 36 Small Tract Oil & Gas Lease Hi Esther, I appreciate you taking the time to speak with me this afternoon. Please find attached an offer letter detailing the lands sought to be leased as well as the offered terms. Thank you for your assistance. Please do not hesitate to contact me with any questions. 3 2,1 Li Sent errittiC to get e f far\ Agal f exacF arrester Section LAND ENERGY, INC. 1615 California Street,Suite 702,Denver,Colorado 80202 T: 303-825-5263 I F: 303-825-6629 I lane@landenergyinc.com January 29,2014 Weld County Attn:Purchasing Department 1150 O Street P.O.Box 758 Greeley,CO 806312 Re: Oil and Gas Lease Covering Lands in: Township 6 North,Range 66 West,61°P.M. Section 25: All that part and parcel of the SW'ASE'%of Section 25 as lies on the Southerly side of the South boundary line of the right of way of the Denver,Laramie and Northwestern Railroad Company,and Westerly of a line drawn to run Northward and parallel with the West line of said SW'/SE'/,which Northward line begins a point three hundred and eighty feet East of the Southwest corner of said tract on the South line thereof and runs North to the point of intersection with said South boundary of the right of way line County of Weld, State of Colorado Section 36: All that part of the following described tract of land which lies in the NW'ASW Y.: A strip of land eighty(80)feet in width lying immediately North parallel and adjacent to the right of way of Colorado Southern Railway Company commencing at a point where said right of way intersects the North line of the Southwest quarter of the Southwest quarter(SW/SW'/)of Section Thirty-six(36),Township Six(6)North,of Range Sixty- six(66)West of the Sixth P.M. in Weld County,Colorado,running thence Northwesterly to the West line of the Southeast quarter of the Northeast quarter(SE'/NEY,)of Section Thirty-four(34),Township Six(6),North,of Range Sixty-six(66)West of the Sixth P.M., in Weld County,Colorado County of Weld,State of Colorado Weld County,Colorado Net Acres: 2.573664 Gross Acres: 2.573664 To Whom It May Concern: Land Energy, Inc. is interested in developing mineral rights underneath the above described interest which, according to title,appears to be owned by Weld County.Land Energy,Inc.hereby offers to lease the above mentioned mineral interest based on a bonus payment of$1,000.00 per net mineral acre for a Paid-Up Oil and Gas Lease with a term of three(3)years and royalty interest of 20%to be paid in the event of production. Please contact me at(303)825-5263 or at Alicia@landenergvinc.com to discuss the potential for an Oil and Gas Lease.Thank you for your time and consideration in this matter. Sincerely, LAND ENERGY,INC. G� CGLo Alicia Beal Land Assistant 202 1/ab Lind Eners9 Land Energy I Et4ts 1-29-14 Land Energy sent Esther a letter submitting a request to lease two small tract leases with their offer. Karla requested the exact legal descriptions to verify if there were current leases or not. After looking into it, there were not leases for the legals. A small tract lease and information was sent to Alicia Beal. Alicia responded that they were not prepared to pay 25% royalty. With that in mind,the documents was filed in old lease request info. 2-5-14 The office received two 30-day mineral owner notifications. Stephanie advised we send a copy to Dave Bauer and Leon in PW. They claimed it was in/near Espanola and ok. On 2-21-14, Stephanie said to put these documents on the BOCC Agenda. 2-14-14 The office received two letters indicating that the county either needs to consent to proposed operations, lease the mineral interests or go Non-Consent. Karla left message for Allyson Vistica at 720- 382-5225. 