OIL, GAS & COALBED METHANE LEASE
THIS AGREEMENT, made and entered into this _______ day of
_________________, 20____, by and between
_______________________________________________________________________________
_______________________________________________________________________________
party(s) of the first part, hereinafter referred as Lessor(s); and Wilon
Resources, Inc. 931 Ashland Terrace, Chattanooga, Tennessee 37415, hereinafter
referred to as Lessee.
WITNESSETH: That the Lessor(s) for and in consideration of the sum of One
Dollar ($1.00) and other good and valuable consideration, the receipt of which
is hereby acknowledged, and performance of the covenants herein has leased and
let, exclusively unto Lessee, the land hereinafter described for the purpose of
exploring, operating and producing oil, gas, coalbed methane and related
products, and the right of injecting water and other fluids in to subsurface
strata, with rights and easements for laying and setting pipes, electric lines,
tanks, power houses, ponds, roadways and fixtures for producing, treating,
maintaining and caring for such products and such other rights and privileges as
are necessary, or convenient for the economical operation alone or conjointly
with neighboring land for oil, gas and coalbed methane products, all that
certain tract of land situated in Wayne County, State of West Virginia,
On the North by the lands of: _______________________________________________
On the East by the lands of: _______________________________________________
On the South by the lands of: ________________________________________________
On the West by the lands of: ________________________________________________
This being the same property conveyed to ______________________________________
This lease shall remain in force for a term of ________ ( ____) year(s),
and as long thereafter as oil, gas and/or coalbed methane are produced from the
premises or operations by drilling or injection are continued, or thereafter, to
pay the Lessor(s) a delay rental at the rate of Dollars ($ _____ ) per acre per
annum payable annually in advance, beginning _______________, _____ , until, but
not after, a well yielding royalty to the Lessor(s) is drilled and oil, gas
and/or coalbed methane is marketed therefrom. For injection purposes this lease
shall continue in full force and effect, only as to well(s) so used and ten (10)
acres contiguous thereto.
Lessee covenants and agrees:
1. To deliver to the credit of Lessor(s), free of cost, in the pipeline to
which Lessee may connect it's well(s), a 1/8th part of all oil produced and
saved from leased premises, or at the Lessee's option pay 1/8th of the market
price for oil of like grade and gravity prevailing on the day such oil is run.
2. To pay to Lessor(s) for all marketed gas or coalbed methane an amount
equal to 1/8th of the price received at the wellhead or meter station.
3. If Lessor(s) owns a less interest than the entire undivided fee,
royalties and rentals shall be paid Lessor(s) only in proportion the Lessor(s)
interest bears to the whole.
4. In the event of a dispute between Lessor(s) and other claimants as to
the right to receive payment of rents and royalties, Lessee may continue it's
operations and deposit same in an escrow account to be disbursed upon legal
resolution of the controversy.
5. The Lessee may use, free of cost, gas, oil, coalbed methane and water
produced on said land for it's operation thereon, except waters from wells of
Lessor(s).
6. Lessor(s) may use free of cost, gas for one (1) house residential house
upon the premises, however, this shall apply only to Lessor(s) or their heirs
who live on the leased premises, no other individuals shall have free gas, which
shall not exceed two hundred thousand (200,000) cubic feet of free gas per year,
which shall be the Lessor(s) sole use for domestic purposes only. Connection
shall be made by a qualified person at Lessor's expense, responsibility and risk
upon advance written notice. Lessee may observe the connection and disapprove
any connection it deems unsafe. Lessor(s) shall save and indemnify Lessee from
any claims or liabilities from Lessors connection and use of gas.
7. When requested by Lessor(s), Lessee shall bury pipe below plow depth
upon tillable land.
8. No well shall be drilled nearer than two hundred (200) feet of the
principal buildings upon said premises, except by mutual consent.
9. Lessee shall pay for actual damages by it to growing crops.
10. Lessee shall have the right during or after the term hereof to remove
all machinery and fixtures placed by it on premises, including the right to draw
and remove casing.
11. If Lessee shall commence to drill a well within the term of this lease
or any extensions, it may drill such well to completion with reasonable
dispatch, and, if oil, gas and/or coalbed methane be found in paying quantities,
this lease shall continue in force as if such well had been completed within the
initial term.
