OIL AND GAS LEASE

 

 

 

 

                                                                    EXHIBIT 10.1

 

 

                               OIL AND GAS LEASE

 

 

 

 STATE    OF    TEXAS                 ss.

                                      ss.

 COUNTY    OP    CALHOUN              ss.

 

 

 

         THIS OIL AND GAS LEASE is made this 24th day of October,  2001, between

Nolie Tiedt, whose address is 406 W. Market Street,  Fayetteville,  Texas 78940,

hereinafter  "Lessor," and James T. Roche,  whose address is 5901 Highland Hills

Trail, Austin, Texas 78731, hereinafter "Lessee."

 

 

 

                                  WITNESSETH

 

         1. That  Lessor,  in  consideration  of Ten Dollars  ($10.00) and other

valuable consideration,  the receipt of which is hereby acknowledged, and of the

covenants and agreements of Lessee hereinafter contained, do hereby grant, lease

and let unto  Lessee  the  land  covered  hereby  for the  purposes  hereinafter

described  and with the  exclusive  right of  exploring,  drilling,  mining  and

operating for, producing and owning oil, gas and sulphur, together with right to

make surveys on said land, lay pipe lines,  establish and utilize facilities for

surface or subsurface disposal of salt water, construct roads and bridges, build

tanks, power stations,  telephone lines, employee houses and other structures on

said land,  necessary or useful in Lessee's  operations in  exploring,  drilling

for, producing,  treating,  storing and transporting  minerals produced from the

land covered  hereby or adjacent  thereto.  The land  covered  hereby and herein

referred  to as the "land" or "said  land" is located in the County of  Calhoun,

State of Texas, and is described as follows:

 

         TRACT ONE: Being all of the ISAAC W. BOONE SURVEY No. 15,  Abstract No.

         56, Calhoun County, Texas, containing  approximately 801.26 acres, more

         or less,  and being a part of that  certain  land  described  in a Deed

         dated July 15, 1949,  Edwin Hawes,  Jr., et al to George Rust Hawes, as

         recorded in Volume 70, Page 209, Deed Records of Calhoun County, Texas.

 

         TRACT TWO: Being all of the ISAAC W. BOONE SURVEY No. 16,  Abstract No.

         57, Calhoun County, Texas, containing  approximately 770.24 acres, more

         or less,  and being the same land  described in that certain Deed dated

         July 15,  1949,  Edwin  Hawes,  Jr.,  et al to George  Rust  Hawes,  as

         recorded in Volume 70, Page 211, Deed Records of Calhoun County, Texas.

 

 

 

 

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         For the purposes of determining  the amount of any bonus,  delay rental

 or other payment hereunder, said land shall be deemed to contain 1,571.5 acres,

 whether  actually  containing more or less, and the above recital of acreage in

 any tract shall be deemed to be the true acreage  thereof.  Lessor  accepts the

 bonus and agrees to accept the delay rentals as lump sum consideration for this

 lease and all rights and options hereunder.

 

         2.  Unless  sooner  terminated  or  longer  kept in force  under  other

provision hereof, this lease shall remain in force for a term of three (3) years

from the effective date hereof,  hereinafter  called "primary term", and as long

thereafter  as oil, gas and/or  sulphur is produced  from the land or other land

pooled therewith in commercial quantities or operations, as hereinafter defined,

are  conducted  upon said  land with no  cessation  for more  than  ninety  (90)

consecutive days.

