COALBED METHANE LEASE
THIS AGREEMENT (herein called the "Lease") is made wih an effective date of May 1, 2008 between INTERNATIONAL PAPER COMPANY, a New York corporation, whose address is 7600 W. Tidwell Road, Suite 300, Houston, Texas 77040-5714 acting solely on its own behalf and in the capacities herein expressly stated, "Lessor"), and E&Pco LLC a Texas Limited Liability Company whose address is 2500 Tanglewilde Suite #492 Houston, Texas 77063 , (herein called "Lessee").
1. For value received, Lessor hereby GRANTS, LEASES and LETS exclusively unto Lessee the land as described in Exhibit "A" and shown on Exhibit A-1 attached hereto and made a part hereof and situated in Caldwell Parish, LA (herein called the "Leased Premises"), for the sole purpose of: (a) exploring, drilling, operating for, producing and marketing, coalbed methane gas, gob gas, and their respective constituent products, and any other minerals produced in conjunction with coalbed methane from coal seams, excluding coal, (all such substances are defined for the purpose of this Lease collectively as "CBM") to the extent of Lessor's ownership in these substances, and (b) (but not exclusive of similar use by Lessor, its successor, assigns, grantees or licensees) building roads, laying water and gas pipelines, installing equipment, storing oil, buildingtanks(but not tank farms), and constructing and laying power stations, power lines,telephone lines, pumping and compressor stations, making land surveys on said land, establishing and utilizing facilities for the surface and subsurface disposal of produced water attributable to the Leased Premises in accordance with the appropriate state and federal regulations, non commercial tower sites and other structures to the extent necessary to investigate,produce, save, dewater, take care of, treat and transport CBM and water attributable to the Leased Premises to the extent of Lessor's rights to grant permission to conduct such activities.Itis not the intent of Lessor to lease, and Lessor hereby expressly reserves from the interests leased hereby, any mineral interests (including any undivided or partial interest) on which Lessor owns only the executive privilege, unless this Lease expressly states (i) that such executive privilege is being exercised and (ii) the names of the owners of the mineral interest on whose behalf such executive privilege is being exercised. For purposes of calculating any ShutInRoyalty, Delay Rental or Minimum Annual Rental payment herein provided for, Lessor and Lessee stipulate that the Leased Premises shall be deemed to contain 9661 net mineral acres, whether they actually contain more or less; however, this stipulation shall not be effective as to or binding upon Lessor or Lessee for any other purpose. If this Lease now or hereafter covers separate tracts, no pooling or unitization of royalty interest as between such separate tracts isintended or shall beimplied or result merely from the inclusion of such separate tracts within this Lease. As used in this paragraph, the words "separate tract" shall mean any tract with royalty or mineral ownership differing, now or hereafter, either as to parties or amounts, from any other part of the Leased Premises. Nothinginthis lease shall be construed as granting any rights to recover anything other than CBM and specifically no rights to coal or hydrocarbons from conventional reservoirs are granted hereunder.Theuseof the term CBM is for convenienceand is intended toinclude names by which CBM is also known, inter alia, such as coal gas, coalseam gas, coalbed gas and firedamp.
| COALBED METHANE LEASE - 1 |
If the Lessor does not own the surface rights to the Leased Premises, the Lessee shall be fully responsible for making all arrrangements with surface owner(s) to allow the Lessee's realization of its rights hereunder. The Lessee is not appointed an agent, representative or partner of the Lessor, and is not authorized or empowered to alter or compromise the Lessor's rights to the Leased Premises.
2. Upon execution of this Lease, Lessee shall pay to Lessor a bonus of $12.00 per net mineral acreinthe Leased Premises as set forth on Exhibit "A,". Subject to the further terms hereof, this Lease shall be for a term of three (3) years from this date (the "Primary Term") and as long thereafter as CBM is produced in Paying Quantities from the Leased Premises; or as long as this Lease is continuedineffect as otherwise provided herein. Except as otherwise specifically provided herein,"PayingQuantities" shall mean productioninquantities sufficient to yield a return on investment in excess of operating costs even though drilling and equipment costs may never be recovered. However,ifLessee can show to the reasonable satisfaction of Lessor that any well(s) that fail to produce in Paying Quantities are necessary for the de-watering process, then such wells shall be deemed to produce in Paying Quantities and shall not be released from the Leased Premises. The status and re-determination, if necessary, of any well that has been "deemed" to produce in Paying Quantities under the foregoing sentence shall be reviewed by Lessee and Lessor from time to time and at a minimum of on an annual basis.
During the Primary Term, Lessee shall be obligated to carry out a minimum drilling program, as set forth below:
lstLease year: 6 wells or equivalent = 7,920 feet of horizontal laterals
2ndLease year: 6 wells or equivalent = 7,920 feet of horizontal laterals
3rd Leaseyear: 6 wells or equivalent = 7,920 feet of horizontal laterals
As long as the Leaseiscontinued beyond the Primary Term by other provisions contained herein, Lessee will continue to drill a minimum of 12 wells per calendar, or horizontal laterals equivalent = 15,840 feet per year until seventy-five percent (75%) of the net acres in the Leased ?remises have been developed, at which time no further drilling commitment will be required to hold the leaseinits entirety. A well shall be defined asaborehole of sufficient depth to test the coal s eams in the Wilcox Formation. Beyond the PrimaryTerm, anduntil 75% of the netacresin the Leased Premises have been developed,in accordance with the provisions of 3(j) herein below the Lessee shallalsomake annual minimum royalty payments of $2.00 per net acre on remaining leased acres on the anniversary date of the lease extensioninorder tomaintainits interest in the whole of the Leased Premises.Inthe event the Lessee drillsfewerthan the required number of wells in any year after the Primary Term, it shall have no right to drillany furtherwells inany subsequentyear and only those wellsandthe drilling orspacingunit (Well Tract) acreage assigned to such wells actuallyinproduction or capable of beinginproduction(toinclude any wells being de-watered) shall then comprise the "Leased Premises" for thepurposeof this Lease and the Lessee shall have no further interest of any kind in the remaining Lands. Wells drilled in excess of the minimum in any lease year can be credited to the subsequent year.
| COALBED METHANE LEASE - 2 |
3. As used herein the "Royalty Fraction" shall mean a Base Royalty of12.5_% plus a Supplemental Royalty based on the Gross Sales Price of the CBM, on a well-by-wellbasis to be determined as follows:
| Price at or Then | | | | |
| Greater than | | | Total Royalty | |
| per MCF of* | | | Rate of | |
| | | | | |
| $ | 2.50 | | | | 12.5 | % |
| $ | 3.00 | | | | 15 | % |
| $ | 3.50 | | | | 16 | % |
| $ | 4.00 | | | | 17 | % |
| $ | 4.50 | | | | 18 | % |
| $ | 5.00 | | | | 19 | % |
| $ | 5.50 | | | | 20 | % |
*Average for month
The royalties to be paid by Lessee to Lessor (at the address shown in Paragraph 20)are:
| 3.(a) | On coalbed methane, produced from theLeased Premises and sold off such premises, or used off the premises (other than for processing at a plant as described in Paragraph 3(c)·hereof),the royalties shall be the Royalty Fraction multiplied by the gross proceeds received from any sale of such coalbed methane.On CBM produced from theLeased Premises and sold by Lessee, the production royalty to be paid to the Lessor by Lessee shall be.the Royalty Fraction of the gross sales price f.o.b. the"Delivery Point". Delivery Point shall be defined as the point at which the CBM is soldto anunaffiliated thirdparty purchaser or the point at which CBM is delivered to an unaffiliated pipeline for redelivery to a point of sale. Royalties shall not be due on any gas used on theLeased Premises by Lessee. |
| 3.(b) | If the CBM produced from any well situated on theLeased Premises shall contain in suspension condensate,gasoline or other natural gas liquids that economically canbeseparated from the CBM and liquefied by the installation by Lessee of traps, separators or other mechanical devices ordinarily used in theindustry for such purpose, thenLessee shall install such devices on theLeased Premises, andLessor shall receive the royalty specified in paragraph 3(a) on the condensate, gasoline or other natural gas liquid Hydrocarbons so recovered, togetherwith the royalty specified in Paragraph 3(a) on the residue gas, determined as provided in Paragraph3(a). |
| 3.(c) | If CBM,gas, or casinghead gas or separated gas resulting from field separation produced from the Leased Premises is processed by or for the accountof Lessee,orbyorfortheaccount of any Affiliate(as hereinafterdefined) for the recovery of liquid hydrocarbons therefrom in a gas processing,absorption. stripping or similar plant,then inlieu ofroyalties on CBM provided in Paragraph 3(a) or 3(b),(i) the royalties shallbe the RoyaltyFraction ofthe Market Valueat theplantof allliquid hydrocarbonsrecovered and saved insuch plantandattributable toCBM producedfrom theLeased Premises,less the Royalty Fraction of thereasonable, directcosts (excluding amortizationand depreciation on pipelineand plant investmentand direct overheadassociatedtherewith)ofprocessing suchCBM in theplant fortherecovery ofsuchliquid hydrocarbons,and(ii) the royalties on the residue CBM resultingfrom such plant operation attn'butable to CBM produced from theLeased Premises shall be in an amount and determined asprovided inparagraph3(a). |
| COALBED METHANE LEASE - 3 |
