Exhibit 10.13
(U&O Agency) May 26, 1995
Drill-to Earn Agrmt
EXPLORATION AND DEVELOPMENT AGREEMENT
-------------------------------------
By and Between
THE UTE INDIAN TRIBE
and
THE UTE DISTRIBUTION CORPORATION
and
PETROGLYPH GAS PARTNERS, L.P.
THIS AGREEMENT IN ITS ENTIRETY AND ALL ATTACHED EXHIBITS MAY NOT BE ALTERED
WITHOUT THE PRIOR APPROVAL OF THE SECRETARY OF THE INTERIOR.
INDEX FOR EXPLORATION AND DEVELOPMENT AGREEMENT
-----------------------------------------------
Article I. DEFINITIONS
Article II. REPRESENTATIONS OF THE UTE TRIBE AND THE UDC
Section 2.1 Representations of the Ute Tribe
Section 2.2 Representations of the UDC
Section 2.3 Joint Exercise
Article III. OBLIGATIONS
Section 3.1 Obligations of Company
3.1.A Opportunity Payment
3.1.B Filing Fee
3.1.C Corporate Information
3.1.D Bonds
3.1.E Wateruse for Drilling and Production
3.1.F Enhanced Recovery Operations
3.1.G Surface Use
3.1.H Drilling Permit
3.1.I Conduct of Operations
Section 3.2 Grant by and Obligations of the Ute Tribe
3.2.A Grant of Access to Contract Premises and of the Right
to Explore for, Develop and Produce Oil and Gas
3.2.B Issuance of Drilling Permits
3.2.C Approval of Agreement
3.2.D Approval of Leases
Article IV. EXPLORATION
Section 4.1 Obligation of Company to Drill Exploration Wells
4.1.A Option of Company to Drill Additional Exploration
Wells
4.1.B Additional Exploration Well(s) in an Exploration Year
4.1.C Well Payment Option
4.1.D Additional On-Lease Wells
Section 4.2 Agreement Lease Earned by Company by Drilling
Exploration Well
4.2.A Agreement Lease
4.2.B Royalties Due Under Agreement Leases
Section 4.3 Failure to Drill Exploration Well
Section 4.4 Expiration of Agreement Lease During Exploration Term
Section 4.5 Relinquishment of Contract Premises at the End of the
Exploration Term
Article V. DISPOSITION OF PRODUCING WELLS AT THE END OF AN
AGREEMENT LEASE
Section 5.1 Disposition of Well
Section 5.2 Plugging and Abandonment Responsibilities
Section 5.3 Conditions for Well Assumption the Ute Tribe and UDC
5.3.A Equipment on Wellsite
5.3.B Well Analysis
5.3.C Plugging and Abandonment Bond
Section 5.4 Disposition of Production
Article VI. EXTENSION OF AGREEMENT TERM
Article VII. DEEP RIGHTS LEASES
Article VIII. FORCE MAJEURE
Section 8.1 Force Majeure Events
Section 8.2 Commencement of Drilling
Article IX. SURRENDER AND RELINQUISHMENT
Article X. BREACH, CANCELLATION, AND RIGHT TO CURE
Section 10.1 Cancellation of Agreement Leases
Section 10.2 Cancellation of Agreement
Article XI. TAXATION
Article XII. PREFERENCE
Article XIII. ENVIRONMENTAL REQUIREMENTS
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Article XIV. MEMORANDUM OF AGREEMENT
Article XV. ASSIGNMENT
Article XVI. TRUST STATUS OF THE CONTRACT PREMISES
Article XVII. INDEMNIFICATION
Article XVIII. NOTICES
Article IXX. MISCELLANEOUS
Section 19.1 Waiver
Section 19.2 Conflict
Section 19.3 Headings
Section 19.4 Regulatory Authority
Section 19.5 Modification
iii
EXHIBITS TO EXPLORATION AGREEMENT
---------------------------------
Exhibit A Contract Premises
Exhibit B-1
through B-16 Agreement Leases
Exhibit C Permit for Use of Water
Exhibit D Ordinance No. 96-02
Exhibit E Mineral Access Agreement
Exhibit F Resolution No. 96-164
Exhibit G Deep Rights Lease Form
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EXPLORATION AND DEVELOPMENT AGREEMENT
-------------------------------------
This Agreement is made and entered into in quintuplicate under authority of
the Indian Mineral Development Act of 1982 (25 U.S.C. (S)(S)2101-2108), and
other applicable acts, among the Ute Indian Tribe of the Uintah and Ouray
Reservation, Utah, pursuant to the Indian Reorganization Act (25 U.S.C. (S)461,
et seq>), hereafter called the "Ute Tribe", the Ute Distribution Corporation, a
Utah Corporation, organized with authority under the Ute Partition and
Termination Act (25 U.S.C. (S)(S)677-677aa) to receive certain proceeds from
minerals held in trust by the United States for the Ute Tribe, hereafter called
"UDC", and Petroglyph Gas Partners, L.P., hereafter called "Company".
WHEREAS, the Ute Tribe, the UDC, and Company have reached an agreement for
the exploration and development of oil and gas, as defined below, in and under
and that may be produced from lands located in Uintah County, Utah, such lands
being particularly described on Exhibit A attached hereto and made a part
hereof.
NOW, THEREFORE, in consideration of the mutual obligations and covenants
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Ute Tribe, the UDC, and
Company hereby agree as follows:
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I. DEFINITIONS
For purposes of this Agreement, the terms and phrases set forth below are
defined as follows:
1.1 Agency - The Uintah and Ouray Agency of the Bureau of Indian Affairs
------
and any successor office thereof of the Bureau of Indian Affairs.
1.2 Agreement Lease - A lease from the Ute Tribe and the UDC to Company
---------------
covering one six hundred and forty (640) acre parcel, more-or-less, or a portion
thereof of the Contract Premises issued pursuant to Section 4.2 below on the
forms attached hereto as Exhibits B-1 through B-16 inclusive.
1.3 Agreement Term - This Agreement shall expire seven (7) years from its
--------------
approval by the Secretary at 11:59 P.M. or upon termination of the last
Agreement Lease issued under the Agreement, whichever is later.
1.4 Contract Premises - The lands located in Uintah County, Utah,
-----------------
described on Exhibit A attached hereto and made a part hereof.
1.5 Effective Date - The Effective Date of this Agreement shall be the
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first day of the month immediately following the date of approval by the
Secretary.
1.6 Exploration Term - Unless sooner terminated or expiring as provided
----------------
for herein, the Exploration Term of this Agreement shall commence on the
effective date and shall end seven (7) years therefrom at 11:59 P.M.
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1.7 Exploration Well - A well drilled, re-entered or recompleted on the
----------------
Contract Premises, which well is drilled during the Exploration Term.
1.8 Exploration Year - A one-year period during the Exploration Term
----------------
commencing on the Effective Date and subsequent annual anniversaries of such
Effective Date and ending twelve (12) months thereafter at 11:59 P.M.