2-21-14 Karla contacted Allyson again and she referred the county to Lane Jungens at Land Energy, Inc(303) 825- 5263. He was contacted and Lane responded that we had to accept their offer or go Non-Consent. Karla gave packet to Stephanie. After talking with Bruce, he stated that we can not go against the code. The company can request or write a letter to the BOCC requesting a work session to discuss the royalty %. Lane said he will try to contact the BOCC. /' , 944O14 Q k.[acul(, 4 4 30- LUG LWe'u eimiz Oyt-- 3/5,44) r' , r.an� cn 31.27%I ; r , r .4_,t. �t +N.o 3/lo//v �.zo/4 -. 0598 w05Qq� tE) �+ �� t � %ate )(._"i.t,�''yS �/ �/W�`/s (raiM •i 5fOrtid +'tUC _ - P;�Jrt tl� ,Q^. l p Imo,, el ,r � . LY7h6erIiad Karla Ford To: lane©ladnenergy.inc;Alicia Beal lane-,tip LtZn energy inc.(0r --) Cc: Esther Gesick;Stephanie Arries Subject: Weld County Small Tract Oil and Gas Lease-Update Importance: High In reference to Weld County Small Tract Oil and Gas Leases,we wanted to inform you of a pending Ordinance update that will affect your company. The Weld County Commissioners are considering updating the Weld County Code Mineral Leasing Policy to change the terms of Small Tract Oil and Gas Leases as follows: Bonus$1,200 per mineral acre 18.5% Royalties Lease will be paid up and no rentals If you are agreeable to these new terms,we will send you the new lease form following approval of the First Reading of the pending Ordinance. This is in regards to the correspondence regarding the Hiner 36C-17 W Well. Karla Ford R Deputy Clerk to the Board 1150 O Street/P.O. Box 758 Greeley, CO 80632 tel: (970)336-7215 X4228 (H r •. , tr 4. y` Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure,If you have received this communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly prohibited. 1 RECEIVED FEB 1 4 2Ji4 WELD COUNTY COMMISSIONERS LAND ENERGY, INC. 1615 California Street,Suite 702,Denver,Colorado 80202 T: 303-825-5263 I F: 303-825-6629 I lane@landenergyinc.com CERTIFIED MAIL/RETURN RECEIPT REQUESTED February 11, 2014 Weld County, Colorado 1150 O Street Greeley,CO 80631 Re: Hiner 36C-17W Well U 611AVj Horizontal Drill Proposal Township 6 North, Range 66 West, 6th P.M. Section 36: NE'/<NE'/ Weld County, Colorado Dear Weld County,Colorado, Our client, Extraction Oil & Gas, LLC, ("Extraction") hereby proposes the drilling and operating of the above captioned horizontal well to an approximate depth of 11,500' to test the Codell formation. Extraction hereby proposes the well as follows: 1. Wellbore Spacing Unit The wellbore spacing unit will be comprised of the S%Z5%z of Section 25 and the N''N%of Section 36, T6N-R66W, 6th P.M. 2. Target Formations This well will be drilled to a total depth to sufficiently test the Codell formation. 3. Surface Location 857' FNL, 644' FEL, Section 36, T6N-R66W 4. Target Bottom Hole 0' FNL, 460' FWL, Section 36,T6N-R66W 5. Anticipated Spud Date May 10, 2014 6. Estimated Working Interest Weld County,Colorado—0.150000% Enclosed for your review are the following: 1. A Plat depicting the location of the proposed well 2. An Authorization for Expenditure("AFE")for the drilling and completion of the well 3. An Election Form You have the option to participate in unit operations for the drilling of this well. This will require you to: (1) enter into a Joint Operating Agreement ("JOA")with us, thereby "pooling" your interest; and (2) pay your proportionate share of the costs of drilling and operating the well, as provided in the JOA. The working interest owned by you would translate into approximately a 0.150000% interest. As you can see by the enclosed AFE, the projected cost to drill, complete and equip this well is $4,154,196.00, of which your participation share would be approximately $6,231.29. If you elect this