SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 6, 1995
Inland Resources Inc.
(Exact name of registrant as specified in its charter)
Washington 0-16487 91-1307042
(State of (Commission File No.) (IRS Employer
incorporation) Identification No.)
475 17th Street, Suite 1500, Denver, Colorado 80202
(Address of principal execute offices, including zip code)
(303) 292-0900
(Registrant's telephone number, including area code)
Item 1. Changes in Control of Registrant.
On November 6, 1995, Inland Resources Inc. ("Registrant") issued
12,000,000 shares of its common stock, par value $.001 per share, to Pengo
Securities Corp. ("Pengo") in consideration of payment by Pengo of $6 million
in cash ($.50 per share). Pengo is an affiliate of Randall D. Smith and
Woodstead Associates II, L.P. and after issuance of these shares, Pengo and
such affiliates will beneficially own approximately 20,600,000 shares of
Registrant's common stock, or approximately 50% of the issued and outstanding
shares of common stock.
Item 2. Acquisition or Disposition of Assets.
On November 6, 1995, Registrant entered into four oil and gas leases
with the Department of Interior covering 6,200 gross acres (5,861 net acres)
located in both Duchesne and Uintah County, Utah. Registrant had earlier, on
September 25, 1995, been named the winning bidder by the Department of
Interior for these federal leases in a federal lease sale. The aggregate
purchase price for the leases was $7,157,646, of which $1,360,000 was paid by
Registrant on September 25, 1995, with the balance being delivered by
Registrant on November 6, 1995. The acquisition price for the leases was paid
in cash from funds on hand. The leases provide for payment of annual rentals
of $2 per acre and a royalty rate of 12.5%. The leases do not have any
producing wells and all of the acreage is considered undeveloped.
Registrant's acreage position in Duchesne and Uintah County, Utah, is
approximately 25,279 net acres after its acquisition of these federal leases.
Item 7. Financial Statements and Exhibits.
(b) No financial statements are included with this Form 8-K because the
acquisition reported constitutes an acquisition of non-income producing
undeveloped oil and gas properties.
(c) Exhibits. The following exhibits are being filed herewith:
10.1 Subscription Agreement between Registrant and Pengo Securities
Corp. dated October 23, 1995, without exhibits.
10.2 Registration Rights Agreement between Registrant and Pengo
Securities Corp. dated November 6, 1995.
10.3 Combined Hydrocarbon Lease between Inland Production Company
("Production") and the U.S. Department of the Interior, Bureau of
Land Management ("Bureau") dated effective October 18, 1995
relating to 677.36 acres.
10.4 Combined Hydrocarbon Lease between Production and the Bureau dated
effective October 18, 1995 relating to 2,879.94 acres.
10.5 Combined Hydrocarbon Lease between Production and the Bureau dated
effective October 18, 1995 relating to 647.32 acres.
10.6 Combined Hydrocarbon Lease between Production and the Bureau dated
effective October 18, 1995 relating to 1,968.01 acres.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
November 8, 1995
INLAND RESOURCES INC.
By: /s/ Kyle R. Miller
Kyle R. Miller, President and
Chief Executive Officer
EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
BETWEEN
INLAND RESOURCES INC.
AND
PENGO SECURITIES CORP.
DATED OCTOBER 23, 1995
<PAGE>
SUBSCRIPTION AGREEMENT
Subscription Agreement dated October 23, 1995 (this "Agreement") between
Inland Resources Inc., a Washington corporation (the "Issuer"), and Pengo
Securities Corp., a Delaware corporation (the "Purchaser").
ARTICLE I
DEFINITIONS
"Affiliate" shall have the meaning given to such term in Rule 405 under
the Securities Act.
"Closing" has the meaning ascribed to such term in Section 2.2.
"Closing Data" has the meaning ascribed to such term in Section 2.2.
"Common Stock" has the meaning ascribed to such term in Section 2.1.
"Governmental Authority" means the United States, any foreign country,
state, county, city or other political subdivision, agency or instrumentality
thereof.
"Invoice" means the invoice to be delivered by the Department of
Interior to the Issuer for the balance of the purchase price for the Leases.
"Leases" means the oil and gas leases located in Duchesne and Uintah
County, Utah that will accompany the Invoice and will be executed by the
Issuer as the successful bidder for the acreage covered by the Leases from the
federal government at a lease sale on September 25, 1995.
"Material Adverse Effect" means any material adverse effect on the
financial condition, assets, business or operations of the Issuer and its
Subsidiaries taken as a whole.
"Registration Rights Agreement" means the Registration Rights Agreement
in the form attached hereto as Exhibit "A".
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity. Such term shall also refer to
any other partnership, limited partnership, joint venture, trust, or other
business entity in which such entity has a material interest.
"Shares" has the meaning ascribed to such term in Section 2.1.
"Transactions" means the issuance and sale of the Shares to the
Purchaser and the other transactions contemplated by this Agreement and the
Registration Rights Agreement.
ARTICLE II
SUBSCRIPTION AND CLOSING
2.1 Subscription. Subject to the terms and conditions of this
Agreement, the Issuer agrees to issue and sell to the Purchaser, and the
Purchaser (or the Purchaser's designee) agrees to subscribe for and purchase
from the Issuer, 12,000,000 shares (the "Shares") of common stock, par value
$.001 per share, of the Issuer (the "Common Stock") , for an aggregate
purchase price of $6,000,000 ($0.50 per Share) (the "Purchase Price").
2.2 Closing. Subject to the terms and conditions of this Agreement,
the issuance and purchase of the Shares shall take place at a closing (the
"Closing") to be held at the offices of the Issuer at 10:00 a.m. (Denver time)
on November 6, 1995. The date on which the Closing occurs is referred to
herein as the "Closing Date." On the Closing Date, the Issuer will deliver
the Shares registered in the name of the Purchaser and/or the Purchaser's
nominees or other designees against receipt of the Purchase Price therefore by
wire transfer of immediately available funds to an account designated by the
Issuer, or by such other method as is mutually agreed to by the Purchaser and
Issuer. Such certificates shall bear appropriate restrictive legends deemed
necessary by the Issuer to comply with applicable securities laws. Within one
(1) business day following the Closing, Issuer shall deliver to the Department
of Interior or other applicable governmental agency, the full amount of the
purchase price for the Leases as set forth in the Invoice, together with the
Leases executed by Issuer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants to the Purchaser as of the date
hereof and as of the Closing Date as follows:
3.1 Authority. The Issuer has all requisite corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to consummate the Transactions to be performed by the Issuer.
The execution and delivery of this Agreement and the Registration Rights
Agreement and the consummation of the Transactions to be performed by the
Issuer have been duly and validly authorized by all necessary action on the
part of the Board of Directors of the Issuer, and no other corporate
proceedings are necessary to authorize the execution and delivery of this
Agreement and the Registration Rights Agreement by the Issuer or to consummate
the Transactions to be performed by the Issuer. This Agreement has been, and
the Registration Rights Agreement, when executed at Closing, will have been,
duly and validly executed and delivered by the Issuer and, assuming this
Agreement and the Registration Rights Agreement constitutes a valid and
binding obligation of the Purchaser, this Agreement constitutes, and the
Registration Rights Agreement, when executed at Closing, will constitute, a
valid and binding agreement of the Issuer, enforceable against the Issuer in
accordance with its terms. Upon receipt by the Issuer of the Purchase Price,
the Shares shall be duly authorized, validly issued, fully paid and non-
assessable.
3.2 Consents and Approval; No Violation. Neither the execution and
delivery of this Agreement or the Registration Rights Agreement by the Issuer,
the consummation of the Transactions to be performed by the Issuer nor
compliance by the Issuer with any of the provisions hereof or of the
Registration Rights Agreement will (i) conflict with or result in any breach
of any provisions of the Articles of Incorporation or by-laws of the Issuer or
any of its Subsidiaries, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority,
except for consents, approvals, authorizations, permits, filings or
notifications which have been obtained or made, (iii) result in a default
(with or without due notice or lapse of time or both) or give rise to any
right of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, contract,
license, agreement or other instrument or obligation to which the Issuer or
any of its Subsidiaries is a party or by which the Issuer or any of its
Subsidiaries or any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained, (iv) result in the creation
or imposition of any lien, charge or other encumbrance on the assets of the
Issuer or any of its Subsidiaries, or (v) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Issuer, any of its
Subsidiaries or any of their respective assets.
3.3 Offering of the Shares. The offer, sale and issuance of the
Shares pursuant to this Agreement do not require registration of the Shares
under the Securities Act, or registration or qualification under any
applicable state "blue sky" or securities laws, based on available non-public
offering exemptions which are based, in part, on Purchaser's representations
in Section 4.3. The Issuer has not taken, directly or indirectly, nor will it
take any action which will subject the issuance or sale of any of the Shares
to be in violation of the provision of Section 5 of the Securities Act or the
provisions of any securities, blue sky law or similar law of any applicable
jurisdiction.
3.4 Broker's or Finder's Commissions. No broker's or finder's fees or
commissions will be payable by the Issuer in connection with the issuance and
sale of the Shares or the Transactions.
3.5 Capitalization. The authorized capital stock of the Issuer
consists of 100,000,000 shares of Common Stock, and 20,000,000 shares of
preferred stock, par value $.001 per share ("Preferred Shares"). As of the
date hereof, 28,927,999 shares of Common Stock and 106,850 Series A Preferred
Shares were issued and outstanding. Except upon written notification to
Purchaser, Issuer will not, prior to the Closing, issue any Common Stock or
Preferred Shares (other than pursuant to the Subscription Agreement or upon
conversion of Series A Preferred Shares or exercise of outstanding options or
warrants), and will not repurchase or redeem any Common Stock or Preferred
Shares. Neither the Issuer nor any Subsidiary has any shares of its capital
stock reserved for issuance, except for shares of Common Stock issuable upon
conversion of Series A Preferred Shares and except for 2,128,000 shares of
Common Stock issuable pursuant to the Issuer's employee stock option plan, of
which options for 1,504,600 shares are outstanding, 4,278,001 shares issuable
pursuant to other outstanding subscriptions, options and warrants, and an
additional 300,000 shares issuable to Kyle R. Miller pursuant to his
Employment Agreement as a result of consummation of your subscription for the
Shares upon Mr. Miller's exercise of a warrant for 300,000 shares, which
warrant will have an exercise price of $0.50 per share. No other options,
warrants or securities convertible into Common Stock, other than the Series A
Preferred Shares, are outstanding; however, the Issuer has granted an ongoing
warrant to Kyle R. Miller in an amount equal to 5% of the Common Stock issued
by the Issuer during the term of the Employment Agreement between the Issuer
and Mr. Miller dated February 23, 1993. All such issued and outstanding
shares of capital stock of the Issuer are validly issued, fully paid, non-
assessable and free of any preemptive rights.
3.6 Publicly Filed Documents. The various reports filed by the Issuer
with the Securities and Exchange Commission do not contain any untrue
statement of a material fact, or omit to state a material fact necessary to
make the statements contained therein not misleading.
3.7 Successful Bidder; Title to Leases. The Issuer was the successful
bidder for the acreage covered by the Leases at the lease sale held by the
federal government on September 25, 1995. The Issuer has received the Leases
from the federal government and upon execution of the Leases and payment in
full of the amount required under the Invoice, the Issuer will hold valid
leasehold title to the Leases upon execution of same by the federal
government. The Issuer represents and warrants that the federal government
will execute the Leases upon receipt of same executed by the Issuer, together
with receipt of the total amount due under the Invoice.
