RELINQUISHMENT A£T LEASZ __ M- 94129 ___ _

COUNTY (CODE) SURVEY BLOCK TOWNSH JP SECTION PART ACRES DEPTH LIMITS BASE FILE (S) CONTROL NO. ( S)

LESSEE DATE PRIMARY TERM BONUS ROYALTY RENTALS

.Wehb - - - (240)---~;asg_u ~z _ _ _ __ _

--- --------1846

160

11074 7 07-1 25880

Pinon Corporation 2/15/90 1 r $4000.00 1/10 ( . 10)

CONTENTS OF ILE NO. M -Cf4 l,~q

/,LEA e 1 I

GLO-S-08- (1- 82)

M. F . Acres

Rema r ks:

/}' I _, '/'1-1 c-l '1 Mineral Classified~ Land

Lease Consideration Comparison ( z,4v J

Lease Date Te r m

Total Bonus

Coun ty __ u/---.:::=£:....:B=-.:t. .... 5..__ __ Area N' · I? ""S9'v <:' Z Sy 184(,.

/!- -:ze 6t ; B/ Ac Rental Comparison

-

t /014- 7

o 7 -r.J.saao 1./e fJ/ L..J C.v ~11 or'-/ r4J Consideration

Recommended C--t. Not Recommended

8-:!.- 9o ~ - -----

lo. ~1-...WJnera 1 Lantl • 1 Off.l):t l .. ~ ron~ Under

\ :\elt~ li.t.ent Act ~ls.ed , ~t.-ber 1967 Q.O-L-1~{9-.'1 7)

• •

4.24837 OIL NV W UAS(

THIS AQU:[H(NT h -.de and ent•nd Into thls__lS:t:.b.~ of February19.2Q_, bet~ the Stat~of lu.u, actlno by and through It' •o~t. BRI S COE R/\NC II INC . _ _____ _ _ _______ ______ of P . O . Box 389 , Uva l de , Tex as 78802

f'/" coo 1 ji./y:) u ld ~nt (" vt Pfiwl ne ht .addru s)

herein referred to u the OI«YT" af ~loll (whether' one or K7rt). and PINON CORPORATION Route 3 , Box 520 CB , San Antonio , Texas 78218 f

----------------------------------------------~~~~--------0 rz o~/{()b3 '7'7

.... t.rnlnaftrr ca l led La~. • • !

•••• • ••:•. l. ~.-; Q.HIS[. for and In coruldentlon of the -=>.mts sta te<! t>.low and of the covenanH and aw-nts to be paid, •• l~t and perfor~De<l by Lessee under t his lease, the Sta t~ or luas act lrq by al'ld thn:luqll th~ owner or the soil , her eby qrants.

• leue-s and l~ts unto Le~s~. for the sole al'ld on ly purpose or prospe<t lrq al'ld dr ll ll rq for and produc lrq oil al'ld gas. h y lrq pipe : • ••1.1nes , bulldlrq tanl.s , Horl119 oil al'ld b\JlldlllQ JXM! r sta ti ons, telephone lines al'ld other ' t ruc tu res th~n. to produce. u~ . ••• • w bb • t_ake c:are of, trea l and t r ansp;>rt u ld producU or t he lease, the f o I low I no hnds s I lla tt<! In e tc.Jnty. • • • .tot e of Texas, to-wit :

• • •• • • ••••

160 acres of land in Webb County , Texas , N . Basquez Sur . No . 1846 , Abst . 2891 , and bei n g more particularly depicted on Exhibit " A" attach ed hereto and incorporated h erein for all purposes

cooUinll19_1....;:6'-0;...._ ___ acres, mre or l~s. The bon~a consideration paid for this leu~ has follows :

l o the State of te.u s : __ F_· O_U_H_T_I_IO_U_S_A_N_D __ A_N_D_N_0_..:_/_1_0_0_-_-_-_-_-_-_-_ -_-_-_-_-_-_-_-_-_-_-_-_-_-_____ _ ())liars 0 4 , 000 . 00 )

l o t he ~r or the soi l : FO UR T HOUS/\ND AND NO/ 1 00---------------------

())llar s (S 4 , 000 . 00 )