option, please mark where indicated on the Election Form, sign where indicated on the enclosed AFE, and return both this letter and the signed AFE to us in the envelope provided. Upon receipt, we will send you a JOA to review and execute. Going forward, you will be entitled to a share of production revenues, as well as being responsible for your share of lease operating expenses, as provided in the JOA. In addition, your participation in any subsequent drilling operations will be governed by the procedures provided in the JOA. If you choose not to participate in unit operations, you have the opportunity to lease your mineral interest and avoid paying your share of participation costs. Land Energy, Inc. ("LEI") recently sent you an Oil and Gas Lease offer by e-mail. If you choose to lease your mineral interest,please let us know. Please be aware that drilling wells carries substantial risk as to whether the drilling and completion investments will be recovered. If you do not agree to participate as outlined above, and do not wish to lease your minerals, Extraction is entitled to be compensated for this risk, which they are willing to undertake. Should you decline to participate, including failure to respond to this letter, the Colorado Oil and Gas Conservation Commission may enter an order statutorily pooling your interest under C.R.S. 34-60-116(6). As a result of the pooling, your working interest will be subject to non-consent penalties as provided under C.R.S. 34-60-116(7) until such time as your proportionate share of costs, plus penalties, are recovered. At that time, you would then be converted to a regular working interest owner. You are therefore strongly encouraged to obtain competent legal counsel to assist you in reviewing this letter and making an informed decision. As we intend to commence the drilling of this well soon, your prompt response is requested. Please mark your selection and return the executed original of this letter no later than thirty (30) days from receipt of this offer. If we do not receive your response by such date, you will be deemed to have elected to not participate in the drilling of the well or future unit operations. �1 Should there be any questions, please contact Allyson Vistica at 720-382-5225. ( AtI V►J Sincerely, ✓✓✓ LAND ENERGY, INC. Lane M.Jungers President 2021/ab ELECTION AND PARTICIPATION I elect to CONSENT to the proposed operations for the Hiner 36C-17W Well. I will execute a Joint Operating Agreement and participate in the well, and upon receipt of an invoice agree to pay my proportionate share of the drilling and completion costs. Please sign and date the enclosed AFE and return it to LEI with this letter. OR I elect to LEASE my mineral interest. Please contact Land Energy, Inc. to discuss the potential for an Oil and Gas Lease. OR I elect to go NON-CONSENT to the proposed operations for the Hiner 36C-17W Well. I will not participate in the unit operations and agree that my interest will be subject to non-consent penalties. Weld County, Colorado Printed Name Date r . fplil Lat40°, Inc. 1635 Foxtrail Drive, Suite 325 Loveland, CO 970-776-3321 I II WELL LOCATION CERTIFICATE SECTION: 36 TOWNSHIP: 6N THIS MAP DOES NOT REPRESENT A BOUNDARY SURVEY RANGE: 66W FOUND /6 REBAR WITH 3.25" ALUM. CAP LS 10855 FOUND 96 REBAR MTH FOUND 96 REBAR WITH 2.5' ALUM. CAP LS 19585 2.5' ALUM. CAP LS 19585 89'47'10" E 2530.96' S 89'47'15" E 2603.42' a 460' N 89'4713' W 4214.07'— — 460' 0' TARGET 91 / N 69'47'13' W 440.70' /_.,____N 34 4'5445' E 1%, 1 I ZI I 857' / IV04 O 1 1./ O 40 I I HINER 36C-17W FC77�-644'—I di N N 4 I N W 1 a —A r//4— f N'I/¢— m a n b N)cn Na a 0I WI IP 21 c.9.I lo" S96, T.6N., R.66IK N 89'49'22" E 2592.04' N 89'49'12" E 