3.8 Delivery of Leases and Invoiced Amount. The Issuer represents and
warrants to Purchaser that upon receipt from the Purchaser of the amount of
the Invoice in accordance with Section 2.2, the Issuer will, within one
business day after such receipt, deliver the executed Leases to the federal
government along with the Invoice amount received from the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Authority. The Purchaser has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions to be performed by the Purchaser. The execution and delivery of
this Agreement and the consummation of the Transactions to be performed by the
Purchaser have been duly and validly authorized by all necessary action on the
part of the Board of Directors of the Purchaser, and no other corporate
proceedings are necessary to authorize the execution and delivery of this
Agreement by the Purchaser or to consummate the Transactions to be performed
by the Purchaser. This Agreement has been duly and validly executed and
delivered by the Purchaser and, assuming this Agreement constitutes a valid
and binding obligation of the Issuer, this Agreement constitutes a valid and
binding agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
4.2 Consents and Approval; No Violation. Neither the execution and
delivery of this Agreement by the Purchaser, the consummation of the
Transactions to be performed by the Purchaser nor compliance by the Purchaser
with any of the provisions hereof will (i) conflict with or result in any
breach of any provisions of the Articles of Incorporation or by-laws of the
Purchaser or any of its Subsidiaries, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, except for consents, approvals, authorizations,
permits, filings or notifications which have been obtained or made, (iii)
result in a default (with or without due notice or lapse of time or both) or
give rise to any right of termination, cancellation or acceleration under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
contract, license, agreement or other instrument or obligation to which the
Purchaser or any of its Subsidiaries is a party or by which the Purchaser or
any of its Subsidiaries or any of their respective assets may be bound, except
for such defaults (or rights of termination, cancellation or acceleration) as
to which requisite waivers or consents have been obtained, or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Purchaser, any of its Subsidiaries or any of their respective assets.
4.3 Securities Laws. The Purchaser has such knowledge and experience
in financial and business matters as enables the Purchaser to evaluate the
merits and risks of an investment in the Shares. The Purchaser is an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act. The Purchaser is subscribing for the Shares for its own account and not
with the view to resale or redistribution thereof in violation of the
Securities Act. The Purchaser acknowledges that it may not transfer the
Shares except pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from the registration requirements
of the Securities Act, and that a legend to such effect shall be included on
the certificate representing the Shares.
ARTICLE V
COVENANTS
5.1 Access to Information. Between the date hereof and the Closing
Date, the Issuer will afford to the Purchaser and its authorized
representatives reasonable access (subject to tenants' rights) to the plant,
offices, warehouses, or other facilities and properties, including oil and gas
properties) and to the books and records of the Issuer and its Subsidiaries,
will permit the Purchaser and its representatives to make such reasonable
inspections as they may require and will cause its officers and those of its
Subsidiaries to furnish the Purchaser and its representatives with such
financial and operating data, environmental assessment and other information
with respect to the business, assets and properties of the Issuer and its
Subsidiaries, as applicable, as the Purchaser and its representatives may from
time to time reasonably request. No inspection or examination by the
Purchaser or its representatives will constitute a waiver of any claim against
the Issuer for misrepresentation or breach of this Agreement. Purchaser shall
hold strictly confidential all information obtained as a result of such
access; provided, that Purchaser shall not be obligated to hold confidential
information which (i) was or becomes generally available to the public other
than as a result of a disclosure by the Purchaser or its representatives or
(ii) was or becomes available to the Purchaser on a nonconfidential basis from
a source other than the Issuer or its representatives, provided that such
source is not bound by a confidentiality agreement with the Company or
otherwise prohibited from transmitting the information to the Purchaser.
5.2 Best Efforts. Subject to the terms and conditions herein
provided, the Issuer and Purchaser agree to use their best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions.
5.3 Public Announcements. The Issuer and Purchaser will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the existence of this Agreement or the Transactions
and shall not issue any press release or make any public statement prior to
such consultation, except as may be required by law or by obligations pursuant
to any listing agreements between the Issuer and NASDAQ.
5.4 SEC Filings. For so long as the Purchaser or any of its
Affiliates own any of the Shares or any other securities of the Issuer, the
Issuer covenants and agrees that it will (i) maintain on a current basis the
filing of all reports required to be filed by the Issuer pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder; (ii) use its reasonable best efforts to maintain its qualification
for the use of Form S-3; and (iii) cooperate with the Purchaser whenever the
Purchaser wishes to dispose of any securities of the Issuer owned by the
Purchaser or any of its Affiliates under Rule 144 and/or Rule 144A under the
Securities Act, to the full extent feasible in order to consummate such
disposition.
ARTICLE VI
PURCHASER'S CONDITIONS
The obligation of the Purchaser to purchase the Shares is subject to the
satisfaction of the following conditions any one or more may be waived by the
Purchaser:
6.1 Representations and Covenants. The representations and
warranties contained in Article III hereof shall be true in all material
respects on and as of the Closing Date as if made on and as of the Closing
Date. The Issuer shall have complied with all of its obligations contained
herein performance of which is required on or prior to the Closing Date. The
Purchaser shall have received a certificate to the foregoing effect executed
by an officer of the Issuer.
6.2 Registration Rights Agreement. The Issuer shall have executed and
deliver the Registration Rights Agreement in the form of Exhibit A hereto.
6.3 Due Diligence. The Purchaser shall, prior to Closing, be
satisfied, in it sole discretion, with the results of its legal and business
due diligence of the Issuer.
6.4 Material Adverse Effect. There shall have been no Material
Adverse Effect since the end of the quarter covered by the Issuer's most
recently filed Form 10-QSB.
6.5 Option of Counsel. The Purchaser shall have received an opinion
of the Issuer's counsel in the form attached hereto as Exhibit "B".
ARTICLE VII
ISSUER'S CONDITIONS
The obligation of the Issuer to issue and sell the Shares is subject to
the satisfaction of the following conditions any one or more of which may be
waived by the Issuer:
7.1 Representations and Covenants. The representations and
warranties contained in Article IV hereof shall be true in all material
respects on and as of the Closing Date as if made on and as of the Closing
Date. The Purchaser shall have complied with all of its obligations contained
herein performance of which is required on or prior to the Closing Date. The
Issuer shall have received a certificate to the foregoing effect executed by
an officer cf the Purchaser.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement ray be terminated and the
transactions contemplated hereby nay be abandoned at any time prior to the
Closing:
(a) By the mutual written consent of the Issuer and Purchaser;
(b) by the Issuer or the Purchaser if the Closing shall not have
occurred on or before December 31, 1995; provided, however, that a party shall
not have the right to terminate this Agreement pursuant to this Section 8.1
(b) if the Closing has failed to occur on or before such date by reason of the
breach by such party of any of its obligation hereunder; or
(c) by the Issuer or the Purchaser if there shall have been a breach
by the other party of any of the covenants contained herein or if any
representation or warranty made by any other party is untrue in any material
respect.
8.2 Effect of Termination In the event of the termination and
abandonment of this Agreement pursuant to Section 8. 1 (a) or (b) this
Agreement shall forthwith become void and have no affect, without any
liability on the part of any party other than Section 9.5.
ARTICLE IX
MISCELLANEOUS
9.1 Entire Agreement This Agreement (a) constitutes the entire
agreement among the parties with respect to subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise.
9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered person, by facsimile, or by registered or certified
mail (postage prepaid, return receipt requested) to respective parties as
follows:
If to the Issuer:
Inland Resources Inc.
475 17th Street
Suite 1500
Denver, Colorado 80202
Fax: 303-296-4070
Attn: Kyle R. Miller
With a copy to:
Glast, Phillips and Murray, P.C.
2200 One Galleria Tower
13355 Noel Road, L.B. 48
Dallas, Texas 75240-6657
Fax: 214-419-8329
Attn: Mike Parsons
If to the Purchaser:
Pengo Securities Corp.
c/o Smith Management Company
885 Third Avenue
34th Floor
New York, New York 10022
Attn: David A. Persing, Esq.
9.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws in the state of New York applicable to agreements
made and wholly performed in the State of New York.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the sane agreement.
9.5 Expenses. Except as otherwise provided herein or in the
Registration Rights Agreement, each party shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with transactions
contemplated hereby, including fees and expenses of its representatives.
9.6 Assignment. Except as provided in this Section 9.6, neither the
Purchaser nor the Issuer may assign its rights or obligations hereunder. The
Purchaser may assign its rights hereunder, subject to compliance with
applicable securities laws.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed and delivered as of the day and year first set above.
INLAND RESOURCES INC.
By: /s/ Kyle R. Miller
Title: President
PENGO SECURITIES
CORP.
By: /s/ David A. Persing
Title: Senior Vice President
EXHIBIT 10.2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered into as of the 6th day of November, 1995 by and between
INLAND RESOURCES INC., a Washington corporation (the "Issuer"), and
PENGO SECURITIES CORP., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Issuer and Purchaser are parties to a
Subscription Agreement dated as of October 23, 1995 (the
"Subscription Agreement") pursuant to which the Issuer has agreed
to sell to the Purchaser 12,000,000 shares of common stock, par
value $.001 per share ("Common Stock"), of the Issuer (the
"Shares"); and
WHEREAS, it is a condition precedent to the Purchaser's
obligation to purchase the Shares that the Issuer and the Purchaser
shall have entered into this Registration Rights Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter set forth, the Issuer and the Purchaser
agree as follows:
1. Shelf Registration Rights.
The Issuer will, as soon as possible following a written
request by Purchaser, file a shelf registration statement (the
"Shelf Registration Statement") on Form S-3 covering the Shares and
thereafter shall use its best efforts to cause the Shelf
Registration Statement to be declared effective as soon as
practicable following such filing and to take any and all
reasonable action within the Issuer's control (provided that such
Registration Statement may be unusable during periods (which shall
not exceed one hundred twenty (120) consecutive days or an
aggregate of one hundred eighty days within any three hundred sixty
five day period) of pending acquisitions or other material events
which would require a post-effective amendment or supplement to the
Shelf Registration Statement, it being agreed that the Issuer shall
use its best efforts to file a post-effective amendment at the
earliest practicable date so that the Shelf Registration Statement
will be useable), as may be necessary or appropriate to maintain
such effectiveness until such time as neither the Purchaser nor any
of its assignees own any Registerable Securities (as defined in
Section 4) . Purchaser will cooperate fully with Issuer by filing
comments or other documents with the SEC which may be required by
the SEC, or by providing such documents as may be reasonably
required by the Issuer. If the Purchaser proposes to dispose of
any of the Registerable Securities pursuant to an underwritten
offering the Purchaser shall have the right to select the
underwriter.
2. Indemnification. In connection with the registration of
any of the Registerable Securities under the Securities Act of
1933, as amended (the "Act"):
(a) Issuer's Indemnification. The Issuer will
indemnify and hold harmless the Purchaser, each person
who controls the Purchaser within the meaning of the Act
and the Securities Exchange Act cf 1934, as amended (the
"Exchange Act") , and the Purchaser' s officers and
directors, as amended against any losses, claims,
expenses, damages or liabilities (including reasonable
attorney's fees) , joint or several, to which the
Purchaser, its controlling persons or such officers and
directors become subject under the Act, insofar as such
losses, claims, expenses, damages or liabilities (or
actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of
any material fact contained in the Shelf Registration
Statement, in any prospectus forming a part of the Shelf
Registration Statement (the "Prospectus") or any
amendment or supplement thereof, or arise out of or are
based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
and will reimburse the Purchaser, each such controlling
person or such officers and directors for any legal or
other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim,
expense, damage, liability or action; provided, however,
that the Issuer will not be liable in any such case if
but only to the extent that any such loss, claim,
expense, damage or liability arises out of our is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with
information furnished in writing to the Issuer by the
Purchaser or Purchaser's underwriter expressly for
inclusion in the Registration Statement.