Total bonus coosldentlon: EIGIIT TIIOUSAND AND NO/ 100--------------------())l lars (S 8 , 000 . 00 )

The tou 1 borus coos !deration peld n~Pre~nts a bonn of FIFTY AND NO/ 10 0 -- ---- ------------ ()) 1 11 r1- ( s-=_~s~"u_-_.-=_o~or:_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-:_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-=_-)-pe_r_a_c:_re-.-on

-----=l"-6""--"'0 ________ net acrts . · • ·

2. ~. Subject to the other prov isi ons In this l e.a~ . , thl,, le>H~ · lN 1 1 be f or ate.-. of o n e ( 1..:.) ______ _ fn. this ~te {~In c:allad "prl•ry tena") and u lono ~rteT as oil ard cps , or • ltheT or then, h p roduced In pay lrq ~nt lttes• fn. uld land .

141.3 100

•As uU<I In thll leaH , the ten~ "produced In ~11"19 q.unt It 1~· •eans Uut the r.ct lpts frm the u le or other author Ired CXliJillleT1:1al use of the wbstance(s) c.overed exceed ovt or pode t opn-1t'10N1 u penses f or the 11~ lllOflths last past.

.. t If no ~ 11 h conenced on the IN~ pr.~ls..es on or befON one (1) yur fi"'OI thh !Utt, s.uch am I ~rury da tt lt:S '« sh.a 11 ~ or tender to the Ootner of the so 11 or

at • or It& wccnson (..tllch ~11 continue as the depcal

c:f\&noes tn the OotneMhlp o ld land), tht ..:lU!lt ~lfled belo.t; tn eddltloo, L.usee shall~ or t (J' Tlt£ GUCEJW. lJJ() (J' rJ C£ (J' ST A l£ (J' TUAS. AT AJJST I K, TUAS, a lll t s.t.- on or be f ON u I

pe r awaph shall opente as a rtnUl shall covtr the prlvllfl9t of dcftrrlfYOl

s.a I d date . r~ts Ullder th h paragraph

P f.)1lle nt s und tr th I s for one (I) ~ar fi"'CCII

•••• • •••• •I n a llt.r .amer and upon llt.e pa tef~n anl"'lally , the c::c.menc~t of a defei"'Nld for wccenlve •. •• periods of one (1) ~r each lng the prl .. ry t.na. All p&)111ents or terders of l"tilta 1 the Ootner of the soil aay ~ •de by

• •• • !thed or sight draft of s.~. or·~ anlgnee of this. lNs..e, and -.y be deliV'ff'ed oo or bef the rtiltal pay ing date . If t he • ba~ designated !9A Is paragraph (or Its successor bank) sllould ~•n to ulst, sus~nd bus s , liquidAte, hll or be

••• succeeded by..tnOt~ bank, or for·~ N!oas.on hll or ~fuse to accept ~ntal, Leu~ shall not be held efault for hllu~ to

:. : • ·.,~e ):YCtri)ayment s or tenders of ~nta 1 unt 11 th l r ty (lO) da)'l after the oomer of t~ so 11 she 11 de liver Less~ • proper

• • ~ordable lnstl'\llllent IWIIIflO another banlt as a~,~t n t to receive such ~nts or tende r s . . ·~ • 4.

• •• • • cr aus.e PRCDUCTICJl ~N..TIE.S . When pr{)(juct lon of oil and/or gas h ~u~ durlno the ter11 of t hi s

to be paid one -half (1/2) of the royalty provided f or In this le..ne t o the C()!Tlii Hioner of

of Texas, at Austin, Tuas, and one-half {1 /2) of such royalty tot~ owner of the soli:

luse. L~s~ agr«s to PiY

the ~nera 1 Land Off Ice of • • • • the State

(a) OIL. Royalty payable on oil, ~lch Is defined as lncludlno all ~roc arbons produced In a liQUid fonD at the lOUth of

the well a nd also as all condensate, dlstllhte, and other llqvld hydrocarbom recovered fn::n oil or ou run thrtJUQ h 1 s~ parator

or ot~ ~lpllent, u ~relnafter provided, sha ll be one-fifth par t of the orou produc tion or the .arket

valve ther eof. at the option of the owner of the soil or the COITBissloner of the ~ner a l Land Office, such value t o be determined