| 3. (d) | The royalties provided in this paragraph 3 shall be determined and delivered to Lessor free of all cost, including but not limited to any development, production, compression, processing treating, dehydrating, gathering, marketing, transportation,delivery,andotherlike costs (other than those provided for in Paragraph 3(c) hereof; such royalties shall also bear and be subject to severence taxes applicable to Lessor's share of productionthatare paid by Lessee. The tenn "Gross Sales Price" as used in this agreement with respect to CBM shal.l mean the final and actual sales price at which CBM·is soldviaan anmlength transaction to a Non-Affiliated Bona Fide Third Party Purchaser f.o.b. the Delivery Point, plus BTU bonus or minus BTu penalty without deduction from said gross salespricefor any on-site handling, collecting, transportation, dehydrating and compressioncharges,brokerage fees, sales commissions, credit losses,·sales tax, discounts on saleof promissory notes, bank fees, license tax, privilege tax, occupational tax, advertising, and any other charges whatsoeverortaxes paid by Lessee fortheprivilege of conducting business in, Louisiana or as specified in Paragraph 24 hereof. The tenn"DeliveryPoint" as used herein shall mean the point at which CBM produced hereunder isdelivered,whether from the well head, compressing station, or a point of entry into a thirdpartytransmission line or carrier or final end-user purchaser.The tenn "Affiliate" meansany individual, corporation, joint venture, partnership or other entity or organization controlling, controlled by or under commoncontrol with Lessee (theconceptofcontrolmeaning the possession, directly or indirectly, of the power to direct or cause the direction of tl:ie management and policies of another, whether through ownership ofvotingsecurities (owning 50% or tnore), by contract or otherwise). The term"BonaFide Third Party Purchaser'' shall meanapurchaser who pays consideration ingoodfaithwithoutintending to take advantageofLessee or Lessor, and in no instance shall said purchaser include.an individual(s), party, company or corporation whichisanAffiliateof Lessee or Affiliate Lessee's successors or assigns. |
| 3. (e) | No shut-in payments are due hereunder during the Primary Term. If at any time, whether before or after the expiration of the Primary Term, Lessee shall havecompleted onthe Leased Premises aCBMwell that iscapableof producinginPaying Quantitiesbutis shut-in due to thelackof a ready and availablemarket,withtheresult that CBMis not produced and sold, or used, Lessee shall pay as Shut-In Royalty to Lessor (at the address specified in Paragraph 20) for each shut-in CBMwell,onor before theexpiration ofthelater of ninety(90)days after (i) theCompletionDate (as hereinafter defined) or(ii)the date such CBM ceases to be sold or used or (iii) after the expiration ofthePrimaryTerm,as the case may be, and thereafter at quarterly intervals on the date the first Shut-In Royaltypaymentis made, an amount equal totwoDollars$2.00multiplied bythe numberof acres of the Leased Premises included in the Well Tract (as hereinafter defined) upon which the well is located. During the periodsforwhichsuchpayments aremade, it will beconsideredthat such wellisproducing CBM in Paying Quantities within the meaning of this Lease and the Lease may be extended fortheWellTract from quarter to quarter bytimely payment of the quarterly Shut-In Royalty. Lessee may notmaintain thisLeaseas to any Well Tract solely by virtue oftheprovisions of thisparagraph 3. (e)formorethan anaggregate of 36 months. Interruption ofacontinuousshut-inperiod onaspecificwell by a return to production ofthewell for a periodofless thanfortyfive(45) days sabllnotbe considered as interrupting the basis for payment of the shut-inroyaltywhich shallcontinueto be dueandpaidquarterlyon the basisindicatedabove. |
| 3. (e)(l) | If at any time Lessee causes CBM to be vented orflared,hereinafter venting,totheatmosphere for a periodgreaterthan thirty(30) days, LesseeshallpaytoLessoronamonthly basis twoDollars$2.00 peracrefor each acreincluded inthe WellTract as aVenting Payment, due on or before the last day of the calendar month following the calendar monthinwhichtheventing occurred.Venting Payments made underthisparagraph 3.(e)(l)shall beconsidered foreach such wellas producing in PayingQuantities. Interruption ofacontinuous venting period on a specificwellby a return to production or shut-in of the wellforaperiodof less thanforty five (45)days shallnotbeconsidered as interruptingthe basisforpayment of theVenting Payment whichshall continue to be due and paid monthly on the basis indicated above.Lesseemaynot maintain thisLeaseas to any Well Tractsolelybyvirtueof theprovisions ofthis paragraph 3.(e)(l) for morethananaggregateof12months. |
| COALBED METHANE LEASE - 4 |
| 3. (f) | Reporting and payment to Lessor of royaltiesfromthe production of CBM shallcommencenolaterthanninety(90) days afterthe date offirst sales from each completed well.Thereafter, unlessotherwisespecifically provided herein,allreportings andpayments of royalties shall be made on or before thelastday of the secondcalendarmonthfollowingthe calendar monthinwhich theproductionoccurred or within fifteen (15) workingdays after Lessee receives its payment fromtheCBM purchaser, whicheveroccursfirst. Inthe eventLessee fails topay anyroyaltieswhen due,Lessorreserves theright, but not the obligation. atanytime to demand payment of royalties directlyfromthepurchaserofthe CBM uponthirty (30) days written noticeto Lesseeandsaid purchaser.Reporting shallshow fortheindividualwell(s)andthemonthly totals:quantitiesof CBMproduced, vented and flared hereunder duringthepreceeding month; the quantitiesof CBMsoldandusedas permitted hereunder,the salespriceattheDelivery Point, calculations of the Royalty Fractionto bepaid by Lessee andthesalespriceforallCBM produced from Lessees operations of which the Leased Premises are a part. Royalties or other payments to Lessor provided for in this Lease that arenotpaid forwhatever reasonwithin the time period specified therefor shall accrue mterest at the rate of six percent (6%) per annum in excess of the prime interest rate posted by atleast75%of thenation'slargest banks as published intheWall Street Journal, per annum, fromduedateuntilpaid, provided that such interest rate shall be reduced automaticallytothe legalmaximum rate in the event same ever exceeds such maximum rate.Acceptance byLessor, itssuccessors, agents, or assigns, of royalties that are past due shall not act as a waiver or estoppel of its right to receive or recover interest due thereon under the provisionshereof.No tender or payment to Lessor of a sumlessthan the total amount duetoLessor shall be deemed a full settlement, whether by accord or satisfaction or otherwise, notwithstanding a check in tender of payment may contain language of settlement or accord printed or otherwise inserted thereon unless made and received in accordance with a separatewrittenagreement executed by Lessor and Lessee.Lessee shallfurnishLessor on a monthlybasiscopies of all reports submitted to the Louisiana State Oil and Gas Board or other regulatory authority showing quantities of Hydrocarbons and water produced from each well located on the Leased Premises and all production sales records and all other data relative to the calculation and payments of royalties. Lessee shall keepallproper records to enable a correct determination of all CBM produced and marketed(ordelivered to Lessors' credit in pipelines or otherwise), to whichrecordsLessor or theirduly authorized agents shall have access to at all reasonable times for a period of three(3) years after the making of any such payments for the putpose of audit or verification of the statements furnished by Lessee to lessor. |
| 3. (g) | Notwithstanding the provisions of Paragraph 3.(f), Lessor and Lessee agreethatthe payment and reporting to Lessor of all royalties then. duefromthe production of CBM on or before the last day of the second·calendar month following the calendar month in which the production occurred shall be deemed aconditionof thisLease.Should this condition be breached, subject to the provisions of Section 3(f) hereof,J,essor shall have the right at the election of Lessor, to give written noticeto Lessee and Lessee shallhave thirty (30) days from receiptofsaid written notice in which tocurethe breachbythe payment and reporting of all royalties then owing, plustheinterest providedforin paragraph 3(f).IfLesseefailstocirre thebreach within said thirty (30) day period then Lessor may, at its option, terminate this Lease. In the·absence of anadverseclaimagainstLessor's title, Lessee shall have no right to withhold or suspend any fundsclaimedby Lessor without the prior written consent of Lessor. Lessee shall pay all reasonable attorney fees incurred by Lessor inconnectionwithany lawsuit inwhichLessor issuccessful in recovering royalties or.interest or in confirming this Lease's termination due to Lessee's failure to pay and report royalties within the periods set forthinthisLease. |
| 3. (h) | Each demand for payment of royalty by Lessor, made as a predicateto Lessor'stermination of this Lease, shall contain a demand for a specific amount ofroyaltyand describe the time period for which the royalty payment is due. In the eventLesseedisputes liability for paying all oranyportion of the demandedroyalty, Lesseeshall, within thirty (30) days of the receipt of such demand, pay any amounts of royalty which are due to Lessor and undisputed by Lessee, andLessee shall,in Writing, descnbe to theLessorthespecificreasonswhyLessee claimsthatit does not owethedisputed amounts to Lessor. Within ten (10) days of the receipt of Lessee's response to Lessor's demand,ifLessee disputestheamount of anyroyaltiesdemanded,representatives of Lessorand Lessee shall meet to attempt,ingood faith, to resolve the disputewith regard to the amount of royalties owed.Inthe event that suchdispute cannotberesolved withinthirty (30) days of Lessor's receipt of Lessee'sresponseto Lessor's demand for payment of royalties, the parties shall submitsuGhdispute to.arbitration before theAmericanAssod.ationofArbitr.cition pursuanttoits RulesfortheResolution ofCommercialDisputes. If the amount in dispute is under $1,000;000, only onearbitrator shallbe appointed. If the.amount m-dispute iSinexcessof $,000,000, thearbitrationpanel shall be composed of three arbitrators,eachof whomshall have atleast ten.(10)yearsof experience in the oil and gasindustryandnoneofwhom shallhave,withinfive(5)years of the date of their appointment, been employed by; sociatedwith,or provided professional services to either Lessoror Lessee.In theev.entathree(3) member panel ofarbitrators isrequired, each partyshall be entitled toappoint one (1)arbitrator,andthetwo arbitrators shall select a third arbitrator. If the two arbitratorsare unable toselect a thirdarbitrator, the third arbitratorshall be appointed bytheUnitedStates DistrictJudgesittingfor the SouhemDistrictof Texas,HoustonDivision.In such arbitrationproceedings, theevidence adducedshallbe governed bytheFederal Rules ofEvidence.The arbitrationproceedingsshall be held in Houston,Texas,or at such other location asmay be.agreedtobythe partiesororderedbythe arbitrators.Intheeventthe arbitrationpanel issues an award stating an amount of unpaid royalties owed toLessor, Lessee shallmake full payment of theawardwithin thirty (30) days ofitsrendition.Duringthependency ofthedispute over unpaid royalties, including arbitration proceedings,Lessorshallnot tenninate theLease;provided, however, should the arbitrationaward determinethat Lessee did notexercisegoodfaith indisputing theamount of royalties owed,thearbitration panelmay,inaddition, provideforterrniilation of the Lease.Any arbitrationaward entered by the arbitration panel determining that Lessor is entitled to tennination of the Lease shall be subject to appeals available from arbitration awards. Shouldthe arbitration panel so determine, it may suspend the award of termination of the Lease pending the appeal from the arbitrator's award. The Lessee shall pay all arbitrationcostsif the panel awards a settlement in favor of Lessor. |