2634.56' l;k— FOUND 96 REBAR WITH FOUND 96 REBAR 711TH 2.5' ALUM. CAP LS 19585 3.25' ALUM. CAP LS 10855 a I FOUND p6 REBAR, BENT I I Z OI OI IN W N N 4: to. W —S'/rl/1F £ SA 7/4 m N N) N m co OI 0 I 100 Z I FOUND i6 REBAR VATIi �I fl 2.5" ALUM. CAP LS 14833 FOUND /6 REBAR 1855 S3.OUND REBAR li 3 — — — — 3.25.1 ALUM. CAP LS 10855 25 ALUM. CAP LS 34592 I S 89'33'07" W 2653.48' S 89'08'16" W 2665.55' In accordance with a request from Qav Doke with EXTRACTION OII A. GAS. Lat40', Inc. has determined the surface location of the HINER 36C-17W to be 857 from the NORTH line and 644' from the EAST Tine and the bottom hole to be 0' from the NORTH line and 460' from the NEST line as measured at right angles from the section lines of Section 36 Township 6 North Range 66 West of the Sixth Principal Meridian, County of Weld, State of Colorado. 0 1000 I hereby state that this Well Locatbn Certificate was prepared by me, or under my direct supervision, l=r--- 1 l _ that the fieldwork was completed on 11/14/2013, for and on behalf of FX1RAC11ON rNL A: GAS Thot this is not a Land Survey Plat or an Improvement Survey Plot, and that it is not to be relied 1'=1000' upon for establishment of fence, building, or other future improvement lines. SI IRFACE I()CATION BOTTOM HfW F NOTE: LAT: 40.4496471 LAT: 40.45213N 1) Bearings shown are Grid Bearings of the Colorado State Plane Coordinate LONG: 104.71854'W LONG: 104.73309W System, North Zone, North American Datum 1983/2007. The lineal dimensions as PDOP: 3.3 ,,,,,\A contained herein are based upon the "U.S. Survey Foot." ELEV: 4661' = \t. 2) Ground elevations are based on an observed GPS elevation (NAVD 1988 DATUM). 1/4,1/4: NE1/4NE1/4 DU VC 11_ 3) IMPROVEMENTS: See I()CATION fRAWING for all visible improvements within 500' "' • •" I'1 of disturbed area. w 61.04:••(29I ti oe(29fF) 4) SURFACE USE: PASTURE TARGET 5) INSTRUMENT OPERATOR: BRIAN ROTDNGHAUS LAT: 40.45199N j tt: , II 4. NEAREST CULTURAL ITEMS: LONG: 104.71795'W i 9 el'C 28175 K. cr Y BUILDING: 436' NE 7 O:Q J Sp: O Yf BUILDING UNIT: 806' NW .A T VSt came `S J HIGH OCCUPANCY BUILDING UNIT: 1246' NE If %117^ I we,,W/ DESIGNATED OUTSIDE ACTIVITY AREA: 1001'+ 1 tp • V� Q� PUBLIC ROAD: 711' W(35TH AVE.) LEGEND Ill S1� • 4J ABOVEGROUND URUTY: 650' E lil= AIJOUOT MONUMENT AS DESCRIBED Brian T. Brink '1..711 a t d . :�r= Lat40', Inc. RAILROAD: 14025' SW Colorado License• ',,�"'-"' al DATE: 11/19/2013 PROPERTY LINE: 3536' SW O- CALCULATED POSITION Land Surveyor No. 38175 PROJECT/: 2013146 Lat40°, Inc. 1635 Foxtrail Drive, Suite 325 Loveland, CO 970-776-3321 blipi eik SITE SKETCH SECTION. 36 TOWNSHIP: 6N HINER 36C-17W RANGE: 66W I ©O1 I I IN I- O1'.> e1 u n p n SW1/45W1/4 SE1/45W1/4 SW1/45E1/4 SE1/45E1/4 SEC. 25, T.BN., R.66W. SEC. 25, T.6N., R.66W. SEC. 25, T.6N., R.66W. SEC. 25, T.BN., R.66JW. TARGET 01 _ N 89'47'13" W 4214.07' ,O 285.48' 1265.48' 1301.71' — — 1301.71' N 89'47'13• W 440.70' / NWI/4NW1/4 NE1/4NW1/4 NWI/4NE1/4 NE1/4NE1/4 / SEC. 36, T.6N., R.66W. SEC. 36, T.6N., R.66W. SEC. 36, T.6N., R.66W. SEC. 36, TAN., R.6 a Cy� w- N 3454'45" E - o © u 0 1042.51' I r, '41 ,I I I HINER 36C-17W I WELL NO. WELL NAME SHL FOOTAGE SHL LAP SHL LONG' PDOP ELEV(FT.) 1/4/1/4 1 KISSLER-AMEN ET AL 1-25 828 FSL 664 FWL 40.45440 -104.73238 2.2 4693 SWSW 2 FLATIRONS 136-4 589 FNL 632 FWL 40.45051 -104.73249 2.1 4672 NWNW 3 FLATIRONS 1-36 711 FNL 1826 FWL 40.45013 -104.72821 2.1 4667 NENW 4 MONFORT 34-25 666 FSL 1998 FEL 40.45387 -104.72343 2.1 4674 SWSE 8 PETERSON 1(P&A) 660 FSL 1980 FEL 40.45376 104.72318 N/A 4666 SWSE NOTE: THE ABANDONED WELL DATA SHOWN IN RED ABOVE WAS OBTAINED FROM COGCC SCOUT CARDS. 