EXHIBIT 10.1
OIL AND GAS LEASE
AGREEMENT, Made and entered into the 10th day of January 2002, by and
between AMD Property Company, LTD. hereinafter called lessor (whether
one or more), and NESS ENERGY INTERNATIONAL, INC. hereinafter called
lessee:
WITNESSETH: That the said lessor, for in consideration of TEN AND
NO/100's ($10.00) Dollars,cash in hand paid, the receipt of which is hereby
acknowledged, and of the covenants and agreements hereinafter contained on the
part of lessee to be paid, kept and performed, has granted, demised, leased
and let, and by these presents does grant, lease and let unto the
said lessee for the sole and only purpose of exploring, drilling,
mining, and operating for oil and gas and of laying pipe lines and
building tanks, power stations and structures thereon to produce,
save and take care of said products, all that certain tract of land
situated in the county of XXXXXX, State of Texas described as follows, to wit:
SEE ATTACHED EXHIBIT A FOR DESCRIPTION
SEE EXHIBIT B FOR ADDITIONAL PROVISIONS
IT IS AGREED THAT A UNIT OR UNITS IF CREATED UNDER PROVISIONS HEREOF,
PRODUCTION, DRILLING OR REWORKING OPERATIONS ON SAID UNIT OR UNITS
SHALL NOT BE EFFECTIVE TO MAINTAIN THIS LEASE IN FORCE AS TO ACREAGE
OUTSIDE OF SUCH UNIT OR UNITS BEYOND THE END OF THE PRIMARY TERM.
IT IS UNDERSTOOD THAT A PORTION OF THE PROPERTY IS RESTRICTED BY A
NON DRILL AGREEMENT ON THE SURFACE AND THIS LEASE IS MADE SUBJECT TO
THAT LIMITATION ON THAT PART SO RESTRICTED.
Notwithstanding any particular description, it is nevertheless the
intention of lessor to include within this lease, and he does hereby
lease, not only the land so described but also any and all other land
owned or claimed by lessor is the herein named survey or surveys, or
in adjoining surveys, and adjoining the herein described land up to
the boundaries of the abutting landowners.
It is agreed that this lease shall remain in force for a term of
THREE years from this date, said term being hereinafter called
"Primary Term," and as long thereafter as oil or gas, or either of
them is produced from said land by the lessee.
In consideration of the premises the said lessee covenants and agrees:
1st . To deliver to the credit of lessor, free of cost, in the pipe
line to which lessee may connect its or his xxxxx, the equal one-
eighth part of all oil produced and saved from the leased premises.
2nd. To pay to lessor, as royalty for gas from each well where gas
only is found, while the same is being sold or used off of the
premises, one-eighth of the market price at the xxxxx of the amount
so sold or used, and where such gas is not so sold or used lessee
shall pay to lessor $50.00 per annum as royalty from each of such
xxxxx and while such royalty is so paid such well shall be held to be
a producing well under the above paragraph setting forth the primary
term hereof. Lessor may have gas free of charge from any gas well on
the leased premises for all stoves and inside lights in the principal
dwelling house on said land during the time by making lessor's own
connections with the well at lessor's own risk and expense.
3rd. To pay lessor as royalty for gas produced from any oil and well
and used by lessee for the manufacture of gasoline, one-eighth of the
market value of such gas. If such gas is sold by lessee, then lessee
agrees to pay lessor, as royalty, one-eighth of the net proceeds
derived from the sale of said casinghead gas at the xxxxx.
If no well be commenced on said land on or before the 10th day of
January, 2004, this lese shall terminate as to both parties.
If, at the expiration of the primary term of this lease, oil or gas
is not being produced on the leased premises, but lessee is then
engaged in drilling for oil or gas, then this lease shall continue in
force so long as drilling operations are being continuously
prosecuted on the lease premises; and drilling operations shall be
considered prosecuted if not more than sixty (60) days shall elapse
between the completion or abandonment of one well and the beginning
of operations for the drilling of a subsequent well. If oil or gas
shall be discovered and produced from any such well or xxxxx drilled
or being drilled at or after the expiration of the primary term of
this lease, this lease shall continue in force so long as oil or gas
shall be produced from the leased premises.
