Exhibit Ref. 10.12
Form SB-2, Amendment No. 2
Mountain Oil, Inc.
SEC File No. 333-37842
OIL AND GAS LEASE
AGREEMENT, Made and entered into the _____day of_______________,
_______, by and between_____________________________________________________
____________________________________________________________________________
_______________________________________, hereinafter called Lessor
(whether one or more) and_________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________, herein after called Lessee:
WITNESSETH, That the Lessor, for and in consideration of_________
_______________________________________________ DOLLARS cash in
hand paid, the receipt of which is hereby acknowledged, and the
covenants and agreements hereinafter contained has granted,
demised, leased and let, and by these presents does grant,
demise, lease and let exclusively unto the said Lessee, the land
hereinafter described, with the exclusive right for the purpose
of mining, exploring by geophysical and other methods, and
operating for an producing there from oil and all gas of
whatsoever nature or kind, with rights of way and easements for
laying pipe lines, and erection of structures theron to produce,
save and take care of said products, all that certain tract of
land situated in the County of______________________
_____________________________________. State
of________________________________, described as follows, to-wit:
And containing__________________ acres, more or less.
1. It is agreed that his lease shall remain in force for a term
of ten years from this date and as long thereafter as oil or gas
of whatsoever nature of kind is produced form said leased
premises or on acreage pooled therewith, or drilling operations
are continued as hereinafter provided. If at the expiration of
the primary term of this lease, oil or gas is not being produced
on the leased premises or on acreage pooled therewith but Lessee
is then engaged in
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drilling or re-working operations thereon, then this lease shall
continue in force so long as operations are being continuously
prosecuted on the leased premises or on acreage pooled therewith;
and operations shall be considered to be continuously prosecuted
if not more than ninety (90) days shall elapse between the
completion or abandonment of one well and the beginning of
operations for the drilling of a subsequent well. If after
discovery of oil or gas on said land on acreage pooled therewith,
the production thereof should cease from any cause after the
primary term, this lease shall not terminate if Lessee commences
additional drilling or re-working operations within ninety (90)
days from date of cessation of production or from date of
completion of dry hole. If oil or gas shall be discovered and
produced as a result of such operations at or after the
expiration of the primary term of this lease, this lease shall
continue in force so long as oil or gas is produced from the
leased premises or on acreage pooled there within.
2. This is a PAID-UP LEASE. In consideration of the down cash
payment. Lessor agrees that Lessee shall not be obligated, except
as otherwise provided herein, to commence or continue any
operations during the primary term. Lessee may at any time or
times during or after the primary term surrender this lease as to
all or any portion of said land and as to any strata or stratum
by delivering to Lessoror by filing for record a release or
releases, and be relieved of all obligations thereafter accruing
as to the acreage surrendered.
3. In consideration of the premises the said Lessee covenants
and agrees:
1st To deliver, free of cost, to the lessor at the well
or to the credit of lessor into the pipeline to which lessee
may connect its well, an equal one-eighth (1/8th) part of all oil
produced and saved from the lease premises or at the lessee's
option to pay the lessor for such on-eighth (1/8th) the marker
price at the wellhead for oil of a like grade and gravity
prevailing on the day such oil is run into the pipeline or
storage tanks.
2nd On Gas, gas condensate, gas distillated, casinghead
gas and all other gased, including their constituent parts,
produced from land and sold or used off the lease premises of in
the manufacture of gasoline of other products, lessee shall pay
to lessor a sum to one-eighth (1/8th) of the gross proceeds
received from the sale of such produced substances where the same
is sold at the month of the \well or, if not sold at the mouth of
the well then one-eighth (1/8th) of the market value thereof at
the mouth of the well, but in no event more than one-
eighth(1/8th) of the actual amount received by lessee for the
sale thereof.
3rd If gas from any well of wells on the premises
capable of producing gas in commercial quantities is not sold or
used off the premises or in the manufacture of gasoline for a
period of one (1) year or more during which time there is no
other production form the lease premises, then lessee shall
become obligated to pay as royalty for such annual period a sum
equal to the delay rentals provided in paragraph 4 hereof;
whether during or after the primary term. In consideration of
the obligation so to pay, it shall within the meaning of all the
terms of this lease, including the habendum clause, be
conclusively deemed that gas is being produced form the premises
during the time such gas is not sold or used.
4. Where gas from a well capable of producing gas s not sold or
used, Lessee may pay or tender as royalty to the royalty owners
one Dollar per year net royalty acre retained hereunder, such
payment or tender to be made on or before the anniversary date of
this lease next ensuing after the expiration of 90 days from the
date such well is shut in and thereafter on or before the
anniversary date of this lease during the period such well is
shut in. If such payment
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of tender is made, it will be considered that gas is being produced
within the meaning of this lease.
5. If said Lessor owns a less interest in the above described
land than the entire and undivided fee simple estate therein,
then the royalties (including and shut-in gas royalty) herein
provided for shall be paid the Lessor only in the proportion
which Lessor's interest bears to the whole and individed fee.
6. Lessee shall have the right to use, free of cost, gas, oil,
and water produced on said land for Lessee's operation thereon,
except water form the wells of Lessor.