(b) Purchaser's Indemnification. The Purchaser
will indemnify and hold harmless the Issuer and each
underwriter of the Registerable Securities and each
person who controls the Issuer or any such underwriter
within the meaning of the Act and the Exchange Act, each
officer of the Issuer who signs the Shelf Registration
Statement and each director of the Issuer, against all
losses, claims, expenses, damages or liabilities
(including reasonable attorneys, fees), joint or several,
to which the Issuer, any such underwriter or such officer
or director or controlling person become subject under
the Act, but only insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material
fact made in reliance on and in conformity with
information relating to the Purchaser furnished in
writing to the Issuer expressly for inclusion in the
Shelf Registration Statement.
(c) Notification. Promptly after receipt by an
indemnified party hereunder of notice of the commencement
of any action, such indemnified party shall, if a claim
in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing
thereof; provided, however, that any failure to give such
notice will not waive any rights of the indemnified party
except to the extent the rights of the indemnifying party
are materially prejudiced. In case any such action shall
be brought against any indemnified party and it shall
notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to
participate in the defense thereof.
(d) If the indemnification provided for in this
Section 2 is unavailable or insufficient to hold harmless
an indemnified party in respect of any losses, claims,
expenses, damages or liabilities or actions in respect
thereof, then each indemnifying party shall in lieu of
indemnifying such indemnified party contribute to the
amount paid or payable by such indemnified party as a
result of such losses, claims, expenses, damages,
liabilities or actions in such proportion as is
appropriate to reflect the relative fault of the Issuer,
on the one hand, and the Purchaser, on the other, in
connection with the statements or omissions which
resulted in such losses, claims, expenses, damages,
liabilities or actions as well as any other relevant
equitable considerations, including the failure to give
any required notice. The relative fault shall be
determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material
fact relates to information supplied by the Issuer, on
the one hand, or the Purchaser, on the other, and the
parties, relative intent, knowledge, access to
information and opportunity to correct or present such
statement or omission. The Issuer and the Purchaser
agree that it would not be just and equitable if
contribution pursuant to this Section 2 (d) were
determined by pro rata allocation or by any other method
of allocation which does not take account of the
equitable considerations referred to above in this
Section 2 (d) . The amount paid or payable to an
indemnified party as a result of the losses, claims,
expenses, damages, liabilities or actions in respect
thereof referred to above in this Section 2(d) shall be
deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
3. Expenses. In connection with the Shelf Registration
Statement, Issuer shall pay all expenses incident to the Issuer's
performance of or compliance with its obligations hereunder,
including, without limitation, all registration, filing and
National Association of Securities Dealers, Inc. fees, all fees and
expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and
delivery expenses, and the reasonable fees and disbursements of the
Issuer's counsel and of its independent public accountants.
Purchaser will be responsible for any expenses incurred by it,
including for its own counsel, accountants, underwriters and
representatives.
4. Registerable Securities. For purposes of this Agreement,
the term "Registerable Securities" shall mean (i) the Shares and
any Shares sold by Purchaser to a permitted assignee pursuant to
Section 8 and (ii) any shares of Common Stock issued or issuable
with respect to the shares of Common Stock described in (i) above,
by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganizations. Registerable Securities shall cease to be
Registerable Securities when they have been disposed of pursuant to
the Shelf Registration Statement or pursuant to Rule 144 under the
Act.
5. Rule 144 Covenants. The Company agrees that for so long
as the Purchaser owns any Registerable Securities to (i) file with
the SEC, in a timely manner, all reports required to be filed by
the Company under the Exchange Act and (ii) to provide the
Purchaser, upon request, information regarding the number of shares
of Common Stock outstanding as shown by the most recent report or
statement published by the Company.
6. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the
State of New York, without regard to the conflict of law principles
thereof.
7. Binding Effect. The obligations of this Agreement shall
be binding upon the parties, their heirs, successors and legal
representatives.
8. Assignment. This Agreement may not be assigned by any
party without the prior written consent of the other party hereto,
except that the Purchaser may assign all or any portion of its
rights under this Agreement to a party to which it sells or
transfers Registerable Securities in a private transaction exempt
from the registration and prospectus delivery requirements of the
Act, provided, at such time, Purchaser furnishes an opinion of
counsel to such effect reasonably acceptable to the Issuer.
9. Amendment. Amendments to this Agreement may only be made
in writing signed by each of the parties.
10. Entire Agreement. This Agreement contains the entire
understanding of the parties and there are no other agreements,
written or oral, regarding the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INLAND RESOURCES INC.
By: /s/ Kyle R. Miller
Vice President
PENGO SECURITIES
CORP.
By: /s/ David A. Persing
Senior Vice President
EXHIBIT 10.3
Form 3140-1 UNITED STATES Serial Number
DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
UTU-74868
COMBINED HYDROCARBON LEASE
This lease is entered into by and between the United States of America,
through the
Bureau of Land Management, as lessor,
and Inland Production Company
475 17th Street Suite 1500
Denver, CO 80202
as lessee, pursuant to the Mineral Leasing Act of 1920 (30 U.S.C. 181 et.
seq.)
and the Minerals Leasing Act for Acquired
Lands (30 U.S.C. 351-359), as appropriate, and as amended by the Combined
Hydrocarbon Leasing Act of 1981 (95 Stat. 1070).
Lands included in lease:
T. 8 S., R. 18 E., Meridian Salt Lake State Utah
County Uintah
Sec. 26, SWSW;
Sec. 31, lots 1, 2, NE, E2NW;
Sec. 33, N2.
Containing 677.36 Acres
This lease is issued granting the exclusive right to drill for, mine
(surface/underground), extract, remove and dispose of all oil and gas (except
helium) from the following described lands for a primary term of 10 years,
subject to extension in accordance with the authorizing acts, and for so long
thereafter as oil or gas is produced in paying quantities. The lessee shall
also have the right to construct and maintain on the leased lands all works,
buildings, plants, roads, communication lines, pipelines, recessions, tanks,
pumping stations, and other structures necessary for the full enjoyment of
this lease. Rights granted are subject to applicable laws, the terms,
conditions and attached stipulations of this lease, regulations and formal
orders.
LEASE TERMS
Sec. 1. RENTAL - (a) Lessee shall pay annual rental to the proper office of
the lessor in advance of each year at a rate of $2.00 per acre or fraction
thereof, until a discovery of oil or gas in paying quantities is made on the
leased land.
(b) If this lease or a portion thereof is committed to an approved
cooperative or unit plan which includes a well capable of producing leased
resources, and the plan contains a provision for allocation of production,
royalties shall be paid on the production allocated to this lease. However,
annual rentals shall continue to be due for those lands not within a
participating area.
Sec. 2. ROYALTIES - (a) Royalties shall be paid to the proper office of lessor
at the rate of 12 1/2 per centum in amount or value of production removed or
sold from the lease, unless this lease is converted from an existing oil and
gas lease, in which case the applicable royalty shall be the royalty described
in the existing lease or in an attached schedule thereto.
(b) Royalties for undivided fractional interest leases shall be paid in the
same proportion as the leased fractional interest is to the full interest in
the resource.
(c) Lessor reserves the right to specify whether royalty is to be paid in
value or in kind, and the right to establish minimum values on production
after giving lessee notice and an opportunity to be heard. When paid in
value, royalties shall be due and payable on the last day of the month fol-
lowing the month in which production occurred. When paid in kind, production
shall be delivered, unless otherwise agreed to by lessor, in merchantable
condition on the premises where produced without cost to lessor. Lessee shall
not be required to hold such production in storage beyond the last day of the
month following the month in which production occurred, nor shall lessee be
held liable for loss or destruction of royalty oil or other products in stor-
age from causes beyond the reasonable control of lessee.
(d) A minimum royalty shall be due for any lease year following discovery in
the amount of $1.00 per acre.
(e) Royalties may be waived, suspended, or reduced, for all or portions of
this lease as provided in the regulations.
Sec. 3. BONDS - Lessee shall file and maintain any bond required under
regulations.
Sec. 4. DILIGENCE, RATE OF DEVELOPMENT, UNITIZATION, AND DRAINAGE - (a) Lessee
shall exercise reasonable diligence, skill, and care in the operation of the
leased lands, and shall prevent unnecessary damage to, loss of, or waste of
leased resources. Lessor reserves the right to specify rates of development
and production in the public interest and to require lessee to subscribe to
such cooperative or unit plan, within thirty (30) days of notice, as is
determined necessary for the proper development and operation of the area,
field, or pool embracing these leased lands. In all cases, lessee shall
either drill and produce wells necessary to protect the leased lands from
drainage or pay compensatory royalty for such drainage in the amount deter-
mined by lessor.
(b) Lessee shall diligently develop the tar sand resource in the leased lands
as prescribed in the regulations, or as specifically set out by the lessor in
approving a plan of operations.
Sec. 5. DOCUMENTS, EVIDENCE, AND INSPECTION
(a) Lessee shall file with the proper office of lessor, not later than thirty
(30) days after the effective date thereof, any contracts or evidence of other
arrangements for the sale or disposal of production. At such times and in
such form as lessor may prescribe, lessee shall furnish detailed statements
showing amounts and quality of all products removed and sold from the lease,
proceeds therefrom, and amount used for production purposes or unavoidably
lost. Lessee also may be required to produce plats and schematic diagrams
showing development work and improvements on the leased lands, and reports
with respect to stockholders, investments, depreciation costs, and Federal
lease interests.
(b) (1) Lessee shall keep a daily drilling record, a log, and complete
information on all well surveys and tests in the form prescribed by lessor for
all wells drilled on the leased lands. Lessee also shall keep a record of all
subsurface investigations of said lands and furnish copies to lessor when
required. Lessee shall keep opened at all reasonable times for inspection by
any duly authorized officer of lessor the leased premises and all wells,
improvements, machinery, and fixtures thereon. Upon request by lessor, lessee
shall make available for inspection and copying by any duly authorized officer
of lessor all books, accounts, maps, and records relative to operations,
surveys, or investigations on or under the leased lands.
(2) Where lessee conducts mining operations under this lease, lessee agrees
to keep clear, accurate, and detailed maps, on a scale of not more than fifty
(5O) feet to the inch. These maps should show lessee workings in each section
of leased lands, and be oriented to a public land corner so that the maps can
be readily and correctly superimposed. The lessee shall also furnish to the
lessor annually, or upon demand, certified copies of such maps and any written
reports of operations as lessor may call for.
(c) Lessee shall maintain copies of all contracts, sales agreements,
accounting records, and documentation such as billings, invoices, or similar
documentation that supports costs claimed as manufacturing, preparation, and
or transportation costs. All such records shall be maintained in lessee's
accounting offices for future audit by lessor. Lessee shall maintain required
records for 6 years after they are generated or, if an audit or investigation
is underway, until released of the obligation to maintain such records by
lessor.
(d) Information obtained under this term shall be open to inspection by the
public only in accordance with the Freedom of Information Act (5 U.S.C. 552).
(e) The lessee agrees to conduct all operations subject to the inspection of
the lessor and to carry out at the lessee's expense all reasonable orders and
requirements to the lessor relative to the prevention of waste and
preservation of the property, and the health and safety of workmen, and on
failure of the lessee so to do, the lessor shall have the right, in addition
to other available remedies, to enter on the property to repair damage or
prevent waste at the lessee's expense.
Sec. 6. CONDUCT OPERATIONS - (a) Lessee shall conduct operations in a manner
that prevents unnecessary impacts and minimizes other impacts to the land,
air, and water, to cultural, biological, visual, and other resources, and to
other land uses or users. Lessee shall take measures deemed necessary by
lessor to accomplish the intent of this lease term. Such measures may
include, but are not limited to, modification to siting or design of
facilities, timing of operations, and specification of interim and final
reclamation measures. Lessor reserves the right to continue existing uses and
to authorize future uses upon or in the leased land, including the approval of
easements or rights-of-ways. Such uses shall be conditioned so as to prevent
unnecessary or unreasonable interference with rights of lease.