1.9 Gas - Natural gas deposits, either combustible or noncombustible,
---
recovered at the surface in the gaseous state, including helium gas, carbon
dioxide gas, and sulfur gas; and hydrocarbons recovered at the surface as
liquids which are the results of condensation caused by reduction of pressure
and temperature of hydrocarbons originally existing in a reservoir in a gaseous
state; excluding gaseous or liquid substances derived, produced or manufactured
from coal, oil shale, tar sands or other hydrocarbons classified as synthetic
hydrocarbons.
1.10 Net Acres or Net Mineral Acres - The exact mineral acreage of the
------------------------------
Contract Premises owned by the Ute Tribe and committed to this Agreement, such
mineral acreage to be determined through a title verification performed at
Company's sole expense.
1.11 Oil - Petroleum or liquid hydrocarbons originally existing in a
---
reservoir in a liquid state.
1.12 Operative Condition or In Good Working Repair -Materials and equipment
---------------------------------------------
transferred to the Ute Tribe and the UDC by Company shall be transferred "as
is". Company shall use reasonable efforts to have the materials and equipment in
a
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condition susceptible to immediate utilization by the Ute Tribe and the UDC for
the purpose such equipment or material was intended or shall be susceptible to
use by the Ute Tribe and the UDC upon the replacement or repair of parts thereof
that are unusable due to normal wear and tear associated with the material or
equipment.
1.13 Producing Well - A well which is completed as producing oil or gas in
--------------
quantities sufficient to pay the costs of operating and maintaining the well and
marketing the product after the payment of any royalties and rentals due under
the Agreement Lease covering lands upon which the well is located.
1.14 Secretary - The Secretary of the Interior or his duly authorized
---------
representative.
1.15 Superintendent - The Superintendent of the Uintah and Ouray Agency of
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the Bureau of Indian Affairs.
II. REPRESENTATIONS OF THE UTE TRIBE AND THE UDC
--------------------------------------------
2.1 Representations of the Ute Tribe
--------------------------------
The Ute Tribe represents, but does not warrant, that oil and gas in and
under and that may be produced from the Contract Premises is owned by the Ute
Tribe or by the United States in trust for the Ute Tribe subject to the
provisions of the Ute Partition and Termination Act, 25 U.S.C. (S)(S)677-677aa.
The Ute Tribe further represents, but does not warrant, that it has the
authority to enter into this Agreement pursuant to the Indian Mineral
Development Act of 1982, 25 U.S.C. (S)(S)2101-2108, and other applicable Acts of
Congress. Finally, the Ute Tribe represents and warrants that no portion of the
Contract Premises is subject
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to any other agreement for the exploration and development of the oil and gas in
effect as of the Effective Date of this Agreement.
2.2 Representations of the UDC
--------------------------
The UDC represents, but does not warrant, that it is organized pursuant to
the Ute Partition and Termination Act, 25 U.S.C. (S)(S)677-677aa, and is
authorized to receive certain proceeds from minerals produced from the Contract
Premises. In this Agreement, the Ute Tribe grants certain rights and privileges
to Company to go upon the Contract Premises to explore for, develop and produce
oil and gas. To the extent that the UDC has an interest in the oil and gas in
the Contract Premises pursuant to the Ute Partition and Termination Act, 25
U.S.C. (S)(S)677-677aa, the grant herein of any right or privilege to Company by
the Ute Tribe shall be deemed as well to be a grant of the identical right or
privilege to Company by the UDC to explore for, develop and produce oil and gas.
It is the specific intent of the UDC by the execution of this Agreement that it
is consenting to the provisions hereof and is granting to Company any interest
of the UDC in the Contract Premises necessary to effect the provisions hereof.
Finally, the UDC represents and warrants that no portion of the Contract
Premises is subject to any other agreement for the exploration and development
of the oil and gas in effect as of the Effective Date of this Agreement.
2.3 Joint Exercise
--------------
The execution of this Agreement shall be deemed the joint management by the
Ute Tribe and the UDC of oil and gas rights in the Contract Premises retained in
trust by the United States
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required by the Ute Partition and Termination Act, 25 U.S.C. (S)(S)677-677aa.
III. OBLIGATIONS
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3.1 Obligations of Company
----------------------
3.1.A Opportunity Payment
-------------------
In consideration of the rights granted to Company by the Ute Tribe and
the UDC in this Agreement, Company agrees to pay jointly to the Ute Tribe and to
the UDC as an opportunity payment the sum of $172,392.50. The opportunity
payment sum as herein stated is a best estimate based on the number of net
mineral acres owned by or held in trust for the Ute Tribe within the Contract
Premises times Seventeen Dollars and Fifty Cents ($17.50) per net acre. Should
the actual net acres change due to title verification by Company and upon mutual
agreement of the Ute Tribe and UDC, such agreement on the part of the Ute Tribe
and UDC not to be unreasonably withheld, the opportunity payment will be
adjusted accordingly. The payment to be made by Company pursuant to this Section
is to be made by certified check, cashier's check, or postal money order payable
to the Bureau of Indian Affairs and shall be delivered to the Superintendent
prior to the Ute Tribe's execution of this Agreement. In the event the Ute Tribe
or the UDC shall fail to execute this Agreement or if the Agreement is not
approved by the Secretary, that opportunity payment paid pursuant to this
Section shall be returned to Company by the Superintendent not later than sixty
(60) days from the Superintendent receiving written notice that the Ute Tribe or
the UDC has refused to execute this Agreement or not later than
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sixty (60) days from the date notice is provided to the Company that the
Secretary has declined to approve this Agreement, whichever is applicable.
Failure by Company to make the payment required in this Section shall
result in the termination of this Agreement and of all rights of Company to earn
Agreement Leases covering Contract Premises in accordance with Article IV of
this Agreement. However, Company shall incur no liability to the Ute Tribe or to
the UDC for failure to make any such payment. Upon termination of this Agreement
pursuant to this Section, the obligation of Company to make additional payments
under this Agreement shall also terminate.
3.1.B Filing Fee
----------
Prior to approval of this Agreement by the Secretary, Company shall
deliver to the Superintendent a certified check, cashier's check or postal money
order payable to the Bureau of Indian Affairs in the amount of $1,200.00 as a
one time filing fee to pay for training, travel and purchase of equipment for
the Ute Tribe's employees assigned to assist the Agency's mineral and mining
programs.
Failure by Company to make payment of the filing fee in the proper
amount at the proper time shall not result in cancellation of this Agreement
unless and until Company shall have failed to correct the error within thirty
(30) days after receipt of written notice from the Ute Tribe and the
Superintendent of such failure.
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3.1.C Corporate Information
---------------------
Company shall furnish to the Superintendent all corporate information
required by 25 C.F.R. (S)225.29, together with such other information as the
Superintendent may deem necessary.
3.1.D Bonds
-----
Company shall supply such bonds for performance and reclamation as the
Superintendent may require, or as otherwise may be required under 25 C.F.R.
