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RES NO 06-01-1978 CITY COUNCIL OF VAN BUREN, ARKANSAS RESOLUTION 11 1.-. 1978 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VAN BUREN, ARKANSAS: 1. THAT the Mayor is hereby authorized and directed to execute a Paid -up Sub surface Oil and Gas Lease with Texas Oil Gas Corporation for Lots numbers 2, 3, 10, and 11, of Block 47 in the Riverside Addition to the City of Van Buren, Arkansas. THAT a copy of said paid -up Sub surface Oil and Gas Lease is attached hereof. PASSED AND APPROVED this 19th day of June, 1978. d g yin Mayor Attest:!- .......L ,.//�7 /.ALA ....ma City Clerk a g l: a E C IE 11 PT Date froz..se_i_ 19 _S. N. 7 1 3 3 9 0. .,N Received F r o m -,41(....fe,.._ Za--e....,e_ _.,oc ..2 j,, ol ,D,la rs YO:o 0 ri it a I 'a j,,, iiporn,, ,y; j. k .1 1 i.. 81 .::."......1.," n n 21 !""T ll i.'". !"1"... .111 1.1". ;:t.' 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E TXO Form 231 (1978) PAID -UP SUBSURFACE OIL AND GAS LEASE This agreement, made this loth day of February 19 7R between the parties whose names are subscribed as Lessor on the Signature Page attached hereto as Exhibit "A hereinafter referred to as "Lessor and TEXAS OIL GAS CORP., hereinafter referred to as "Lessee WITNESSETH: That Lessor, for and in consideration of the sum of Ten Dollars ($10.00) lawful money of the United States A of America, to Lessor paid, and of other valuable considerations, the receipt of all of which is hereby acknowledged; and in E.v consideration of the performance by Lessee of the covenants and agreements hereinafter contained, Lessor has leased, let and demised, and by these presents does lease, let and demise, unto Lessee, ALL THE LAND LYING MORE THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE, BUT NONE OF THE LAND LYING ABOVE THE DEPTH OF FIVE HUNDRED (500) FEET BELOW THE SURFACE, of the lands specifically described on the Lessor's Signature Page attached hereto including Lessor's rights in all easements, streets, alleys, and waterways and canals within or adjoining said lands, all of which land is hereinafter referred to as "leased premises with the sole and exclusive right to Lessee to explore and to drill for and to produce, extract and take oil, gas and other hydrocarbons from said leased premises, and to exercise all the rights and privileges hereinafter set forth, together with all rights necessary or convenient thereto for any or all of the above purposes, including without limiting the generality thereof, subsurface rights of way for drilling, repairing, redrilling, deepening, maintaining, operating, abandoning, reworking and removing wells in, into and through said leased premises, and Lessee hereby leases said leased premises from Lessor for the uses and purposes aforesaid with the rights hereinafter set forth. Lessee shall have no right, without the consent of Lessor in writing being first obtained, to drill any well or wells from the surface of said leased premises, or to use said sur- face, or that portion lying above a depth of five hundred (500) feet below said surface, for any purpose. Lessee may, at its option, obtain rights in respect to other lands in the vicinity of said leased premises and may have available on such other lands drill sites from which wells can be slant drilled into said leased premises for the purposes of this Lease. Lessee shall have the full, unrestricted and exclusive right, power and authority to produce oil, gas, or other hydrocarbons from under or beneath or recoverable from said leased premises, and to exercise all other rights and privileges herein set forth, by means of any well or wells the surface drill sites of which are located on such other lands, the producing intervals of which are bottomed in said leased premises, and which are slant drilled through and into said leased premises. The rights and privileges granted to Lessee here- under shall be sole and exclusive. 1. This Lease shall remain in force for a primary term of FTVE S years and as long thereafter as oil, gas or other hydrocarbons is produced from said leased premises or from lands pooled therewith. 2. Lessee shall deliver, free of cost, to Lessor at the wells, or to the credit of Lessor in the pipeline to which the wells may be connected, the equal one eighth part of all oil and other liquid hydrocarbons produced and saved from the leased premises, or at Lessee's option, to pay Lessor for such one eighth royalty the market price at the well for such oil and other liquid hydrocar- bons of like grade and gravity prevailing on the day such oil and other liquid hydrocarbons are run from the lease stock tanks. 3. Lessee shall pay Lessor one eighth of the proceeds received by Lessee at the well for all gas (including all substances contained in such gas) produced from the leased premises and sold by Lessee. If such gas is used by Lessee off the leased prem- ises or used by Lessee for the manufacture of casinghead gasoline or other products, Lessee shall pay Lessor one eighth of the prevailing market price at the well for the gas so used. 4. Lessee hereby is given the right at its option. at any time and whether before or after production, to pool for develop- ment and operation purposes all or any part or parts of leased premises or rights therein with any other land in the vicinity thereof, or with any leasehold, operating or other rights or interests in such other land so as to create units of such size and surface acreage as Lessee may desire but containing not more than forty -five (45) acres; provided, however, a unit may be established hereunder containing not more than 640 