Notice of confidentiality rights: if you are a natural person, you may remove or strike any of the following information from this instrument before it is filed for record in the public records – your social security number or your driver’s license number


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NameNotice of confidentiality rights: if you are a natural person, you may remove or strike any of the following information from this instrument before it is filed for record in the public records – your social security number or your driver’s license number
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25. Lessee and each assignee and sublessee of this Lease agree, within ten (10) days after the making of any assignment or sublease, to furnish each Lessor, in writing, with the name and address of such assignee or sublessee. No such assignment or sublease shall be effective as to any Lessor until thirty (30) days after such Lessor has been furnished in writing the name and address of the assignee as specified above. Any transaction between any Lessor and the Lessee or any assignee or sublessee of assignment or sublease or transfer of any nature becomes effective as to such Lessor shall be binding upon each assignee or sublessee or transferee of the party with whom or which Lessor conducts such transaction in the same manner and to the same extent as if such assignment, sublease or transfer were made after the date of such transaction.

26. In the event this Lease terminates for any reason, Lessee agrees to prepare and record in Howard and Borden Counties, Texas a good and sufficient release of this Lease, properly executed by all parties then owning any working interest in this Lease, and to send a copy of such release to Lessor.

27. Lessee agrees to save, indemnify and forever hold each lessor and each surface owner harmless from and against any claim, loss, cause of action, liability, fine, expense (including attorneys fees and expenses of litigation and/or preparing for litigation) which arises or is asserted after the date of this lease and is attributable to the operations under this lease by either lessee, lessee’s employees, agents or contractors, including, without limitation, independent contractors, and INCLUDING, WITHOUT LIMITATION, ANY CLAIM, LOSS, CAUSE OF ACTION OR LIABILITY AS TO WHICH LESSOR OR ANY LESSOR OR SURFACE OWNER OR ANY SURFACE OWNER SHALL BE NEGLIGENT TO ANY EXTENT, unless it is determined by final judgment of a court of competent jurisdiction that the percentage of negligence of Lessor is greater than the percentage of negligence of Lessee, and agrees to indemnify, defend and hold lessor and each surface owner harmless against any loss, liability, claim, fine, expense (including attorneys fees and expenses) and cause of action caused by or any way arising out of any violation (or defense of any alleged violation) of any federal, state or local law, rule or regulation resulting from or in any way arising out of any act or omission of lessee or any of lessee’s agents, independent contractors or employees, or employees of any of them, or any person coming on the land with the express or implied consent of lessee in connection with operations under this lease. This provision shall, without limitation, apply to any violation of any federal, state or local law or regulation applicable to any waste material, drilling matter, fluid or other hazardous substance released or caused to be released in or in connection with any operation of lessee or for lessee pursuant to this lease on land covered by this lease or into any water course or any body of water. Upon receiving any notice regarding violation of any law, rule or regulation, lessee will forward a copy of such notice to lessor by certified mail within thirty (30) days. In addition to all other remedies of lessor for violation of this provision, lessor shall have the right to terminate this lease upon thirty (30) days written notice in event lessee fails to comply with the provisions of this paragraph relating to compliance with rules and regulations of governmental agencies and fails to either cure such breach or commence good faith efforts to cure such breach within such thirty (30) day period. If good faith efforts to cure such breach are commenced within such thirty (30) day period, lessor shall have no right to terminate this lease under this provision so long as lessee continues in good faith and with reasonable efforts to cure such breach, and if such breach is cured pursuant to such efforts, then there shall be no right to terminate this lease on account of such breach, but without limitation of any other remedy lessor might have on account of such breach of this provision of this lease. This provision and its indemnities shall survive the termination of this lease, and shall inure to the successors, heirs and assigns of lessor and lessee.

28. Lessee shall not allow any well located on the land covered by this Lease other than a shut-in well capable of producing gas only for which shut-in gas well payments are authorized to be and are being paid, to remain shut-in, temporarily abandoned or in an otherwise non-productive state for a period of more than six (6) months from the date of last production or the time permitted by the rules and regulations of the applicable regulatory authority, whichever is less, without beginning plugging and abandoning operations with respect to the well and restoring the location, and providing that these procedures must be completed within two (2) months of their initiation.