(S)225.30.
3.1.E Water Use for Drilling and Production
-------------------------------------
Company shall purchase from the Ute Tribe a water permit for each well
drilled on the Contract Premises. The water permit fee shall be $-0- per well.
Water permits shall allow Company to utilize water of the Ute Tribe for the
drilling and the completion of wells and for production of oil and gas from the
Contract Premises, excluding such water as may be necessary in any enhanced
hydrocarbon recovery system. The water of the Ute Tribe used by Company pursuant
to a water permit has been appropriated and reserved for Indian water rights
lands owned by the Ute Tribe. Water permits under this Agreement shall follow
that form appearing as Exhibit C hereto.
3.1.F Enhanced Recovery Operations
----------------------------
It is recognized and understood by the parties that it may be
necessary for the Company to institute and consummate a secondary recovery or
pressure maintenance program to develop the Contract Premises to its maximum
economic potential. With respect
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to such a secondary recovery or pressure maintenance program, the UDC, Ute Tribe
and Company agree:
(i) Water Wells - Company shall have the right to drill and maintain water
-----------
supply wells on the Contract Premises and to inject into formations underlying
the Contract Premises any substances for secondary recovery or pressure
maintenance purposes in accordance with a plan of operation approved by the
Secretary. This right shall include Company drilling and maintaining injection
wells on the Contract Premises and completing the same in the formations
underlying the Contract Premises. The Company may, in connection with the
secondary recovery or pressure maintenance program the subject hereof, also use
as much of the surface of the Contract Premises as may be reasonably necessary
for the operation and the development of the Contract Premises.
(ii) Water Subject to Section and Well Transfer - Company shall have free
------------------------------------------
use of water from the Contract Premises for operations under this Section except
water from existing fresh water wells, private lakes, ponds, streams or
irrigation ditches located on the Contract Premises. In the event Company shall
drill water wells in connection with a secondary recovery or pressure
maintenance program and shall at any time cease using such well(s) for a
secondary recovery or pressure maintenance operation, Company shall promptly
notify the Ute Tribe in writing to that affect and shall thereafter transfer to
the Ute Tribe all of its right, title and interest to such well(s) upon written
request of the Ute Tribe.
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(iii) Plan of Operation - Prior to commencement of a secondary recovery or
-----------------
pressure maintenance program on the Contract Premises, Company shall submit to
the Secretary for approval a plan of operations for the first year of such a
program. Upon approval of the plan by the Secretary, such plan shall constitute
the future operating objectives of the Company under its secondary recovery or
pressure maintenance program for the period specified therein. Following
submission and approval of the initial plan of operations, the Company shall
from time to time, but not less than each year during the term of such secondary
recovery or pressure maintenance program, and before the expiration of any
existing plan, submit a plan for an additional specified period of operations.
Said plan or plans shall be modified or supplemented when necessary to meet
changed conditions, or to protect the interests of all parties to this
Agreement. Reasonable diligence shall be exercised in complying with any
approved plan of operation for a secondary recovery or pressure maintenance
program.
3.1.G Surface Use
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Where Company desires to use any portion of the surface of the
Contract Premises owned by the Ute Tribe, or owned by the United States of
America in trust for the benefit of the Ute Tribe, in conjunction with its
operations for drilling and producing of one or more wells drilled pursuant to
this Agreement or on lands not covered by an Agreement Lease, Company shall
apply to the Ute Tribe for a Mineral Access Agreement for the use of those lands
on the form attached hereto as Exhibit E. Company
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agrees to construct and use any such mineral access so granted subject to and in
accordance with the conditions set forth by Ordinance No. 91-03, or any
successor Ordinance thereto, attached hereto as Exhibit D. With the exception of
actual surface damages, that payment identified in Section 3.1.A hereof shall be
deemed to have compensated the Ute Tribe for any access payment called for under
Ordinance No. 91-03, or any successor Ordinance thereto. Mineral Access
Agreements granted to Company under this subsection shall carry a term of twenty
(20) years and shall be renewable by Company for an additional twenty (20)
years.
3.1.H Drilling Permit
---------------
Prior to commencing operations upon Contract Premises for the drilling
of a well pursuant to Article IV, or the drilling of any well on the Contract
Premises subject to an Agreement Lease, Company shall apply to the Vernal Office
of the Bureau of Land Management for a permit to conduct operations upon the
Contract Premises. Company shall satisfy all lawful requirements for the
issuance of a permit made by the Bureau of Land Management.
3.1.I Conduct of Operations
---------------------
All operations associated with the exploration, development and
production of oil and gas from the Contract Premises shall be conducted in
accordance with 43 C.F.R. Part 3160.
As to any well drilled upon the Contract Premises pursuant to the
authority granted to Company under this Agreement
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but prior to issuance of an Agreement Lease, Company agrees as follows:
(i) To carry on all operations hereunder in a good and workmanlike
manner in accordance with approved methods and practice, having due regard
for the prevention of waste of oil or gas developed on the land, or the
entrance of water through wells drilled by Company to any strata containing
usable or potable water or to the productive sands or oil or gas-bearing
strata to the destruction or injury of the usable or potable water or of
the oil or gas deposits, the preservation and conservation of the property
for future productive operations, and to the health and safety of workmen
and employees;
(ii) To plug securely all wells before abandoning the same and to
effectually shut off all water from the oil or gas-bearing strata, from any
other strata containing mineral resources and from all strata containing
water of potential value;
(iii) Not to drill any well within five hundred (500) feet of any
house structure, or reservoir of water without the Ute Tribe's written
consent;
(iv) To bury all pipelines crossing tillable lands below plow depth
unless other arrangements therefore are made with the surface owner; and
(v) To pay the Ute Tribe all damages to crops, buildings, and other
improvements of the Ute Tribe occasioned by Company's operations, except,
that Company shall not be held responsible for casualties occasioned by
causes beyond Company's control.
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3.2 Grant by and Obligations of the Ute Tribe
-----------------------------------------
3.2.A Grant of Access to Contract Premises and of the Right to
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Explore for, Develop and Produce Oil and Gas
--------------------------------------------
Commencing with the Effective Date of this Agreement and ending with
the expiration of the Exploration Term, the Ute Tribe and the UDC grant to
Company the exclusive right to go upon Contract Premises to conduct operations
for the drilling of one or more wells, drilled pursuant to Article IV of this
Agreement, and to operate any such wells so drilled for the production of
oil and gas. Upon drilling a well to the depth specified in Section 4.1 such
that an Agreement Lease will be issued to Company, but prior to issuance of the
Agreement Lease and approval thereof by the Secretary, the right of Company
granted herein to operate such well for the production of oil and gas shall be
governed by the provisions of the Agreement Lease attached hereto as Exhibit B-1
through B-16 inclusive which covers the 640-acre parcel or portion thereof of
the Contract Premises on which the Exploration Well is located.