7. When requested by Lessor, Lessee shall bury Leasee's
pipeline below plow depth.
8. No well shall be drilled nearer than 200 feet to the house
or barn now on said premises without consent of Lessor
9. Lessee shall pay for damages caused by lessee's operations
to growing crops on said land.
10. Lessee shall have the rite at any time to remove all
machinery and fixtures placed on said premises, including the
right to draw and remove casing.
11. The rights of Lessor and Leassee hereunder may be assigned
in whole or part. No change in ownership of Lessor's interest
(by assignment or otherwise) shall be binding on Lessee until
Lessee has been furnished with notice, consisting of certified
copies of all records instruments or documents and other
information necessary to establish a complete chain or record
title from Lessor and then only with respect to payments
thereafter made. No other kind of notice, whether actual or
constructive, shall be binding on Lessee. No present or future
division of Lessor's ownership as to different portions or
parcels of said land shall operate to enlarge the obligations of
diminish the rights of Lessee, and all Lessee's operations may be
conducted without regard to any such division. If all or nay
part of this lease is assigned, no leaseholder owner shall be
liable for any act or omission of any other leaseholder owner.
12. Lessee, at its option, is hereby given the right and power
at any time and from time to time as a recurring right, either
before or after production, as to all or any part of the land
described herein and as to any one or more of the formations
hereunder, to pool or unitize the lease, hold estate and the
mineral estate covered by this lease with other land, lease or
leases in the immediate vicinity for the production not oil and
gas, or separately for the production of either when in Lessee's
judgment it is necessary or advisable to do so, and irrespective
of whether authority similar to this exists with respect to such
other land, lease or leases. Likewise, units previously formed to
include formations not producing oil or gas, may, be reformed to
exclude such non-producing formations. The forming or reforming
of any unit shall be accomplished by Lessee executing and filling
of record a declaration of such unitization or reformation, which
declaration shall describe the unit. Any unit may include land
upon which a well has theretofore, been completed for upon which
operations for drilling has theretofore been commenced.
Productions, drilling or reworking operations or a well shut in
for want of a market anywhere on a unit which includes all or
part of this lease shall be treated as is it were production,
drilling or reworking operations or a well shut in for want of a
market under this lease. In lieu or the royalties elsewhere
herein specified, including shut-in gas royalties, lessor shall
revive on production from the unit so pooled royalties only on
the portion of such productions allocated to this lease; such
allocation shall be that proportion of the unit production that
the total number of surfaces acres covered by this lease and
included in the unit bears to the total number of surface acres
in the unit bears to the total number of surface acres in such
unit. In addition to the foregoing, Lessee shall have the right
to unitize, pool, or combine all or any
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part of the above described lands as to one of more of the formations
hereunder with other land in the same general area by entering
into a cooperative or unit plan of development of operation
approved by any governmental authority and, from time to time,
with like approval, to modify, change or terminate any such plan
or agreement and, in such event, the terms, conditions and
provisions of this lease shall be deemed modified to conform to
the terms, conditions , and provisions of such approved
cooperative or unit plan of development or operation and,
particularly, all drilling and development requirements of this
lease, express or implied, shall be satisfied by compliance with
the drilling and development requirement of such plan or
agreement, and this lease shall not terminate or explore during
the life of such plan or agreement . In the event that said
above described lands or any part thereof, shall hereafter be
operated under any such cooperative or unit plan of development
or operation whereby the production there from is allocated to
different portions of the land covered by said plan, then the
production allocated to any particular tract of land shall, for
the purpose of computing the royalties to be paid hereunder to
Lessor, be regarded as having been produced form the particular
tract of land to which it is allocated and not to any other tract
of land; and royalty payments to be made hereunder to lessor
shall be based upon production only as so allocated. Lessor
shall formally express Lessor's consent to any cooperative or
unit plan of development or operation adopted by Lessee and
approved by any governmental agency by executing the same upon
request of Lessee.
13. All express of implied covenants of this lease shall be
subject to all Federal and State laws. Executive Orders, Rules or
Regulations, and this lease shall not be terminated, in whole or
in part, nor Lessee held liable in damages, for failure to comply
therewith, if compliance is prevented by, or if such failure is
the result of, any such Law, Order, Rule or Regulation.
14. Lessor hereby warrants and agrees to the lands herein
described, and agrees that the Lessee shall have the right at any
time to redeem for Lessor, by payment, and mortgages, taxes or
other liens on the above described lands in the event of default
of payment by Lessor and be subrogated to the rights of the
holder thereof and the undersigned Lessor, for themselves and
their heirs, successors and assigns, hereby surrender and release
all right to dower and homestead in the premises described
herein, insofar as said right of dower and homestead may in any
way affect the purpose for which this lease is made, as recited
herein.
15. Should any one or more of the parties hereinabove named as
Lessor fail to execute this lease, it shall nevertheless be
binding upon all such parties who do execute it as Lessor. The
word "Lessor" as used in this lease, shall mean any one or more
or all of the parties who execute this lease as Lessor. All the
provisions of this lease shall be binding on the heirs,
successors and assigns of Lessor and Lessee.
IN WITNESS WHEREOF, this instrument is executed as of the
date first above written.
____________________________________
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____________________________________
____________________________________
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