| COALBED METHANE LEASE - 5 |
| 3. (i) | Notwithstanding the provisions of this Paragraph 3 to the contrary, Lessor shall have the right and option, but not the obligation,totakeinkind all or partof Lessor'sRoyalty Fraction of all CBM produced under the terms of this Lease and to separately market such CBM for Lessor's own account. Lessor's optionmaybe exercised at any time and from time to time by Lessor giving Lessee not less sixty (60) days advance written notice. Lessee agrees that all CBM contracts which obligates Lesseetosell gasforgreaterthan athirty (30) day term shall include a provision whereby the Lessor has the right totakein kind and separately market Lessor's royalty share of CBM, and Lessee shall expressly provide in the contracts that the CBM transmission carrier shall be obligated by contract to carry the Lessor's royalty share of CBM on the same terms, conditions and atarate not greater than the rate applied to lessee's CBM. In the event Lessor elects to takeinkind Lessor's royalty CBM, Lessee agrees to deliver such CBMintothe sales pipeline freeofall cost and expense to Lessor except Lessor's share of severence taxes. ShouldLessorelect not to take in kind its Royalty Fraction of any Cl3M produced hereunder after having done so, Lessor shall notify Lessee, upon sixty (60) dayswrittennotice, of Lessor's desire to no longer take saidroyaltyin kind and it shall beLessee'sobligation to market said production for Lessor and to pay Lessor's royalty according to the terms of this Lease. |
| 3. (j) | If, during any calendar year after the Primary Term while this Lease is in force, CBM shall be produced from any well on the Leased Premises,buttherehasnot been paid hereunder toLessorthe sum of at least $2.00 per netacreduring that yearforeach net acre subject to this Lease at the end of such year, by way of shut-in CBM well royalties and/or royalties paid on actual production, Lessee shall, within ninety (90) days after the end of such lease year, pay or tender toLessor(at the address specified in Paragraph 20), as a minimum annual royalty, the difference between the total of such production royalty and shut in gas royalty payments made under this Lease during suchleaseyear and said sum of $2.00 per net mineral acre multiplied by the number of net acres towhichthis Lease is in force at theendof such calendar year. The payment of minimumannualroyalty provided for in this Paragraph 3U) shall not be in lieu of actual production of CBM in paying quantities and Lessee shall not beentitledtocontinue thisLeaseinforce by payment of such minimum royalty if, in fact,theactual production of CBM is not in paying quantities as determined in accordance with the provisions of Paragraph2 above.It is further provided that nothing contained in this Paragraph 3U)shallbe construed as preventing or delaying the termination of thisLeaseundertheprovisions of Paragraph4hereof, nor as impairing Lessee's continuing obligation to reasonably develop the Leased Premises after the discovery of CBM thereon in paying quantities, inaccordance withthis Lease, nor as in any manner impairing Lessee's continuing obligationstoprotect theLeasedPremisesfromdrainage bywellson adjoining oradjacent lands,asprovided inParagraph 6 hereof. |
| 3. (k) | Measurement of CBM. (a) The unit of vol\IDle for measurement of theCBM producedhereunder shall be one (1) cubic foot of gas at a base temperature of60 degreesFahrenheit and at an absolute pressure of fourteen and seventy-three hundredths(14.73)pounds persquareinch, absolute ("PSIA").Allfundamental constants, observations, records and procedures involved in determining and/or verifying the quaritity and other characteristics of gas delivered hereunder, unless otherwise specified hereinshallbeinaccordance with the standards prescribed in Report No. 3 of the AmericanGas Association("AGA'')asnow andfromtime totime maybeamended orsupplemented..All measurements of CBM shall be determined by calculations in thetermsof such unit All quantities given herein, unless expressly otherwisestated,arein tenm of such unit(b) Lessee orthe purchaser of production, asrequiredbyLesseeand underLessee'sdirection and supervision shall maintain and operate at its soleexpense measuringstations locatedateach wellhead.. Said measuring stations shall be equippedwithturbineorrotarymetersor other types of meters withtotalizer as agreedtobyLessorand Lesseesoas to accomplishthe accurate measurement ofvolumes ofCBM produced hereunder.(c)Lessor may at its option and expenseinstall checkmetersforchecking Lessee'smetering equipmentand the same shallbeso installedasto not interfere with the operation ofLessee'sfacilities.(d)Thespecificgravity of the CBMflowingthrough themeterormeters shall be detemrined monthly by the use of an AGA accepted gravitometerorbycomputingfromfractional analysis ofsamplesoftheCBMtakenat as many pointsas necessary topermitthecalculation ofanaverage specific gravityrepresentative ofallthe CBMproducedhereunder.Specificgravity sodeterminedwillbe used incalculatinggasproduction for the month in wruch the tests aremade.(e) The Gross HeatingValueofthe CBM shall bedetermined bytakingcontinuoussamples at as many points as necessarytopermit thecalculationof an average Gross Heating Value representativeofall CBM produced and sold hereunder..Thesamplemay be run on a calorimeteror Grossheating Value may becomputedfromfractional analysisofsuchsample.The resultshallbe applied to CBM produced during the month in which samples are taken. (f) Ifupon any test, the metering equipment in the aggregate is found to be inaccurate by two (2) percent or more, registration thereof or any payment based upon such registration shall be corrected at the rate of such inaccuracy which is definitely known or agreed upon, or if not known or agreed upon, then for a period extending back one-half of the time elapsed since the previous calibration. Following any test, any metering equipment found to be inaccurate to any degree shall be adjusted immediately to measure accurately. |
| COALBED METHANE LEASE - 6 |
4. IfLessee has not met its minimum annual drilling program as set out in Paragraph 2 hereof, as of each respective anniversary date, the Lease shall terminate as to the undeveloped acreage unless on or before such respective anniversary date Lessee shall pay or tender the sum of $2.00 per net undeveloped mineral acre, (being $2.00 times the number of undeveloped acres in the Leased Premises) (herein called "Delay Rental") to Lessor at the following address: International Paper Minerals Division, 7600 W. Tidwell Road, Suite 300, Houston,Texas 77040- 5714, Attention: Manager Mineral Resources.Such payment shall cover the privilege of deferring the respective annual minimum drilling program for a period of twelve 02) months. The payment or tender of Delay Rental may be made by check delivered on or before the due date for such payment to Lessor at the address designated above or to such other address hereafter specified in written notice from Lessor to Lessee, said written notice to be delivered to Lessee at least forty-five (45) days prior to any particular anniversary date.Lessee may atany time execute, file in the proper public records and deliver to Lessor a rel;;se or releases covering any portion or portions of the Leased Premises and thereby surrender this Lease asto such portionotportions and be relieved of all obligations not theretofore accrued asto the acreage surrendered, and thereafter the Delay Rental hereunder and the Minimum Annual Rentalpayable in accordance with paragraph 3G) shall be reduced in the proportion that the acreage covered hereby is reduced by such release orreleases. Any bonus or other payµient or consideration paid by Lessee to Lessor for this Lease shall not be credited, allocated or prorated to or against the Delay Rentals provided for in this paragraph.Ifduring the Primary Term Drilling Operations (as hereinafter defined) are commenced on the Leased Premises, this Lease will remain in effect as to the entirety of the Leased Premises without the further payment of annual Delay Rentals only for so long as Continuous Operations (as hereinafter defined) are prosecuted or the minimum annual drilling commitment has been met. Should Lessee thereafter during the Primary Term hereof cease to conduct such Continuous Operations, or if all of the Leased Premises are not maintained by Continuous Operations or the minimum annual drilling commitmenthas notbeen met, this Lease shall terminate as to all portions of the Leased Premisesnot thenincludedinWellTracts (as hereinafter defined) unless on or before the date on which the next subsequentwell is required to be commenced, or on or before the anniversary date of a respective annual minimum drilling program, whichever date is later,Lessee pays or tenders to Lessor,in the manner Specified above, Delay Rentals equalto $2.00 times the number of net undeveloped acres in the Leased Premises located outside of existing Well Tracts, and thereafter resumes payment of annual Delay Rentals thereon as hereinabove provided.DelayRentals can not extend theleaselonger than three(3) years under any circumstances.
| COALBED METHANE LEASE - 7 |
5.(a) As used in this Lease, the terms "Operations,""Drilling Operations,"Continuous Operations" and "Other Operations" shall have the meanings set forthinParagraph 5(d) hereof
5.(b) Inthe event Lessee at any time drills a dry Hole on the Leased Premisesand no CBM is then being produced in paying quantities hereunder, 0r in the event all productionof CBM in paying quantities from the LeasedPremises should at any time cease for any cause and this Lease is not otherwise being maintained, this Lease shall continue in effect for a periodof ninety (90) days from abandonment of suchdryhole or cessatioh of production and may be;
continued thereafter under the following conditions:
5(b)(l) If Lessee commences Operations on the Leased Premises within such 90 day period, this Lease shall continue in effect as long as IDrilling Operations or OtherOperations are prosecuted with due diligence and so long ther1after as CBM is produced hereunder; provided however, this Lease may not be maintained so.ely by Other Operations for any period in excess of ninety (90) consecutive days unless the minimum annual drilling commitment is continually met or delay rentals have been paid.