Upon receipt of an application by the Agency from Company for a
Mineral Access Agreement covering the Contract Premises to be used by Company
for drilling any well pursuant to this Agreement or any well on the Contract
Premises subject to an Agreement Lease, the Ute Tribe hereby gives its consent
for issuance of a Mineral Access Agreement to Company in accordance with the
application made on the form attached hereto as Exhibit E. In addition, such
easement shall be issued subject to the
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conditions set forth in the form of application attached hereto as Exhibit E,
and at no cost to Company.
3.2.B Issuance of Drilling Permits
----------------------------
Within thirty (30) days after receipt from Company of an application
to drill which is filed pursuant to Section 3.1.G, the Ute Tribe and the UDC
shall use their best efforts to have the Vernal Office of the Bureau of Land
Management issue to Company a permit allowing Company to enter upon the Contract
Premises for the purpose of drilling the well for which the application is made.
Failure of the Bureau of Land Management to issue the permit within the thirty
(30) day period shall be an instance of Force Majeure to which the provision of
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Article IX shall apply.
3.2.C Approval of Agreement
---------------------
The Ute Tribe and the UDC shall use their best efforts to obtain
approval of this Agreement from the Secretary. Any such approval shall provide
that this Agreement shall be deemed effective on the first day of the month
immediately following the date of approval.
3.2.D Approval of Leases
------------------
After issuance by the Ute Tribe and the UDC of an Agreement Lease
pursuant to Article IV, the Ute Tribe and the UDC shall submit to and obtain the
approval of the Secretary of any such Lease. Notwithstanding the date of
approval by the Secretary, the approval of any Agreement Lease shall specify
that the effective date of the Agreement Lease is the first day of the
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month in which the well which earned the Agreement Lease is drilled to the depth
specified in Section 4.1.
IV. EXPLORATION
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4.1 Obligation of Company to Drill Exploration Wells
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During the first Exploration Year, Company shall drill, or cause to be
drilled, two (2) Exploration Wells on the Contract Premises or on lands
communitized therewith at a location selected by Company in its sole discretion.
To earn an Agreement Lease pursuant to this Article IV, any such wells shall be
drilled by Company to a depth:
(i) sufficient to obtain production above 6,000 feet which results in the
completion of a Producing Well; or
(ii) to a depth of 6,000 feet or to a depth adequate to test the Green
River Formation, whichever is the lesser.
Any Exploration Well may be drilled to a deeper depth at the discretion of
Company, pursuant to Article VII, but in no event shall any Exploration Well be
drilled to a depth below the base of the Mesaverde Formation or its
stratigraphic equivalent. In the event the Mesaverde Formation is not
encountered in the Exploration Well, or cannot be identified, the well shall not
be drilled below the base of the Tertiary System. The cost, risk and expense of
drilling and completing any Exploration Well pursuant to this Section 4.1 shall
be borne solely by Company.
4.1.A Option of Company to Drill Additional Exploration Wells
-------------------------------------------------------
During the second Exploration Year of the Exploration Term, Company
shall have the option, but not the obligation, to drill, or cause to be drilled,
four (4) or more Exploration Wells
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in accordance with the terms of Section 4.1 of this Agreement. During each of
the third, fourth, fifth, sixth and seventh Exploration Years of the Exploration
Term, Company shall have the option, but not the obligation, to drill, or cause
to be drilled, three (3) or more Exploration Wells in accordance with the terms
of Section 4.1 of this Agreement.
4.1.B Additional Exploration Well(s) in an Exploration Year
-----------------------------------------------------
If Company should drill more than the required number of Exploration
Wells set out in Section 4.1.A of this Agreement during any Exploration Year,
all of which meet the requirements of Section 4.1, each Exploration Well drilled
during that Exploration Year in excess of the required number shall be deemed,
for purposes of this Agreement, as an Exploration Well drilled in a subsequent
Exploration Year, and shall be deemed an exercise of the option of Company to
drill Exploration Wells during subsequent Exploration Years. For example, if
Company shall drill three (3) Exploration Wells which meet the requirements of
Section 4.1 during the first Exploration Year, one (1) of those Exploration
Wells shall be deemed an Exploration Well drilled during the second Exploration
Year and Company will be required to drill only three (3) Exploration Wells to
satisfy the provisions of this Article calling for optional Exploration Wells
during the second Exploration Year. Any Exploration Well drilled during one
Exploration Year which is deemed pursuant to this paragraph as an Exploration
Well drilled in a subsequent Exploration Year shall be counted as an Exploration
Well drilled in the immediate Exploration Year for which Exploration Wells
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have not been drilled in determining the number of Exploration Wells drilled
during subsequent Exploration Years. Irrespective of whether a well drilled
during one Exploration Year is deemed to be a well drilled during a subsequent
Exploration Year pursuant to this Section, Company agrees that in order to
prevent expiration of this Agreement at the end of each Exploration Year of the
Exploration Term, it must have drilled a cumulative number of Exploration Wells
which satisfy the provisions of this Section 4.1 or made timely payment of the
monetary penalty as described in Section 4.1.C or a proper combination of
drilling and penalty payment(s).
4.1.C Well Payment Option
-------------------
In the event Company fails to drill any of the Exploration Wells
called for by 4.1 or 4.1.A, Company has the option to pay a Ten Thousand Dollar
($10,000.00) penalty payment for each well not drilled. Said penalty payment
shall be made by check payable to the Bureau of Indian Affairs and delivered to
the Superintendent on or before thirty (30) days from the last day of any
Exploration Year in which Company failed to drill the obligated number of wells.
Should Company make timely payment of the penalty payment described hereinabove,
the Ute Tribe and the UDC hereby agree that Company shall have complied with the
required Exploration Wells provision and this Agreement shall remain in full
force and effect according to its terms. Payment of the penalty called for
herein shall in no event, however, operate to allow Company to earn an Agreement
Lease, the earning
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of Agreement Leases being specifically governed by Section 4.2.A of this
Agreement.
4.1.D Additional On-Lease Wells
-------------------------
In the event Company drills, re-enters or reworks more than one (1)
well on an Agreement Lease, such additional wells drilled on an Agreement Lease
shall not be considered an Exploration Well(s) for the purpose of meeting the
number of Exploration Wells required by this Agreement, and shall not act to
earn leases on the Contract Premises.
4.2 Agreement Lease Earned by Company by Drilling Exploration Well
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4.2.A Agreement Lease
---------------
If during any Exploration Year Company shall commence the drilling of
a Exploration Well and the well is drilled to the depth specified in Section
4.1, the Ute Tribe and the UDC shall issue to Company, without regard to whether
the Exploration Well is completed as a Producing Well, an Agreement Lease on the
applicable lease form attached hereto as Exhibit B-1 through B-16 covering the
lands of the Contract Premises upon which the Exploration Well is drilled.