It is specially agreed that in the event that oil or gas is being
produced or is obtained from said premises after the expiration of
the primary term hereof and said production shall for any reason
cease or terminate, lessee shall have the right at any time within
ninety (90) days from this cessation of such production to resume
drilling operations in the effort to make said leased premises again
produce oil or gas, in which event this lease shall remain in force
so long as such operations are continuously prosecuted, as defined in
the preceding paragraph, and if they result in production, of oil or
gas, so long thereafter as oil or gas is produced from the premises.
If said lessor owns a less interest in the above described land the
entire and undivided fee simple estate or no Interest therein, then
the royalties and rentals herein provided for shall be paid the said
lessor only in proportion which lessor's interest, if any, bears to
the whole and undivided fee.
Lessee shall have the right to use, free of cost, gas, oil and water
produced on said land for all operations thereon, except from water
xxxxx of lessor. When requested by lessor, lessee shall bury pipe
line below plow depth. No well shall be drilled nearer than 200 feet
to the house or barn now on said premises without the written consent
of the lessor. Lessee shall pay for damages caused by all operations
to growing crops on said land. 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.
If the estate of either party herein is assigned-and the privilege of
assigning in whole or in part is expressly allowed - the covenants
hereof shall extend to their heirs, executors, administrators,
successors, or assigns, but no change in the ownership of the land or
assignment of rentals or royalties shall be binding on the lessee
until after the lessee has been furnished with a written transfer or
assignment, or a certified copy thereof; and it is hereby agreed that
in the event this lease shall be assigned as to a part or as in parts
of the above described lands and assigns or assignees of such part or
parts shall fall or make default in the payment of the proportionate
part of the rents due from him or them, such default shall and
operate to defeat or effect this lease so far as it covers a part or
parts of said land upon which the said lessee or any assignees
thereof shall make due payment of said rental.
Lessee shall have the exclusive right to build, operate and maintain
pits, reservoirs, pickup stations and plants for the purpose of
picking up and conserving the waste oil that flows down the creeks,
ravines and across the land embraced in this lease, whether said oil
is produced from land covered by this lease or other lands, and
lessor shall be entitled to receive the royalty hereinbefore reserved
on all such oil so saved.
In case of cancellation or termination of this lease for any cause,
lessee shall have the right to retain under the terms hereof twenty
(20) acres of land around each oil or gas well producing, being
worked on or drilling hereunder (as long as such operations are
continued in good faith) such tract to be designated by lease in as
near a square form as practicable.
In the event lessor considers that lessee has not complied with all
its obligations hereunder, both express and implied, before
production has been secured or after production has been accrued,
lessor shall notify lessee in writing, setting out specifically in
what respects lessee has breached this contract. Lessee shall then
have sixty (60) days after receipt of said notice within which to
meet or commence to meet all or any part of the breaches alleged by
lessor. The service of said notice shall be precedent to the
bringing of any action by lessor on said lease for any cause, and no
such action shall be brought until the lapse of sixty (60) days after
service of such notice on lessee. Neither the service of said notice
nor the doing of any acts by lessee aimed to meet, all or any of the
alleged breaches shall be deemed an admission or presumption that
lessee has failed to perform all of its obligations hereunder.
This to the minerals vested in grantee under this grant shall not end
or revert to grantor until there is a complete, absolute, and
intentional abandonment by grantee of each and all of the purposes,
expressed or implied, of this grant and every part and parcel of the
premises described in this grant.
Lessor hereby agrees that the lessee shall have the right at any time
to redeem for lessor by payment any mortgages, taxes or other liens
or interest and other charges on the above described lands in the
event of default which may become due under this lease.
All express or implied covenants of this lease shall be subject to
all Federal and State laws, Executive orders, rules or regulations
and this lease shall not be terminated, in whole or in part, nor
lessee held liable in damages for failure to comply therewith, if
compliance is prevented by, or if such failure is the result of any
such law, order, rule or regulation. And if from such cause lessee
is prevented from conducting drilling or reworking operations on or
producing oil or gas from, the leased premises, the time while lessee
is so prevented shall not be counted against lessee, and this lease
shall be extended for a period of time equal to that during which
such lessee is so prevented from conducting drilling or reworking
operations on or producing oil or gas from, such leased premises,
notwithstanding any other provision hereof.