acres plus 10% acreage tolerance if unitized only as to gas rights or only as to gas and gas condensate, except that units pooled for oil or oil and gas for or in conjunction with repressuring, pressure maintenance, cycling and secondary recovery operations or any one or more of same, may be formed to include not more than 320 acres. If at any time larger units are required under any then applicable law, rule, regulation or order of any governmental authority for the drilling, completion or operation of a well, or for obtaining maximum allowable from any contemplated, drilling or completed well, any such unit may be established or enlarged to conform to the size specified by such law, rule, regulation or order. Each unit shall be created by Lessee's recording a Declaration of Pooling containing a description of the unit so created, such unit being hereinafter referred to as "said unit Operations on any part of any lands so pooled shall, except for the payment of royalties, be considered operations on leased premises under this Lease, and, notwithstanding the status of a well at the time of pooling, such operations shall be deemed to be in connection with a well which was commenced on leased premises under this Lease. The term "operations" as used herein shall include, without limitation, the following: commencing, construction of roadways, preparation of drillsite, drilling, testing, com- pleting, reworking, recompleting, deepening, plugging back, repressuring, pressure maintenance, cycling, secondary recovery operations, or the production of oil or gas, or the existence of a shut -in well capable of producing oil or gas. There shall be allocated to the portion of leased premises included in said unit such proportion of the actual production from all lands so pooled as such portion of leased premises, computed on an acreage basis, bears to the entire acreage of said unit. The production so allocated shall be considered for the purpose of payment or delivery of royalty to be the entire produc- tion for the portion of leased premises included in said unit in the same manner as though produced from such portion of leased premises under the terms of this Lease. 5. If a well capable of producing gas or gas and gas condensate in paying quantities located on the leased premises or said unit is at any time shut -in and no gas or gas- condensate therefrom is sold or used off the premises or -for the manufacture of gasoline or other products, nevertheless such shut -in well shall be deemed to be a well on the leased premises producing gas in paying quantities and this Lease will continue in force during all of the time or times while such well is so shut -in, whether before or after the expiration of the primary term hereof. Lessee shall use reasonable diligence to market gas or gas- condensate capable of being produced from such shut -in well but shall be under no obligation to market such products under terms, conditions or circumstances which, in Lessee's judgment exercised in good faith, are unsatisfactory. Lessee shall be obligated to pay, or tender to Lessor within 45 days after the expiration of each period of one year in length (annual period) during which such well is so shut -in, as royalty, an amount of One Dollar ($1.00) per net royalty acre (or any fraction thereof); provided that, if gas or gas condensate from such well is sold or used as aforesaid before the end of any such annual period, or if, at the end of any such annual period, this Lease is being maintained in force and effect otherwise than by reason of such shut -in well, Lessee shall not be obligated to pay or tender, for that particular annual period, said sum of money. Such payment shall be deemed a royalty under all provisions of this Lease. Royalty ownership as of the last day of each such annual period as shown by Lessee's record shall govern the determination of the party or parties entitled to receive such payment. 6. If the Lessor owns a lesser interest in the leased premises than the entire and undivided mineral estate therein, then the royalties herein provided for shall be paid the said Lessor only in the proportion which his interest bears to the whole and undivided mineral estate. 7. If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is hereby expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns, but no change in the ownership of the minerals in and under the leased premises or assignment of royalties shall be binding on Lessee unless Lessee shall have been furnished ninety (90) days before payment hereunder of such royalties, with certified copies of recorded instru- ments showing evidence of title. If six or more parties become entitled to royalties hereunder, Lessee may withhold payment thereof unless and until furnished with a recordable instrument executed by all of such parties designating an agent to receive payment for all. 8. Lessee shall have the right to use, free of cost, gas, oil and water found on the leased premises for its operations, except water from the wells of the Lessor. Lessee shall have the right at any time during, or after the expiration of this Lease to enter upon the property and to remove all machinery, fixtures, and other structures placed on said premises, including the right to draw and remove all casing, but the Lessee shall be under no obligation to do so. 9. Notwithstanding anything contained in this Lease to the contrary, it is expressly agreed that if the Lessee shall com- mence operations as provided herein at any time while this Lease is in force, this Lease shall remain in force and its terms shall continue so long as such operations are prosecuted, and if production results therefrom, then as long as production is maintained. 