Without regard to the depth to which the Exploration Well is drilled, the
Agreement Lease shall cover all formations between the surface of the earth down
to the base of the Mesaverde Formation or its stratigraphic equivalent. In the
event the Mesaverde Formation is not encountered, or cannot be identified, the
Agreement Lease shall cover all formations between the surface of the earth down
to the base of the Tertiary System. The Agreement Lease shall be executed by the
Ute Tribe and the UDC within forty-five (45) days of reaching the depth
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specified in Section 4.1, and shall be issued with an effective date of the
first day of the month in which the Exploration Well earning the Agreement Lease
reached the depth specified in Section 4.1.
4.2.B Royalties Due Under Agreement Leases
------------------------------------
The obligation of Company to pay royalty pursuant to the terms and
provision of any Agreement Lease issued to Company pursuant to this Article
shall commence with the first production of oil or gas from any well located
upon lands covered by the Agreement Lease and shall be remitted in accordance
with the provisions of 30 C.F.R. Parts 202, 210 and 218, as supplemented by Part
206, Valuation of Lease Products. The first royalty payment for any such well is
due within ninety (90) days of the date of delivery by the Ute Tribe and the UDC
to Company of the approved Agreement Lease covering the land upon which the well
is located, or ninety (90) days after the date of first production, whichever is
later. All subsequent royalty payments shall be made monthly in accordance with
the applicable Agreement Lease.
4.3 Failure to Drill Exploration Well
---------------------------------
If Company shall fail to drill two (2) Exploration Wells to the depth
specified in Section 4.1 above or to make timely payment of the monetary penalty
as determined in Section 4.1.C or a proper combination of drilling an penalty
payments during the first Exploration Year of the Exploration Term, then all
rights of Company to acquire Agreement Leases covering the Contract Premises
pursuant to Article IV of this Agreement shall terminate; however, any Agreement
Lease previously earned by or
19
issued to Company as the result of drilling an Exploration Well during the first
Exploration Year shall remain in effect according to its terms. Similarly, if
Company shall fail to exercise its Exploration Well option to the depth
specified in Section 4.1 during the second, third, fourth, fifth, sixth or
seventh Exploration Years of the Exploration Term or make timely payment of the
monetary penalty as described in Section 4.1.C or a proper combination of
drilling and penalty payments, all rights of Company to acquire additional
Agreement Leases pursuant to Article IV of this Agreement shall terminate;
however, any Agreement Leases previously earned by or issued to Company as the
result of drilling an Exploration Well during the Exploration Term shall remain
in effect according to its terms.
All Contract Premises not covered by an Agreement Lease in effect at the
end of an Exploration Year in which the required number of Exploration Wells are
not drilled shall be deemed to be released from the provisions of this
Agreement. However, any Mineral Access Agreements issued by the Ute Tribe to
Company pursuant to Section 3.1.G covering Contract Premises so relinquished
shall remain in effect according to their terms. Company shall incur no
liability to the Ute Tribe or the UDC for failure to drill any Exploration Well
in accordance with Sections 4.1 or 4.1.A above except the termination of rights
as set forth in this Section.
4.4 Expiration of Agreement Lease During Exploration Term
-----------------------------------------------------
Should any Agreement Lease issued to Company by the Ute Tribe and the UDC
expire at the end of its Primary Term, as
20
specified in such Agreement Lease, during the Exploration Term of this
Agreement, such expired lease lands shall no longer be considered as part of the
Contract Premises and shall not thereafter be subject to the lease earning
provisions of Section 4.2.A of this Agreement.
4.5 Relinquishment of Contract Premises at the End of the Exploration Term
----------------------------------------------------------------------
At the end of the Exploration Term of this Agreement, the rights of Company
to drill Exploration Wells and to acquire Agreement Leases covering the Contract
Premises shall expire. All Contract Premises which, at the end of the
Exploration Term, are not subject to an Agreement Lease which is in its primary
term or which is in its extended terms by reason of the existence of a Producing
Well located upon lands covered by the Agreement Lease or on land communitized
therewith, shall no longer be subject to the provision of Article IV of this
Agreement.
V. DISPOSITION OF PRODUCING WELLS AT THE END
-----------------------------------------
OF AN AGREEMENT LEASE
---------------------
5.1 Disposition of Well
-------------------
If an Agreement Lease expires or is cancelled, upon which there are one or
more wells that are capable of production in paying quantities, Company will, at
the request of the Ute Tribe and the UDC, relinquish its interest in any such
Producing Well to the Ute Tribe for the benefit of the Ute Tribe and the UDC in
accordance with the requirements of this Section. In addition, Company will upon
appropriate approvals assign operating rights to the Ute Tribe for the benefit
of the Ute Tribe and the UDC. The Ute Tribe and the UDC shall thereafter manage
any such well
21
in accordance with the provisions of the Ute Partition and Termination Act, 25
U.S.C. (S)(S)677-677aa.
As to any such Producing Well in which Company relinquishes its interest to
the Ute Tribe for the benefit of the Ute Tribe and the UDC pursuant to this
Section, Company and the Ute Tribe agree to establish a fair salvage value for
the material and equipment associated with operating the well as a Producing
Well and if such value approximates Company's estimate of the cost of plugging
and abandoning such well(s) then Company shall exchange the salvage value of
Company's interest in all material and equipment associated with operating the
well as a Producing Well, excluding buildings, compressors or injection
facilities and equipment, in return for the Ute Tribe and the UDC assuming all
of Company's obligations with respect to operations conducted at the well,
including any obligation to plug and abandon the well and to restore any of the
Contract Premises used in operations on the Producing Well. It is understood
that no interest will be conveyed to the Ute Tribe and the UDC in any materials
or equipment which are utilized by or associated with operation of any other
well or wells located on the Contract Premises, e.g. electrical lines, injection
systems, oil or gas transmission lines. All materials and equipment transferred
to the Ute Tribe shall be in operative condition or in good working repair, to
avoid large expenditures of funds beyond economic values in order to continue
operations. Company shall have no obligation to plug and abandon any Producing
Well or restore any of the Contract Premises used in operations on any Producing
Well in which
22
Company relinquishes its interest to the Ute Tribe for the benefit of the Ute
Tribe and the UDC pursuant to this Section. Finally, in the event Company and
the Ute Tribe cannot come to agreement that the value of the materials and
equipment to be exchanged approximates the estimated cost of plugging and
abandoning such well, unless Company and the Ute Tribe come to other terms
regarding the turnover, then Company shall remain obligated to plug and abandon
the well(s) pursuant to the terms hereof and applicable rules and regulations.
5.2 Plugging and Abandonment Responsibilities
-----------------------------------------
In the event the Ute Tribe and the UDC request that Company relinquish to
them a well or wells on the Contract Premises, the Ute Tribe and the UDC by that
request agree to assume all plugging and abandonment obligations of Company, and
the Ute Tribe and the UDC further agree that all plugging and abandonment
procedures to be utilized will be approved by and carried out to the
satisfaction of the Bureau of Land Management or the authorized representative
of the Secretary.
