Two additional things I would like to ask. What can someone tell me about the wells in Burke County, especially Petro-Hunts wells in T 159, R 94, Sec 7A
Back to DUnn Country - RW Kennedy, here is part of the lease offer I received that seems disproportionately aggressive to the lessor. Here is part of it I would appreciate your comments compared to what you have seen before.
1. It is agreed that this lease shall remain in force for a term of Five (5) years from this date, and as long thereafter as oil or gas of whatsoever nature or kind is produced from said leased premises or on acreage pooled therewith, or operations are continued as hereinafter provided. If, at the expiration of the primary term of this lease, oil or gas is not being produced on the leased premises or on acreage pooled therewith but Lessee is then engaged in drilling, fracture stimulation, completion or re-working operations (collectively “operations”) thereon, then this lease shall continue in force so long as operations are being continuously prosecuted on the leased premises or on acreage pooled therewith; and operations shall be considered to be continuously prosecuted if not more than ninety (90) days shall elapse between the completion or abandonment of operations on one well and the beginning of operations on another well. If after discovery of oil or gas on said land or on acreage pooled therewith, the production thereof should cease from any
cause after the primary term, this lease shall not terminate if Lessee commences additional operations within ninety (90) days from date of cessation of
production or from date of completion of a dry hole. If oil or gas shall be discovered and produced as a result of such operations at or after the expiration of
the primary term of this lease, this lease shall continue in force so long as oil or gas is produced from the leased premises or on acreage pooled therewith, or
is otherwise maintained in effect under the provisions of this lease.
2. This is a PAID-UP LEASE. In consideration of the down cash payment, Lessor agrees that Lessee shall not be obligated, except as otherwise provided herein, to commence or continue any operations during the primary term. Lessee may at any time or times during or after the primary term surrender this lease as to all or any portion of said land and as to any strata or stratum by delivering to Lessor or by filing for record a release or releases, and be relieved of all obligation thereafter accruing as to the acreage surrendered.
3. In consideration of the premises the said Lessee covenants and agrees:
1st. To pay Lessor, as royalty, fourteen percent (14%) of all oil produced, saved and marketed from the leased premises, or to deliver
to the credit of Lessor, free of cost, in the pipeline to which Lessee may connect wells on said land, fourteen percent (14%) of all oil produced and saved
from the leased premises.
2nd. To pay to Lessor, as royalty, fourteen percent (14%) of the market value for gas of whatsoever nature or kind, liquid hydrocarbons and their respective constituent elements, casing head gas or other gaseous substances, produced from the leased premises. The term “market value” shall be deemed to mean the net value realized at the wellhead for gas after deducting any gas used on the leased premises and any reasonable and necessary costs to transport, compress, dehydrate, gather, process, condition or to otherwise bring the gas into a marketable condition. It is agreed, however, that no such costs shall exceed what is reasonable and necessary to bring the gas into marketable condition. Such costs shall be deemed to be reasonable if they are found to be approximately the same as similar costs charged or paid for gas produced in the vicinity of the leased lands of like kind, quality and quantity.
4. Where gas from a well capable of producing gas is not sold or used, Lessee may pay or tender as royalty to the royalty owners one dollar ($1.00) per year per net mineral acre covered by this lease, such payment or tender to be made on or before the anniversary date of this lease next ensuing after the expiration of ninety (90) days from the date such well is shut in and thereafter on or before the anniversary date of this lease during the period such well is shut in. If such payment or tender is made, it will be considered that gas is being produced within the meaning of this lease.
5. If said Lessor owns a less interest in the above-described land than the entire and undivided fee simple estate therein, then the royalties (including any shut-in gas royalty) herein provided for shall be paid the Lessor only in the proportion which Lessor’s interest bears to the whole and undivided fee. Any interest in production from the lands herein described to which the interest of Lessor may be subject shall be deducted from the Lessor’s royalty herein reserved.
6. Lessee shall have the right to use, free of cost, gas, oil and water produced on said land for Lessee’s operation thereon, except water from the
wells of Lessor.
7. When requested by Lessor, Lessee shall bury Lessee’s pipeline below plow depth.
8. No well shall be drilled nearer than 200 feet to the house or barn now on said premises without written consent of Lessor.
9. Lessee shall pay for damages caused by Lessee’s operations to growing crops on said land.
10. Lessee shall have the right at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove
casing.
11. The rights of Lessor and Lessee hereunder may be assigned in whole or part. No change in ownership of Lessor’s interest (by assignment or
otherwise) shall be binding on Lessee until Lessee has been furnished with notice, consisting of certified copies of all recorded instruments or documents and
other information necessary to establish a complete chain of record title from Lessor, and then only with respect to payments thereafter made. No other kind
of notice, whether actual or constructive, shall be binding on Lessee. No present or future division of Lessor’s ownership as to different portions or parcels
of said land shall operate to enlarge the obligations or diminish the rights of Lessee, and all Lessee’s operations may be conducted without regard to any
such division. If all or any part of this lease is assigned, no leasehold owner shall be liable for any act or omission of any other leasehold owner.
12. Lessee, at its option, is hereby given the right and power at any time and from time to time as a recurring right, either before or after production, as to all or any part of the land described herein and as to any one or more of the formations hereunder, to pool or unitize the leasehold estate and the mineral estate covered by this lease with other land, lease or leases in the immediate vicinity for the production of oil and gas, or separately for the production of either, when in Lessee’s judgment it is necessary or advisable to do so, and irrespective of whether authority similar to this exists with respect to such other land, lease or leases. Likewise, units previously formed to include formations not producing oil or gas, may be reformed to exclude such nonproducing formations. The forming or reforming of any unit shall be accomplished by Lessee executing and filing of record a declaration of such unitization or reformation, which declaration shall describe the unit. Any unit may include land upon which a well has theretofore been completed or upon which operations for drilling have theretofore been commenced. Production, drilling or reworking operations or a well shut in for want of a market anywhere on a unit which includes all or a part of this lease shall be treated as if it were production, drilling or reworking operations or a well shut in for want of a market under this lease. In lieu of the royalties elsewhere herein specified, including shut-in gas royalties, Lessor shall receive on production from the unit so pooled royalties only on the portion of such production allocated to this lease; such allocation shall be that proportion of the unit production that the total
number of surface acres covered by this lease and included in the unit bears to the total number of surface acres in such unit. In addition to the foregoing,
Lessee shall have the right to unitize, pool, or combine all or any part of the above described lands as to one or more of the formations thereunder with other
lands in the same general area by entering into a cooperative or unit plan of development or operation approved by any governmental authority and, from
time to time, with like approval, to modify, change or terminate any such plan or agreement and, in such event, the terms, conditions and provisions of this
lease shall be deemed modified to conform to the terms, conditions, and provisions of such approved cooperative or unit plan of development or operation
and, particularly, all drilling and development requirements of this lease, express or implied, shall be satisfied by compliance with the drilling and
development requirements of such plan or agreement, and this lease shall not terminate or expire during the life of such plan or agreement. In the event that
said above described lands or any part thereof, shall hereafter be operated under any such cooperative or unit plan of development or operation whereby the
production therefrom is allocated to different portions of the land covered by said plan, then the production allocated to any particular tract of land shall, for
the purpose of computing the royalties to be paid hereunder to Lessor, be regarded as having been produced from the particular tract of land to which it is
allocated and not to any other tract of land; and the royalty payments to be made hereunder to Lessor shall be based upon production only as so allocated.
Lessor shall formally express Lessor’s consent to any cooperative or unit plan of development or operation adopted by Lessee and approved by any governmental agency be executing the same upon request of Lessee.