Sec. 3. Bonds - A bond must be filed and maintained for lease
operations as required under regulations.
Sec. 4. Diligence, rate of development, unitization, and drainage -
Lessee must exercise reasonable diligence in developing and
producing, and must prevent unnecessary damage to, loss of, or waste
of leased resources. Lessor reserves right to specify rates of
development and production in the public interest and to require lessee
to subscribe to a cooperative or unit plan, within 30 days of notice, if
deemed necessary for proper development and operation of area, field,
or pool embracing these leased lands. Lessee must drill and produce
wells necessary to protect leased lands from drainage or pay
compensatory royalty for drainage in amount determined by lessor.
Sec. 5. Documents, evidence, and inspection - Lessee must file with
proper office of lessor, not later than 30 days after effective date
thereof, any contract or evidence of other arrangement for sale or
disposal of production. At such times and in such form as lessor may
prescribe, lessee must furnish detailed statements showing amounts and
quality of all products removed and sold, proceeds therefrom, and
amount used for production purposes or unavoidably lost. Lessee may
be required to provide plats and schematic diagrams showing
development work and improvements, and reports with respect to
parties in interest, expenditures, and depreciation costs. In the form
prescribed by lessor, lessee must keep a daily drilling record, a log,
information on well surveys and tests, and a record of subsurface
investigations and furnish copies to lessor when required. Lessee must
keep open at all reasonable times for inspection by any representative
of lessor, the leased premises and all wells, improvements, machinery,
and fixtures thereon, and all books, accounts, maps, and records
relative to operations, surveys, or investigations on or in the leased
lands. Lessee must maintain copies of all contracts, sales agreements,
accounting records, and documentation such as billings, invoices, or
similar documentation that supports costs claimed as manufacturing,
preparation, and/or transportation costs. All such records must be
maintained in lessee's accounting offices for future audit by lessor.
Lessee must maintain required records for 6 years after they are
generated or, if an audit or investigation is underway, until released of
the obligation to maintain such records by lessor.
During existence of this lease, information obtained under this section
will be closed to inspection by the public in accordance with the
Freedom of Information Act (5 U.S.C. 552).
Sec. 6. Conduct of operations - Lessee must conduct operations in a
manner that minimizes adverse impacts to the land, air, and water, to
cultural, biological, visual, and other resources, and to other land uses
or users. Lessee must take reasonable measures deemed necessary by
lessor to accomplish the intent of this section. To the extent consistent
with lease rights granted, such measures may include, but are not
limited to, modification to siting or design of facilities, timing of
operations, and specification of interim and final reclamation measures.
Lessor reserves the right to continue existing uses and to authorize
future uses upon or in the leased lands, including the approval of
easements or rights-of-way. Such uses must be conditioned so as to
prevent unnecessary or unreasonable interference with rights of lessee.
Prior to disturbing the surface of the leased lands, lessee must contact
lessor to be apprised of procedures to be followed and modifications or
reclamation measures that may be necessary. Areas to be disturbed may
require inventories or special studies to determine the extent of impacts
to other resources. Lessee may be required to complete minor
inventories or short term special studies under guidelines provided by
lessor. If in the conduct of operations, threatened or endangered
species, objects of historic or scientific interest, or substantial
unanticipated environmental effects are observed, lessee must
immediately contact lessor. Lessee must cease any operations that
would result in the destruction of such species or objects.
Sec. 7. Mining operations - To the extent that impacts from mining
operations would be substantially different or greater than those
associated with normal drilling operations, lessor reserves the right to
deny approval of such operations.
Sec. 8. Extraction of helium - Lessor reserves the option of extracting
or having extracted helium from gas production in a manner specified
and by means provided by lessor at no expense or loss to lessee or
owner of the gas. Lessee must include in any contract of sale of gas the
provisions of this section.
Sec. 9. Damages to property - Lessee must pay lessor for damage to
lessor's improvements, and must save and hold lessor harmless from all
claims for damage or harm to persons or property as a result of lease
operations.
Sec. 10. Protection of diverse interests and equal opportunity - Lessee
must pay, when due, all taxes legally assessed and levied under laws of
the State or the United States; accord all employees complete freedom
of purchase; pay all wages at least twice each month in lawful money
of the United States; maintain a safe working environment in
accordance with standard industry practices; and take measures
necessary to protect the health and safety of the public.
Lessor reserves the right to ensure that production is sold at reasonable
prices and to prevent monopoly. If lessee operates a pipeline, or owns
controlling interest in a pipeline or a company operating a pipeline,
which may be operated accessible to oil derived from these leased
lands, lessee must comply with section 28 of the Mineral Leasing Act
of 1920.
Lessee must comply with Executive Order No. 11246 of September 24,
1965, as amended, and regulations and relevant orders of the Secretary
of Labor issued pursuant thereto. Neither lessee nor lessee's
subcontractors must maintain segregated facilities.
Sec. 11. Transfer of lease interests and relinquishment of lease - As
required by regulations, lessee must file with lessor any assignment or
other transfer of an interest in this lease. Lessee may relinquish this
lease or any legal subdivision by filing in the proper office a written
relinquishment, which will be effective as of the date of filing, subject
to the continued obligation of the lessee and surety to pay all accrued
rentals and royalties.
Sec. 12. Delivery of premises - At such time as all or portions of this
lease are returned to lessor, lessee must place affected wells in
condition for suspension or abandonment, reclaim the land as specified
by lessor and, within a reasonable period of time, remove equipment
and improvements not deemed necessary by lessor for preservation of
producible wells.
Sec. 13. Proceedings in case of default - If lessee fails to comply with
any provisions of this lease, and the noncompliance continues for 30
days after written notice thereof, this lease will be subject to
cancellation unless or until the leasehold contains a well capable of
production of oil or gas in paying quantities, or the lease is committed
to an approved cooperative or unit plan or communitization agreement
which contains a well capable of production of unitized substances in
paying quantities. This provision will not be construed to prevent the
exercise by lessor of any other legal and equitable remedy, including
waiver of the default. Any such remedy or waiver will not prevent later
cancellation for the same default occurring at any other time. Lessee
will be subject to applicable provisions and penalties of FOGRMA (30
U.S.C. 1701).
Sec. 14. Heirs and successors-in-interest - Each obligation of this lease
will extend to and be binding upon, and every benefit hereof will inure
to the heirs, executors, administrators, successors, beneficiaries, or
assignees of the respective parties hereto.
(Continued on page 4) (Form 3100-11, page 3)