Lessor hereby acknowledges that he has received from lessee for his
own use and reference a true and correct copy of this lease.
IN TESTIMONY WHEREOF, we sign, this 10th day of January 2002
AMD Property Company, LTD.
By: AMD Management, LLC, General Partner
By: s/s Xxxx Xxxxxx, President
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF XXXXXX
Before me, the undersigned authority, on this day personally appeared
Xxxx Xxxxxx, President of AMD Management, LLC, General Partner, known
to me to be the person whose name subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, This 10th day of January, 2002.
s/s Xxxx X. Love
Notary Public, in and for the State of Texas
My Commission Expires: 08-24-02
EXHIBIT A
A 159.70 Acre tract of land, being a part of the Xxxxxx Xxxxxx
Survey, Abstract 1893, Xxxxxx County, Texas and being more fully
described by metes and bounds as follows:
BEGINNING at a fence post in the WBL of a County Road, said point
being N 89 deg. 10 min. 32 sec, W., 20.0 ft. from the N. E. Corner of
the Xxxxxx Xxxxxx Survey, Abstract 1893;
THENCE, with the general line of a fence N 89 deg. 10 min, 32 sec.
W., 2620.0 ft. to a fence post in the EBL of another County road, for
a corner;
THENCE, with the EBL of the above mentioned County Road and with the
general line of a fence SOUTH, 2673.50 ft. to a fence post for a corner;
THENCE, with the general line of a fence S 89 deg. 40 min. 43 sec.
E., 1150.94 ft. to a steel rod for a corner;
THENCE, with the general line of a fence S 89 deg. 26 min. 14 sec.
E., 1452.73 ft. to a fence post in the WBL of first mentioned County
Road, for a corner;
THENCE, with the WBL of said County Road and with the general line of
a fence N 00 deg. 20 min. 53 sec. E., 2656.57 ft. to the place of
beginning and containing 159.70 Acres of land, more or less.
EXHIBIT B
ADDITIONAL PROVISIONS
NOTHWITHSTANDING THE PRINTED PROVISIONS OF THIS LEASE, IT IS
SPECIFICALLY AGREED AS FOLLOWS:
A) LESSEE SHALL PAY TO LESSOR, FOR EACH LOCATION, PRIOR TO DRILLING
ANY WELL $500.00 IN RANGE LAND OR GRAZING PASTURE, $1,000.00 IN
IMPROVED PASTURES OR CULTIVATED FIELDS. AS PAYMENT FOR ACTUAL
DAMAGES TO THE SURFACE OF LAND AND/OR CROPS GROWING THEREON.
B) IF AVAILABLE LESSEE SHALL PAY LESSOR $1,000.00 FOR WATER FOR
DRILLING OPERATIONS, PROVIDED THAT WATER IS ABUNDANT ENOUGH FOR THE
COMPLETION OF THE DRILLING OPERATION.
C) PRIOR TO THE DRILLING OF A WELL, THE LANDOWNER SHALL BE NOTIFIED
AND ADVISED AS TO THE PROPOSED LOCATION OF THE WELL. IN THE EVENT
LESSOR OBJECTS TO THE PROPOSED LOCATION, LESSEE AND LESSOR WILL
JOINTLY RESOLVE THE LOCATION, THE CONSENT FOR WHICH THE LESSOR WILL
NOT UNDULY WITHHOLD.
D) IT IS AGREED THAT IF A UNIT OR UNITS IS CREATED UNDER PROVISIONS
HEREUNDER, PRODUCTION, DRILLING OR REWORKING OPERATIONS ON SAID
UNIT OR UNITS SHALL NOT BE EFFECTIVE TO MAINTAIN THIS LEASE IN
FORCE AS TO ACREAGE OUTSIDE OF SUCH UNIT OR UNITS BEYOND THE END OF
THE PRIMARY TERM.