(b) Prior to disturbing the surface of the leased lands, lessee shall contact
lessor to be apprised of procedures to be followed and modifications or
reclamation measures that may be necessary. Areas to be disturbed may require
inventories or special studies to determine the extent of impacts to other
resources. Lessee may be required to complete such under guidelines provided
by lessor. If, in the conduct of operations, lessee observes or encounters
any threatened or endangered species, cultural resources, other specific
resources that are statutorily protected, or substantially different, or
unanticipated environmental affects, lessee shall immediately contact lessor.
Lessee shall cease any operations which would result in the destruction of
such.
Sec. 7. DAMAGES TO PROPERTY- Lessee shall pay lessor for damage to lessor's
property improvements, and shall save and hold lessor harmless from all claims
for damage or harm to persons or property as a result of lease operations.
Sec. 8. PROTECTION OF DIVERSE INTERESTS AND EQUAL- OPPORTUNITY - (a) The
lessee shall: Pay when due all taxes legally assessed and levied under laws of
the State or the United States; accord all employees complete freedom of
purchase; pay all wages at least twice each month in lawful money of the
United States; maintain a safe working environment in accordance with standard
industry practices; and take measures necessary to protect the health and
safety of the public. Lessor reserves the right to ensure that production is
sold at a reasonable price and to prevent monopoly.
(b) Lessee shall comply with the provisions of Executive Order No. 11246 of
September 24, 1965, as amended, and the rules, regulations, and relevant
orders of the Secretary of Labor issued pursuant thereto. Neither the lessee
nor the lessee's subcontractors shall maintain segregated facilities.
Sec. 9. TRANSFER OF LEASE INTERESTS, AND RELINQUISHMENT OF LEASE - (a) Lessee
shall file for approval or recording in the proper office of lessor any
instrument transferring a record title, or working or royalty interest in this
lease, and shall not create overriding royalties in excess of that allowed by
regulations.
(b) The lessee may relinquish this lease or any legal subdivision by filing
in the proper Bureau of Land Management office a written relinquishment, which
shall be effective as of the date of filing, subject to the continued
obligation of the lessee and surety to pay all accrued rentals and royalties.
Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - (a) At
such time as all or portion of this lease are returned to lessor, lessee shall
deliver up to lessor the land leased, underground timbering, and such other
supports and structures necessary for the preservation of the mine or deposits
and place all wells in condition for suspension or abandonment. Within 180
days thereof, lessee shall remove from the premises all other structures,
machinery, equipment, tools, and materials as required by the authorized
officer. Any such structures, machinery, equipment, tools, and materials re-
maining on the leased lands beyond 180 days, or approved extension thereof,
shall become the property of the Lessor. If the surface is owned by third
parties, lessor may waive the requirement for removal provided the third
parties do not object to such waiver.
(b) At such times as all or portions of this lease is returned to lessor,
lessee shall place all wells in condition for suspension or abandonment and,
as provided in paragraph (a) of this section, remove equipment and improve-
ments not deemed necessary by lessor for preservation of producible wells or
continued protection of the environment.
(c) Lessee shall, prior to the termination of bond liability or at any other
time when required and in the manner directed by the lessor, reclaim all lands
the surface of which has been disturbed, dispose of all debris or solid waste,
repair the offsite and onsite damage caused by lessee's activity or activities
incidential thereto, and reclaim access roads or trails.
Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with
applicable laws, existing orders or regulations, or the terms, conditions or
stipulations of this lease, and the noncompliance continues for 30 days after
written notice thereof, this lease shall be subject to cancellation. This
provision shall not be construed to prevent the exercise by lessor of any
other legal and equitable remedy, including waiver of the default. Any such
remedy or waiver shall not prevent later cancellation for the same default
occurring at any other time.
Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease
shall extend to and be binding upon, and every benefit hereof shall inure to,
the heirs, executors, administrators, successors, or assigns to the respective
parties hereto.
A. UNDERSIGNED CERTIFIES AS FOLLOWS:
1. Lessee is a citizen of the United States; an association of such
citizens; a municipality; a corporation organized under the laws of
the United States or of any State or Territory thereof.
2. All parties holding an interest in the lease are in compliance
with 43 CFR 3100 and the authorizing acts.
3. Lessee is not considered a minor under the laws of the State in
which the lands covered by this lease are located.
B. UNDERSIGNED AGREES THAT lessee's signature to this lease constitutes
acceptance of this lease, including all terms, conditions and stipulations
pertaining thereto. 18 U.S.C. Sec. 1001 makes it a crime for any person
knowingly and willfully to make to any Department or agency of the United
States any false, fictitious or fraudulent statements or representations
as to any matter within its jurisdiction.
Duly executed this 18th day of October, 19 95
__________________________________________
(Signature of Lessee or Attorney-
in-fact)
Inland Production Company By
Company or Lessee Name
Chris A. Potter (Signature of Lessee) (Signing Officer)
____________________________________________________
Attorney-in-Fact (Title) (Title) (Date)
October 18, 1995
____________________________________________________
(Date) (Effective Date of Lease)
Title 18 U.S.C. Section 1001, makes it a crime for any person knowingly and
willfully to make to any department or agency of the United States any false,
fictitious or fraudulent statements or representations as to any matter within
its jurisdiction.
_____________________________________________________________________________
This form doe not constitute an information collection as defined by 44 U.S.C.
3502 and therefore does not require OMB approval.
Combined Hydrocarbon
UTU-74868
<PAGE>
STIPULATIONS
NO SURFACE OCCUPANCY STIPULATION - GOLDEN EAGLE NEST SITES
No surface occupancy or use is allowed (does not apply to casual use) within
1/2 mile of golden eagle nests which have been active within the past two
years. This restriction would not apply to maintenance and operation of
existing programs and facilities. It would not apply if impacts could be
mitigated through other management actions or site specific analysis of
terrain features.
On the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 22, SENE.
For the purpose of:
Protection of golden nest sites as described in the Diamond Mountain Resource
Management Plan and EIS. Waivers, exceptions, or modifications to this
limitation may be specifically approved in writing by the authorized officer
of the Bureau of Land Management if either the resource values change or the
lessee/operator demonstrates that adverse impacts can be mitigated. Any
changes to this stipulation will be made in accordance with the land use plan
and/or the regulatory provisions for such changes. (For guidance on the use of
this stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
CONTROLLED SURFACE USE STIPULATION - CRITICAL SOILS, MUNICIPAL WATERSHEDS,
FLOODPLAINS
Surface occupancy or use is subject to the following special operating
constraints. Preclude surface disturbing activities in areas of critical
soils (highly saline and/or erodible), municipal watersheds and floodplains
during times of saturated soils (usually Spring runoff and Fall rains). On
the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 13, lot 4;
Sec. 23, SENW.
For the purpose of:
Preserving and protecting critical soils, floodplains, and municipal watershed
from severe erosion as described in the Diamond Mountain Resource Management
Plan and EIS. Waivers, exceptions, or modifications to this limitation may be
specifically approved in writing by the authorized officer of the Bureau of
Land Management if either the resource values change or the lessee/operator
demonstrates that adverse impacts can be mitigated. Any changes to this
stipulation will be made in accordance with the land use plan and/or the
regulatory provisions for such changes. (For guidance on the use of this
stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
<PAGE>
Combined Hydrocarbon
UTU-74868
NOTICES
FERRUGINOUS HAWK HABITAT
The lessee/operator is given notice that lot 4 Sec. 13; NE Sec. 22; NWNW Sec.
23, T. 8 S., R. 16 E., SLM, Utah, have been identified as containing
Ferruginous Hawk Habitat Modifications to the Surface Use Plan of Operations
may be required in order to protect to Ferruginous Hawk and/or habitat from
surface disturbing activities in accordance with Section 6 of the lease terms,
Endangered Species Act and 43 CFR 3101.1-2.
GOLDEN EAGLE HABITAT
The lessee/operator is given notice that lots 1-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2 (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R. 16 E.,
SLM, Utah, have been identified as containing Golden Eagle Habitat
Modifications to the surface Use Plan of Operations may be required in order
to protect the Golden Eagle and/or habitat from surface disturbing activities
in accordance with Section 6 of the lease terms, Endangered Species Act, and
43 CFR 3101.1-2.
HIGH POTENTIAL PALEONTOLOGICAL RESOURCES
The lessee/operator is given notice that lots 2-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2NW, SWNW (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R.
16 E, SLM, Utah, have been identified as having high potential paleontological
resources. Modifications to the Surface Use Plan of Operations may be
required in order to protect paleontological resources from surface disturbing
activities in accordance with Section 6 of the lease terms and 43 CFR
3101.1-2.
BURROWING OWL HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Burrowing Owl (Category 2) Habitat. Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Burrowing Owl and/or habitat from surface disturbing activities in accordance
with Section 6 of the lease terms, Endangered Species Act, and 43 CFR
3101.1-2.
MOUNTAIN PLOVER HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Mountain Plover (Category 1) Habitat Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Mountain Plover and/or habitat from surface disturbing activities in
accordance with Section 6 of the lease terms, Endangered Species Act and 43
CFR 3101.1-2.
EXHIBIT 10.4
Form 3140-1 UNITED STATES Serial Number
(June 1984) DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
UTU-74868
COMBINED HYDROCARBON LEASE
This lease is entered into by and between the United States of America, through
the Bureau of Land Management, as lessor,
and Inland Production Company
475 17th Street Suite 1500
Denver, CO 80202
as lessee, pursuant to the Mineral Leasing Act of 1920 (30 U.S.C. 181 et.
seq.) and the Minerals Leasing Act for Acquired
Lands (30 U.S.C. 351-359), as appropriate, and as amended by the Combined
Hydrocarbon Leasing Act of 1981 (95 Stat. 1070).
Lands included in lease:
T. 8 S., R. 17 E., Meridian Salt Lake State Utah
County Duchesne & Uintah
Sec. 24, lot 1, E2SE; Sec. 33, N2NE, SWNE, W2NW, SENW,
S2;
Sec. 25, E2E2, SWSW; Sec. 34, N2, W2SW, SESW, N2SE, SWSE.
Sec. 26, S2S2;
Sec. 27, and 28, all;
Containing 2,879.94 Acres
This lease is issued granting the exclusive right to drill for, mine
(surface/underground), extract, remove and dispose of all oil and gas (except
helium) from the following described lands for a primary term of 10 years,
subject to extension in accordance with the authorizing acts, and for so long
thereafter as oil or gas is produced in paying quantities. The lessee shall
also have the right to construct and maintain on the leased lands all works,
buildings, plants, roads, communication lines, pipelines, recessions, tanks,
pumping stations, and other structures necessary for the full enjoyment of
this lease. Rights granted are subject to applicable laws, the terms,
conditions and attached stipulations of this lease, regulations and formal
orders.
LEASE TERMS
Sec. 1. RENTAL - (a) Lessee shall pay annual rental to the proper office of
the lessor in advance of each year at a rate of $2.00 per acre or fraction
thereof, until a discovery of oil or gas in paying quantities is made on the
leased land.
(b) If this lease or a portion thereof is committed to an approved
cooperative or unit plan which includes a well capable of producing leased
resources, and the plan contains a provision for allocation of production,
royalties shall be paid on the production allocated to this lease. However,
annual rentals shall continue to be due for those lands not within a
participating area.
Sec. 2. ROYALTIES - (a) Royalties shall be paid to the proper office of lessor
at the rate of 12 1/2 per centum in amount or value of production removed or
sold from the lease, unless this lease is converted from an existing oil and
gas lease, in which case the applicable royalty shall be the royalty described
in the existing lease or in an attached schedule thereto.
(b) Royalties for undivided fractional interest leases shall be paid in the
same proportion as the leased fractional interest is to the full interest in
the resource.