12. If the estate of either party is assigned (assigning in whole or part
is expressly allowed) the covenants hereof shall extend to successors or
assigns, but no change in ownership or assignment shall be binding on Lessee
until after Lessee has been furnished with a written transfer or assignment If
this lease shall be assigned, as to a part of the lands and the assignee of such
part shall default in payment of a proportionate part of rents due, such default
shall not operate to defeat or affect this lease in so far as it covers a part
or parts of said lands upon which the Lessee shall make due payments of rentals.
13. It the lease premises are now, or shall be hereinafter be owned in
several or in separate tracts, the premises nevertheless shall be developed and
operated as one lease, and all royalties accruing hereunder shall be treated as
an entirety and shall be divided among, and paid to, such separate owners in the
proportion that the acreage owned by such separate owner bears to the entire
lease acreage.
14. If at any time there be as many as four (4) parties entitled to rental
or royalties, Lessee may withhold payment thereof until all parties designate in
writing, in a recordable instrument, to be filed with Lessee, a common agent to
receive all payments due hereunder, and to execute division and transfer orders
on behalf of said parties and their respective successors in title.
15. Lessee may pool or combine the acreage covered by this lease or any
portion thereof with other land in the immediate vicinity when in Lessee's
judgment, it is necessary or advisable to do so in order to properly develop and
operate said premises in compliance with spacing rules of any lawful authority
or to promote the conservation of oil, gas or coalbed methane produced from said
premises. If production is found on the pooled acreage, it shall be treated as
if production is had from this l ease, whether the well or wells be located on
the premises covered by this lease or not. In lieu of the royalties elsewhere
herein specified, Lessor(s) shall receive on production from a unit so pooled
only such portion of the royalty stipulated herein as the amount of his acreage
placed in the unit or his royalty interest herein bears to the total acreage so
pooled in the particular unit involved.
16. Lessor(s) hereby warrant generally the title to the lease premises.
Lessee shall have the right to redeem from Lessor(s), by payment, any mortgage,
taxes or liens on said lands, if Lessor(s) defaults and be subrogated to the
rights of the holder thereof. Any such payments made be Lessee shall be deducted
from money due the Lessor(s) under this lease.
17. This lease shall not expire at the end of either the primary or
secondary terms hereof if there is a well capable of producing oil, gas and/or
coalbed methane in paying quantities located upon some part of the lands
embraced herein where such well is shut-in due to the inability of the Lessee to
obtain a pipeline connection or to market the oil and/or gas therefrom; and, if
the annual rental as provided herein, is paid the payment of the said annual
rental shall be considered for all purposes the same as if oil, gas and/or
coalbed methane were being produced in paying quantities and upon the
commencement of marketing oil, gas and/or coalbed methane from any well or wells
the royalty paid for the lease year in which the oil, gas and/or coalbed methane
is first marketed shall be credited upon the royalty payable hereunder to the
Lessor(s) for such year.
18. All covenants of this lease shall be subject to all Federal and State
laws and to all executive orders, rule or regulations of Federal and State
authorities and this lease shall not be terminated, in whole or part, nor Lessee
held liable for any failure to perform thereunder if such failure is due to or
is the result of any such law, order, rule or regulation.
19. Other provisions:
IN WITNESS WHEREOF, the parties hereto have signed their names this ______
day of _________________20___
______________________________________
______________________________________
______________________________________
STATE OF WEST VIRGINIA
COUNTY OF ____________________
I, __________________, a Notary Public, in and for said State and County,
do certify that _________________________whose name(s) are signed to the within
writing bearing date the _______ day of _________________, 19____ has (have)
this day acknowledged the same before me in my said county.
Given under my hand this ________ day of __________________, 20_____.
_________________________________
Notary Public
My commission expires __________________________.
STATE OF WEST VIRGINIA
COUNTY OF _____________________
I, ___________________, a Notary Public in and for said State and County,
do certify that ________________________________,whose name(s) are signed to the
within writing bearing date the ______ day of ________________, 20______ has
(have) this day acknowledged the same before my said county.
Given under my hand this __________ day _________________________, 20____.
_____________________________________
Notary Public
My commission expires _______________________________.
THIS INSTRUMENT PREPARED BY
Wilon Resources, Inc., 931 Ashland Terrace, Chattanooga, Tennessee 37415
By _______________________________