5.(c) If no CBM is being produced from the Lease Premises at the expirationof the Primary Term, but Lessee is then engaged in Drilling Opera,ons, or if within the ninety(90)day period specified in Para,graph 5.(b) above Lessee commenies Drilling Operations, thisLease shall continue in effect in the manner and for the time speci:fi.4 in Paragraph 5.(e) hereof.
5.(d) For purposes of this Lease:
5.(d)(l) The term "Drilling Operations"shAfl mean that a derrick,a rig and machinery capable of drilling a depth sufficient totest the prospective coalseam horizon at the permitted depth has been erected on the Leased Premises andtJiat such rig is rotatingunderpower.
5.(d)(2) Theterm "Other Operations" shalllincludeallcompletion or abandonment operations, reworking,reconditioning, deepening, p1ugging back, cleaning out,repairing, testing or dewatering of a well being conducted with eqiliptnent customarily usedinthe industry for such operations, in a prudent manner with reasona le diligenceina bonafide good faith effort to obtain, maintain, enhance and/orrestore theprMuction ofCBM in Paying Quantities. Coal desorption testing beyond 90 days from coal core retrieved shallnot meet the definition of "Other Operations" under this Lease.
5.(d)(3) The term "Operations"shall mean ither DrillingOperations orOther Operations, or both.
5.(d)(4) The completion date of a produchlgwell is herein defined as:(i) the date thirty (30) days following the running of final producti9n casing and/or linerinthe hole, or, (ii) thirty (30) daysfollowing thedatetotal depth is rached, or(iii) the dateofcompletion as reported to the statewide conservation agency or co:rrlmission having jurisdiction, whichever is the earlier date. Thecompletion date ofawell whicresults inadry holeandis abandoned shallbethe date upon which all work in thehole has be completed and theplug isset, or thedrillingrig ceasesto operateonsuchwell,whichev¢ris the earlierdate.Thecommencement dateof Operations not specifically set forth in this pfu-agraph shallbethedate onwhich the equipment required to conduct such Operations in the manner specified herein has been installed on the well and the actual operation thereof has commenced; and the completion or cessation of any such Operations shall be deemed to have occurred on the earlier of the date such Operations are discontinued or the date such equipment is removed from the well.
| COALBED METHANE LEASE - 8 |
The cessation of production from a well shall be deemed to have occurred when actual production has ceased, without any reasonable expectation of resumption of production in Paying Quantities from that well; and except for a gas well on which Shut-In Royalty payments have been paid under paragraph 3(e) above, a well shall be conclusively presumed to have ceased production without reasonable expectation of resumption thereof if no CBM is produced in Paying Quantities for a period of ninety (90) consecutive days, and no Operations are conducted thereon during such ninety (90) day period.
5.(d)(5) Operations shall be Continuous Operations if not more than ninety (90) days elapse.betWeen the completion or abandonment of Drilling Operations on one well and the Commencement of Drilling Operations on another well.
5.(e) This Lease shall continue in force as to all of the Leased Premises solong as Lessee is engaged in Continuous Operations (as hereinabove defined) on theLeased Premises and production in paying quantities continues, subject to the limitations setforthinthis Paragraph 5.(e). Upon Lessee's failure to maintain Continuous Drilling Operations this Lease shall tenninate except as follows:
5.(e)(l) IfLessee has completed a CBM well on the Leased Premises, then this Lease shall continue as to and only as to the intervaJ from the surface to100 feet below the base of the deepest producing Coal Seam in such well, insofar as such intervalpertains to a tract of a maximum of one hundred sixty (160)surfaceacres, plus or minus a tolerance of10%, around each such well.The respective surface acres and strata thereunde!perpetuated as prescribed above shall be referred to herein as a "Well Tract". In the event any federal or state law, or any order, rule or regulation of the statewide conservation agency or commission having jurisdiction prescribes a spacing pattern for the development of the field,or allocates a producing allowable in whole or in part based on surface acreage per well or based upon the acreageto be drained by a well drilled horizontally,or otherwise inanarticulated manner,thenany Well Tract retained hereunder may include as much additional acreage as may be so prescribed or as may be used in such allocation or allowable.Ifsuch "order" results in a spacing pattern or allocation of allowable based on acreage which amount is less than that originally established, then eachsuch Well Tract shall be revised to include such lesser.amount of acreage. Such reduction shall beimmediately effective and Lessee shall then comply with thecontinuous drillingprovisions of Paragraph 5. Each Well Tract shall, as nearly as practicable,be in the fonn of a square or arectangle with thewell by virtue of which same is held located in the approximate centerthereof.However, as an overriding consideration, Lessee shall form each Well Tract so as to best utilize all available acreage covered by this Lease and so as not to leave acreage outsideof a Well Tract which cannot be utilized or included in subsequently created Well Tracts.
| COALBED METHANE LEASE - 9 |
5.(e)(2) Ifthestatewideconservationagencyorcommissiondoesnotprescribe a spacing unit and pattern, then within ninety(90) days after the completion date of anyproducing well, Lessee shall designate to Lessor in writing a Well Tract for each such well, with the producing stratum or strata defined with particularity by reference to Lessee's well logs. Lessee shall file a memorandum in the proper county records describing the WellTractor Well Tracts. After the expiration of the Primary Term, and the expiration of compliance withthe continuous development obligations herein described, each WellTractshall constitute a separate Lease with the terms of this Lease, and neither production fromnorOperations on any other Well Tract or any other portion of the Leased Premises shall maintain this Lease in force as to any other Well Tract. The determination of a well's classification as CBM by a governmental authorityshallbe controlling as between Lessor and Lessee for all purposes of this Lease; provided however, if it is subsequently determined that such classificationisnot correct, Lessor's and Lessee's rights under this Lease shall in no way be limited or impaired thereby.
5.(f) Lessee may at any time execute, fileinthe proper public records and deliver to Lessor a release or releases covering any portion or portions of the Leased Premises and thereby surrender this Lease as to such portion or portions and be relieved of all obligations not theretofore accrued as to the acreage surrendered.
6. In the event a well or wells producing CBM should be broughtindraining the Leased Premises, Lessee agrees to drill such offset wells as a reasonable and prudent operator would drill under the same or similar circumstances. Withoutlimiting theforegoing, it shall be presumed that any producing CBM well situated within 500 feet oftheLeased Premises, is draining the Leased Premises. Operations for any such offset well to be drilled to protect the Leased Premises from drainage shall be commenced within one hundred twenty(120)days after commencement of production from the draining well and continued with due diligence and in a prudent manner with no cessation of Operations ofmorethanthirty(30)days. It isfurtherprovided that in lieu of drilling such offset well, Lessee may, atitsoption, withintheone hundred twenty (120) day period, releasetheLease as tothatportion of theLeasedPremises lying adjacent to such draining well. The portion of the Leased Premises so released shallbeas nearly as practical in the form of a square or rectangle (either in stand-up or laydownform)and shall be 160 acres or such larger area as may be permitted or prescribed bytheappropriategovernmentalauthority for the draining well.
7. Lessee recognizes that Lessor doesnotownthesurfaceestate associatedwiththe LeasePremisesandthat Lessor onlyisleasing whatever right itmay have relative tothecoalbed methane on the lease premises. At least three days.prior to commencement· of seismic or operations other than drilling hereunder, Lessee will contact said RegionalManagerand.Lessor notifying them of the date and locations where said operationswillbeconducted, and an estimateof the time necessary for its completion with a copy toLessor. Lessordoes notgrantpermissionforsaid seismic surveyswithoutthe permission ofthesurface owner.Uponreceiptofsuch notice, Lessor will furnishLessee withits then current fee schedule for seismic damages, ifapplicable. IntheeventLessee performs, orcausestobeperformed, anyseismic operationsonthe Leased Premises, Lessee agrees to pay Lessor, or the applicable surface owner, theamounts setforthinsuch feeschedule. Lesseeagreesto make suchpaymentpromptly upon thecompletion of said seismic operations by checkpayabletoINTERNATIONAL PAPERCOMPANY or the applicable surface owner. Such payment shall be for minimum damages to the surface of the Leased Premises.Any excessive damages as determined by the Regional Manager, as a result of said seismic operations, shall be borne by Lessee. It is understood that notwithstanding the criteria set out in this clause that the provisions of applicable legislation, rules and policies will override the criteria and that such must be complied with by the Lessee. It is also understood by the Lessee that such legislation, rules and policies may be in the process of being changed to reflect CBM. It is the responsibility of the Lessee to obtain all necessary permits and authorizations necessary for the conduct of its operations and the Lessor agrees to cooperate with respect to obtaining such permits or authorizations when necessary or appropriate.
| COALBED METHANE LEASE - 10 |
8. Itis expressly agreed and understood that the Lessee is not granted any right to voluntarily pool, combine or unitize the Leased Premises in which Lessor owns one hundred percent (100%) of the CBM rights with any land not covered by this Lease without thepriorwritten consent of Lessor. Lessee shall notify Lessor in writing not lessthanten(10) days prior to Lessee's commencement of any action to institute or support any statutory, administrative or regulatory action to combine, pool or unitize the Leased Premises with any landsnotcovered by this Lease. Said notice shall include copies of any support materials availabletoLesseewhichwould aid Lessor in assessing the consequences of the proposed action. Additionally,Lesseeshall notify Lessor in writing upon receiving notice that a third partyintends toinstitute such action to combine, pool or unitize the Leased Premiseswithlands not covered bythisLease, such notice to be given within five (5) days of Lessee's receipt thereof, or in any event within a time sufficient to permit Lessor to participate in any proposed hearing or proceeding.Inthe event any part of the land included in this Lease is unitized by order of any governmental authority having jurisdiction for production of oil and/or gas/and orCBMthen, notwithstanding anything to the contrary contained in this Lease or in the unit order, and whether or not the unit well is located on the Leased Premises, theroyaltyherein reserved in favor of Lessor on productionfromsuch unit shall be calculated and paid on the proportion of the land included in this Lease bears to the land included in the whole government approvedwell-site spacing unit.