(c) Lessor reserves the right to specify whether royalty is to be paid in
value or in kind, and the right to establish minimum values on production
after giving lessee notice and an opportunity to be heard. When paid in
value, royalties shall be due and payable on the last day of the month fol-
lowing the month in which production occurred. When paid in kind, production
shall be delivered, unless otherwise agreed to by lessor, in merchantable
condition on the premises where produced without cost to lessor. Lessee shall
not be required to hold such production in storage beyond the last day of the
month following the month in which production occurred, nor shall lessee be
held liable for loss or destruction of royalty oil or other products in stor-
age from causes beyond the reasonable control of lessee.
(d) A minimum royalty shall be due for any lease year following discovery in
the amount of $1.00 per acre.
(e) Royalties may be waived, suspended, or reduced, for all or portions of
this lease as provided in the regulations.
Sec. 3. BONDS - Lessee shall file and maintain any bond required under
regulations.
Sec. 4. DILIGENCE, RATE OF DEVELOPMENT, UNITIZATION, AND DRAINAGE - (a) Lessee
shall exercise reasonable diligence, skill, and care in the operation of the
leased lands, and shall prevent unnecessary damage to, loss of, or waste of
leased resources. Lessor reserves the right to specify rates of development
and production in the public interest and to require lessee to subscribe to
such cooperative or unit plan, within thirty (30) days of notice, as is
determined necessary for the proper development and operation of the area,
field, or pool embracing these leased lands. In all cases, lessee shall
either drill and produce wells necessary to protect the leased lands from
drainage or pay compensatory royalty for such drainage in the amount deter-
mined by lessor.
(b) Lessee shall diligently develop the tar sand resource in the leased lands
as prescribed in the regulations, or as specifically set out by the lessor in
approving a plan of operations.
Sec. 5. DOCUMENTS, EVIDENCE, AND INSPECTION
(a) Lessee shall file with the proper office of lessor, not later than thirty
(30) days after the effective date thereof, any contracts or evidence of other
arrangements for the sale or disposal of production. At such times and in
such form as lessor may prescribe, lessee shall furnish detailed statements
showing amounts and quality of all products removed and sold from the lease,
proceeds therefrom, and amount used for production purposes or unavoidably
lost. Lessee also may be required to produce plats and schematic diagrams
showing development work and improvements on the leased lands, and reports
with respect to stockholders, investments, depreciation costs, and Federal
lease interests.
(b) (1) Lessee shall keep a daily drilling record, a log, and complete
information on all well surveys and tests in the form prescribed by lessor for
all wells drilled on the leased lands. Lessee also shall keep a record of all
subsurface investigations of said lands and furnish copies to lessor when
required. Lessee shall keep opened at all reasonable times for inspection by
any duly authorized officer of lessor the leased premises and all wells,
improvements, machinery, and fixtures thereon. Upon request by lessor, lessee
shall make available for inspection and copying by any duly authorized officer
of lessor all books, accounts, maps, and records relative to operations,
surveys, or investigations on or under the leased lands.
(2) Where lessee conducts mining operations under this lease, lessee agrees
to keep clear, accurate, and detailed maps, on a scale of not more than fifty
(5O) feet to the inch. These maps should show lessee workings in each section
of leased lands, and be oriented to a public land corner so that the maps can
be readily and correctly superimposed. The lessee shall also furnish to the
lessor annually, or upon demand, certified copies of such maps and any written
reports of operations as lessor may call for.
(c) Lessee shall maintain copies of all contracts, sales agreements,
accounting records, and documentation such as billings, invoices, or similar
documentation that supports costs claimed as manufacturing, preparation, and
or transportation costs. All such records shall be maintained in lessee's
accounting offices for future audit by lessor. Lessee shall maintain required
records for 6 years after they are generated or, if an audit or investigation
is underway, until released of the obligation to maintain such records by
lessor.
(d) Information obtained under this term shall be open to inspection by the
public only in accordance with the Freedom of Information Act (5 U.S.C. 552).
(e) The lessee agrees to conduct all operations subject to the inspection of
the lessor and to carry out at the lessee's expense all reasonable orders and
requirements to the lessor relative to the prevention of waste and
preservation of the property, and the health and safety of workmen, and on
failure of the lessee so to do, the lessor shall have the right, in addition
to other available remedies, to enter on the property to repair damage or
prevent waste at the lessee's expense.
Sec. 6. CONDUCT OPERATIONS - (a) Lessee shall conduct operations in a manner
that prevents unnecessary impacts and minimizes other impacts to the land,
air, and water, to cultural, biological, visual, and other resources, and to
other land uses or users. Lessee shall take measures deemed necessary by
lessor to accomplish the intent of this lease term. Such measures may
include, but are not limited to, modification to siting or design of
facilities, timing of operations, and specification of interim and final
reclamation measures. Lessor reserves the right to continue existing uses and
to authorize future uses upon or in the leased land, including the approval of
easements or rights-of-ways. Such uses shall be conditioned so as to prevent
unnecessary or unreasonable interference with rights of lease.
(b) Prior to disturbing the surface of the leased lands, lessee shall contact
lessor to be apprised of procedures to be followed and modifications or
reclamation measures that may be necessary. Areas to be disturbed may require
inventories or special studies to determine the extent of impacts to other
resources. Lessee may be required to complete such under guidelines provided
by lessor. If, in the conduct of operations, lessee observes or encounters
any threatened or endangered species, cultural resources, other specific
resources that are statutorily protected, or substantially different, or
unanticipated environmental affects, lessee shall immediately contact lessor.
Lessee shall cease any operations which would result in the destruction of
such.
Sec. 7. DAMAGES TO PROPERTY- Lessee shall pay lessor for damage to lessor's
property improvements, and shall save and hold lessor harmless from all claims
for damage or harm to persons or property as a result of lease operations.
Sec. 8. PROTECTION OF DIVERSE INTERESTS AND EQUAL- OPPORTUNITY - (a) The
lessee shall: Pay when due all taxes legally assessed and levied under laws of
the State or the United States; accord all employees complete freedom of
purchase; pay all wages at least twice each month in lawful money of the
United States; maintain a safe working environment in accordance with standard
industry practices; and take measures necessary to protect the health and
safety of the public. Lessor reserves the right to ensure that production is
sold at a reasonable price and to prevent monopoly.
(b) Lessee shall comply with the provisions of Executive Order No. 11246 of
September 24, 1965, as amended, and the rules, regulations, and relevant
orders of the Secretary of Labor issued pursuant thereto. Neither the lessee
nor the lessee's subcontractors shall maintain segregated facilities.
Sec. 9. TRANSFER OF LEASE INTERESTS, AND RELINQUISHMENT OF LEASE - (a) Lessee
shall file for approval or recording in the proper office of lessor any
instrument transferring a record title, or working or royalty interest in this
lease, and shall not create overriding royalties in excess of that allowed by
regulations.
(b) The lessee may relinquish this lease or any legal subdivision by filing
in the proper Bureau of Land Management office a written relinquishment, which
shall be effective as of the date of filing, subject to the continued
obligation of the lessee and surety to pay all accrued rentals and royalties.
Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - (a) At
such time as all or portion of this lease are returned to lessor, lessee shall
deliver up to lessor the land leased, underground timbering, and such other
supports and structures necessary for the preservation of the mine or deposits
and place all wells in condition for suspension or abandonment. Within 180
days thereof, lessee shall remove from the premises all other structures,
machinery, equipment, tools, and materials as required by the authorized
officer. Any such structures, machinery, equipment, tools, and materials re-
maining on the leased lands beyond 180 days, or approved extension thereof,
shall become the property of the Lessor. If the surface is owned by third
parties, lessor may waive the requirement for removal provided the third
parties do not object to such waiver.
(b) At such times as all or portions of this lease is returned to lessor,
lessee shall place all wells in condition for suspension or abandonment and,
as provided in paragraph (a) of this section, remove equipment and improve-
ments not deemed necessary by lessor for preservation of producible wells or
continued protection of the environment.
(c) Lessee shall, prior to the termination of bond liability or at any other
time when required and in the manner directed by the lessor, reclaim all lands
the surface of which has been disturbed, dispose of all debris or solid waste,
repair the offsite and onsite damage caused by lessee's activity or activities
incidential thereto, and reclaim access roads or trails.
Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with
applicable laws, existing orders or regulations, or the terms, conditions or
stipulations of this lease, and the noncompliance continues for 30 days after
written notice thereof, this lease shall be subject to cancellation. This
provision shall not be construed to prevent the exercise by lessor of any
other legal and equitable remedy, including waiver of the default. Any such
remedy or waiver shall not prevent later cancellation for the same default
occurring at any other time.
Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease
shall extend to and be binding upon, and every benefit hereof shall inure to,
the heirs, executors, administrators, successors, or assigns to the respective
parties hereto.
A. UNDERSIGNED CERTIFIES AS FOLLOWS:
1. Lessee is a citizen of the United States; an association of such
citizens; a municipality; a corporation organized under the laws of
the United States or of any State or Territory thereof.
2. All parties holding an interest in the lease are in compliance
with 43 CFR 3100 and the authorizing acts.
3. Lessee is not considered a minor under the laws of the State in
which the lands covered by this lease are located.
B. UNDERSIGNED AGREES THAT lessee's signature to this lease constitutes
acceptance of this lease, including all terms, conditions and stipulations
pertaining thereto. 18 U.S.C. Sec. 1001 makes it a crime for any person
knowingly and willfully to make to any Department or agency of the United
States any false, fictitious or fraudulent statements or representations
as to any matter within its jurisdiction.
Duly executed this 18th day of October, 19 95
__________________________________________
(Signature of Lessee or Attorney-in-
fact)
Inland Production Company By
Company or Lessee Name
Chris A. Potter (Signature of Lessee) (Signing Officer)
____________________________________________________
Attorney-in-Fact (Title) (Title) (Date)
October 18, 1995 ____________________________________________
(Date) (Effective Date of Lease)
Title 18 U.S.C. Section 1001, makes it a crime for any person knowingly and
willfully to make to any department or agency of the United States any false,
fictitious or fraudulent statements or representations as to any matter within
its jurisdiction.
_____________________________________________________________________________
This form doe not constitute an information collection as defined by 44 U.S.C.
3502 and therefore does not require OMB approval.
<PAGE>
Combined Hydrocarbon
UTU-74868
<PAGE>
STIPULATIONS
NO SURFACE OCCUPANCY STIPULATION - GOLDEN EAGLE NEST SITES
No surface occupancy or use is allowed (does not apply to casual use) within
1/2 mile of golden eagle nests which have been active within the past two
years. This restriction would not apply to maintenance and operation of
existing programs and facilities. It would not apply if impacts could be
mitigated through other management actions or site specific analysis of
terrain features.
On the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 22, SENE.
For the purpose of:
Protection of golden nest sites as described in the Diamond Mountain Resource
Management Plan and EIS. Waivers, exceptions, or modifications to this
limitation may be specifically approved in writing by the authorized officer
of the Bureau of Land Management if either the resource values change or the
lessee/operator demonstrates that adverse impacts can be mitigated. Any
changes to this stipulation will be made in accordance with the land use plan
and/or the regulatory provisions for such changes. (For guidance on the use of
this stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
CONTROLLED SURFACE USE STIPULATION - CRITICAL SOILS, MUNICIPAL WATERSHEDS,
FLOODPLAINS
Surface occupancy or use is subject to the following special operating
constraints. Preclude surface disturbing activities in areas of critical
soils (highly saline and/or erodible), municipal watersheds and floodplains
during times of saturated soils (usually Spring runoff and Fall rains). On
the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 13, lot 4;
Sec. 23, SENW.
For the purpose of:
Preserving and protecting critical soils, floodplains, and municipal watershed
from severe erosion as described in the Diamond Mountain Resource Management
Plan and EIS. Waivers, exceptions, or modifications to this limitation may be
specifically approved in writing by the authorized officer of the Bureau of
Land Management if either the resource values change or the lessee/operator
demonstrates that adverse impacts can be mitigated. Any changes to this
stipulation will be made in accordance with the land use plan and/or the
regulatory provisions for such changes. (For guidance on the use of this
stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
<PAGE>
Combined Hydrocarbon
UTU-74868
NOTICES
FERRUGINOUS HAWK HABITAT
The lessee/operator is given notice that lot 4 Sec. 13; NE Sec. 22; NWNW Sec.