5.3 Conditions for Well Assumption by Ute Tribe and UDC
---------------------------------------------------
5.3.A Equipment on Wellsite
---------------------
Prior to the Superintendent consenting to Company relinquishing a
well(s) to the Ute Tribe and the UDC pursuant to this Article, the Ute Tribe and
the UDC shall provide to the Superintendent such assurances as he deems
appropriate that any equipment necessary for continued production operations
will remain:
(i) on the well location(s) for the beneficial use of the Ute Tribe and
the UDC; and
23
(ii) available as collateral (salvage value) toward the cost of the
plugging and abandonment of the wellbore and wellsite.
5.3.B Well Analysis
-------------
Prior to the Superintendent consenting to a well(s) relinquishment by
Company to the Ute Tribe and the UDC and/or release of the well(s) from
Company's plugging and abandonment bond, the Superintendent shall be provided
with those items set forth below.
(i) Company shall deliver to the Superintendent, at its sole cost and
expense but with no liability to it for any reliance thereon:
- Results of a casing pressure test, if conducted by Company, to
determine the competency of the wellbore(s) to be relinquished.
- Its best estimate of the completeness and competency of the
wellsite(s) equipment to continue operations of the wellbore(s).
- An Affidavit of Fixed Expenditure (AFE) of all costs associated with
the plugging and abandonment procedures of the particular well(s), on
Form 3160.5, entitled Sundry Notice of the Intent to Plug and Abandon,
with an attached plan of such procedure, for review by the Bureau of
Land Management for engineering adequacy.
- Notification whether the equipment remaining for production
operations is of sufficient salvage value to offset the cost of the
plugging and abandonment.
(ii) A Reserves Analysis (remaining producible oil and gas) from the Bureau
of Land Management determining the ability of the well(s) to continue
production of oil and gas in economic quantities.
5.3.C Plugging and Abandonment Bond
-----------------------------
Failure of the Ute Tribe, the UDC or Company to provide that
information set out in 5.3.A or 5.3.B above or submission of information
indicating that the assets of the to-be-relinquished well(s) are insufficient to
defray the costs of plugging and
24
abandonment may, in the Superintendent's discretion, require that the Ute Tribe
and the UDC post a plugging and abandonment bond prior to the issuance of any
approval related to such relinquishment(s).
5.4 Disposition of Production
-------------------------
After expiration or the final adjudication of cancellation of an Agreement
Lease, all production shall be owned by the Ute Tribe and the UDC as required by
25 U.S.C. (S)(S)677-677aa.
VI. EXTENSION OF AGREEMENT TERM
---------------------------
Contrary provisions of this Agreement notwithstanding, Company 24 shall
have the right to maintain this Agreement in effect one (1) year beyond the end
of the Exploration Term as to Contract Premises which would otherwise be
relinquished pursuant to Section 4.5 or as a result of its failure to drill
option wells pursuant to Section 4.1.A by the payment of a sum equal to $10.00
per net mineral acre as to Contract Premises desired by Company to be extended.
To retain lands within the coverage of this Agreement, Company shall, not later
than (30) days before the end of the Exploration Term or its omission to
exercise its drilling option or to make a penalty payment, (i) notify the Ute
Tribe and the UDC of the Contract Premises to which the extension is to apply,
and (ii) deposit with the Superintendent, for the benefit of the Ute Tribe and
the UDC, the amount of $10.00 per net mineral acre of the Contract Premises
which is to be maintained in effect. Any such payment shall be made by certified
check, cashier's check, or postal money order payable to the Bureau of Indian
Affairs.
25
If Company shall timely notify the Ute Tribe and the UDC of an election to
maintain portions of the Contract Premises in effect which would otherwise be
relinquished, and shall make a timely payment of the necessary amount in
accordance with the preceding paragraph, then the Contract Premises and this
Agreement shall be maintained in effect not only as to any lands upon which
there is located a Producing Well but also as to all lands which have been
designated for extension by Company and for which an extension payment has been
made.
VII. DEEP RIGHTS
-----------
During the first ten (10) years following the Effective Date of this
Agreement, Company has the option, but not the obligation, to purchase from the
Ute Tribe and the UDC one (1) or more Oil and Gas Leases covering the Contract
Premises but only as to formations between the base of the Mesaverde Formation
or its stratigraphic equivalent and the top of the Jurassic System, or, if the
Mesaverde Formation is not encountered or cannot be identified, as to formations
between the base of the Tertiary System and the top of the Jurassic System. Any
lease covering these so-called deep rights shall cover one (1) entire section of
the Contract Premises or shall cover a partial section of the Contract Premises,
if the entire section is not owned by the Ute Tribe; shall provide for a primary
term of two (2) years and for a royalty of 18%; and shall be issued on the form
attached hereto as Exhibit G. Company may exercise its right to acquire an Oil
and Gas Lease covering "deep rights" as specified in this Article by paying a
bonus jointly to the Ute Tribe and the UDC of $15.00
26
per net mineral acre in the section or partial section of the Contract Premises
to be covered by the Lease. Any such payment to be made by Company pursuant to
this Article is to be made by certified check, cashier's check, or postal money
order payable to the Bureau of Indian Affairs deposited with the Superintendent
prior to the end of the ten (10) year period specified in this Article. Upon
receipt of such payment, the Ute Tribe and the UDC shall cause the Lease or
Leases to be issued to Company, and shall obtain approval of the Lease(s) from
the Secretary. Any such Lease(s) shall be maintained in effect under its own
terms except as it might be amended pursuant to the provisions of this
Agreement.
Company's option to obtain Deep Right Leases under this Article shall
remain in force for the period set out herein if and only if this Agreement
remains in force by reason of the existence of a valid Agreement Lease.
VIII. FORCE MAJEURE
-------------
8.1 Force Majeure Events
--------------------
If Company, the Ute Tribe or the UDC, is prevented from complying with any
of its obligations as imposed herein, except for the payment of monies, by
reason of lack of water, equipment, labor or other material, by reason of fire,
storm, flood, explosion, act of God, by reason of rebellion, insurrection or
riot, by reason of differences with the workmen or material suppliers or labor
disputes, including strikes and walkouts, by reason of failure to receive timely
delivery of supplies, materials, or equipment, by reason of failure of carriers
to
27
transport or to furnish facilities for transportation, by reason of non-
availability of drilling equipment including but not limited to drilling rigs,
and/or drilling crews, by reason of any federal, state, or tribal law, or any
order, rule or regulation of governmental authority, by reason of lack of
drilling permits or extreme weather conditions, or by reason of any other cause
or causes beyond Company's, the UDC's, or the Ute Tribe's control or any
operation of Force Majeure, then, while so prevented, this Agreement shall not
-------------
terminate in whole or in part and performance under this Agreement shall be
temporarily excused. The parties further agree that any delays caused by the
failure of the Ute Tribe and the UDC to respond when required pursuant to the
provisions of this Agreement, or delay occasioned by the United States of
America in granting any permit for the use or occupancy of any portion of the
Contract Premises, shall temporarily excuse performance under this Agreement for
the period of such delay and for so long as reasonable efforts are being used to
obtain any such necessary approval or response.