9. This Lease does not include and there is hereby excepted andreservedtoLessorall minerals except "CBM" as defined inParagraph1,includingbut notlimited tosulphur (except when produced as a constituent element), coal, lignite, ironore, limestone,uranium and other fissionable materials, geothermalenergy(including hydrostatic pressureand.thermalenergy), base and precious metals and other mineral and non-mineralsubstances,presentlyowned by Lessor in, under or upon the Leased Premises, together withtherights of ingress and egress and use of the Leased Premises by Lessor and itsmineral lessees,forpurposesofexploration for and production of the non-CBM minerals reserved herein to Lessor. Lessor andLesseeeach shallconducttheirrespectiveoperations ontheLeasedPremisessoasnottounreasonably interfere with the operations or activities of the other. Gobgas is considered CBM and forthe purpose ofthis Lease isdefinedasthatgaswhichis liberatedandaccumulates within the fractured collapse zone resulting from the underground mining of coalseams.
| COALBED METHANE LEASE - 11 |
10. The rightsofeither partyhereunder maybeassigned in whole or in part and theprovisionshereofshall extend to the respective heirs, executors, administrators,successors andassigns of the parties hereto; provided, however that any such assignmentbyLessee shallrequirethe prior written consent of Lessor, and such consent shall not be unreasonably withheld.IfLessor denies Lessee's request to assign, Lessor may, at its sole discretion, agreetogrant such consent after an amendment of the terms contained herein, including,butnotlimited to:a) increased insurance requirements, b) bonding or letters of credit covering financial obligations, plugging, abandonment, restoration, or other mutually agreed considerations.Nochange or division in Lessor's ownership of the land, rentals or royalties however accomplished shall operate to enlarge the obligations or diminish the rights of Lessee, nor shall any such change or division be effective for any purpose until the person acquiring any interest has furnished Lessee with the instrument or instruments, or certified copies thereof, constituting the change of title from Lessor. Notwithstanding the foregoing, if Lessee elects to assign any part or all of Lessee's rights and interests hereunder, Lessee and Lessee's assignees shall remain liable and responsible to Les.sor (unless released in writing by Lessor) for all surface and subsurface damageswhichmay be caused to the Leased Premises, both before and after the effective date of any.such assignment, and shall remain bound by all of the terms, conditions and covenants, both express and implied, of this Lease, including the payment of royalty. Lessee shall comply andcauseany successor assignee to comply with all valid laws, rules, and regulations affecting the Leased Premises and all operations thereon.
Notwithstanding any consenttoassignment, in whole or in part, Lessor shall retain the right and in its sole discretion havethe righttoapprove any operator, including any party which may take an assignment of Lessee's interest in the Leased Premises. In the event Lessee elects not to act the capacity of operator in conducting thedrillingor production operations for any well drilled under the terms of this Lease_, Lessee shall furnish Lessor a written notice which informs Lessor of such election and which simultaneously designatesaproposed substitute operator forapprovalby Lessor. Lessor reserves the absolute right toapproveor disapprove any such proposed substitute operator and no operations may be conducted ontheLeased Premises by any such proposed substitute operator until Lessor has furnished Lesseeawritten notice of such approval. Any writtenrequestby Lessee forLessor'sconsentto assignits operatingrightshereunder must be accompanied by evidence acceptable toLessorthat theproposedoperator/assignee has the financial and technical capabilities to undertake the obligations and liabilities imposedby theterms and conditions ofthis Lease unless suchrequirementis waivedin writingby Lessor.
11. In no event shall Lesseeenterintoacontract for the sale of Lessor's RoyaltyFractionof CBM which does not provideforat least semi-annual redeterminationofthe prices paid for CBM sold under any suchcontract.Lessee shall notenterinto any contract withany Affiliate relativeto the sale,gathering,treating, compressing,marketing, operating, transportingor processing of anyCBMproduced from theLeasedPremiseswithout thepriorwritten consent.of Lessor.IfLessee enters intoany suchAffiliate contractwithoutLessor'spriorwrittenconsent,Lessorshall havethe rightto unilaterally declare thatallroyalties have not been paid andthat a defaulthas occurredunder the provisionsofParagraph 3.(g) ofthisLease.
| COALBED METHANE LEASE - 12 |
12. This Lease is granted without any covenant of title or warranty of title of any kind whatsoever, expressed or implied, and Lessee shall havenorecourse against the Lessor in the event of any failure of title, nor shall any of the consideration paid hereafter, or any delay rentals or shut-in payments made hereunder be refunded to Lessee, except as otherwise expressly stated herein. Lessee shall have the right to purchase, pay or redeem any mortgage, tax or otherlienon the Leased Premises and be subrogated to the rights of the holderthereof.Lessee at its option may discharge any tax lien upon Lessor's interest in the Leased Premises(unlesssuch tax lien is being contested in good faith by Lessor by appropriate proceedings instituted for such purpose) and, in the event Lessee does so, Lessee shall have the right to apply royalties hereundertoreimburse such payment after notice thereof to Lessor.IfLessee obtains a title opinion ortitleinsurance policy on any portion of the Leased Premises, Lessor will be provided a copy of such title material at no cost to Lessor. Lessee may undertake title curative work for the purpose of which is to affirm Lessor's title or possession oftheLeased Premises. Theresultsof any such curative work shall be furnished to Lessor.
13. Except as expressly limitedinthis paragraph but otherwise notwithstanding any other provision of this Lease, if this Lease covers a lesser interestinthe CBM in all or any part of said land other than the 100% CBM estate, or no interest therein, then the Delay Rentals and minimum annual rentals and CBM royalties, shall be paid only in the proportion which the interest therein, if any, covered by this Lease, bears to the whole100%CBM estate therein. The Bonus Payments shall be due and payable notwithstanding that the ownership of the CBM estate shall be determined or believed to be less than 100%. The Bonding requirements shall remain the same notwithstanding the determination of any reductioninthe Lessor's CBM interests.Should any lands covered by this Lease be subjecttoa nonparticipating royalty interest,the royalty to be paid to Lessor herein shall be proportionately burdened orreducedby said nonparticipating royaltyinterest. Lessor's royalty shall proportionately bear such nonparticipating royalty interests and Lessee shall, prior to the date herein above set out for the first payment of royalty from each well herein, notify Lessor in writing of the existence of such nonparticipating royalty, such notice shallspecifically describe thecreating of such interestand shall include copies of the instruments creating a nonparticipating royaltytothe extent, and only to the extent that such interests would be borne by Lessor if the owners of those interests adopted and ratified the terms of this Lease, whether or not such adoption or ratification has in fact occurred. Proceeds due any other third partyforproductionfroma well on theLeasedPremises shall be borne by Lessee.
14. Lessee is hereby granted theright,subject totheprovisions ofParagraph16ofthis Lease, to conduct or cause to be conducted, those operations which it deems reasonably necessary for its development of theLeased Premises.Suchoperations maybeconducted, withthe permission of the surface owner, by Lessee, its agents, representatives, and contractors solely for Lessee's benefit, and therightto conduct such operationsmaynot beassignedbyLessee toany other party unless the grant includes all or aportionoftheleaseholdoperating interest created by thisLease.Notwithstanding anything in thisLease to the contrary, Lessorreservesthe rightto conduct,or grant the right to conduct tothirdparties,exploratory operationsonthe Leased Premisesinrespect of the non-CBM and otherHydrocarbonand non-Hydrocarbon estate.
| COALBED METHANE LEASE - 13 |
All such rights are subject to legislation, rules and policies as may exist from time to time as established by the Commission.
15. The execution of division orders shall never be required as a prerequisite for payment of royalty or any other monies accruing under this Lease. Any amendment, alteration, extension or ratification of this Lease or of any term or provisions hereof shall be made by a recordable instrument titled "CBM Lease Amendment'' executed by Lessor and Lessee, and any purported amendment, alteration, extension or ratification not so drafted and executed shallbe of no force or effect. (Insert statement of equivalents **)
16. The provisions ofthis paragraph shallbe operative as to (i) the Leased Premises and (ii) any lands pooled therewith (the "Area").
16. (a) Lessee shall notify Lessor:
16. (a)(l) inwriting , no later than ten(10) days prior to the commencement of any seismic or drilling operations, including the location of any proposed seismic operations and the location and objective depth of any proposed well.
16. (a)(2) either orally orinwriting, at least forty-eight (48) hours prior to commencement of any operations to test, log or plug any well.
16. (a)(3) either orally or in writing , at least twenty-four (24) hours prior to conducting any completion or coring operations on any well.
16. (a)(4) inwriting,as to the date any well is (i) commenced,(ii) completed, (iii) plugged or (iv) shut-in, within twenty-four (24) hours of same.
16.(b) Lessee shall furnish Lessor the following information foreachwell(including exploration core holes) drilled within twenty-four (24) hours after such information is made, produced or obtained by Lessee:
1. Daily drilling and mud log reports.
2. Samples of all cores and samples takenfrom themud or coring.
3. Complete copies of all logs and electrical survey runs showing formations encountered and the identification ofsuch formations as determined by Lessee,its geologists or paleontologists. Also, Lessee shall furnish Lessor with log data in LAS Fonnat or other format requested by Lessor on 3W'floppy disk or CD-Rom.
4. Results of all tests,including drill stem tests,formation tests, coreanalyses,water quality, desorption results, and vitrinite reflectance.
5. All dipmeter and velocity surveys, including Lessee's interpretations thereof.
6. Adsorption isotherm data and vitrinitereflectance data.
| COALBED METHANE LEASE - 14 |
7. Copies of all permits or forms filed with the Oil and Gas Commission or anygovernmental agency.
8. Monthly production reports and information regarding the sale of CBM and its respective constituent products produced hereunder.
9. Surveys of the Leased Premises, includinglocationplats, made by or for Lessee annually update and submit
10. Such other information and data as the Lessor may reasonably request, all of which information shall be held by Lessor as confidential information, which shall not, without the prior written consent of Lessee, be disclosed in any way to any other person,firmor business entity.
16. (c) Lessee shall submit to Lessor on an annual basis a map showing the well locations and designation of all Well Tracts.