by l) the highest post~ price, plus prmhn , If l f\Y , offered or paid for oil, conden$-lte, distillate, Of' other liquid

hydrocarbons, rupec tl~ly, of a like type a nd gravity In the ~,~tnera l aru wntl"! produc ed and ~n run, or 2) the hlgheU •r~tt

price thereof offe~ or paid In the general a ~a .Oe~ produced and ~n run, or l ) the gron proceed..s of the ule thei"!Of ,

llillche~r I' greatest. lessee a~s that befor e l f\Y QH prtduced frtn the leased pnnlses h sold, u~ or processed In a plant, It will be run free of cost to~ parties ent itled t o royalties through an a~ate oil a nd oas s..epa rator of con~nt lonal

type, or other equipment a t least as ef ficient, so t hat a ll liquid hydroc arbons re<ove r able from t he gas by such ~ans wi ll be reco~red. The requlrtJnent that such oas ~run th rough a s..epa rator or ot~r equ l~n t lill y be wal~d In wrltii"'Q by t he royalty

owners upon such teniiS and condltloru as thty prescrl~.

(b) 101 ~ '-'5 . Royalty oo any oas (lncludiOQ fh~ ou ). .Oi ch h tieflrocd as a ll hydrocarbons and ~s-tou s

s.utntances not defined as oil In wt.p.ar-o r aph (a) abo~. produced fro~·~ well on uld land (uc.ept as provided htr!ln with

rupect to oas proc~sed In • plant for t he utrac t lon of g.uol lne, ll~ ld ~rboru or other produc ts) lha 11

be one-fift h part of the oron projuctlon or the ~~a rlet valve ~f. a t th! 09tlon of the owner of the soil or

the c.c.ntul~r of the '-eneral Land Office, such valve to be bued on the hl~st • rht price paid or offtnld f or gas of cc.apar able ~allty In the ~ral ar&& wfle~ proruced and~ run, or the grou price paid or offtnld to the producer, ""~~~r

h greater; provided that the ~~axlan prHwrt bue In ~uurlng the gas ~ this least sha 11 not at a~ t l~~~r v.c~ 14 .6S

pourds peT' ~N lrrll absolute, and the SUnd&rd bl~ t~ratLJT'f Shall be si xty (60) deQ~ ra~lt, corNCtlon to Lot M de

for pressure accordii"'Q to Boyle's l..h, and for sp«lflc gravity accordlno to ttits .wje by the ~lance l'l thod or by the .:nt

llpprOV«f •thod of t.H t lng be log us.t<l by the Indus try at the t I-.e of tA1 t lng .

(c) P«<C£SSlD ~- ~lty on IJlY ~~ proc.H~ In a Q&sollne pl111t or other plant for the recovery of Oil-Cline or other llqvld hydrourbom shall be o n e - fift h part of the ~siM QU and the llqvld hyttrourbons utr acted

or the aarket value thereof, at the option of the owner of the l-Oll or the Coml ss loner of the Gene ral Lu-d Office . All

royalties due ~eln shall ~ bas.t<l on one hurd~ peru nt (100\) of t he tot a l plant production of residue oas att rlbut abl t t o

~s produced fra~~ tl11s leas..e, and oo fifty percent (50-11), or that pe rcent accrulno to Len~ . ""lche~r Is gl"!ater. of the t ot al plant produc tion of liquid hydi"''C.ArlXXlS att ributable to the Qal p~ted frcm thh lt>He; provided th.at If liquid hydroc l rlX)r'IS

2 1413 101

' are f"'8CCI>Itred f n. QIS procened In 1 plant In ,.,l ch Les~ (or Its ~rent, J.Utnldlary or affiliate ) owns an lnt~1t, then the

. P~t~t~oe ippllcable to ll~td 1"\ydroc.arboos shall be fifty percffit (SO\) or the hlg!le1t percent accrvtno to 1 third perty proc:Hslng gu through such plant under 1 proceHII'lQ ~nt neootlated at ,,..•s lffill lh (or If there h no such t hird ~rty, the highest perunt then being ipeeltled In processii"IQ a~nts or cootracts In the lrd.ntry), wtllc.hever Is ~ter. The

rupectlve N>)'lltl~ on residue QIS and on 11!1-lld ~rboos sh&l l be dete,.. lned by 1) the highe st .sr let price ~ld or offered for aey gu (or 11!1-lld hydrocarbons) of COI!parable !1Jallty In the oenoeral area , or 2) the gross price ~ld or offeNd for s.uch residue QIS (or the •lghted l\1r1Qe gross "1111"111 price for the rup«tiV9 grades of ll~ld 1\ydrocarbons, r .0.8. I t tnt plant In

.tlldl uld gas h procesJ.ed). lllllthever h greater .