E) WHEREVER, THE FRACTION ONE-EIGHTH APPEARS IN THE PRINTED FORM, IT
IS HEREBY AMENDED TO READ ONE-FIFTH (1/5).
F) THIS LEASE SHALL NOT BE CONTINUED IN FORCE BY REASON OF THE SHUT-IN
WELL PROVISION FOR ANY SHUT-IN PERIOD OF MORE THAN TWO CONSECUTIVE YEARS.
G) ALL ROYALTIES ACCRUING UNDER THIS LEASE SHALL NEVER BEAR, EITHER
DIRECTLY OR INDIRECTLY; ANY PART OF THE COST OR EXPENSES OF
PRODUCTION, SEPARATION, GATHERING, DEHYDRATION, COMPRESSION,
TRANSPORTATION, TRUCKING, PROCESSING, TREATMENT, STORAGE, OR
MARKETING OF THE OIL OR GAS PRODUCED FROM THE LEASED PREMISES.
H) LESSEE SHALL FILL TO AT LEAST TEN (10) INCHES ABOVE GROUND LEVEL
ALL SLUSH PITS, CELLARS AND CIRCULATION PITS WITHIN FIFTEEN (15)
DAYS AFTER COMPLETION OF EACH WELL, OR IF THE PITS OR WELL CELLARS
ARE TOO WET TO COVER THEY MAY BE FENCED BY LESSEE WITH A
SUBSTANTIAL NET WIRE FENCE UNTIL THEY ARE DRY ENOUGH TO BE FILLED
AT WHICH TIME THEY SHALL BE FILLED. NO PITS OTHER THAN SMALL BS
PITS NOT LARGER THAN TEN (10) FEET BY THIRTY (30) FEET (WHICH SHALL
BE SECURELY FENCED) AS PROVIDED ABOVE, AT EACH PRODUCING WELL SHALL
BE MAINTAINED ON THE LEASED PREMISES.
I) ANY OF LESSOR'S SERVICE ROADS NOW LOCATED ON THE LEASED PREMISES OR
ON LESSOR'S ADJACENT PREMISES MAY BE USED BY LESSEE FOR LESSEE'S
OPERATIONS ON THE LEASED PREMISES ONLY, BUT THEY SHALL BE KEPT IN
GOOD REPAIR BY LESSEE DURING OPERATIONS ON THE PROPERTY, THE ROADS
SHALL BE GRADED AND SMOOTHED OVER AND LEFT IN GOOD REASONABLE
CONDITION. IF TO OBTAIN INGRESS AND EGRESS FROM THE LEASED
PREMISES IT BECOMES NECESSARY FOR LESSEE TO CUT IN ANY FENCE OF
LESSOR, LESSEE SHALL INSTALL AND MAINTAIN SUITABLE AND WELL-BUILT
GATES OR CATTLEGUARDS INSTALLED TO LESSOR'S SATISFACTION, WHICH
GATES AND CATTLEGUARDS SHALL UPON THE TERMINATION OF THIS LEASE FOR
ANY CAUSE, BECOME THE PROPERTY OF THE LESSOR. IF ANY FENCES OF
LESSOR ARE TO BE CUT FOR THE PURPOSE OF INSTALLING CATTLEGUARDS OR
GATES BEFORE THE FENCES ARE CUT, SUBSTANTIAL H-BRACES SHALL BE
INSTALLED ON EACH SIDE OF THE PLACE TO BE CUT SO AS NOT TO REMOVE
STRETCH FROM THE FENCE WIRES. IT IS UNDERSTOOD AND AGREED THAT
LESSEE MAY INSTALL HEAVY DUTY CATTLEGUARDS DURING DRILLING
OPERATIONS WHICH MAY BE REMOVED AFTER THE COMPLETION OF OPERATIONS,
AND IF SUCH ARE REMOVED, SUBSTANTIAL GATES WILL BE PLACED IN THE
CUTS MADE IN LESSOR'S FENCES OR THE OPENING WILL BE SECURELY
REFENCED IN AS GOOD CONDITION AS THE FENCE WAS IN PRIOR TO CUTTING.
SIGNED FOR IDENTIFICATION:
s/s Xxxx Xxxxxx
