EXHIBIT 10.4
OIL AND GAS LEASE
This Agreement is made and entered into this_____ day of __________, 200__, by
and between:
___________________________ , whose address is ____________________ ,
hereinafter called Lessor (whether one or more), and
Vista Exploration Corporation, whose address is _________________________ ,
hereinafter called Lessee.
WITNESSETH, that the Lessor, for and in consideration of TEN DOLLARS ($10.00),
cash in hand paid, the receipt and sufficiency of which are 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 Lessee, the land hereinafter described, with the exclusive
right for the purpose of exploring by geophysical and other methods, and
operating for and producing therefrom oil, gas, and other hydrocarbons and all
other minerals or substances, whether similar or dissimilar, including, but not
limited to, coalbed methane, helium, nitrogen, carbon dioxide, condensate,
distillate, casinghead gas, casinghead gasoline and all substances produced in
association therewith from coal bearing formations or elsewhere, that may be
produced from any well drilled under the terms of this lease, with rights-of-way
and easements for laying pipe lines and servicing or drilling other xxxxx in the
vicinity of said lands, and erection of structures thereon to produce, save and
take care of said products, including the right to inject salt water, production
fluids, gases and other fluids into strata below those providing fresh water
from xxxxx located on the herein leased lands or on adjacent lands, all that
certain tract of land, together with any reversionary, remainder and executory
rights therein, situated in _______ County, State of KANSAS, described as
follows:
____________________________________________
and containing ___ acres, more or less, together with all 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.
1. It is agreed that this lease shall remain in force for a term of FIVE (5)
YEARS from the date of this lease and as long thereafter as oil or gas of
whatsoever nature or kind is produced from said leased premises or on acreage
pooled 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 therewith but Lessee is
then engaged in drilling or re-working 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 therewith; and operations shall be
considered to be continuously prosecuted if not more than One Hundred Twenty
(120) days shall elapse between the completion or abandonment of one well and
the beginning of operations for the drilling or a subsequent well. If, after
discovery, of oil or gas on said land or on acreage pooled therewith, the
production thereof should cease from any cause after the primary term, this
lease shall not terminate if Lessee commences additional drilling or re-working
operations within One Hundred Twenty (120) days from date of cessation of
production or from date of completion of dry hole. If oil or gas shall be
discovered and produced as a result of such operations 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 from the leased premises or on acreage pooled
therewith.
2. This is a PAID-UP LEASE. In consideration of the cash payment, Lessor agrees
that Lessee shall not be obligated, except as otherwise provided herein, to
commence or continue any operations or to make any rental payments 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.
3. In consideration of the premises Lessee covenants and agrees:
A. To deliver to the credit of Lessor, free of cost, in the pipe line to
which Lessee may connect xxxxx on said land, equal to one-eighth (1/8)
part of all oil produced and saved from the leased premises.
B. To pay Lessor one-eighth (1/8) of the net proceeds at the well from
the proceeds received for gas sold from each well where gas only is
found, or the market value at the well of such gas used off the
premises.
C. To pay Lessor one-eighth (1/8) of the market value at the well for gas
produced from any oil well and used off the premises, or for the
manufacture of casinghead gasoline or dry commercial gas.
D. To pay Lessor one-eighth (1/8) of the proceeds received from the sale
of any substance covered by this lease, other than oil and gas and the
products thereof, which Lessee may elect to produce, save, and market
from the leased premises.
4. Where gas from a well capable of producing gas is not sold or used, Lessee
may pay or tender to Lessor, as a royalty payment, One Dollar per year per net
royalty acre retained hereunder, such payment or tender to be made on or before
the anniversary date of this lease next ensuing after the expiration of 90 days
from the date such well is shut-in and thereafter on or before the anniversary
date of this lease during the period such well is shut-in. If such payment or
tender is made, it will be considered that gas is being produced within the
meaning of this lease.
5. If Lessor owns a less interest in the above described land than the entire
and undivided fee simple estate therein, then the royalties (including any
shut-in gas royalty) herein provided for shall be paid to 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 said land for Lessee's operation thereon, except water from the xxxxx of
Lessor.
7. When requested by Lessor, Lessee shall bury Lessee's pipeline below plow
depth.
8. No well shall be drilled closer than 200 feet from the house or barn now on
said premises without written consent of Lessor.
9. Lessee shall pay for damages caused by Lessee's operations to growing crops
on said land.
10. Lessee shall have the right at any time to remove all machinery and fixtures
placed on said premises, including the right to draw and remove casing.
11. The rights of Lessor and Lessee hereunder may be assigned in whole or part.
No change in ownership of Lessor's interest (by assignment or otherwise) shall
be binding on Lessee until Lessee has been furnished with notice, consisting of
certified copies of all recorded instruments or documents and other information
necessary to establish a complete chain of record title 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 said land
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. If
all or any part of this lease is assigned, no leasehold owner shall be liable
for any act or omission of any other leasehold owner.
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 land described herein and as to any one or more of the
formations hereunder, to pool 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 shall be
accomplished by Lessee executing and filing a record of declaration of such
unitization or reformation, which declaration shall describe the unit. Any unit
may include land upon which a well has theretofore been completed or upon which
operations for drilling have theretofore been commenced. Production, drilling or
re-working operations or a well shut-in for want of a market anywhere on a unit
which includes all or a part of this lease shall be treated as if it were
production, drilling, or re-working operations or a well shut-in for want of a
market under this lease. In lieu of the royalties elsewhere herein specified,
including shut-in gas royalties, Lessor shall receive on production from the
unit so pooled royalties only on the portion of such production allocated to
this lease; such allocation shall be that proportion of the unit production that
the total number of surface acres covered by this lease and included in the unit
bears to the total number of surface acres in such unit. In addition to the
foregoing, Lessee shall have the right to unitize, pool, or combine all or any
part of the above described lands as to one or more of the formations thereunder
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, 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. This lease shall not
terminate or expire during the life of such plan or agreement. In the event that
said above described lands, or any part thereof, shall hereafter be operated
under any such cooperative or unit plan of development or operation whereby the
production therefrom is allocated to different portions of the land covered by
said plan, then the production allocated to any particular tract of land shall,
for the purpose of computing the royalties to be paid hereunder to Lessor, be
regarded as having been produced from the particular tract of land to which it
is allocated and not to any other tract of land; and the royalty payments to be
made hereunder to Lessor shall be based upon production only as so allocated.
