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OIL AND GAS LEASE

Oil or Gas Lease Agreement

OIL AND GAS LEASE | Document Parties: PETROGEN CORP | Northern Trust Bank of Texas, N.A You are currently viewing:
This Oil or Gas Lease Agreement involves

PETROGEN CORP | Northern Trust Bank of Texas, N.A

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Title: OIL AND GAS LEASE
Date: 4/15/2005
Industry: Oil and Gas Operations     Sector: Energy

OIL AND GAS LEASE, Parties: petrogen corp , northern trust bank of texas  n.a
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                                OIL AND GAS LEASE

 

 

 

  STATE OF TEXAS                        ss.

 

 

  COUNTY OF CALHOUN                     ss.

 

 

 

THIS OIL AND GAS LEASE is made this 31st day of August, 2004, by and between The

Northern Trust Bank of Texas, N.A., as Successor Trustee of the Leila Clark Wynn

Mineral   Trust,   whose   address is 2121 San   Jacinto   Street,   P.O.   Box 226270,

Dallas, Texas 75222,   hereinafter "Lessor," and Petrogen,   Inc. whose address is

3200 Southwest Freeway, Suite 3300, Houston, Texas 77027, 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,   does 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   Calboun,

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.

 

         For the   purposes   of   determining   the   amount   of any   bonus or other

payment hereunder,   said land shall be deemed to contain, 1,571,3 acres, whether

actually   containing   more or less,   arid.   the above   recital of acreage in any

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

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 six (6) months

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   laud with no   cessation   for more   than   ninety   (90)

consecutive days.

 

 

 

 

                  OIL AND GAS LEASE, PAGE I OF 7 PAGES

 

08-23-04

 

 

<PAGE>

 

         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 1/5th 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;

 

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

         land (1) when sold by Lessee,   I/5tli of the amount realized by Lessee,

         computed at the mouth of the well,   or (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 each

         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 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,   the sum of

         $7,857.50.   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 (I) 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 (I) 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 at any time or times   during   the   primary   term   operations   are

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

thereafter   terminate on the date next   following   the   ninetieth day after such

discontinuance   unless   on or   before   such   date   Lessee   conducts   operations;

provided,   however,   if such date is at the end of the primary term,   this lease

shall   terminate   at   the   end   of   such   term   or on the   ninetieth   day   after

discontinuance   of all operations,   whichever is the later date,   unless on such

late date either (1) Lessee is   conducting   operations   or (2) the shut-in well

provisions   of paragraph 3 or the   provisions   of   paragraph 10 are   applicable.

Whenever used in this lease the word "operations"   shall mean operations for and

any of the following:   drilling, testing, completing,   reworking,   recompleting,

deepening, plugging back or repairing of a well in search for or in an. endeavor

to   obtain   production   of   oil,   gas or   sulphur,   whether   or   not   in   paying

quantities.

 

 

 

                      OIL AND GAS LEASE. PAGE 2 OF 7 PAGES

 

  08-23-04

 

 

<PAGE>

 

 

         5.   Lessee   shall   have   the use,   free   from   royalty,   of oil and gas

produced from said land in ail operations hereunder. Lessee shall have the right

at any time to remove all machinery and fixtures placed on said land,   including

the right to draw and remove   casing.   No well shall be drilled   nearer than 200

feet to the house or barn now on said land   without   the   consent of the Lessor.

Lessee   shall pay for   damages   caused by its   operations   to growing   crops and

timber on said land.

 

         6. The rights and estate of any party hereto may be assigned   from time

to time in   whole   or in   part   and as to any   minerals   or   horizon.   AH of the

covenants,   obligations, and considerations of this lease shall extend to and be

binding   upon   the   parties   hereto,   their   heirs,   successors,    assigns,   and

successive   assigns,   No change   or   division   in the   ownership   of said   land,

royalties,   or other moneys,   or any part   thereof,   howsoever   effected,   shall

increase the   obligations or diminish the rights of Lessee,   including,   but not

limited   to,   the   location   and   drilling   of   wells   and   the   measurement   of

production. Notwithstanding any Other actual or constructive knowledge or notice

hereof or to Lessee,   its   successors   or assigns,   no change or division in the

ownership   of said   lands of the   royalties,   or other   moneys,   or the right to

receive   the same,   howsoever   effected,   shall be binding   upon the then record

owner of this lease until   thirty (30) days after   there has been   furnished   to

such   record   owner at his or its   principal   place of   business   by   Lessor   or

Lessor's   heirs,   successors,   or assigns,   notice of such   change or   division,

supported by either originals or duly certified copies of the instruments   which

have been property   filed for record and which evidence such change or division,

and of such court records and   proceedings,   transcripts,   or other documents as

shall be necessary in the opinion of such record owner to establish the validity

of such change or division,   If any such change in ownership occurs by reason of

death of the owner,   Lessee may   nevertheless   pay or tender such royalties,   or

other   moneys,   or part   thereof,   to the credit of the decedent in a depository

bank provided for above.

 

         7. In the event Lessor   considers that Lessee has not complied with all

its obligations hereunder, both express and implied, 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 the   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 its obligations hereunder. If

this lease is cancelled for any cause, it shall nevertheless remain in force and

effect as to (I)   sufficient   acreage   around   each   well as to which   there are

operations to constitute a drilling or maximum   allowable unit under   applicable

governmental regulations,   (but in no event less than forty acres), such acreage

to be   designated   by Lessee as   nearly as   practicable   in the form of a square

centered at the well, or in such shape as then existing   spacing rules   require;

and (2) any part of said   land   included   in a pooled   unit on which   there   are

operations.   Lessee shall also have such easements on said land as are necessary

to operations on the acreage so retained.

 

         8. Lessor's rights and interests   hereunder shall be charged   primarily

with any mortgages,   taxes or other liens, or interest and other charges on said

land,   bat Lessor   agrees that Lessee shall have the right at any time to pay or

reduce same for Lessor,   either before, or after maturity,   and be surrogated to

the rights of the bolder thereof and to deduct amounts so paid from royalties or

other   payments   payable or which may become   payable to Lessor   and/or   assigns

under this   lease.   If this lease   covers a less   interest   in the oil,   gas and

sulphur in all or any part of said land than the entire


 
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