29. The initial payment of royalties on production from any well drilled on the land shall be made not later than 120 days after the date when such well is completed. Subsequent payments for royalties on oil shall be payable not later than sixty (60) days after the end of the month in which such production occurred, and on gas, not later than ninety (90) days after the end of the month in which such production occurred. Lessee shall be responsible for payment of such royalties notwithstanding the fact that a purchaser of production may actually be disbursing royalty payments. All royalties not paid when due shall bear interest at the rate of 10% per annum from the day they are due until thirty (30) days after they are due, and shall bear interest at the highest non-usurious rate authorized by applicable law from thirty (30) days after they are due until paid in full. If a reasonable requirement in a title opinion materially raises an issue as to title to any interest of lessor in the proceeds of the sale of production, lessee may withhold only the disputed interest of lessor, without interest, until such requirement is satisfied, provided that lessee shall have notified lessor in writing of such title requirement within thirty (30) days after the date of the opinion in which the requirement is contained. Such withholding shall not be authorized for a period of more than thirty (30) days unless notice of such requirement is given to lessor in writing within the thirty (30) day period provided above. Lessee shall be entitled to receive a division order conforming to the form of division order found in Section 91.402 of the Texas Natural Resources Code signed by lessor prior to payment of proceeds of lessor. Such division order shall be sent to lessor promptly after the initial sale of oil and/or gas as produced from this lease. Notwithstanding any effect signing a division order might otherwise have, signing a division order shall not have the effect of ratifying this lease if it has expired prior to execution of the division order, and lessee shall have no right to place in any division order any language ratifying the lease. Lessee further agrees to furnish each lessor, in writing, within sixty (60) days after the sale by lessor of any oil or gas produced from the land covered by this lease with (1) the name and address of the purchaser of such oil or gas; (2) the lease or division order number or other information necessary to identify the land covered by this lease on the records of such purchaser; and (3) the date that such sales commenced. Failure or refusal of lessor to sign a division order shall not affect the right of lessor to receive royalties provided in this lease. If it shall be determined by final judgment of a court of competent jurisdiction that Lessee is obligated to any Lessor for non-payment of royalties in accordance with the terms of this Lease, and Lessee shall fail to pay and fully discharge such judgment within 90 days after the judgment becomes final, this Lease shall terminate insofar as it covers the interest of each Lessor who is entitled to receive any portion of the amount of such judgment.

30. Lessee expressly agrees with Lessor to comply with all of the provisions of subchapter J of Chapter 91 (currently 91.401 through 91.406) of the Texas Natural Resources Code as it now exists and with all future amendments and additions to such subchapter, and, should such subchapter be replaced or superseded or renumbered, with all provisions of any subsequent replacement or renumbered statutory provisions succeeding or reasonably equivalent to those of the present subchapter J. Any failure to comply with any of such provisions with respect to payment for royalty shall be a breach of the Lessee’s covenants under this Lease and shall authorize all remedies available for breach of this Lease, regardless of whether or not such failure would afford Lessor any private remedy under general law in absence of an express provision in the Lease.

31. Lessee agrees to keep Lessor fully informed regarding any sales of production to any subsidiary, any arrangement by which Lessee sells the production and then reacquires any part of it or the right to receive the proceeds of any part of it, any arrangement whereby Lessee is paid any payment in lieu of production or any payment for a buy down of a contract or as a bonus for entering into the contract, any take or pay agreement Lessee may make and any take or pay payments Lessee may receive thereunder, and all other agreements and arrangements whereby Lessee receives any benefit or profit from the sale or other disposition of production or its proceeds which Lessee does not share with the royalty owners, whether or not Lessee believes that such payment or benefit is required to be shared with the royalty owners, all wells on adjacent land which are draining the leased premises or all wells in which Lessee has any interest which are or may be draining the leased premises even though they are not on adjacent land, or water flood and other secondary recovery operations on adjacent lands or in the field which might affect production from any well on the leased premises, and any other conditions or operations in the area which will or in reasonable probability may adversely affect the production from any well or wells on the leased premises of which Lessee has or acquires knowledge. No cause of action which any royalty owner may have based upon anything required to be disclosed under this paragraph shall accrue until Lessee complies with the provisions of this paragraph or until such Lessor acquires actual notice of the facts upon which such cause of action is based.

