|
Exhibit
10.4
OIL, GAS AND MINERAL
LEASE
THIS AGREEMENT made this 9
th day of February, 2007, between
GEORGE G. GRIFFIN, JR. AND GEORGE G. GRIFFIN, JR. AS TRUSTEE FOR
THE GRIFFIN FAMILY TRUST DATED APRIL 20. 1997
Lessor (whether one or more), whose address is:
212 CONTOUR DRIVE, GONZALES, TEXAS 78629 and
LUCAS ENERGY, INC. 3000 RICHMOND AVENUE, SUITE 400. HOUSTON. TEXAS
77098 , Lessee, WITNESSETH:
1.
Lessor, in consideration of NONE
Dollars, 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 and with the exclusive right of
exploring, drilling, mining and operating for, producing and
owning oil, gas, sulphur and all other minerals (whether or not
similar to those mentioned), together with the 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, dig canals, 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
any other land adjacent thereto. The land covered hereby, herein
called "said land", is located in the County of GONZALES, State
of TEXAS , and is described as follows:
498.27 ACRES OF LAND, MORE OR LESS, OUT OF THE
G. W. BARNETT SURVEY A-110 GONZALES COUNTY, TEXAS, BEING THAT
SAME LAND DESCRIBED IN A DEED RECORDED IN VOLUME 163 PAGES
262263 OF THE OFFICIAL RECORDS OF GONZALES COUNTY, TEXAS.
This lease also covers and includes, in addition
to that above described, all land, if any, contiguous or
adjacent to or adjoining the land above described and (a) owned
or claimed by lessor by limitation, prescription, possession,
reversion or unrecorded instrument or (b) as to which lessor has
a preference right of acquisition. Lessor agrees to execute any
supplemental instrument requested by lessee for a more complete
or accurate description of said land. For the purpose of
determining the amount of any bonus, delay rental or other
payment hereunder, said land shall be deemed to contain 498.27
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 rental as lump sum consideration for this lease and
all rights and option hereunder.
2.
Unless sooner terminated or longer kept in force
under other provisions hereof, this lease shall remain in force
for a term one year from the date hereof, hereinafter called
"primary term", and as long thereafter as 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 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 wells 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 on 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 off said land
or in the manufacture of gasoline or other products, the market
value, at the mouth of the well, of one-eighth of such gas and
casinghead gas; (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 sulphur 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 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, a sum equal to the amount of
annual delay rental provided for in this lease. 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 wells were producing, and may be
deposited in a depository bank provided for below. Nothing
herein shall impair lessee's right to release as provided in
paragraph 5 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.
Lessee is hereby granted the right, at its option,
to pool or unitize any land covered by this lease with any other
land covered by this lease, and/or with any other land, lease,
or leases, as to any or all minerals or horizons, so as to
establish units containing not more than 80 surface acres, plus
10% acreage tolerance; provided, however, units may be
established as to any one or more horizons, or existing units
may be enlarged as to any one or more horizons, so as to contain
not more than 640 surface acres plus 10% acreage tolerance, if
limited to one or more of the following: (I) gas, other than
casinghead gas, (2) liquid hydrocarbons (condensate) which are
not liquids in the subsurface reservoir, (3) minerals produced
from wells classified as gas wells by the conservation agency
having jurisdiction. If larger units than any of those herein
permitted, either at the time established, or after enlargement,
are required under any governmental rule or order, 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, any such unit may be established
or enlarged to conform to the size required by such governmental
order or rule. Lessee shall exercise said option as to each
desired unit by executing an instrument identifying such unit
and filing it for record in the public office in which this
lease is recorded. Each of said options may be exercised by
lessee at any time and from time to time while
this lease is in force, and whether before or after production
has been established either on said land, or on the portion of
said land included in the unit, or on other land unitized
therewith. A unit established hereunder shall be valid and
effective for all purposes of this lease even though there may
be mineral, royalty, or leasehold interests in lands within the
unit which are not effectively pooled or unitized. Any
operations conducted on any part of such unitized land shall be
considered, for all purposes, except the payment of royalty,
operations conducted upon said land under this lease. There
shall be allocated to the land covered by this lease within each
such unit (or to each separate tract within the unit if this
lease covers separate tracts within the unit that proportion of
the total production of unitized minerals from the unit, after
deducting any used in lease or unit operations, which the number
of surface acres in such land (or in each such separate tract)
covered by this lease within the unit bears to the total number
of surface acres in the unit, and the production so allocated
shall be considered for all purposes, including payment or
delivery of royalty, overriding royalty and any other payments
out of production to be the entire production of unitized
minerals from the land to which allocated in the same manner as
though produced therefrom under the terms of this lease. The
owner of the reversionary estate of any term royalty or mineral
estate agrees that the accrual of royalties pursuant to this
paragraph or of shut-in royalties from a well on the unit shall
satisfy any limitation of term requiring production of oil or
gas. The formation of any unit hereunder which includes land not
covered by this lease shall not have the effect of exchanging or
transferring any interest under this lease (including, without
limitation, any delay rental and shut-in royalty which may
become payable under this lease) between parties owning
interests in land covered by this lease and parties owning
interests in land not covered by this lease. Neither shall it
impair the right of lessee to release as provided in paragraph 5
hereof, except that lessee may not so r
|