Notwithstanding the preceding paragraph, if at the end of any Exploration
Year Company is being prevented by a circumstance of Force Majeure from drilling
-------------
an Exploration Well, the period for the commencement of actual drilling
operations on such Exploration Well shall not be extended for more than six (6)
months from the end of the Exploration Year, and the period for performance to
drill the Exploration Well to a depth sufficient to satisfy the provisions of
Section 4.1 shall not be extended for more than ninety (90) days after the
commencement of actual
28
drilling operations absent the written consent of the Ute Tribe and UDC to
extend such period of Force Majeure. Any Exploration Well drilled during an
-------------
extended period for performance resulting from a circumstance of Force Majeure,
-------------
subject to the limitations in this paragraph, shall be deemed an Exploration
Well drilled during the Exploration Year in which the event of Force Majeure
-------------
occurred.
8.2 Commencement of Drilling
------------------------
For purposes of this Article, actual drilling operations on an Exploration
Well shall be deemed to be commenced at such time as a spudding rig or drilling
rig begins actual drilling; provided, that in no event shall drilling be deemed
to have commenced if Company shall permit more than sixty (60) days to elapse
between the date on which a spudding rig is released and the date on which a
drilling rig capable of reaching the depth required under Section 4.1 of this
Agreement begins actual drilling of a well.
IX. SURRENDER AND RELINQUISHMENT
----------------------------
Company may, on approval of the Secretary, surrender any portion of the
Contract Premises subject to this Agreement from the provisions hereof by the
payment of the sum of $100.00 and all rentals, royalties and other obligations
then due; provided, that Company makes a showing to the Superintendent that full
provision has been made for conservation and protection of the surface and
mineral estates and the proper abandonment of all wells located on Contract
Premises to be surrendered. If the surrender of Contract Premises made by
Company pursuant to this
29
Section is approved by the Secretary, the surrender shall be effective on the
date made without regard to the date of approval of the surrender.
X. BREACH CANCELLATION AND RIGHT TO CURE
-------------------------------------
10.1 Cancellation of Agreement Leases
--------------------------------
Failure of Company to comply with the regulations contained in 43 C.F.R.
Part 3160 with respect to operations conducted under any Agreement Lease shall
subject Company to the assessments and penalties set forth therein, but shall
not result in the cancellation of an Agreement Lease unless cancellation is the
appropriate remedy provided by the regulations in 43 C.F.R. Part 3160. Any
failure of Company to comply with these regulations shall not be deemed a breach
of this Agreement.
10.2 Cancellation of Agreement
-------------------------
If the Ute Tribe and the Superintendent shall deem any provisions of this
Agreement to be breached, the Ute Tribe and the Superintendent shall notify
Company in writing of the breach the Ute Tribe and the Superintendent believe to
exist. Company shall have sixty (60) days from receipt of such written notice to
cure or correct the alleged breach unless such other cure period is applicable
under other provisions of this Agreement or the breach cannot be correct within
sixty (60) days with reasonable diligence. If the breach cannot be corrected
within the sixty (60) day period, Company shall commence all reasonable and
necessary steps to correct the breach within the sixty (60) day period and shall
thereafter diligently pursue the matter until the breach has been corrected. If
the Ute Tribe and the
30
Superintendent believe at the end of such sixty (60) day period that the alleged
breach has not been adequately corrected or that appropriate steps have not been
taken to correct the breach, then this Agreement shall be subject to
cancellation pursuant to the procedures contained at 25 C.F.R. (S)225.36. If
this Agreement is cancelled as a result of any such proceedings, all Agreement
Leases then in effect or earned shall remain in effect according to their terms.
XI. TAXATION
--------
During that period from the Effective Date hereof until expiration of this
Agreement and Agreement Leases issued pursuant hereto, the Ute Tribe hereby
agrees not to impose on Company's interest in the Contract Premises any taxes of
any sort or kind in addition to that severance tax established by the Ute Tribe
in Ordinance No. 88-07.
XII. PREFERENCE
----------
12.1 In connection with the performance of work done under this Agreement,
Company agrees:
(i) to actively recruit, train and employ members of the Ute Tribe with
the intent of maximizing employment and advancement opportunities for
members of the Ute Tribe;
(ii) with the intent of maximizing the number as such subcontracts awarded
to members of the Ute Tribe, to advertise all specifications for
subcontracts which exceed ten thousand dollars ($10,000.00) in amount
through one of the following methods: a) publication in a newspaper of
general circulation on the Reservation; b) publication [and] in the
Ute Bulletin or any successor tribal newspaper; or c) by posting a
notice at the same time as it posts notice of well permits to be
issued by the Superintendent; and
iii) with the intent of maximizing the amount of goods and services
purchased from members of the Ute Tribe, to advertise all requirements
for goods and services which
31
exceed ten thousand dollars ($10,000.00) in amount in one of the
following methods: a) publication in a newspaper of general
circulation on the Reservation; b) publication in the Ute Bulletin, or
any successor tribal newspaper; or c) by posting a notice at the same
time as it posts notice of well permits to be issued by the
Superintendent.
Company further agrees to require all subcontractors engaged in the
performance of work under this Agreement to comply with the provisions of the
preceding paragraph.
12.2 Company shall permit the Ute Tribe to audit its records during
normal business hours to determine Company's compliance with the requirements of
this Article.
12.3 Company agrees and consents to the jurisdiction of the Ute Tribal
Court for the resolution of any dispute arising under this Article. If Company
is found to be in breach of this Article by the Ute Tribal Court, Company agrees
to pay to the Ute Tribe Scholarship Fund $1,000.00 as liquidated damages for
each violation and to reimburse the Ute Tribe for reasonable attorneys' fees and
costs associated with enforcement of this Article.
XIII. ENVIRONMENTAL REQUIREMENTS
--------------------------
Company is solely responsible for fulfilling any and all National
Environmental Policy Act requirements concerning the Contract Premises. The Ute
Tribe agrees to provide copies of existing Bureau of Land Management
environmental documents pertinent to the area for Company's use. Archaeological
activities of Company will include participation of the Ute Tribal Cultural
Resource Protection Program and, when warranted, the Tribal Preservation
Officer.
32
XIV. MEMORANDUM OF AGREEMENT
-----------------------
Concurrent with the execution of this Agreement, the parties may execute a
short form memorandum of this Agreement to be placed of record in the Office of
the Register of Deeds of Uintah County, Utah. Costs of recording the Memorandum
of Agreement shall be borne by Company. In the event this Agreement is not
approved by the Secretary, the parties shall execute a Notice of Termination of
this Agreement which shall be recorded, at Company's expense, in Duchesne
County, Utah. Company agrees to record in Duchesne County, Utah, at its expense,
a release or releases of all Agreement Leases relinquished in whole or in part
under the provisions of this Agreement.
