EXHIBIT 10.1
XXXXXXX COUNTY 010731
OIL, GAS AND MINERAL LEASE
THIS AGREEMENT made this 27th day of May, 2001
Xxx Xxxxxxx Xxxxx, Jr., individually and Executor and Trustee of the
Xxx X. Xxxxx, Xx. Estate
Lessor (whether one or more), whose address is: 425 Xxxxxxxxxxx, XX
00000 and Ness Energy International, Inc. 0000 X-00 Xxx Xx, Xxxxxx
Xxxx, XX 00000 Lessee, WITNESSETH:
1. Lessor in consideration of Ten Dollars and other valuable
consideration Dollars ($10.00 and OVC), in hand paid, of the
royalties herein provided, and of the agreements of Lessee herein
contained, hereby grants, leases and lets exclusively unto Lessee
for the purpose of investigating, exploring, prospecting, drilling
and mining for and producing oil, gas and all other minerals,
conducting exploration, geologic and geophysical surveys by
seismograph, core test, gravity and magnetic methods, injecting
gas, water and other fluids, and air into subsurface strata, laying
pipe lines, building roads, tanks, power stations, telephone lines
and other structures thereon and on, over and across lands owned or
claimed by Lessor adjacent and contiguous thereto, to produce,
save, take care of, treat, transport and own said products, and
housing its employees, the following described land in Xxxxxxx
County, Texas, to-wit:
All unleased portions of the Xxxxx Ranch located approximately 15
miles NNW from Rocksprings and more particularly described in
Attachments "A".
All references to one/eighth royalty shall be changed to
three/sixteenths royalty (3/16) herein.
This lease also covers and includes all land owned or claimed by
Lessor adjacent or contiguous to the land particularly described
above, whether the same be in said survey or surveys or in adjacent
surveys, although not included within the boundaries of the land
particularly described above.
2. This is a paid up lease and subject to the other provisions herein
contained, this lease shall be for a term of until June 30, 2004
years from this time (primary term) and as long thereafter as oil,
gas or other mineral is produced from said land or land with which
said land is pooled hereunder.
3. As royalty, lessee covenants and agrees: (a) To deliver to the
credit of lessor, in the pipelines to which lessee may connect its
xxxxx, the equal one-eighth part of all oil produced and saved by
lessee from said land, or from time to time, at the option of
lessee, to pay lessor the average posted market price of such one-
eighth part of such oil at the xxxxx as of the day it is run to the
pipe line or storage tanks, lessor's interest, in either case, to
bear one-eighth of the cost of treating oil to render it marketable
pipe line oil; (b) to pay lessor for gas and casinghead gas
produced from said land (1) when sold by lessee, one-eighth of the
amount realized by lessee, computed at the mouth of the well, or;
(2) when used by lessee of said land or in the manufacture of
gasoline or other products, one-eighth of the amount realized from
the sale of gasoline or other products extracted therefrom and one-
eighth of the amount realized from the sale of residue gas after
deducting the amount used for plant fuel and/or compression; (c) To
pay lessor on all other minerals mined and marketed or utilized by
lessee from said land, one-tenth either in kind or value at the
well or mine at lessee's election, except that on sulfur mined and
marketed the royalty shall be one dollar ($1.00) per long ton. If,
at the expiration of the primary term or at any time or times
thereafter, there is any well on said land or on lands with which
said land or any portion thereof has been pooled, capable of
producing oil or gas, and all such xxxxx are shut-in, this lease
shall, nevertheless, continue in force as though operations were
being conducted on said land for so long as said xxxxx are shut-in,
and thereafter this lease may be continued in force as if no shut-
in had occurred. Lessee consents and agrees to use reasonable
diligence to produce, utilize, or market the minerals capable of
being produced from said xxxxx, but in the exercise of such
diligence, lessee shall not be obligated to install or furnish
facilities other than well facilities and ordinary lease facilities
of flow lines, separator, and lease tank, and shall not be required
to settle labor trouble or to market gas upon terms unacceptable to
lessee. If, at any time or times after the expiration of the
primary term, all such xxxxx are shut-in for a period of ninety
consecutive days, and during such time there are no operations on
said land, then at or before the expiration of said ninety day
period, lessee shall pay or tender, by check or draft of lessee, as
royalty, a sum equal to one dollar ($1.00) for each acre of land
then covered hereby. Lessee shall make like payments or tenders at
or before the end of each anniversary of the expiration of said
ninety day period if upon such anniversary this lease is being
continued in force solely by reason of the provisions of this
paragraph. Each such payment or tender shall be made to the
parties who at the time of payment would be entitled to receive the
royalties which would be paid under this lease if the xxxxx were
producing, and may be deposited in the People's State Bank at
Rocksprings, Texas or its successors, which shall continue as the
depositories, regardless of changes in the ownership of shut-in
royalty. If at any time that lessee pays or tenders shut-in
royalty, two or more parties are, or claim to be, entitled to
receive same, lessee may, in lieu of any other method of payment
herein provided, pay or tender shut-in royalty, in the manner above
specified, either jointly to such parties or separately to each in
accordance with their respective ownerships thereof, as lessee may
elect. Any payment hereunder may be made by check or draft of
lessee deposited in the mail or delivered to the party entitled to
receive payment or to a depository bank provided for above on or
before the last date for payment. Nothing herein shall impair
lessee's right to release as provided in paragraph 5 hereof, in the
event of assignment of this lease in whole or in part, liability
for payment hereunder shall rest exclusively on the then owners of
this lease, severally as to acreage owned by each.