10. If, after the expiration of the primary term of this Lease, production on the leased premises should cease from any cause, this Lease shall not terminate provided Lessee commences operations for additional drilling or reworking within sixty days from such cessation, and this Lease shall remain in force during the prosecution of such operations and if production results therefrom, then as long as production is maintained. 11. Lessee may at any time surrender or cancel this Lease in whole or in part by delivering or mailing such release to the Lessor, or by placing such release of record in the proper County. In case this Lease is surrendered or cancelled as to only a portion of the acreage covered thereby, then all payments and liabilities thereafter accruing under the terms of this Lease as to the portion cancelled shall cease. As to the portion of the acreage not released, the terms and provisions of this Lease shall continue and remain in full force and effect for all purposes. 12. All provisions hereof, express or implied, shall be subject to all Federal and State Laws and the orders, rules and regu- lations of all governmental agencies administering the same, and this Lease shall not in any way be terminated wholly or par- tially, nor shall the Lessee be liable in damages for failure to comply with any of the express or implied provisions hereof if such failure accords with any such laws, orders, rules or regulations. Should the Lessee be prevented during the last year of the primary term hereof from drilling a well hereunder by the order of any constituted authority having jurisdiction, or if Lessee shall be unable during said period to drill a well hereunder due to the equipment necessary in the drilling thereof not being avail- able for any cause, the primary term of this Lease shall continue until one year after said order is suspended or said equipment is available. 13. Lessee hereby is given the right to acquire for its own benefit, deeds, leases, or assignments covering any interest or claim in leased premises which Lessee or any other party contends is outstanding and not covered hereby and even though such outstanding interest or claim be invalid or adverse to Lessor. In the event the validity of this Lease be disputed by Lessor or by any other person, then, for the period such dispute remains undisposed of, Lessee shall be relieved of all obligations hereunder to explore or develop leased premises, all royalties or other payments which would otherwise accrue shall be superseded for such period, and this Lease automatically shall be extended for an additional period equal to the duration of said period. 14. It is specifically understood that each wife executing this Lease, for the consideration above set out, and the covenants and agreements contained in this Lease to be performed by the Lessee, does hereby release and relinquish unto said Lessee, all right of dower and homestead in and to the lands covered hereby for the purposes of this Lease. 15. This Lease and all of its terms and conditions shall be binding upon all successors of the Lessors and the Lessees. Should any one or more of the parties named on Exhibit "r as Lessors fail to execute this Lease, it shall nevertheless be binding upon all Lessors who do execute it. Notwithstanding any language herein to the contrary, it is expressly understood and agreed that any payment or payments made by the Lessee to the owner of any interest subject to this Lease shall be sufficient payment hereunder as to such interest notwithstanding the joinder herein of the spouse of any such party as a party- Lessor for the purpose of waiving homestead, dower or inchoate rights of inheritance, if any, or for any other purpose. 16. Lessor hereby warrants and agrees to defend the title to the land described on Exhibit "A" opposite such Lessor's name" and agrees that the Lessee shall have the right at any time to redeem for Lessor, by payment, any mortgage, taxes or other liens on the land in the event of default of payment by the Lessor and the Lessee shall be subrogated to the rights of the holder thereof, and Lessor hereby agrees that any such payments made by the Lessee for the Lessor may, at Lessee's option, be deducted from any amounts of money which may become due or payable to the Lessor under the terms of this Lease. 17. For convenience in obtaining Oil and Gas Leases covering relatively small tracts of land located in the same general vicinity, this form was designed for execution by a number of different Lessors who own interests in separate tracts (hereinafter referred to as "separately owned tracts and for counterpart execution. Exhibit "A whether one or more, attached hereto and constituting a part hereof separately lists the Lessor and opposite the Lessor's name(s), describes the separately owned tract with respect to which such Lessor acts in the execution of this Lease. The legal effect of this Lease shall be, and all of its terms and provisions shall be interpreted, as if it was a separate Lease covering each separately owned tract executed only by the Lessor (whether one or more) purporting to act with respect to such separately owned tract. Lessee may combine said counterparts to form one single instrument for recording purposes. 18. This Lease and all its terms, conditions and stipulations shall extend to and be binding on all successors in title of said Lessor or Lessee. IN WITNESS WHEREOF, this Lease is executed as of the date first set out hereinabove by the Lessors set forth on Exhibit "A Page 2