XV. ASSIGNMENT
----------
The rights and benefits granted and the obligations assumed pursuant to
this Agreement shall extend to and be binding upon the successors or assigns of
the parties hereto. Company agrees not to assign, sublet or transfer its rights
under this Agreement, or any leases which may be issued according to the
provision hereof, without the prior written consent of the Ute Tribe, the UDC
and the Superintendent. The Ute Tribe and the UDC agree that such consent will
not be unreasonably withheld.
XVI. TRUST STATUS OF THE CONTRACT PREMISES
-------------------------------------
Nothing contained in this Agreement shall operate to delay or prevent a
termination of federal trust responsibilities over the Contract Premises during
the term of this Agreement. However, termination of federal trust responsibility
shall not serve to abrogate this Agreement, or any Agreement Leases issued
pursuant
33
to this Agreement. The Ute Tribe shall notify Company of any such change in the
status of the lands.
XVII. INDEMNIFICATION
---------------
Company, for itself and its successors, subrogees, assigns, representatives
and related or affiliated entities, covenants and agrees to indemnify and hold
harmless the Ute Tribe, the UDC and the United States for and from any and all
liabilities, rights, claims, demands, damages, costs, expenses, actions, causes
of action, suits or controversies of every kind and description whatsoever at
law or equity asserted by persons not parties to this Agreement which arise out
of Company's performance of this Agreement.
XVIII. NOTICES
-------
All Notices required to be given pursuant to this Agreement shall be sent
by certified mail, return receipt requested, with postage prepaid to the parties
at the following addresses:
Petroglyph Gas Partners, L.P.
P.O. Box 1839
Hutchinson, Kansas 67504-1839
Attn: Robert A. Christensen
Ute Indian Tribe of the Uintah and Ouray Reservation
P. O. Box 190
Fort Duchesne, UT 84026
Attn: Director, Energy and Minerals Dept.
Ute Distribution Corporation
P. O. Box 696
Roosevelt, UT 84066
Attn: Corporate President
Superintendent of the Uintah and Ouray Agency of the Bureau of Indian
Affairs
P.O. Box 130
Fort Duchesne, UT 84026
34
Each party shall have the right to change the address to which notices required
under this Agreement are to be sent. However, no change of address shall become
effective until written notice of that change shall be given by the party
desiring the address change and the same has been received by the other party.
XIX. MISCELLANEOUS
-------------
19.1 Waiver
------
No waiver by either party of any one or more defaults by the other in the
performance of this Agreement shall operate or be construed as a waiver of any
future default or defaults, whether of a like or of a different nature.
19.2 Conflict
--------
If there is a conflict between the terms of this Agreement and an Agreement
Lease, the terms of this Agreement shall prevail.
19.3 Headings
--------
All headings used in this Agreement are inserted only for convenience and
ease of reference, and are not to be considered in the construction or
interpretation of any provision of this Agreement.
19.4 Regulatory Authority
--------------------
Company agrees to abide by and conform to 25 C.F.R., 30 C.F.R. and 43
C.F.R., and any and all other regulations and manuals of the Secretary now or
hereafter in force relative to oil and gas leases.
35
19.5 Modification of Agreement
-------------------------
No provision of this Agreement may be changed, modified, assigned, waived
or discharged orally, unless approved by the parties hereto and no change,
modification, assignment, waiver or amendment of any provision will be effective
except by written instrument executed by said parties.
WHEREFORE, the Ute Tribe, the UDC and Company do hereby make and enter into
this Agreement on the dates below appearing, to be effective as of the Effective
Date as defined in Section 1.5.
36
ATTEST: UTE INDIAN TRIBE
/s/ Dana West By: /s/ Ruby Atwine
- --------------------------- ---------------------------
Name: Dana West Name: Ruby Atwine
Date: 10/3/96 Title: Chairman
Date: 10/3/96
ATTEST: UTE DISTRIBUTION CORPORATION
By: /s/ Lois LaRose
- --------------------------- ---------------------------
Name: Name: Lois LaRose
Date: Title: President
Date: 10-30-96
ATTEST: PETROGLYPH GAS PARTNERS, L.P.
by Petroglyph Energy, Inc.,
general partner
/s/ Robert A. Christensen By: /s/ Robert C. Murdock
- --------------------------- ---------------------------
Name: ROBERT A. CHRISTENSEN, Secy Name: ROBERT C. MURDOCK
Date: August 28, 1996 Title: PRESIDENT
Date: August 28, 1996
It has been determined that approval of this document is not such a
major federal action significantly affecting the quality of the human
environment as to require the preparation of an environmental impact statement
under Section 102(2)(c) of the National Environmental Policy Act of 1969 (42
U.S.C. 4332(s)(c); AND Environmental Assessment of Oil and Gas Development,
---------------------------------------------------
Duchesne River Area; Environmental Assessment No. 3, Bureau of Land Management.
Vernal District, Vernal, Utah: prepared April, 1982.
APPROVED Bureau of Indian Affairs, Uintah and Ouray Agency, under
authority delegated to the Superintendent by Phoenix Area Redelegation Order No.
3, Amendment 6, Section 2.17, Part 2 (34 F.R.; 11108).
Date: 12/11/96 /s/ [SIGNATURE APPEARS HERE]
--------------- ----------------------------
Superintendent
37
EXHIBIT A
Township 4 South, Range 2 East, USM
- -----------------------------------
Section 13: E/2NE, NESE, Lots 4, 5,, 8, & 9
Section 14: Lots 3, 4, 5, 6, E/2SW, SENW & SWSE
Section 15: NE/4
Section 23: W/2NE, SENE, W/2, Lots 6 & 11 (W/2SE)
Section 24: ScNW
Section 26: N/2 (less mining claim)
Section 35: S/2 (less mining claim)
Section 36: All (less mining claim)
Township 4 South, Range 3 East, USM
- -----------------------------------
Section 6: All Section 20: All (less mining claim)
Section 7: All Section 29: Lots 3 & 4
Section 17: All Section 30: E/2E/2, Lots 13 & 14
Section 18: All Section 28: All
Section 19: All Section 29: S/2
Section 31: All Section 33: All
Section 32: All
Township 5 South, Range 2 East, USM
- -----------------------------------
Section 1: Lots 2, 5, 6, 7, 8 & 9
Section 2: N/2, Lot 6 (less mining claim)
Section 3: All
Section 10: All
Section 11: Lots 3, 4, 5, 6, 7, 9, 10 & 11
Section 12: Lots 1, 2, 3 & 4
Section 14: All
Section 15: All
Section 22: All
Section 23: All
Township 5 South, Range 3 East, USM
- -----------------------------------
Section 5: Lots 4 & 5
Section 6: Lots 1 & 2, S/2NE, N/2SE
Section 7: Lots 5, 9, 10 & 11
Section 8: Lots 2, 3 & 4
TOTALING - 9,851 acres more-or-less
38