Lessor shall formally express Lessor's consent to any cooperative or unit plan
of development or operation adopted by Lessee and approved by any governmental
agency by executing the same upon request of Lessee.
13. For purposes of promoting the development of shallow gas and associated
hydrocarbons produced in conjunction therewith, Lessee is granted the power to
pool and unitize all or portions of this lease into a development unit
containing not more than 3,000 acres. This grant shall only be effective if
Lessee drills or has drilled at least Two (2) xxxxx within the pooled unit no
later than one (1) year from declaration of pooling and in no event later than
one (1) year after the expiration of the primary term hereof. This special
pooling grant is only effective as to formations hereby defines as geologic
formations located from the surface of the earth to one hundred feet (100')
below the top of the Pre-Cambrian formation. The pooled unit must consist of all
contiguous acreage with at least one common corner. To utilize this pooling
grant, Lessee shall file with the Office of the Register of Deeds of the
relevant county or counties a declaration of the exact description of the unit
formed pursuant to this clause. Subject to fulfilling the above described
drilling requirements, such declaration is all that is required to establish the
pooled unit. If such gas well or xxxxx as contemplated by this clause shall not
be drilled on the premises herein leased it shall nevertheless be deemed to be
upon the leased premises within the meaning of all covenants, expressed or
implied, in this lease. Lessor shall receive on hydrocarbon production thus
pooled the same proportion of the royalty stipulation herein reserved as the
proportion that the Lessor's acreage placed in the unit bears to the total
acreage so pooled in the particular declared unit, regardless of which xxxxx the
production actually comes from. After one such unit has been declared, Lessee
may add other lands to such unit up to the limit of 3,000 acres.
14. All express or implied covenants of this lease shall be subject to all
Federal and State laws, executive orders, rules or regulations; and this lease
shall not be terminated, in whole or in part, nor Lessee held liable for
damages, or for failure to comply therewith, if compliance is prevented by, or
if such failure is the result of, any such law, order, rule or regulation.
15. Lessor hereby warrants and agrees to defend the title to the lands herein
described, and agrees that Lessee shall have the right at any time to redeem for
Lessor, by payment, any mortgages, taxes or other liens on the above described
lands, in the event of default of payment by Lessor and be subrogated to the
rights of the holder thereof; and Lessor hereby agrees that any such payments
made by Lessee for Lessor may be deducted from any amounts of money which may
become due to Lessor under the terms of this lease. The undersigned Lessors, for
themselves and their heirs, successors and assigns, hereby surrender and release
all right of dower and homestead in the 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.
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. Lessee has the option to extend this lease for an additional term of THREE
(3) YEARS from the expiration of the primary term of this lease, and as long
thereafter as oil or gas, or either of them, is produced from said land by the
Lessee, its successors and assigns, said renewal to be under the same terms and
conditions as contained in this lease. Lessee, its successors or assigns, may
exercise this option to renew if on or before the expiration date of the primary
term of this lease, Lessee pays or tenders to Lessor or to Lessor's credit, the
sum of TEN (10) DOLLARS per net mineral acre.
18. Bonuses may be paid by check or draft and may be remitted by mail. Mailing
of bonuses on or before the bonus paying date shall be deemed a timely tender
thereof and shall preclude termination of this lease.
IN WITNESS WHEREOF, this instrument is executed as of the date first above
written.
________________________________ ________________________________
SS/Tax ID# _____________________ SS/Tax ID# ________________________________
EXHIBIT "A"
This Exhibit "A" is attached to and made a part thereof that certain Oil
and Gas Lease dated this _____ day of _____________________, 200__.
Notwithstanding anything to the contrary contained in the Oil and Gas Lease to
which this Exhibit is attached and made a part of, the provisions of this
Exhibit shall prevail whenever in conflict with the provisions of the Oil and
Gas Lease.
1. Lessee and Lessor agree that any access roads, well sites, or pipelines to be
constructed under the terms of this lease shall be located after consultation
with and consent of Lessor, provided however, that Lessor shall not attempt to
prohibit said construction or make unreasonable requests of Lessee.
2. Lessee agrees that as soon as is reasonably possible, following completion of
its operations, Lessee shall restore its well site, as nearly as possible, to
its original condition and land contour.
3. Lessee agrees to be a prudent operator and will keep all surface disturbances
to the minimum area necessary to conduct its operations.
4. Lessee shall indemnify and hold Lessor harmless from any and all liability,
liens, claims and environmental liability arising out of Lessee's operations
under the terms of this lease.
5. This lease shall terminate on the first anniversary date, unless Lessee pays
or tenders to Lessor, in the same manner provided for payment of shut-in
loyalties, TEN DOLLARS ($10.00) per net mineral acre covered by this lease. If
said payment is not made, Lessee agrees to record a Release of Lease within
THIRTY (30) DAYS of said termination.
6. Lessee agrees to pay Lessor a one-time payment of FIVE HUNDRED DOLLARS
($500.00) per acre for all property which is damaged as a direct result of
Lessee's operations under the terms of this lease.