32. All provisions of this lease relating to the surface or to surface damages are for the benefit of any surface owner and any tenant who may be on the land, and any surface owner or any tenant of any surface owner at any time shall have the right to sue or take any other action authorized by this lease or by law for the enforcement or breach of any provision of this lease which benefits the surface and would not be relevant to an owner who owned only a mineral or royalty interest in the land.

33. Any land which is at any time taken out of agricultural production under the U.S.D.A. CRP Program or any other program which, in the future, rewards a farmer for temporarily taking land out of production shall nevertheless be deemed or shall be continued to be deemed, as the case may be, cultivated land for all purposes of this lease.

34. In the event any salt water or other substance which is or could be harmful to the surface should be deposited on the land covered by this lease as a result of any leak from any pipeline, tank or well head of Lessee or transporting or storing any such substance for Lessee or from any trucks carrying such substance for Lessee or in any other manner from operations under this Lease, Lessee agrees to remove all of the soil affected by such deposit down to a depth of 24” below the surface or the depth of top soil, whichever is less, at the sole cost, risk and expense of Lessee, to replace such removed soil with top soil of a quality at least equal to that removed. If, after such removal and restoration is completed, there remains any decrease in the fair market value of the land because of such spill, Lessee shall be liable to Lessor for such decrease in value of the land, along with any other damages for which Lessee may be liable to Lessor on account of such spill. Lessee’s liability for damages for pollution as provided in this paragraph shall be absolute.

35. Lessee agrees to construct and at all times maintain a substantial fence sufficient to turn livestock around all facilities, including, without limitation, pump jacks, maintained by Lessee on uncultivated land, and around all open pits on uncultivated land, except that Lessee shall not be required to fence well location sites during the process of actual drilling operations so long as such operations continue, but if Lessee leaves any open pits on uncultivated lands after cessation of actual operations, such pits shall be fenced from the time when actual drilling operations on the well cease (whether or not they have been completed) for a period of thirty (30) days or more until such pits are filled and leveled in accordance with the terms of this Lease. Lessee shall also construct a damn or berm around any locations from which it is possible that any liquids will spill onto adjoining land of Lessor and fence such locations so as to keep livestock away from any liquids which may be on the land as a result of any intentional or accidental actions of Lessee or any person on the land assisting Lessee in operations or maintenance of any of its property or equipment on the land pursuant to this lease.

36. Whenever Lessee is required to restore the premises of any uncultivated land under any provision of this lease, restoration of the premises shall include the re-seeding of all land the premises of which Lessee is required to restore under the provisions of this paragraph with seed acceptable to the surface owner, without limitation of any more specific provisions for re-seeding pertaining to specific operations provided elsewhere in this lease.

37. All cattle guards shall be built at least fifteen (15) inches above the ground and all cattle guards leaving the leased premises shall contain a gate capable of restraining livestock which shall be kept locked at all times except during drilling operations unless and except as the surface owner or owners otherwise agrees or agree. If Lessee shall cut any fence, including, without limitation, any cross fence, in its operations under this Lease, Lessee agrees to install a cattle guard meeting all of the requirements of a cattle guard in this lease at each location where Lessee shall have cut a fence, and shall maintain such cattle guard in the same manner as provided herein with respect to other cattle guards. The cattle guards shall be maintained in good operating condition by Lessee, at the expense of Lessee, during the entire term of this lease, unless Lessee shall advise the surface owner or owners of the land that Lessee no longer desires to use a cattle guard, in which event such surface owner or owners shall have the option to require that such cattle guard remain in place, and if any surface owner shall exercise that option, such surface owner shall thereafter be responsible for maintaining such cattle guard and such cattle guard shall become the property of such surface owner assuming the obligation to maintain it, or such surface owners, if more than one exercises such option, in the proportions in which they own the surface. If no surface owner requests that the cattle guard remain in place, Lessee shall forthwith remove the cattle guard and restore the fences to the same condition in which they were prior to the construction of the cattle guard or, if requested by a surface owner, shall construct a gate in lieu of the cattle guard, which shall be sufficient to turn livestock. Any gate so constructed may be locked by any surface owner, but either Lessee or anyone coming on the land at the instance of Lessee shall be entitled to a key to such lock under such circumstances.
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