4. Lessee, at its option, is hereby given the right and power to pool
or combine the acreage covered by this lease or any portion thereof
as to oil and gas, or either of them, with any other land covered
by this lease, and/or with any other land, lease or leases in the
immediate vicinity thereof to the extent hereinafter stipulated,
when in Lessee's judgement it is necessary or advisable to do so in
order properly to explore, or to develop and operate said leased
premises in compliance with the spacing rules of the Railroad
Commission of Texas, or other lawful authority, or when to do so
would, in the judgment of Lessee, promote the conservation of oil
and gas in and under and that may be produced from said premises.
Units pooled for oil hereunder shall not substantially exceed 40
acres each in area, and units pooled for gas hereunder shall not
substantially exceed in area 640 acres each plus a tolerance of ten
percent (10%) thereof, provided that should governmental authority
having jurisdiction prescribe or permit the creation of units
larger than those specified, for the drilling or operation of a
well at a regular location or for obtaining maximum allowable from
any well to be drilled, drilling or already drilled, units
thereafter created may conform substantially in size with those
prescribed or permitted by governmental regulations. Lessee under
the provisions hereof may pool or combine acreage covered by this
lease or any portion thereof as above provided as to oil in any one
or more strats. The units formed by pooling as to any stratum or
strata need not conform in size of area with the unit or units into
which the lease is pooled or combined as to any other stratum or
strata, and oil units need not conform as to area with gas units.
The pooling in one or more instances shall not exhaust the rights
of the Lessee hereunder to pool this lease or portions thereof into
other units. Lessee shall file for record in the appropriate
records of the county in which the leased premises are situated an
instrument describing and designating the pooled acreage as a
pooled unit; and upon such recordation the unit shall be effective
as to all parties hereon, their heirs, successors, and assigns,
irrespective of whether or not the unit is likewise effective as to
all other owners of surface, mineral, royalty, or other rights in
land included in such unit. Lessee may at its election exercise
its pooling option before or after commencing operations for or
completing an oil or gas well on the leased premises, and the
pooled unit may include, but it is not required to include, land or
leases upon which a well capable of producing oil or gas in paying
quantities has therefore been completed or upon which operations
for the drilling of a well for oil or gas have theretofore been
commenced. In the event of operations for drilling on or
production of oil or gas from any part of a pooled unit which
includes all or a portion of the land covered by this lease,
regardless of whether such operations for drilling were commenced
or such production was secured before of after the execution of
this instrument or the instrument designating the pooled unit, such
operations shall be considered as operations for drilling on or
production of oil or gas from land covered by this lease whether or
not the well or xxxxx be located on the premises covered by this
lease and in such even operations for drilling shall be deemed to
have been commenced on said land within the meaning of paragraph 5
of this lease; and the entire acreage constituting such unit or
units, as to oil and gas, or either of them, as herein provided,
shall be treated for all purposes, except the payment of royalties
on production from the pooled unit, as if the same were included in
this lease. For the purpose of computing the royalties to which
owners of royalties and payments out of production and each of them
shall be entitled on production of oil and gas, or either of them,
from the pooled unit, there shall be allocated to the land covered
by this lease and included in said unit (or to each separate tract
within the unit if this lease covers separate tracts within the
unit) a pro rata portion of the oil and gas, or either of them,
produced from the pooled unit after deducting that used for
operations on the pooled unit. Such allocation shall be on an
acreage basis-that is to say, there shall be allocated to the
acreage covered by this lease and included in the pooled unit (or
to each separate tract within the unit if this lease covers
separate tracts within the unit) that pro rate portion of the oil
and gas, or either of them, produced from the pooled unit which the
number of surface acres covered by this lease (or in each such
separate tract) and included in the pooled unit bears to the total
number of surface acres included in the pooled unit. Royalties
hereunder shall be computed on the portion of such production,
whether it be oil and gas, or either of them, so allocated to the
land covered by this lease and included in the unit just as though
such production were from such land. The production from an oil
well will be considered as production from the lease or all pooled
unit from which it is producing and not as production from a gas
pooled unit; and production from a gas well will be considered as
production from the lease or gas pooled unit from which it is
producing and not from an oil pooled unit. The formation of any
unit hereunder shall not have the effect of changing the ownership
of any shut-in production royalty which may become payable under
this lease. If this lease not or hereafter covers separate tracts,
no pooling or unitization of royalty interest as between any such
separate tracts is intended or shall be implied or result merely
from the inclusion of such separate tracts within this lease but
Lessee shall nevertheless have the right to pool as provided above
with consequent allocation of production as above provided. As
used in this paragraph 4, the words "separate tract" mean any tract
with royalty ownership differing, now or hereafter, either as to
parties or amounts, from that as to any other part of the leased
premises. At expiration of primary term this lease shall expire
except for 320 acres around each producing well.