16. (d) Ifpermitted by third party contacts, Lessee shall furnish Lessor copies of all proprietary seismic and geophysical data owned by Lessee, including source tapes, field data and associated documentation and the results of any reprocessing of such data.Inaddition,ifso permitted, Lessee shall furnish copies of all seismic and geophysical dataacquired byor used by Lessee after the date of this Lease including copies of source tapes, fielddataandassociateddocumentation and the results of any reprocessing of such data relating to linescrossing theArea, and any other seismic data generated as a result of such seismic operations from which Lessee is required to furnish data to Lessor
16.(e) Informationfurnishedto Lessor hereunder may be used for its own purposes or that of any affiliated, subsidiary; provided, however, Lessor and/or its affiliated subsidiary companies agree that such information shall be maintained confidential by Lessor and/or its affiliated and subsidiary companies for a period of one(1)year from thedatesuch information becomes available to Lessor.
17. During thetermof this lease,Lessorand/or its'authorizedrepresentatives, at Lessor's sole risk and expense, shall have full rights of ingress and egress to the Area and any lands pooled therewith for the purpose of inspecting drilling or producing operations, machinery, equipment and all other operations or purposes whichLessormay consider necessary or advisable. Additionally, upon not less thanfive(5) days' advance notice to Lessee, Lessor and/or its authorized representatives, shall have theright,during regular business hoursat Lessee'soffice, to inspect, examine, make copies of and extracts from Lessee's books, records, accoWlts,contracts,commitments andagreementsinsofar asthey relate to theLeased Premises, operations thereon or production therefrom (including, without limitation,theinformationreferred toinParagraph16above).
| COALBED METHANE LEASE - 15 |
18 (a). PriortoLessee abandoninganywells onthe Leased Premises Lessorshall have theright,within thirty (30) days (twenty-four(24)hoursifarigis onlocation) afterreceipt of notice of Lessee's intention to so abandon, to take over the well or wells. Lessor shall give Lessee written notice of its intention to take over any such well or wells on or before the expiration of suchthirty (30) day or twenty-four (24) hour period, whichever is applicableIfthe well is taken over by Lessor and results in a completion attempt wherein a well capable of production is encountered, then all of Lessee's right and interest in such well shall be ownedbyLessor as provided hereinafter. It is expressly understoodthatLessee's interest in and rightstosuch well and its associated Well Tract may be subject to agreements under which other parties may have a contractual right to take over said well and to acquireall,or a portion, of Lessee's rights, exclusive of those to be earned by Lessor hereunder.Inthe event one or more parties having such right, including Lessor, desire to take over the well,thisLease shall bereleased toLessor (as to the well and its associated Well Tract as hereinafter provided); provided that Lessor agrees to pay Lessee the reasonable salvage value of any salvageable material in thehole whichLessee has contributed, less the cost of salvaging same. Should Lessee fail to comply withtheterms and conditions of this Paragraph 18 prior to plugging anywellontheLeased Premises, Lessee shall pay to Lessor $ 100,000 as liquidated damages for such noncompliance.
IfLessor takes over the well and the completion attempt results in adryhole, Lessor agrees to plug and abandon the well or wells at its solecost,risk and expense andLessee's rightshereunder shall remain in full force and effect.
Likewise, if Lessor takes over the well, but no operations areconductedin saidwellby Lessor and Lessor notifies Lessee within 30 days after Lessor took over said well that Lessorisreleasing said well, then, and in that event, Lessee agrees to plug and abandon the well or wells at its sole cost, risk and expense.
Upon receipt of such noticefromLessor after the takeover of a well that theLessorhascompleted a well capable of production., Lessee shall promptly deliver to Lessora release ofall of its interest in the Well Tract for such well,madepursuant to the provisions ofParagraph 5relating to termination of the Lease as to Well Tracts and Lessor shall paytoLessee the salvage value of the salvageable material for the well determined in accordancewiththeprovisions ofcustomary accounting procedures.The material shall then be conveyedtoLessorbyanitemizedbill of salefreeand clear of allencumbrances.
Lessor's rights andLessee'sobligations under this Paragraph 18shall not beeffective so long as Lessee maintains the Lease as to the Well Tract for suchwellby Other Operations (excluding abandonment)orby Drilling Operationsasprovided inParagraph 5.
18 (b) Pluggingandother covenants.
Lessee shall comply with all rules and regulations of the State of Louisiana concerning thecasingof wells orthe pluggingofdryand abandonedCBMwells, and with any otherlawspertainingto CBM wells.
| COALBED METHANE LEASE - 16 |
Lessee shall plug all holes and abandon CBM wells in accordance with the rules and regulations of the State of Louisiana in accordance with the following:
| a. | CBM wells shall be mapped by a registered land surveyor to locate the collar and elevation of the holes on the surface. |
| b. | Appropriate well logs shall be run in the well to detennine the exact depthand thickness of all coal seams. The logs to be run shall include at a minimum gamma ray, bulk density and caliper. Lessor shall have the right to run additional logs of its own at a time convenient to Lessee. Lessor shall bear the cost of any expenses incurred for said additional logging. |
| c. | Surface casing shall be left in the hole as specified in the drilling permit. |
| d. | Lessee shall notify Lessor in writing at least thirty (30) days prior to the beginning of any well plugging operation as per Paragraph 18(a). |
18 (c) Restoration
Lessee agrees, upon the completion or abandonment of eachwell drilled by iton the Leased Premises,to promptly restore the surface of the Leased Premises to as near the same condition as it was prior to the drilling of said well as is practicable. Such surface restoration shall include, without limitation, reforestation, the cleaning and levelling of all locations, the filling and levelling of all mud pits or other excavations, including roads, the removal ofalldrilling mud and drilling fluids from such pits and other excavations priorto the filling and levelling thereof.Ifthe relevant well is abandoned as a dry hole or afterthe cessation of production, Lessee shall remove all fences, equipment,machinery, and tanks, and all other structures, concrete or other foundations or property of any kind or character as soon as possible after the cessation of such operations but no later than three (3) months after the abandonment of each drill site.
19.(a). Lessee agrees to indemnify and hold Lessor harmlessfromany claim orcause ofactionby any person whomsoever arising outof or in connection with its operations on the Leased Premises, including, but not limited to any claims by the owner of thesurface or other mineral interest holders.Inthe event Lessor is made a party defendant in any claim for loss, injury,or damages to persons or property arising out of or in connectionwithLessee's operations on the Leased Premises or lands pooled therewith,Lessee agrees to defendLessorat its solecost and expense and satisfy any judgment which may be rendered againstLessor.IfLessee fails orrefuses to retain counsel and actively defendany suchsuit, Lessor mayretain counsel of its choice to defend the action. Lessee in such event shall be liable for reasonable attorneys' fees,court costs, includingexpertwitne'Sses,and theamount ofany money judgment which may be awarded against Lessor.
| COALBED METHANE LEASE - 17 |
19. (b).Lessee on behalf of itself andits directors, officers, employees, agents, consultants,contractors,licensees and inviteesand theirrespectivesuccessors and assigns (collectively,the"Releasors") shall indemnify and hold harmless Lessor and its directors, officers, employees, agents consultants, contractors, licensees and invitees and their respectiveheirs,executors, administrators, successors and assigns (collectively, the"Releasees"),and each ofthem,from and against any and all liens, claims, demands, suits, actions, causes of action, costs, expenses, losses, damages and liabilities (including without limitation special, exemplary or consequential damages and economic loss and including losses from property damage, personal injury or death), orders including penalties and fines imposed pursuant to any federal or statelegislation,and judgments, suffered or incurred by the Releasees or any of them or brought, made or
imposed against the Leased Premises or lands pooled therewith or against the Releasees or any of them, in respect of, as a result of or arising from:
(i) any personal injury (including death resulting at any time therefrom) or property damage or loss suffered or incurred on the Leased Premises or lands pooled therewith in connectionwithany operation or activity of theReleasorsor any of them or any exercise or purported exercise of the CBM Rights or any rights ancillary thereto; or
(ii) any breach or default in the due observance or performanceofthe obligations of Lessee under thisLease;or
(iii) any negligence orwilfulmisconduct on the part oftheReleasors oranyof them on or with respect to the Leased Premises orlandspooled therewithorwithrespect to the CBM Rights or any exploitationthereof;or
(iv) any damage to or contamination of the Leased Premises or lands pooled therewith or any improvements thereto or any other environmental damage caused by the Releasors or any ofthemor arisingfrom or as a resultofany exercise orpurported exercise of the CBM Rightsorany rights ancillary thereto; or
(v) the CBM Rights, or any activity or operations of the Releasors or anyof themon or with respect toanypart ofthe Leased Premises orlandspooledtherewith, or any act or omission of the Releasorsorany of themwithrespect to or in connection withthe CBMRights or the exerciseor exploitationthereof under this Lease or otheiwise.
19(£) Lessor and any third party having coalmining rightsgranted by Lessor shall have noresponsibility forthe shortening of theproductivelife orthereduction in the amount ofrecoverable reserves from any Well Tract or portion of theLeased Premises as aresult of coalmining activities ontheLeased Premises("MineThrough").
| COALBED METHANE LEASE - 18 |
20. Except with respect to noticesandreports required to begivenpursuant tothe provisions ofParagraph16hereof,anynoticeorothercommunication permitted or required under the termshereof shall be in writing and, unlessothelWisespecified, shall be deemedproperly given onthe ate personally delivered or on the date postmarked if mailed, registered or certified, by postage prepaid and United States mail, addressed to Lessor or Lessee at the addresses set forth below, or to such other address as may hereafter be designated by either party to the other by notice.
Notice given in any other manner shall be effective onlyifand when received.