23, T. 8 S., R. 16 E., SLM, Utah, have been identified as containing
Ferruginous Hawk Habitat Modifications to the Surface Use Plan of Operations
may be required in order to protect to Ferruginous Hawk and/or habitat from
surface disturbing activities in accordance with Section 6 of the lease terms,
Endangered Species Act and 43 CFR 3101.1-2.
GOLDEN EAGLE HABITAT
The lessee/operator is given notice that lots 1-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2 (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R. 16 E.,
SLM, Utah, have been identified as containing Golden Eagle Habitat
Modifications to the surface Use Plan of Operations may be required in order
to protect the Golden Eagle and/or habitat from surface disturbing activities
in accordance with Section 6 of the lease terms, Endangered Species Act, and
43 CFR 3101.1-2.
HIGH POTENTIAL PALEONTOLOGICAL RESOURCES
The lessee/operator is given notice that lots 2-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2NW, SWNW (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R.
16 E, SLM, Utah, have been identified as having high potential paleontological
resources. Modifications to the Surface Use Plan of Operations may be
required in order to protect paleontological resources from surface disturbing
activities in accordance with Section 6 of the lease terms and 43 CFR 3101.1-2.
BURROWING OWL HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Burrowing Owl (Category 2) Habitat. Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Burrowing Owl and/or habitat from surface disturbing activities in accordance
with Section 6 of the lease terms, Endangered Species Act, and 43 CFR 3101.1-2.
MOUNTAIN PLOVER HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Mountain Plover (Category 1) Habitat Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Mountain Plover and/or habitat from surface disturbing activities in
accordance with Section 6 of the lease terms, Endangered Species Act and 43
CFR 3101.1-2.
EXHIBIT 10.5
Form 3140-1 UNITED STATES Serial Number
(June 1984) DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
UTU-74868
COMBINED HYDROCARBON LEASE
This lease is entered into by and between the United States of America,
through the Bureau of Land Management, as lessor,
and Inland Production Company
475 17th Street Suite 1500
Denver, CO 80202
as lessee, pursuant to the Mineral Leasing Act of 1920 (30 U.S.C. 181 et. seq.)
and the Minerals Leasing Act for Acquired
Lands (30 U.S.C. 351-359), as appropriate, and as amended by the Combined
Hydrocarbon Leasing Act of 1981 (95 Stat. 1070).
Lands included in lease:
T. 8 S., R. 16 E., Meridian Salt Lake State Utah
County Duchesne
Sec. 13, all (excluding Patent No. 813321);
Sec. 22, NE;
Sec. 23, NW,
Sec. 24, N2, (excluding Patent Nos. 813321 and 884015).
Containing 674.32 Acres
This lease is issued granting the exclusive right to drill for, mine
(surface/underground), extract, remove and dispose of all oil and gas (except
helium) from the following described lands for a primary term of 10 years,
subject to extension in accordance with the authorizing acts, and for so long
thereafter as oil or gas is produced in paying quantities. The lessee shall
also have the right to construct and maintain on the leased lands all works,
buildings, plants, roads, communication lines, pipelines, recessions, tanks,
pumping stations, and other structures necessary for the full enjoyment of
this lease. Rights granted are subject to applicable laws, the terms,
conditions and attached stipulations of this lease, regulations and formal
orders.
LEASE TERMS
Sec. 1. RENTAL - (a) Lessee shall pay annual rental to the proper office of
the lessor in advance of each year at a rate of $2.00 per acre or fraction
thereof, until a discovery of oil or gas in paying quantities is made on the
leased land.
(b) If this lease or a portion thereof is committed to an approved
cooperative or unit plan which includes a well capable of producing leased
resources, and the plan contains a provision for allocation of production,
royalties shall be paid on the production allocated to this lease. However,
annual rentals shall continue to be due for those lands not within a
participating area.
Sec. 2. ROYALTIES - (a) Royalties shall be paid to the proper office of lessor
at the rate of 12 1/2 per centum in amount or value of production removed or
sold from the lease, unless this lease is converted from an existing oil and
gas lease, in which case the applicable royalty shall be the royalty described
in the existing lease or in an attached schedule thereto.
(b) Royalties for undivided fractional interest leases shall be paid in the
same proportion as the leased fractional interest is to the full interest in
the resource.
(c) Lessor reserves the right to specify whether royalty is to be paid in
value or in kind, and the right to establish minimum values on production
after giving lessee notice and an opportunity to be heard. When paid in
value, royalties shall be due and payable on the last day of the month fol-
lowing the month in which production occurred. When paid in kind, production
shall be delivered, unless otherwise agreed to by lessor, in merchantable
condition on the premises where produced without cost to lessor. Lessee shall
not be required to hold such production in storage beyond the last day of the
month following the month in which production occurred, nor shall lessee be
held liable for loss or destruction of royalty oil or other products in stor-
age from causes beyond the reasonable control of lessee.
(d) A minimum royalty shall be due for any lease year following discovery in
the amount of $1.00 per acre.
(e) Royalties may be waived, suspended, or reduced, for all or portions of
this lease as provided in the regulations.
Sec. 3. BONDS - Lessee shall file and maintain any bond required under
regulations.
Sec. 4. DILIGENCE, RATE OF DEVELOPMENT, UNITIZATION, AND DRAINAGE - (a) Lessee
shall exercise reasonable diligence, skill, and care in the operation of the
leased lands, and shall prevent unnecessary damage to, loss of, or waste of
leased resources. Lessor reserves the right to specify rates of development
and production in the public interest and to require lessee to subscribe to
such cooperative or unit plan, within thirty (30) days of notice, as is
determined necessary for the proper development and operation of the area,
field, or pool embracing these leased lands. In all cases, lessee shall
either drill and produce wells necessary to protect the leased lands from
drainage or pay compensatory royalty for such drainage in the amount deter-
mined by lessor.
(b) Lessee shall diligently develop the tar sand resource in the leased lands
as prescribed in the regulations, or as specifically set out by the lessor in
approving a plan of operations.
Sec. 5. DOCUMENTS, EVIDENCE, AND INSPECTION
(a) Lessee shall file with the proper office of lessor, not later than thirty
(30) days after the effective date thereof, any contracts or evidence of other
arrangements for the sale or disposal of production. At such times and in
such form as lessor may prescribe, lessee shall furnish detailed statements
showing amounts and quality of all products removed and sold from the lease,
proceeds therefrom, and amount used for production purposes or unavoidably
lost. Lessee also may be required to produce plats and schematic diagrams
showing development work and improvements on the leased lands, and reports
with respect to stockholders, investments, depreciation costs, and Federal
lease interests.
(b) (1) Lessee shall keep a daily drilling record, a log, and complete
information on all well surveys and tests in the form prescribed by lessor for
all wells drilled on the leased lands. Lessee also shall keep a record of all
subsurface investigations of said lands and furnish copies to lessor when
required. Lessee shall keep opened at all reasonable times for inspection by
any duly authorized officer of lessor the leased premises and all wells,
improvements, machinery, and fixtures thereon. Upon request by lessor, lessee
shall make available for inspection and copying by any duly authorized officer
of lessor all books, accounts, maps, and records relative to operations,
surveys, or investigations on or under the leased lands.
(2) Where lessee conducts mining operations under this lease, lessee agrees
to keep clear, accurate, and detailed maps, on a scale of not more than fifty
(5O) feet to the inch. These maps should show lessee workings in each section
of leased lands, and be oriented to a public land corner so that the maps can
be readily and correctly superimposed. The lessee shall also furnish to the
lessor annually, or upon demand, certified copies of such maps and any written
reports of operations as lessor may call for.
(c) Lessee shall maintain copies of all contracts, sales agreements,
accounting records, and documentation such as billings, invoices, or similar
documentation that supports costs claimed as manufacturing, preparation, and
or transportation costs. All such records shall be maintained in lessee's
accounting offices for future audit by lessor. Lessee shall maintain required
records for 6 years after they are generated or, if an audit or investigation
is underway, until released of the obligation to maintain such records by
lessor.
(d) Information obtained under this term shall be open to inspection by the
public only in accordance with the Freedom of Information Act (5 U.S.C. 552).
(e) The lessee agrees to conduct all operations subject to the inspection of
the lessor and to carry out at the lessee's expense all reasonable orders and
requirements to the lessor relative to the prevention of waste and
preservation of the property, and the health and safety of workmen, and on
failure of the lessee so to do, the lessor shall have the right, in addition
to other available remedies, to enter on the property to repair damage or
prevent waste at the lessee's expense.
Sec. 6. CONDUCT OPERATIONS - (a) Lessee shall conduct operations in a manner
that prevents unnecessary impacts and minimizes other impacts to the land,
air, and water, to cultural, biological, visual, and other resources, and to
other land uses or users. Lessee shall take measures deemed necessary by
lessor to accomplish the intent of this lease term. Such measures may
include, but are not limited to, modification to siting or design of
facilities, timing of operations, and specification of interim and final
reclamation measures. Lessor reserves the right to continue existing uses and
to authorize future uses upon or in the leased land, including the approval of
easements or rights-of-ways. Such uses shall be conditioned so as to prevent
unnecessary or unreasonable interference with rights of lease.
(b) Prior to disturbing the surface of the leased lands, lessee shall contact
lessor to be apprised of procedures to be followed and modifications or
reclamation measures that may be necessary. Areas to be disturbed may require
inventories or special studies to determine the extent of impacts to other
resources. Lessee may be required to complete such under guidelines provided
by lessor. If, in the conduct of operations, lessee observes or encounters
any threatened or endangered species, cultural resources, other specific
resources that are statutorily protected, or substantially different, or
unanticipated environmental affects, lessee shall immediately contact lessor.
Lessee shall cease any operations which would result in the destruction of
such.
Sec. 7. DAMAGES TO PROPERTY- Lessee shall pay lessor for damage to lessor's
property improvements, and shall save and hold lessor harmless from all claims
for damage or harm to persons or property as a result of lease operations.
Sec. 8. PROTECTION OF DIVERSE INTERESTS AND EQUAL- OPPORTUNITY - (a) The
lessee shall: Pay when due all taxes legally assessed and levied under laws of
the State or the United States; accord all employees complete freedom of
purchase; pay all wages at least twice each month in lawful money of the
United States; maintain a safe working environment in accordance with standard
industry practices; and take measures necessary to protect the health and
safety of the public. Lessor reserves the right to ensure that production is
sold at a reasonable price and to prevent monopoly.
(b) Lessee shall comply with the provisions of Executive Order No. 11246 of
September 24, 1965, as amended, and the rules, regulations, and relevant
orders of the Secretary of Labor issued pursuant thereto. Neither the lessee
nor the lessee's subcontractors shall maintain segregated facilities.
Sec. 9. TRANSFER OF LEASE INTERESTS, AND RELINQUISHMENT OF LEASE - (a) Lessee
shall file for approval or recording in the proper office of lessor any
instrument transferring a record title, or working or royalty interest in this
lease, and shall not create overriding royalties in excess of that allowed by
regulations.
(b) The lessee may relinquish this lease or any legal subdivision by filing
in the proper Bureau of Land Management office a written relinquishment, which
shall be effective as of the date of filing, subject to the continued
obligation of the lessee and surety to pay all accrued rentals and royalties.
Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - (a) At
such time as all or portion of this lease are returned to lessor, lessee shall
deliver up to lessor the land leased, underground timbering, and such other
supports and structures necessary for the preservation of the mine or deposits
and place all wells in condition for suspension or abandonment. Within 180
days thereof, lessee shall remove from the premises all other structures,
machinery, equipment, tools, and materials as required by the authorized
officer. Any such structures, machinery, equipment, tools, and materials re-
maining on the leased lands beyond 180 days, or approved extension thereof,
shall become the property of the Lessor. If the surface is owned by third
parties, lessor may waive the requirement for removal provided the third
parties do not object to such waiver.
