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EXHIBIT 10.7
OIL, GAS AND MINERAL LEASE
THIS AGREEMENT made this 30th day of November, 1949, between
Seven J Stock Farm, Inc
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Lessor (whether one or more), and Woodley Petroleum Company
Lessee,
WITNESSETH:
1. Lessor in consideration of Ten and no/100 Dollars ( $10.00 )
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,
laying
pipelines, building roads, tanks, purpose of investigating,
exploring,
prospecting, drilling and mining for and producing oil, gas and
all other
minerals, laying pipe lines, building roads, tanks, power
stations,
telephone lines, houses for its employees, and other structures
thereon to
produce, save, take care of, treat, transport, and own said
products, the
following described land in Houston County, Texas, to-wit:
10,463.54 acres, more or less, formerly known as the Murray
Ranch
Plantation, located in the John Durst Grant, Abst. 29, Barton
Clark League,
Abst. 23, and Ignacio Lopez League, Abst. No. 50, being the same
land
described in deed dated March 9, 1948, from Carl O. Murray et al
to Seven J
Stock Farm, Inc., recorded in Volume 261, Page 551, Deed Records
of Houston
County Texas
and any and all land and rights and interest in land owned or
claimed by
Lessor, adjacent or contiguous to the land above described.
Lessor agrees
to deliver to Lessee any supplemental instrument deemed
necessary or
required by Lessee for a more complete or accurate description
of the land
and interests covered hereby. For the purpose of determining the
amount of
any money payment hereunder, including the down cash payment,
said premises
shall be treated as comprising 10,463.54 acres, whether there be
more or
less.
2. Subject to the other provisions herein contained, this lease
shall
be for a term of five years from this date (called "primary
term") and as
long thereafter as oil, gas or other mineral is produced in
paying
quantities from said land hereunder, or land with which it or
any part may
be pooled, or as long as operations are prosecuted as
hereinafter provided.
3. Royalties payable to lessor are: (a) On oil, and on
condensate
saved at the well, one-eighth of that produced and saved from
said land,
the same to be delivered at the well or to the credit of Lessor
in the pipe
line to which the wells may be connected; Lessee may from time
to time
purchase any such royalty oil or condensate in its possession,
paying the
market price therefor prevailing for the field where produced
for oil or
condensate of like kind and gravity on the date of purchase. (b)
On gas,
including casinghead gas or other gaseous substance, produced
from said
land and sold or used off the premises or in the manufacture of
gasoline or
other products therefrom, the market value at the well of
one-eighth of the
gas so sold or used, provided that on gas sold at the well the
royalty
shall be one-eighth of the amount realized from such sale; if
gas or
gas-condensate and/or other liquefiable hydrocarbon should be
discovered on
said land or land with which it or any part thereof may be
pooled, and
which substance or substances can not be profitably produced for
lack of a
market at the well or wells, Lessee may pay or tender to the
parties
entitled to the royalty from the above land a sum equal to the
amount of
the annual rental payable in lieu of drilling operations; such
payment to
be made on or before the rental date, ( or subsequent
anniversary thereof
whether or not within the primary term) next ensuing after the
expiration
of 30 days from the completion or shutting in of such well or
wells and
annually thereafter, and such payment or tender shall be made in
the manner
provided below for the payment of delay rentals and in the bank
to which
delay rentals may be paid, and while such royalty is so paid or
tendered
this lease shall be considered as producing in paying quantities
such of
the above mentioned substances as the well or wells are capable
of
producing. Such payment or tender may be made jointly to the
credit of any
adverse claimants of the same royalty interest. Any payments
made as
royalty on such a shut in well or wells shall be credited
against any
royalties on oil, gas or other minerals produced from the land
covered
hereby or land with which it or any part thereof may be pooled
therewith
during any year for which payment for a shut in well or wells is
made. (c)
On all other minerals mined and marketed, one-tenth either in
kind or value
at the well or mine, at Lessee's election, except, that on
sulphur the
royalty shall be One ($1.00) Dollar per long ton. Each royalty
herein
provided in all instances shall bear its proportionate part of
production,
severance and other direct tax or taxes applicable thereto. No
royalty
shall be payable on gas returned to the formations under said
land or unit
authorized hereunder, and Lessee shall have free use of oil,
gas, coal,
wood and water from said land, except water from Lessor's wells,
for all
operations hereunder, and the royalty on oil, gas and coal shall
be
computed after deducting any so used.
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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 with
other land, lease or leases in the immediate vicinity thereof
when in
Lessee's judgment it is necessary or advisable to do so in order
properly
to develop and operate said premises in compliance with any
lawful spacing
rules which may be prescribed for the field in which this lease
is situated
by any duly authorized authority, or when to do so would, in the
judgment
of Lessee, promote the conservation of the oil and gas in and
under and
that may be produced from said premises, such pooling to be into
a unit or
units not exceeding 43 acres each for the exploration and
development of
oil and 647 acres each for the exploration and development of
gas,
gas-condensate and other hydrocarbons. Lessee shall execute in
writing and
file for record in the county or counties in which the land is
situation an
instrument identifying and describing the pooled acreage. The
entire
acreage so pooled into a tract or unit shall be treated for all
purposes
except the payment of royalties on production from the pooled
unit as if it
were included in this lease. If production is found on the
pooled acreage,
it shall be treated as if production is had from this lease,
whether the
well or wells be located on the premises covered by this lease
or not. In
lieu of the royalties elsewhere herein specified, Lessor shall
receive on
production from a unit so pooled only such portion of the
royalty
stipulated herein as the amount of his acreage placed in the
unit or his
royalty interest therein on an acreage basis bears to the total
acreage so
pooled in the particular unit involved. Lesee shall not be
liable to any
party for reduction of the acreage content of any unit resulting
from loss
or failure of title or for any cause beyond its control, nor
shall lessee
be obligated to make any retroactive apportionment of royalty or
sums paid
on production in the event of any such reduction in acreage
content.
5. If operations for drilling are not commenced on said land or
on
acreage pooled with such land, or any part thereof on or before
one year
from this date, the lease shall then terminate as to both
parties, unless
on or before such anniversary date Lessee shall pay or tender to
Lessor or
to the credit of Lessor in The City National Bank at Houston,
Texas (which
bank and its successors are Lessor's agent and shall continue as
the
depository for all rentals payable hereunder regardless of
changes in
ownership of said land or the rentals) the sum of Ten Thousand
Four Hundred
Sixty-Three and 54/100 Dollars ($10,463.54), herein called
rental), which
shall cover the privilege of deferring commencement of drilling
operations
for a period of twelve (12) months. In like manner and upon like
payments
or tenders annually the commencement of drilling operations may
be further
deferred for successive periods of twelve (12) months each
during the
primary term. The payment or tender of rental may be made by the
check or
draft of Lessee mailed or delivered to said bank on or before
such date of
payment. If such bank (or any successor bank) should fail,
liquidate or be
succeeded by another bank, or for any reason fail or refuse to
accept
rental, Le
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