Except as expressly provided herein to the contrary,allnotices and reports , required under this Lease shall be delivered to Lessor atthefollowing address:
International Paper Company
Mineral Resources Division
7600 W.Tidwell Rd., Suite 300
Houston, Texas 77040-5714
Attention: Manager Mineral Resources
Physical Address:
International Paper Company
Mineral Resources Division
7600 W.Tidwell Rd.,Suite 300
Houston, Texas 77040-5714
All payments, royalty payments and royalty reports shall be madeanddeliveredtoLessor on the due dates set forth herein at the following address:
International Paper
Mineral Resources Division
7600 W.Tidwell Rd.,Suite 300
Houston, TX77040-5714
Telephone numbers listed for convenience:
Phone Number(713)651-2768
Fax Number (713) 951-4554
Emailaddress: ________________
All notices required under this Lease from Lessor to Lessee shallbedelivered toLessee atthe following address:
E&Pco
2500Tanglewilde
Suite 492
Houston,TX77063
Telephone numberslistedforconvenience:
Phone Number713-978-6503
Fax Number 713-978-6772
| COALBED METHANE LEASE - 19 |
21. Upon expiration or termination of this Lease for any reason as to all or any portion of the Leased Premises, Lessee at its sole cost and expense shall promptlyprepare,executeandfileinthe appropriate Parish land records office an appropriate release instrumentcovering allor such portion of such land, and shall forward a copy of same as recorded to Lessor.Failuretoprovide Lessor with a recorded copy of said instrument within ninety (90)daysafter the expiration of the Primary Term (or any other time at which therehasbeen a terminationofthe rights under this Lease, whether partial or complete) will result in a penalty to Lessee of $100.00 per: day until said instrument is provided to Lessor. The daily penalty shall not begin to accrue until 30 days after Lessor has notified Lessee in writing to file such release. The penalty will be due and payable on demand of Lessor.
22. Lessee,ifnotindefault hereunder, and provided Lessor does not elect to take over any well(s) shall have the right at any time during or within one hundred eighty (180) days after the expiration of this Lease to remove all property and fixtures placed by Lessee on the Leased Premises, including the right to draw and remove all casing; provided that,Lessor shall have the right to acquire any fresh water wells drilled by Lessee on the Leased Premises by payingLesseethe salvage value of the equipment in and on such well less the cost of salvagingthesame.All property and fixtures not removed within such one hundred eighty (180)dayperiod will become the property of the Lessor or the surface owner, exceptthat ifLessor atanytime during orwithinten (10) days after theexpirationof this Leaserequiresin a written noticetoLessee that any of such property be removed,Lesseeshall remove the same withinsuchone hundred eighty (180) day period, or, in the event Lessee fails so to do, Lessor may remove same at the sole cost, risk and expense of Lessee.
23. During the term of this Lease,Lessee shall, atitsexpense,maintain in forceandeffect minimum insurance in a form subject to approval of Lessor and with aninsurancecompany approved by Lessor as follows:
A. Comprehensive General Liability Insurance, with limits ofliability ofnot less than the following:
| | Bodilyinjury/PropertyDamage | |
| | Combined anyone occurrence | $1,000,000 |
| | Aggregate | $2,000,000 |
Suchinsuranceshall includethe following:
| 1. | ContractualLiability,insuring the indemnity agreementscontained in this contract. |
| 2. | Coverage for property damage due to blastingand explosion,structuralpropertydamage,underground propertydamage,and surface damagefromblowoutandcratering. |
| 3. | Lessee shall purchase Extended Reporting Provisionifpolicyiswrittenona claims-madebasisand is non-renewed orcancelled. |
| COALBED METHANE LEASE - 20 |
B. Comprehensive Automobile Liability Insurance, with limits of liability of not less than the following:
Bodilylnjury/PropertyDamage
Combined any one accident or occurrence $2,000,000
Such coverage shall include owned, hired and nonowned v ehicles.
C. Excess Liability Insurance with limits of liability of not less than $5,000,000.
D. Environmental Impairment Liability Insurance withlimits ofliability of not less than $5,000,000.
Each insurance policy maintained by Lessee, must be endorsed as follows:
| 1. | Lessor, its owners, subsidiaries and affiliated companies, as well as their employees, officers, and agents shall be named as "Additional Insured." (Except for Workmen's Compensation policy). |
| 2. | All coverages shall contain waivers of subrogation (whether byloan receipts, equitable assignment, or otherwise) against Lessor,its owners, subsidiaries and affiliated companies, as well as their employees,officers and agents. |
| 3. | The coverage afforded herein shall be primary in relation to any policies carried by Lessor, its subsidiaries, owners and affiliated companies, as well as their employees, officers and agents. |
Inaddition to the above insurance requirements the Lessee shall obtain coverage under theWorkers Compensation Actand regulations and the Lessee shall be considered to be the "Prime Contractor" under theWorkers Compensation Actand regulations.The Lessee shallalso require that all subcontractors be in compliance withthe provisions oftheWorkersCompensation Actand regulations.
Lessee shall furnish Lessor with certificates of insurance evidencing compliance withthis obligation prior to commencement of operations hereunder and shall give Lessorten (10)days notice of any proposed change of insurance carriers or coverage.
24. During the term of this Lease, Lesseeshall be responsiblefor and pay whendue,or reimburse Lessor for if paid by Lessor, any and all taxes payable in respect tothe CBM,or any exploitation, or production, or operation, or activity, or property or improvements by the Lessee on the Leased Premises or with respect to the CBM, including all real and personal property taxes, assessments and charges and Lessee shall provide proof of payment to Lessor promptly. Lessor shall provide copies of all such notices to Lesseeupon receipt.
In the event Lessee fails to pay any royalty or any other sum due toLessor under this Agreementin the manner so prescribed,Lessor shall have,without notice to Lessee or demand to Lessee,a perfected security interestandalien on all machinery, equipment, structures,and otherproperty of Lessee of every kind located on the Leased Premises at the time of default and thereafter.Ifsuchadefault in paymentcontinuesfor morethanthirty(30) days,the above granted lien maybeenforced as provided by thelaws ofthe State of Louisiana,includingbutnotlimitedto theUniform Commercial Code.
| COALBED METHANE LEASE - 21 |
25. The Lessee shall give Lessor prompt written notice ofanyclaims of or by third parties or any other event or circwnstance that could adversely affect the ability or legal rightofthe Lessee to produce, save, take clear title to and sell CBM from the LeIased Premises pursuant to the CBM rights granted herein(the "Adverse Claims"). The Lessee shall use allreasonablecommercial efforts to resist and defend against any Adverse Claims, anh shall not, without Lessor's prior written corisent, which will not unreasonably be withheld, settle any Adverse Claimsinany manner that could adversely affect the ability orlegalri*t of the Lessee to produce, save, take clear titletoand sell CBM from anypartof the Leased Premises pursuanttoany of the rights granted herein. Lessor shall have the right at Lessor's!expensetoparticipateinresisting and defending against any Adverse Claims and at its option to!assume conduct thereof, in its own nameorin the name of the Lessee or both.
TheLessee shall pay and continue to pay the CBM royalty as provided herein notwithstanding any Adverse Claims, provided that to the extent the payments hereunder=would be reduced if an Adverse Claim were successful, the Lessee may pay the proportionate part of each subsequent
payment that would be applicable to such reduction, into trust an escroYi account or registry of a court of competent jurisdiction in the State of Louisiana pending final resolution or settlement of the Adverse Claim, on terms that provide for paymentthereof accordingto such final resolution or settlement including payment to Lessor in the event that the Adverse Claim isnotupheld.
26. Notwithstanding any operational standards set out inthiLease, it is understood and agreed that all rightsgrantedhereunder are subjecttothe applicable laws of the State of Louisiana without limiting the generality of the foregoing the applicable provisions of the Petroleumand-Natural Gas Act, the Oil and Gas.Comm-i-s--s-i--o.n..·.A_,_c_t, the.Coal Act, the ForestPracti Mines Act. Failure to comply with any provisions of applicable laws will allow the Lessoratits optiontoterminate thisLeasebygiving noticepursuant to Section20.
27. All referencestocurrencyareinUnitedStatesfunds.
28.(a) ThisAgreementis and will be deemed to have been made in Louisiana, and for all purposes will be governed exclusively by and construed·and enforced in accordance with the laws prevailinginthe State of Louisianaand therightsand remediesofthe parties willbe detennined in accordance with those laws.·
28. (b) Each of the parties irrevocablyattomsto the jurisdiction of the courts ofLouisianaand all courts having appellate jurisdiction thereoverand agreesthatanyproceedingcommencedormaintainedin respect oforarising as a consequence ofthisLeasewill be commencedor maintained only in such of thoseCourtsasisappropriate.
29. (a)Allquestionsor mattersindispute with respect to accounting,engineering or·technical matters, other than disputes over royalty paymentswhichshall begovernedby paragraph3(h) hereof,will besubmittedtoarbitrationpursuanttotheterms ofthis Section 29.All arbitrators appointed shall be knowledgeable withrespectto the subjectmatter or question.
| COALBED METHANE LEASE - 22 |
29. (b)Itwill be a condition precedent to the right of any party to submit any mattertoarbitration pursuant to the provisions of this Section 29, that any party intending to refer any matter to arbitration will have given not less than thirty (30) days' prior written notice of its intention so to do to the other party together with particulars of the matter in dispute.
29. (c) On the expiration of such thirty (30) days,theparty who gave suchnotice mayproceed to refer the dispute to arbitration as provided in Paragraph 29.(d). The parties may appoint a single arbitrator by mutual agreement.
29. (d)Inthe event the parties do not appoint a single arbitrator, the party desiring arbitration will appoint one arbitrator, and will notify the other party of such appointment, and the other party will, within 15 days after receiving such notice, appoint an arbitrator, and the two arbitrators so named, before proceeding to act, will, within 15 days of the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator to act with them and be chairman of the arbitration herein provided for.
29. (e)Ifthe other party will fail to appoint an arbitrator within 15 daysafterreceiving notice of the appointment of the first arbitrator, and if the two arbitrators appointed by the parties fail to agree on the appointment of the chairman, thechairmanwill be appointed under the provision of the American Arbitration Association.
29.(£)Except as specifically otherwise provided in Paragraph 30.(d) the arbitrationhereinprovided for will be conductedinaccordance with such Rules of the American Arbitration Association for the Resolution of Commercial Disputes("Rules").