(b) At such times as all or portions of this lease is returned to lessor,
lessee shall place all wells in condition for suspension or abandonment and,
as provided in paragraph (a) of this section, remove equipment and improve-
ments not deemed necessary by lessor for preservation of producible wells or
continued protection of the environment.
(c) Lessee shall, prior to the termination of bond liability or at any other
time when required and in the manner directed by the lessor, reclaim all lands
the surface of which has been disturbed, dispose of all debris or solid waste,
repair the offsite and onsite damage caused by lessee's activity or activities
incidential thereto, and reclaim access roads or trails.
Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with
applicable laws, existing orders or regulations, or the terms, conditions or
stipulations of this lease, and the noncompliance continues for 30 days after
written notice thereof, this lease shall be subject to cancellation. This
provision shall not be construed to prevent the exercise by lessor of any
other legal and equitable remedy, including waiver of the default. Any such
remedy or waiver shall not prevent later cancellation for the same default
occurring at any other time.
Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease
shall extend to and be binding upon, and every benefit hereof shall inure to,
the heirs, executors, administrators, successors, or assigns to the respective
parties hereto.
A. UNDERSIGNED CERTIFIES AS FOLLOWS:
1. Lessee is a citizen of the United States; an association of such
citizens; a municipality; a corporation organized under the laws of
the United States or of any State or Territory thereof.
2. All parties holding an interest in the lease are in compliance
with 43 CFR 3100 and the authorizing acts.
3. Lessee is not considered a minor under the laws of the State in
which the lands covered by this lease are located.
B. UNDERSIGNED AGREES THAT lessee's signature to this lease constitutes
acceptance of this lease, including all terms, conditions and stipulations
pertaining thereto. 18 U.S.C. Sec. 1001 makes it a crime for any person
knowingly and willfully to make to any Department or agency of the United
States any false, fictitious or fraudulent statements or representations
as to any matter within its jurisdiction.
Duly executed this 18th day of October, 19 95
__________________________________________
(Signature of Lessee or Attorney-
in-fact)
Inland Production Company By
Company or Lessee Name
Chris A. Potter (Signature of Lessee) (Signing Officer)
____________________________________________________
Attorney-in-Fact (Title) (Title) (Date)
October 18, 1995 ____________________________________________
(Date) (Effective Date of Lease)
Title 18 U.S.C. Section 1001, makes it a crime for any person knowingly and
willfully to make to any department or agency of the United States any false,
fictitious or fraudulent statements or representations as to any matter within
its jurisdiction.
_____________________________________________________________________________
This form doe not constitute an information collection as defined by 44 U.S.C.
3502 and therefore does not require OMB approval.
<PAGE>
Combined Hydrocarbon
UTU-74868
<PAGE>
STIPULATIONS
NO SURFACE OCCUPANCY STIPULATION - GOLDEN EAGLE NEST SITES
No surface occupancy or use is allowed (does not apply to casual use) within
1/2 mile of golden eagle nests which have been active within the past two
years. This restriction would not apply to maintenance and operation of
existing programs and facilities. It would not apply if impacts could be
mitigated through other management actions or site specific analysis of
terrain features.
On the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 22, SENE.
For the purpose of:
Protection of golden nest sites as described in the Diamond Mountain Resource
Management Plan and EIS. Waivers, exceptions, or modifications to this
limitation may be specifically approved in writing by the authorized officer
of the Bureau of Land Management if either the resource values change or the
lessee/operator demonstrates that adverse impacts can be mitigated. Any
changes to this stipulation will be made in accordance with the land use plan
and/or the regulatory provisions for such changes. (For guidance on the use of
this stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
CONTROLLED SURFACE USE STIPULATION - CRITICAL SOILS, MUNICIPAL WATERSHEDS,
FLOODPLAINS
Surface occupancy or use is subject to the following special operating
constraints. Preclude surface disturbing activities in areas of critical
soils (highly saline and/or erodible), municipal watersheds and floodplains
during times of saturated soils (usually Spring runoff and Fall rains). On
the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 13, lot 4;
Sec. 23, SENW.
For the purpose of:
Preserving and protecting critical soils, floodplains, and municipal watershed
from severe erosion as described in the Diamond Mountain Resource Management
Plan and EIS. Waivers, exceptions, or modifications to this limitation may be
specifically approved in writing by the authorized officer of the Bureau of
Land Management if either the resource values change or the lessee/operator
demonstrates that adverse impacts can be mitigated. Any changes to this
stipulation will be made in accordance with the land use plan and/or the
regulatory provisions for such changes. (For guidance on the use of this
stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
<PAGE>
Combined Hydrocarbon
UTU-74868
NOTICES
FERRUGINOUS HAWK HABITAT
The lessee/operator is given notice that lot 4 Sec. 13; NE Sec. 22; NWNW Sec.
23, T. 8 S., R. 16 E., SLM, Utah, have been identified as containing
Ferruginous Hawk Habitat Modifications to the Surface Use Plan of Operations
may be required in order to protect to Ferruginous Hawk and/or habitat from
surface disturbing activities in accordance with Section 6 of the lease terms,
Endangered Species Act and 43 CFR 3101.1-2.
GOLDEN EAGLE HABITAT
The lessee/operator is given notice that lots 1-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2 (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R. 16 E.,
SLM, Utah, have been identified as containing Golden Eagle Habitat
Modifications to the surface Use Plan of Operations may be required in order
to protect the Golden Eagle and/or habitat from surface disturbing activities
in accordance with Section 6 of the lease terms, Endangered Species Act, and
43 CFR 3101.1-2.
HIGH POTENTIAL PALEONTOLOGICAL RESOURCES
The lessee/operator is given notice that lots 2-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2NW, SWNW (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R.
16 E, SLM, Utah, have been identified as having high potential paleontological
resources. Modifications to the Surface Use Plan of Operations may be
required in order to protect paleontological resources from surface disturbing
activities in accordance with Section 6 of the lease terms and 43 CFR 3101.1-2.
BURROWING OWL HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Burrowing Owl (Category 2) Habitat. Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Burrowing Owl and/or habitat from surface disturbing activities in accordance
with Section 6 of the lease terms, Endangered Species Act, and 43 CFR 3101.1-2.
MOUNTAIN PLOVER HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Mountain Plover (Category 1) Habitat Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Mountain Plover and/or habitat from surface disturbing activities in
accordance with Section 6 of the lease terms, Endangered Species Act and 43
CFR 3101.1-2.
EXHIBIT 10.6
Form 3140-1 UNITED STATES Serial Number
(June 1984) DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
UTU-74869
COMBINED HYDROCARBON LEASE
This lease is entered into by and between the United States of America, through
the Bureau of Land Management, as lessor,
and Inland Production Company
475 17th Street Suite 1500
Denver, CO 80202
as lessee, pursuant to the Mineral Leasing Act of 1920 (30 U.S.C. 181 et. seq.)
and the Minerals Leasing Act for Acquired
Lands (30 U.S.C. 351-359), as appropriate, and as amended by the Combined
Hydrocarbon Leasing Act of 1981 (95 Stat. 1070).
Lands included in lease:
T. 8 S., R. 17 E., Meridian Salt Lake State Utah
County Duchesne
Sec. 18, lots 3, 4;
Sec. 19, lots 1, 2 E2NW (excluding Patent No. 880415);
Sec. 29, all;
Sec. 30, lots 1-14, E2NE, E2SW, SWSE;
Sec. 31, lots 1-5, W2E2, SENE, E2W2, NESE.
Containing 1,968.01 Acres
This lease is issued granting the exclusive right to drill for, mine
(surface/underground), extract, remove and dispose of all oil and gas (except
helium) from the following described lands for a primary term of 10 years,
subject to extension in accordance with the authorizing acts, and for so long
thereafter as oil or gas is produced in paying quantities. The lessee shall
also have the right to construct and maintain on the leased lands all works,
buildings, plants, roads, communication lines, pipelines, recessions, tanks,
pumping stations, and other structures necessary for the full enjoyment of
this lease. Rights granted are subject to applicable laws, the terms,
conditions and attached stipulations of this lease, regulations and formal
orders.
LEASE TERMS
Sec. 1. RENTAL - (a) Lessee shall pay annual rental to the proper office of
the lessor in advance of each year at a rate of $2.00 per acre or fraction
thereof, until a discovery of oil or gas in paying quantities is made on the
leased land.
(b) If this lease or a portion thereof is committed to an approved
cooperative or unit plan which includes a well capable of producing leased
resources, and the plan contains a provision for allocation of production,
royalties shall be paid on the production allocated to this lease. However,
annual rentals shall continue to be due for those lands not within a
participating area.
Sec. 2. ROYALTIES - (a) Royalties shall be paid to the proper office of lessor
at the rate of 12 1/2 per centum in amount or value of production removed or
sold from the lease, unless this lease is converted from an existing oil and
gas lease, in which case the applicable royalty shall be the royalty described
in the existing lease or in an attached schedule thereto.
(b) Royalties for undivided fractional interest leases shall be paid in the
same proportion as the leased fractional interest is to the full interest in
the resource.
(c) Lessor reserves the right to specify whether royalty is to be paid in
value or in kind, and the right to establish minimum values on production
after giving lessee notice and an opportunity to be heard. When paid in
value, royalties shall be due and payable on the last day of the month fol-
lowing the month in which production occurred. When paid in kind, production
shall be delivered, unless otherwise agreed to by lessor, in merchantable
condition on the premises where produced without cost to lessor. Lessee shall
not be required to hold such production in storage beyond the last day of the
month following the month in which production occurred, nor shall lessee be
held liable for loss or destruction of royalty oil or other products in stor-
age from causes beyond the reasonable control of lessee.
(d) A minimum royalty shall be due for any lease year following discovery in
the amount of $1.00 per acre.
(e) Royalties may be waived, suspended, or reduced, for all or portions of
this lease as provided in the regulations.
Sec. 3. BONDS - Lessee shall file and maintain any bond required under
regulations.
Sec. 4. DILIGENCE, RATE OF DEVELOPMENT, UNITIZATION, AND DRAINAGE - (a) Lessee
shall exercise reasonable diligence, skill, and care in the operation of the
leased lands, and shall prevent unnecessary damage to, loss of, or waste of
leased resources. Lessor reserves the right to specify rates of development
and production in the public interest and to require lessee to subscribe to
such cooperative or unit plan, within thirty (30) days of notice, as is
determined necessary for the proper development and operation of the area,
field, or pool embracing these leased lands. In all cases, lessee shall
either drill and produce wells necessary to protect the leased lands from
drainage or pay compensatory royalty for such drainage in the amount deter-
mined by lessor.
(b) Lessee shall diligently develop the tar sand resource in the leased lands
as prescribed in the regulations, or as specifically set out by the lessor in
approving a plan of operations.
Sec. 5. DOCUMENTS, EVIDENCE, AND INSPECTION
(a) Lessee shall file with the proper office of lessor, not later than thirty
(30) days after the effective date thereof, any contracts or evidence of other
arrangements for the sale or disposal of production. At such times and in
such form as lessor may prescribe, lessee shall furnish detailed statements
showing amounts and quality of all products removed and sold from the lease,
proceeds therefrom, and amount used for production purposes or unavoidably
lost. Lessee also may be required to produce plats and schematic diagrams
showing development work and improvements on the leased lands, and reports
with respect to stockholders, investments, depreciation costs, and Federal
lease interests.