5. If at the expiration of the primary term, oil, gas, or other
mineral is not being produced on said land, or from the land pooled
therewith, but Lessee is then engaged in drilling or reworking
operations thereon, or shall have completed a dry hole thereon
within 60 days prior to the end of the primary term, the lease
shall remain in force as long as operations on said well or for
drilling or reworking of any additional well are proceeded with no
operation of more than 60 consecutive days, and if they result in
the production of oil, gas or either mineral, so long thereafter as
oil, gas, or other mineral is produced from said land, or from land
provided pooled therewith. If, after the expiration of the primary
term of this lease and after oil, gas, or other mineral is produced
from said land, or from land pooled therewith, the production
thereof should cease from any cause, this lease shall not
terminate. If, lessee commences operations for drilling or
reworking within 60 days after the cessation of each production,
but shall remain in force and effect as long as such operations are
presented with no cessation of more than 60 consecutive days, and
if they result in the production of oil, gas, or other mineral, so
long thereafter as oil, gas, or other mineral is produced from said
land, or from land pooled therewith. Any pooled unit delegated by
lessee in compliance with the terms hereof, may be dissolved by
lessee by instrument filed for record in the appropriate records of
the county in which the leased premises are at any time after
the completion of a dry hole or the completion of production on
said unit. In the event a well or xxxxx producing oil or gas in
paying quantities should be brought in on adjacent land and within
330 feet of and draining the leased premises or land pooled
therewith surrender this lease as to such portion or portions need
be relived of all obligations as to the acreage surrounded.
6. Lessee shall have the right at any time during or after the
expiration of this lease to remove all property and fixtures placed
by lessee on said land, including the right to draw and remove
casing. When required by Lessee, Lessee will buy all pipelines
below ordinary plowed depth, and no well shall be drilled within
200 (200) feet of any residence or barn being on said land without
lessor's consent.
7. The rights of either party hereunder may be assigned in whole or
part and the provisions hereof shall extend to their heirs,
successors and assigns: but no change or division of the land, or
royalties, however, accomplished, shall operate to enlarge the
obligations or diminish the rights of lessee; and no change or
division in such ownership shall be biding on lessee until 30 days
after lessee shall have been furnished by registered US mail at
lessees principal place of business with a certified copy of
recorded instrument or instructions evidencing terms. In the event
of assignment hereof in whole or in part, liability for breach of
any obligations hereinafter shall rest exclusively upon the owner
of this lease or of a portion thereof who commits such breach. If
six or more parties becomes entitled to royalty hereunder, lessee
may withhold payment thereof unless and until furnished with a
recordable instrument executed by all such parties designating an
agent to receive for payment of all.
8. The breach by lessee of any obligation arising hereunder shall not
work a forfeiture or cancellation of this lease nor cause a
termination of revocation of the estate created by hereby or be
grounds for cancellation hereof in whole or in part. No obligation
reasonably to develop the lease premises shall arise during the
primary term should oil, gas, or other minerals in paying
quantities be discovered on said premises then a after the
expiration term, lessee shall develop the acreage retained
hereunder as a reasonably prudent operator, but discharging the
obligation, it shall in no event be required to drill more than one
well per 40 acres of the area retained hereunder and capable of
producing oil in paying quantities and one well per 640 acres plus
an acreage tolerance not to exceed 10% of 640 acres of the area
retained hereunder and capable producing gas or other minerals in
paying quantities. If after the expiration of the primary term,
lessor considers that operations or not at any time being conducted
in compliance with this lease, lessor shall notify lessee in
writing of the facts relied upon as constituting a breach hereof,
and lessee, if in default, shall have 90 days after receipt of such
notice in which to compliance with the obligations imposed by
virtue of this instrument.