0 800 I' DATE: 11/19/2013 1•=800' PROJECT/: 2013146 r Authority For Expenditure Property/Well Name Hiner 36C-17W AFE# 14-22 EXTR CTION Legal Wed 36-6N-66WSlate CO Oil&Gas API# Depth 11,500 Operator Extraction Oil&Gas DAlllnq $j'ross Corraetlon Gross 9200 IDC Cost 9J001CC Cost Legal/Title 9201 10,000 Completion Rig 9301 10000 Surface Damages 9202 14,375 Drilling Rig Daywak 9302 0 Surveys/Permits 9203 7500 Title Work 9303 0 Location/Roads/Pits 9204 15,000 Chemicals 9304 0 Drilling Contract 9205 280,000 Completion Tools/Service 9305 0 Mud I Chemicals/Water 9206 58,250 Contract Services 9306 148000 Trucking/Transportation 9207 25,000 Gas Sales Connection 9307 0 Cement/Cementing Services 9208 65.000 Cement/Cementing Services 9308 0 Disposal Services 9209 18.000 Completion Fluids/Disposal .9309 0 Water Hauling uling...Ds_.._.a__.._....__.__......_.._. ........_...._. Rig Mobil/Demobil 9210 15,000 Wato Hauling/Disposal 9310 45,000 Inspection/Testing 9211 23,500 Location/Roads/Pits 9311 3,500 Equipment Rental 9212 190.800 Equipment Rental 9312 33,000 Open Hole Logging 9213 0 Cased Hole Logs/Perforating 9313 3,500 Directional Equip B Services 9214 120,000 Acidizing I Fractunng 9314 1248,500 Coring B Analysis 9216 0 Trucking/Transportation 9315 20,000 Drill Stem Test 9217 0 Inspection I Testing 9317 10,000 Casing Crew 9218 30,000 Casing Crew 9318 15000 Dnll Bits 9219 45,000 Tank Hauling/Rental 9319 33,700 Liability Insurance 9220 17250 Insurance 9320 0 Roustabout Services 9221 10,000 Roustabout Services 9321 62500 Consulting Services 9222 47,500 Consulting Services 9322 _ 0 Electricity 9223 0 Electricity 9323 0 Fuel and Power 9224 58,800 Fuel 9324 0 Wireline Service 9226 0 Wireline Service 9326 0 Engineer/Geologic Supervision 9228 18,000 Flow Testing 9327 25,000 Downhole Logging 9229 60,000 Engineer/Geologic Supervision 9328 0 Seismic Testing 9240 0 Completion Overhead 9340 _ 38,547 Location Restoration 9245 20,000 Environmental --_---_ 9345 1,500 Miscellaneous 9250 _ 1,000 Miscellaneous 9350 25.000 Drilling Overhead 9260 22755 Contingencies 9390 237,471 Plug B Abandon 9265 0 Outside Operated ICC 9395 0 Contingencies 9270 140,183 Outside Operated IDC 9295 0 Drilllrw Sim Completlon rose 9400 TDC cost 9400 TCC Cost Surface Casing 9418 31,100 Production Casing/Liner 9402 50.400 Intermediate Casing 9401 184,500 Tubing 9403 24,375 Casinghead I Valves/Fittings 9416 4 13,500 Wellhead/Valves/Fittings 9404 21,500 Pumping Unit 9405 0 Plunger Lift 9406 6,000 Tank Battery 9407 47,000 Treater/Separator 9408 65.000 leasehold rose Downhole Pump 9409 0 M •.1 Flowlines/Fittings 9410 20,000 Acreage Cost 9101 0 Surface Equipment 9411 11,000 Recording Fees 9102 0 Meter Run/Facilities 9412 750 Title Curative 9103 0 Rods 9413 0 Legal Fees 9104 0 Valves/F4tings/Nipples 9414 35,000 Abstract Fees 9105 0 Liner Hanger/Packer Assembly 9415 325,000 Geological 9106 0 Emission Control DeviceNRU 9417 27,500 Seismic 9107 0 Production Packer/Anchor 9419 0 Consulting Services 9108 0 Compression Equipment 9420 0 Bonus Payments 9109 0 Subsurface Equip 9421 0 Acquisition Cast 9110 0 Waterflood Plant 9422 0 Delay Rentals 9111 0 Water Filter 9423 0 Organizational Costs 9112 0 Gas Line Pipe 9424 0 LP Management Fee 9113 0 Automation Equipment 9425 18,440 Insurance 9114 0 Acquisition Cost 9470 0 LP Hedging Costs 9115 0 Equipment Salvage 9480 0 Other LP Costs 9116 0 Miscellaneous 9490 0 Other JV Costs 9117 0 Outside Operated LWE 9495 0 Miscellaneous 9190 0 Plugging and Abandonment 9496 0 Drilling Completion Gross Cost Leasehold $0 Intangible $1,312,913 $1,960,218 $3,273,131 Tangible $229,100 $651,965 $881,065 Total $4,154,196 Created 2/12/2014 INTEREST OWNER SIGNATURE-F01 Extraction Oil&Gas I Print Name: Matt Owens Date: 2/11/2014 By: { Print Name: Date: Company: Weld County,Colorado Working Interest: 0.150000% By: Date: Print Name: Title: Hello