29. (g) The chairman, or in the case where only one arbitrator is appointed, the single arbitrator, will fix a time and place in Houston, Texas, for thepurposeof hearing the evidence and representations of the parties, and he will preside over the arbitration and determine all questions of procedure not provided for under such Rules or Paragraph30.(d).
29.(h) After hearing any evidence and representationsthatthepartiesmay submit,thesingle arbitrator, or the arbitrators, as the case may be, will make an award and reduce the same to writing, specifying the time frame for theawardanddeliverone copythereof toeachof theparties.
29. (i)Theexpense of the arbitration will bepaidas specifiedintheaward.
29.(j)The partiesagree thattheawardof amajority ofthearbitrators, or inthecase ofa single arbitrator, of such arbitrator, will be final and binding uponeach ofthem,subject onlyto the limited appeals fromarbitrationawards.
30.(a)Thepartiesagreetokeepconfidentialcertain information."ConfidentialInformation" is defined as
| COALBED METHANE LEASE - 23 |
(i) all information, data,kriowledge,and know-how (inwhateverformandhowever communicated)relating, directly or indirectly, to Lessor(orto itsaffiliates or to its or their business, operations, properties, products, markets, or financial positions) that is delivered or disclosed by Lessor or any of its officers, directors, partners, members, employees, agents, affiliates, or shareholders to Lessee in writing, electronically, verbally, or through visual means, or which Lessee learns or obtains orally, through observation or through: analyses, interpretations, compilations, studies, or evaluations of such information, data, knowledge, or know-how, but
(ii) does not include information, data, knowledge, and know-how, as shown by written records, that
(A) is in Lessee's possession before disclosure to Lessee,
(B) isinthe public domain before disclosure to Lessee, or
(C) lawfully enters the public domain through no violation of this Agreement after disclosure to Lessee, but
(iii) includes all analyses, interpretations, compilations, studies, and evaluations of such information, data, knowledge, and know-how generated or prepared by or on behalf ofLessoror Lessee.
30. (b) The term "document," as usedinthis Lease, includes any writing, instrument, agreement, letter, memorandum, chart, graph, blueprint, photograph, financial statement, or data, telex,facsimile,cable,tape,disk, or other electronic, digital, magnetic, laser, or other recording or image in whatever form or medium.
30. (c) Recipient will use the Confidential Information solely for the Purposes of carrying out its obligations under theLease andfornootherpurpose.·
30. (d) Lessee will keep the Confidential Information confidential and not disclose the Confidential Information to any person or entity other than
(i) suchofLessee's officers,directors,partners, members, employees,attorneys, accountants, or financial advisors who have a bona fide need to have access tosucbConfidential Informationinorder for Lesseetocarry out the Purposes, and
(ii) such other persons asLessorhereafteragreesinwriting may receive suchConfidential Information (which agreement may be withheld for any reason or forno reason).
30.(e)Lesseewill be responsible and liable for any use or disclosure oftheConfidential Information by such parties in violation: of thisAgreement.
30. (f) Nothingcontainedhereinwillbe deemed toprevent disclosureofany of theConfidential Informationif,such disclosureislegallyrequiredtobemadeinajudicial,administrative, or governmental proceeding pursuant to a valid subpoena or otherapplicableorder, but, Lessee will
| COALBED METHANE LEASE - 24 |
(i) give Lessor at least 10 days written notice (unless less timeispermitted by the applicable proceeding) before disclosing any Confidential Informationinany such proceeding and, in making such disclosure,
(ii) disclose only that portion thereof required to be disclosed, and
(iii) will take all reasonable efforts to preserve the confidentiality thereof, including obtaining protective orders and supporting Lessor in intervention.
31. This Lease may be executed in multiplecounterparts,eachofwhich shall be deemed an original for all purposes and all ofwhichtaken together shall constitute a single document, but shall not be effective unless executed by all the Parties hereto.
32. The obligations of the parties under this Lease are subjecttoextension duetoforce majeure as defined in this paragraph.Ifeither party hereto is rendered unable, wholly or in part, by force rnajeure to carry out its obligations under this Lease, other than the obligationtomake money payments, that party shall give to the other party hereto prompt written notice of the force majeure with reasonably full particulars concerning it; thereupon, the obligations of the party giving the notice, sofaras they are affected by the force majeure, shall be suspended during, but no longer than, the continuance of the force majeure.Force Majeure does notbeginand shall not beeffectivefor any purpose under this Lease untiltheotherpartyshallhave received written notice of the force majeure conditionfromnotifying party.Theaffectedparty shall use all reasonable diligence to remove the force majeure situation as quickly as practicable. The requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes, lockouts, or other labor difficulty by the party involved, contrary to its wishes; how all such difficulties shall be handled shall beentirelywithin thediscretionof the party concerned once the cause of force majeure is eliminated, the claiming party shall promptly recommence operations.The term "force rnajeure" ashere employed,shall mean anactof God, strike, lockout, or other industrial disturbance, act of the public enemy,war,blockade, public riot, lightning, fire,storm,flood, explosion,governmental action, governmentaldelay, restraint or inaction, unavailability ofequipment,andanyothercause;whetherof the kind specificallyenumeratedaboveor otherwise, which isnot reasonably with inthecontrol of theparty claiming suspension. Lessor on priorwrittennotice may terminate this Lease if a cause of force majeure claimed by Lessee lasts longer than 365 days.
33. Severability-Ifany provisionofthis Lease or theapplicationthereof toLessoror Lesseeshall, for anyreasonandtoanyextent,be heldtobe invalid or unenforceable, theremainderof thisLeased agreement shall notbeaffectedthereby,butrathershallbe enforced to the greatest extent permitted by law.
| COALBED METHANE LEASE - 25 |
34. Binding Effect-This Lease agreement shall inure to the benefit of and be binding upon the successors and assigns of Lessor and Lessee.
INWITNESS WHEREOF, the parties have executed this Lease effective as of the date first above written.
LESSOR:
| | LESSOR: |
| | |
 | INTERNATIONAL PAPER COMPANY |
| |
| By: | /s/ R.T. Kaczorowski |
| | | R.T. Kaczorowski |
| | | Agent and Attorney-in-Fact |
 | By: | /s/ Charles E. Edwards |
| |
| |
| Title: | CHIEF EXECUTIVE OFFICER |
| Instrument Prepared by: | INTERNATIONAL PAPERCOMPANY |
| | P.O.Box 4258 |
| | Houston,Texas 77210 |
| COALBED METHANE LEASE - 26 |
EXHIBIT "A"
Attached to and made a part of that certain Coalbed Methane Lease between International Paper Company, as Lessor and E&Pco, as Lessee, dated May 1, 2008.
The Leased Premises shall consist of the CBM Interests owned by International Paper Company
in the following described lands located in Caldwell Parish, LA
Caldwell Parish, LA -Exhibit A Property Description: 9661± acres
| Tl3N -R5E | |
| | |
| Section 1 | Entire Section |
| | |
| Section 2 | NE 4 |
| | E2 of NW4 |
| | NW4 of NW4 |
| | SW4 -A11lying N & E of Morengo Lake and Bayou |
| | SE4 |
| | |
| Section 12 | Entire Section |
| | |
| Section 13 | Entire Section |
| | |
| Section 24 | Entire Section |
| | |
| Section 25 | Entire Section lying N of Boeuf River· |
| | |
| T13N -R6E | |
| | |
| Section 5 | Lot 3 (SW4 of SW4 lying S & W of Boeuf River) |
| | |
| Section 6 | Lot 3, 4 & 5 (All lying S & W of Boeuf River) |
| | |
| Section 7 | EntireSection |
| | |
| Section 8 | Lots 3, 4 &6(All lying S & W of Boeuf River) |
| | |
| Section 17 | Lots 2,3,4, 5, 6 & 7 (All lying W of Boeuf River) |
| | |
| Section 18 | EntireSection |
| | |
| Section 19 | Lots 1, 2, 3, 4, 5, 6 & 7 (All lying W of Boeuf River) |
| | |
| Section 20 | Lots 2,3,4, 5 & 8 (All lying W of Boeuf River) |
| | |
| Section 30 | Entire Section N & W of Boeuf River |
| | |
| Section21 | Lot 4 (Allof NW4lyingW of Boeuf River) |
| | |
| Section 21 | Lot 5 (All of SW4 lying W of Boeuf River) |
| | |
| T14N -R5E | |
| | |
| Section 25 | Lots5,6,7 &8(All lying S of BoeufRiver) |
| | S2 of SW4 |
| | S2 of SE4 |
| COALBED METHANE LEASE - 27 |
| Section 26 | Lots 2, 8&9 (All lying S of Boeuf River) |
| | SW4 of SW4 |
| | SE4 of SE4 |
| | |
| Section 27 | Lots 2, 8&9 (All lying S of Boeuf River) E2 of SE4 |
| | NW4 of SE4 |
| | |
| Section 35 | Entire Section |
| | |
| Section 36 | Entire Section |
| | |
| Tl4N -R6E | |
| | |
| Section 30 | Lot 5 (All lying S&W of Boeuf River) |
| | |
| Section 31 | Lots 2&3 (All lying S&W of Boeuf River) |
| COALBED METHANE LEASE - 28 |
EXHIBIT "A-1"
Attached to and made a part of that certain Coalbed Methane Lease between International Paper Company, as Lessor and E&Pco, as Lessee, dated May1,2008.
MapofLeased Premises
| COALBED METHANE LEASE - 29 |
Dear Osman,
Attached please find a copy of the lease agreement which is certified and registered in the Caldwell Parish Clerk of Records. (file # 222364)
This goes along with item #7 of the outstanding list.
Regards,
Charles E. "Chuck" Edwards
E&Pco, LLC
2500 Tanglewilde, Suite 492
Houston, Texas 77063
Direct: 713-978-6503
Fax: 713-978-6772
E-mail: chuckedwards@e-pco.com