(b) (1) Lessee shall keep a daily drilling record, a log, and complete
information on all well surveys and tests in the form prescribed by lessor for
all wells drilled on the leased lands. Lessee also shall keep a record of all
subsurface investigations of said lands and furnish copies to lessor when
required. Lessee shall keep opened at all reasonable times for inspection by
any duly authorized officer of lessor the leased premises and all wells,
improvements, machinery, and fixtures thereon. Upon request by lessor, lessee
shall make available for inspection and copying by any duly authorized officer
of lessor all books, accounts, maps, and records relative to operations,
surveys, or investigations on or under the leased lands.
(2) Where lessee conducts mining operations under this lease, lessee agrees
to keep clear, accurate, and detailed maps, on a scale of not more than fifty
(5O) feet to the inch. These maps should show lessee workings in each section
of leased lands, and be oriented to a public land corner so that the maps can
be readily and correctly superimposed. The lessee shall also furnish to the
lessor annually, or upon demand, certified copies of such maps and any written
reports of operations as lessor may call for.
(c) Lessee shall maintain copies of all contracts, sales agreements,
accounting records, and documentation such as billings, invoices, or similar
documentation that supports costs claimed as manufacturing, preparation, and
or transportation costs. All such records shall be maintained in lessee's
accounting offices for future audit by lessor. Lessee shall maintain required
records for 6 years after they are generated or, if an audit or investigation
is underway, until released of the obligation to maintain such records by
lessor.
(d) Information obtained under this term shall be open to inspection by the
public only in accordance with the Freedom of Information Act (5 U.S.C. 552).
(e) The lessee agrees to conduct all operations subject to the inspection of
the lessor and to carry out at the lessee's expense all reasonable orders and
requirements to the lessor relative to the prevention of waste and
preservation of the property, and the health and safety of workmen, and on
failure of the lessee so to do, the lessor shall have the right, in addition
to other available remedies, to enter on the property to repair damage or
prevent waste at the lessee's expense.
Sec. 6. CONDUCT OPERATIONS - (a) Lessee shall conduct operations in a manner
that prevents unnecessary impacts and minimizes other impacts to the land,
air, and water, to cultural, biological, visual, and other resources, and to
other land uses or users. Lessee shall take measures deemed necessary by
lessor to accomplish the intent of this lease term. Such measures may
include, but are not limited to, modification to siting or design of
facilities, timing of operations, and specification of interim and final
reclamation measures. Lessor reserves the right to continue existing uses and
to authorize future uses upon or in the leased land, including the approval of
easements or rights-of-ways. Such uses shall be conditioned so as to prevent
unnecessary or unreasonable interference with rights of lease.
(b) Prior to disturbing the surface of the leased lands, lessee shall contact
lessor to be apprised of procedures to be followed and modifications or
reclamation measures that may be necessary. Areas to be disturbed may require
inventories or special studies to determine the extent of impacts to other
resources. Lessee may be required to complete such under guidelines provided
by lessor. If, in the conduct of operations, lessee observes or encounters
any threatened or endangered species, cultural resources, other specific
resources that are statutorily protected, or substantially different, or
unanticipated environmental affects, lessee shall immediately contact lessor.
Lessee shall cease any operations which would result in the destruction of
such.
Sec. 7. DAMAGES TO PROPERTY- Lessee shall pay lessor for damage to lessor's
property improvements, and shall save and hold lessor harmless from all claims
for damage or harm to persons or property as a result of lease operations.
Sec. 8. PROTECTION OF DIVERSE INTERESTS AND EQUAL- OPPORTUNITY - (a) The
lessee shall: Pay when due all taxes legally assessed and levied under laws of
the State or the United States; accord all employees complete freedom of
purchase; pay all wages at least twice each month in lawful money of the
United States; maintain a safe working environment in accordance with standard
industry practices; and take measures necessary to protect the health and
safety of the public. Lessor reserves the right to ensure that production is
sold at a reasonable price and to prevent monopoly.
(b) Lessee shall comply with the provisions of Executive Order No. 11246 of
September 24, 1965, as amended, and the rules, regulations, and relevant
orders of the Secretary of Labor issued pursuant thereto. Neither the lessee
nor the lessee's subcontractors shall maintain segregated facilities.
Sec. 9. TRANSFER OF LEASE INTERESTS, AND RELINQUISHMENT OF LEASE - (a) Lessee
shall file for approval or recording in the proper office of lessor any
instrument transferring a record title, or working or royalty interest in this
lease, and shall not create overriding royalties in excess of that allowed by
regulations.
(b) The lessee may relinquish this lease or any legal subdivision by filing
in the proper Bureau of Land Management office a written relinquishment, which
shall be effective as of the date of filing, subject to the continued
obligation of the lessee and surety to pay all accrued rentals and royalties.
Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - (a) At
such time as all or portion of this lease are returned to lessor, lessee shall
deliver up to lessor the land leased, underground timbering, and such other
supports and structures necessary for the preservation of the mine or deposits
and place all wells in condition for suspension or abandonment. Within 180
days thereof, lessee shall remove from the premises all other structures,
machinery, equipment, tools, and materials as required by the authorized
officer. Any such structures, machinery, equipment, tools, and materials re-
maining on the leased lands beyond 180 days, or approved extension thereof,
shall become the property of the Lessor. If the surface is owned by third
parties, lessor may waive the requirement for removal provided the third
parties do not object to such waiver.
(b) At such times as all or portions of this lease is returned to lessor,
lessee shall place all wells in condition for suspension or abandonment and,
as provided in paragraph (a) of this section, remove equipment and improve-
ments not deemed necessary by lessor for preservation of producible wells or
continued protection of the environment.
(c) Lessee shall, prior to the termination of bond liability or at any other
time when required and in the manner directed by the lessor, reclaim all lands
the surface of which has been disturbed, dispose of all debris or solid waste,
repair the offsite and onsite damage caused by lessee's activity or activities
incidential thereto, and reclaim access roads or trails.
Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with
applicable laws, existing orders or regulations, or the terms, conditions or
stipulations of this lease, and the noncompliance continues for 30 days after
written notice thereof, this lease shall be subject to cancellation. This
provision shall not be construed to prevent the exercise by lessor of any
other legal and equitable remedy, including waiver of the default. Any such
remedy or waiver shall not prevent later cancellation for the same default
occurring at any other time.
Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease
shall extend to and be binding upon, and every benefit hereof shall inure to,
the heirs, executors, administrators, successors, or assigns to the respective
parties hereto.
A. UNDERSIGNED CERTIFIES AS FOLLOWS:
1. Lessee is a citizen of the United States; an association of such
citizens; a municipality; a corporation organized under the laws of
the United States or of any State or Territory thereof.
2. All parties holding an interest in the lease are in compliance
with 43 CFR 3100 and the authorizing acts.
3. Lessee is not considered a minor under the laws of the State in
which the lands covered by this lease are located.
B. UNDERSIGNED AGREES THAT lessee's signature to this lease constitutes
acceptance of this lease, including all terms, conditions and stipulations
pertaining thereto. 18 U.S.C. Sec. 1001 makes it a crime for any person
knowingly and willfully to make to any Department or agency of the United
States any false, fictitious or fraudulent statements or representations
as to any matter within its jurisdiction.
Duly executed this 18th day of October, 19 95
__________________________________________
(Signature of Lessee or Attorney-
in-fact)
Inland Production Company By
Company or Lessee Name
Chris A. Potter (Signature of Lessee) (Signing Officer)
____________________________________________________
Attorney-in-Fact (Title) (Title) (Date)
October 18, 1995 ________________________________________
(Date) (Effective Date of Lease)
Title 18 U.S.C. Section 1001, makes it a crime for any person knowingly and
willfully to make to any department or agency of the United States any false,
fictitious or fraudulent statements or representations as to any matter within
its jurisdiction.
____________________________________________________________________________
This form doe not constitute an information collection as defined by 44 U.S.C.
3502 and therefore does not require OMB approval.
<PAGE>
Combined Hydrocarbon
UTU-74868
<PAGE>
STIPULATIONS
NO SURFACE OCCUPANCY STIPULATION - GOLDEN EAGLE NEST SITES
No surface occupancy or use is allowed (does not apply to casual use) within
1/2 mile of golden eagle nests which have been active within the past two
years. This restriction would not apply to maintenance and operation of
existing programs and facilities. It would not apply if impacts could be
mitigated through other management actions or site specific analysis of
terrain features.
On the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 22, SENE.
For the purpose of:
Protection of golden nest sites as described in the Diamond Mountain Resource
Management Plan and EIS. Waivers, exceptions, or modifications to this
limitation may be specifically approved in writing by the authorized officer
of the Bureau of Land Management if either the resource values change or the
lessee/operator demonstrates that adverse impacts can be mitigated. Any
changes to this stipulation will be made in accordance with the land use plan
and/or the regulatory provisions for such changes. (For guidance on the use of
this stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
CONTROLLED SURFACE USE STIPULATION - CRITICAL SOILS, MUNICIPAL WATERSHEDS,
FLOODPLAINS
Surface occupancy or use is subject to the following special operating
constraints. Preclude surface disturbing activities in areas of critical
soils (highly saline and/or erodible), municipal watersheds and floodplains
during times of saturated soils (usually Spring runoff and Fall rains). On
the lands described below:
T. 8 S., R. 16 E., SLM, Utah
Sec. 13, lot 4;
Sec. 23, SENW.
For the purpose of:
Preserving and protecting critical soils, floodplains, and municipal watershed
from severe erosion as described in the Diamond Mountain Resource Management
Plan and EIS. Waivers, exceptions, or modifications to this limitation may be
specifically approved in writing by the authorized officer of the Bureau of
Land Management if either the resource values change or the lessee/operator
demonstrates that adverse impacts can be mitigated. Any changes to this
stipulation will be made in accordance with the land use plan and/or the
regulatory provisions for such changes. (For guidance on the use of this
stipulation see BLM Manual 1624 and 3101 or FS Manual 1950 and 2820.)
<PAGE>
Combined Hydrocarbon
UTU-74868
NOTICES
FERRUGINOUS HAWK HABITAT
The lessee/operator is given notice that lot 4 Sec. 13; NE Sec. 22; NWNW Sec.
23, T. 8 S., R. 16 E., SLM, Utah, have been identified as containing
Ferruginous Hawk Habitat Modifications to the Surface Use Plan of Operations
may be required in order to protect to Ferruginous Hawk and/or habitat from
surface disturbing activities in accordance with Section 6 of the lease terms,
Endangered Species Act and 43 CFR 3101.1-2.
GOLDEN EAGLE HABITAT
The lessee/operator is given notice that lots 1-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2 (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R. 16 E.,
SLM, Utah, have been identified as containing Golden Eagle Habitat
Modifications to the surface Use Plan of Operations may be required in order
to protect the Golden Eagle and/or habitat from surface disturbing activities
in accordance with Section 6 of the lease terms, Endangered Species Act, and
43 CFR 3101.1-2.
HIGH POTENTIAL PALEONTOLOGICAL RESOURCES
The lessee/operator is given notice that lots 2-4 Sec. 13; NE Sec. 22; NW Sec.
23; N2NW, SWNW (excluding Patent Nos. 813321 and 884015) Sec. 24, T. 8 S., R.
16 E, SLM, Utah, have been identified as having high potential paleontological
resources. Modifications to the Surface Use Plan of Operations may be
required in order to protect paleontological resources from surface disturbing
activities in accordance with Section 6 of the lease terms and 43 CFR 3101.1-2.
BURROWING OWL HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Burrowing Owl (Category 2) Habitat. Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Burrowing Owl and/or habitat from surface disturbing activities in accordance
with Section 6 of the lease terms, Endangered Species Act, and 43 CFR 3101.1-2.
MOUNTAIN PLOVER HABITAT
The lessee/operator is given notice that lands in this lease have been
identified as containing Mountain Plover (Category 1) Habitat Modifications to
the Surface Use Plan of Operations may be required in order to protect the
Mountain Plover and/or habitat from surface disturbing activities in
accordance with Section 6 of the lease terms, Endangered Species Act and 43
CFR 3101.1-2.