9. Lessor hereby warrants and agrees to defend to the title and said
land and agrees that lessee at its option discharge any tax,
mortgage or any other of said land, either in whole or in part, and
in event lessee does not, it shall be subrogated to such lien with
right to enforce same and royalties accruing hereunder satisfying
same. Without impairment of lessee rights of the warranty in event
of failure of title it is agreed if this lease covers a less
interest in the oil, gas, sulphur, and or other minerals in all or
in any part of said land, then the entire and undivided fee simple
estate (where lessors interest herein specified or not), or no
interest therein then the royalties and other monies accruing from
any part as to which the lease covers less than such full interest,
shall be paid only in the proportion which the interest therein, if
any, covered by this lease, bears to the whole and undivided fee
simple estate therein. All royalty interest covered by this lease
(whether or not owned by lessor) shall be paid be paid out of the
royalty provided. Should any one or more of the parties named
above as lessor's fail to execute this lease it shall nevertheless
be binding upon the party or parties executing the same.
10. Should Lessee be prevented from complying with any express or
implied covenants of this lease, from conducting drilling or
reworking operations thereon or from producing any oil, gas or
other minerals therefrom by reason s of scarcity or of inability to
obtain or to use equipment or material, or by oppression of force
majeure, and federal or state law, or any other rule or regulation
of governmental authority, then while so prevented, lessee's
obligation to comply with such covenant shall be suspended and the
lessee shall not be liable in damages for failure to comply
therewith; and this lease shall be extended while and so long as
lessee is prevented by any such cause from conducting drilling on
or from reworking operations producing oil and gas from the lease
premises; and the time while lessee is so prevented shall not be
counted against lessee, anything in this lease to the contrary not
withstanding.
IN WITNESS WHEREOF, this instrument is executed on the date first
above written
s/s Xxxxxxxx Xxxx Xxxxx s/s Xxx Xxxxxxx Xxxxx, Jr.
Xxxxxxxx Xxxx Xxxxx, Individually Xxx Xxxxxxx Xxxxx, Jr.,
Individually and
Executor and Trustee of the
Xxx X. Xxxxx Xx.
STATE OF TEXAS
COUNTY OF XXXXXXX
This instrument was acknowledged before me on the 12th day of June, 2001
s/s Xxxxxxx X. Xxxxxx III
Notary Public, State of Texas
Notary's name (printed): Xxxxxxx X. Xxxxxx III
Notary's commission expires: 5-9-2005
(Xxx Xxxxxxx Xxxxx, Jr.)
STATE OF TEXAS
COUNTY OF BEXAR
This instrument was acknowledged before me on the 22 day of June, 2001
s/s Xxxxxxxxx Xxxxxx
Notary Public, State of Texas
Notary's name (printed)
Notary's commission expires: June 30, 2004
(Xxxxxxxx Xxxx Xxxxx)
"EXHIBIT A"
"To Oil and Gas Lease dated May 27, 2001, Xxx Xxxxxxx Xxxxx, Jr.,
Individually and as" "Trustee, et al, as Lessor, to Ness Energy International,
Inc., as Lessee."
Abstract # Certificate Survey Original Grantee Description
3120 4/1196 8 G.C.&S.F. Ry. Co. All of the East
246.13 ac.
1035 4/1196 7-BR G.C.&S.F. Ry. Co. 701.2 acres - BR
1973 4/1383 26 G.C.&S.F. Ry. Co. All of the South
40.58 acres
2716 1/617 44 B.S.&F. 167.54 ac
2421 1/619 48 B.S.&F. All of the
South 317.53 ac.
1321 151 7 T.C. Ry. Co. All of the
North & West
180 ac.
1825 1462 8 E.L. & R.R. Ry. Co. All of the
West 591.0 ac.
836 1463 9 E.L. & R.R. Ry. Co. 469.5 acres
2975 1463 10 E.L. & R.R. Ry. Co. 14.0 acres
837 1464 11 E.L. & R.R. Ry. Co. 148.58 acres
1351 28/110 13 Wash. Cnty. Ry. Co. All of the S/2
being 320
"acres, more or less"
1686 28/110 14 Wash. Cnty. Ry. Co. 593.7 acres
2230 1/614 38 B.S.&F. All of the
South 158.4 ac.
713 1/616 41 B.S.&F. 161.66 acres
2810 1/616 42 B.S.&F. 400.0 acres
716 1/619 47 B.S.&F. 640.0 acres
717 1/620 49 B.S.&F. 396.75 ac.
2085 1/620 50 B.S.&F. 643.0 ac.
