EXHIBIT 10.4
Form ▇▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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. ▇▇, ▇▇▇▇, ▇▇▇▇, ▇▇▇▇, ▇▇▇▇,
▇▇;
Sec. ▇▇, ▇▇▇▇, ▇▇▇▇; Sec. ▇▇, ▇▇, ▇▇▇▇, ▇▇▇▇, ▇▇▇▇, ▇▇▇▇.
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 ▇▇▇▇▇ 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 ▇▇▇▇▇ 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 ▇▇▇▇▇,
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 ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇ 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 ▇▇▇▇▇ 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 ▇▇▇▇▇ 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
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (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
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.)
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.