 

         3. As royalty, Lessee covenants and agrees:

 

            (a) To deliver  to the  credit of Lessor,  in the pipe line to which

            Lessee  may  connect  its  wells,  the equal  l/5th  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  l/5th  part of such oil at the wells as of the day it

            is run to the pipe line or  storage  tanks,  Lessor's  interest,  in

            either case,  to bear l/5th of the cost of treating oil to render it

            marketable pipe line-oil;

 

            (b) To pay Lessor on gas and  casinghead gas produced from said land

            (1) when sold by  Lessee,  l/5th of the amount  realized  by Lessee,

            computed  at the mouth of the well,  of (2) when used by Lessee  off

            said land or in the manufacture of gasoline or other  products,  the

            market  value,  at the mouth of the  well,  of l/5th of such gas and

            casinghead gas;

 

            (c) To pay  Lessor  on all  other  minerals  mined  or  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 sulphur

            mined and  marketed  the royalty  shall be $2.50 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 and gas, and all such wells are  shut-in,  this lease

            shall,  nevertheless,  continue in force as though  operations  were

            being  conducted on said land for so long as said wells are shut-in,

            and thereafter this lease may be continued in force as if no shut-in

            had  occurred.   Lessee  covenants  and  agrees  to  use  reasonable

            diligence to produce, utilize, or market the minerals capable of

 

 

 

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            being  produced  from  said  wells,  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 wells 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 the  amount of annual  delay  rental  provided  for in this

            lease.  Upon making said payment,  it will be  considered  that each

            such well is producing gas in paying  quantities  within the meaning

            of this lease for a period of one (1) year after the  expiration  of

            said ninety (90) day  period.  In like manner and upon like  payment

            being  made  annually  on or  before  the  expiration  of  the  last

            preceding  year for which such  payment or tender has been made,  it

            will be  considered  that said well or wells  are  producing  gas in

            commercial  quantities for successive  periods of one (1) year each.

            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 wells were producing,  and may

            be  deposited in the  depository  bank  provided for below.  Nothing

            herein  shall  impair  Lessee's  right to  release  as  provided  in

            paragraph 4 hereof. In event of assignment of this lease in whole or

            in part,  liability for payment  hereunder shall rest exclusively on

            the then  owner or owners of this  lease,  severally  as to  acreage

            owned by each.

 

         4. If operations  are not conducted on said land on or before the first

anniversary of the effective date of this lease, then this lease shall terminate

as to both parties,  unless Lessee on or before said date shall,  subject to the

further provisions hereof, pay or tender to Lessor or to Lessor's credit the sum

of  $7,857.50,  which shall  operate as delay rental and cover the  privilege of

deferring  operations  for one year from said date.  The portion of delay rental

due to Lessor shall be sent to Lessor's  address as shown above.  In like manner

and upon like payments or tenders, operations may be further deferred for a like

period of one year during the primary  term.  If at any time that Lessee pays or

tenders delay rental,  royalties,  or other moneys,  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 such  rental,  royalties,  or other

moneys,  in the manner  herein  specified,  either  jointly  to such  parties or

separately to each in accordance with their  respective  ownership  thereof,  as

Lessee may elect. Any payment  hereunder may be made by check or draft of Lessee

deposited  in the mail or  delivered  to  Lessor or to a  depository  bank on or

before the last date for payment. Said

 

 

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delay rental shall be apportion  able as to said land on an acreage  basis,  and

failure to make  proper  payment or tender of delay  rental as to any portion of

said land or as to any  interest  therein  shall not affect this lease as to any

portion of said land or as to any interest therein as to which proper payment or

tender is made. Lessee may at any time and from time to time execute and deliver

to Lessor or file for record a release or  releases of this lease as to any part

or all of said land or of any  mineral  or  horizon  hereunder,  and  thereby be

relieved of all  obligations  as to the released  acreage or  interest.  If this

lease is so released as to all  minerals  and  horizons  under a portion of said

land, the delay rental and other payments computed in accordance therewith shall

thereupon be reduced HA the  proportion  that the acreage  released bears to the

acreage which was covered by this lease immediately prior to such release.

 

          5. If at any time or times  during the primary  terra  operations  are

conducted on said land and if all operations are discontinued,  this lease shall

thereafter  terminate on its  anniversary  date next following the ninetieth day

after such  discontinuance  unless on or before  such  anniversary  date  Lessee

eithe