(d) ~ ~. aoya 1 t y on CITborl black , s.u I ptlur or aey o thn' prOO.Jc ts prOO.J c ed or •nuhc t.ured from gas (except I 1"111 H~td t\ydroc.arboos) whether uld QIS be •casinghead, • •dry,• or any other ou . by fractlooatii"IQ , bumlno or any other processing

shill be o n e - fift h p.art of the gross pro<Lctloo of s.uch ~ts, or tN • n et value t~f. at the ~tloo o1 tN ~of the soli or tht c.c:-lnlontr of the General Land Office, s.uch • net va lue to be dete,..lned u f ollows: 1) oo the buts of the hlgheU •rtet price of Nch prOO.Jct for the ume .,th In ,.,lch wch product h prOO.Jced, or 2) on tnt bu h of

the avtr IIJe gross u I e pr I~ of M dl prod.lc t for the ~-.e ., t h In wtd dl s.uch prOO.Jc t h so I d. --" I chotver I s gNll t e r • .... • •••• • 5 . KIIUU. lOTAI..TY. For .adl calmdar )'9ollr following the dl t t of tllt uplrat loo of the prl• ry te,.. ~n thh lease Is

.JwJd for any pert of wch calendar yur by production, the roya lty rK.el~ Lnder this luse a at not be leu than an MO.J nt • .~1 to the t otal anrual delay rental provided f or In Paragraptl ). If Paragraph 3 of this lust ~s not s pe<:lfy 1 delay rental

.-ount, then f or the purposes of thh peragraph, the delay rental arrount s"'ll be one dollar (Sl.OO) per acre . . .. • • • • •• • 6 . lOYAllY II KIIIJ. Motwlthstand lno 11"\Y other prov Is lon In t his lease , a t any t lcre or f rm tire t o tire, the ~r of t he

• • Ull t or the Carmi u loner of the Gener al land Off Ice ~~e y . at the opt I on of t I t hrr, upon not leu t han sIxty ( 60 ) d1y1 not Ice to

• tt~t•holde-r of the ltue. Nqvlrt that the pe)'VIenl of any royalties accruing to ~uch royalty ()o(T)tr unde r this lease be ~~edt In • t Ind . • •• . . . ... .

7 • .:1 OCDOCTlOO. lesJ.ee agrees that a ll royalties accrvlrq under this luse (Inc luding tho~ ~ld In kind) shall be

without deduction f or the cost of produc I no . gather lng , stor lno . ~parat lng, trea t lng. dehydr at lng , CCJ!l>M!SS lno . process lng,

transportlno . and otherttht uk.lng the oil , gas and other prtx:lucts htN~Under rudy for u lr or u~. Len~ a~;~ ree s to corput t and

~ royaltlu on the qrou value rteel~. lncludlno any Nlllburs~nt s for ~veranct t.u" and production N la ted c01ts.

8 . P'l.MT flU 00 M:CYUlD ~. No royalty sha ll be ~yablt on any gas as • Y ~re~nt thh lust ' s ~tlonatr sh1rt

of any fuel used to process gas produc~ ~nder In 11'\Y proc rsslno plant. Motvlthstandlrq any other provision or this le.ue.

and subject to t he written consent of the ()o(T)tr of the soil and the ComiiBioner of t he !;ener1 l Lind Office, l~s~ ~~ey re<:ytle

on for gas lift pvrpo~s on tht le.as~ prunlses or f or Injec t lon Into any oil or gas produc lng fonet ton underlying the lMstd

pr--.htS after tht liQUid hydrocarbons contained In the gu have been rurovtd; no roya l ties s"' ll be payable on the re<ytltd QIS

until It h produced and sold or us~ by Ltssee In a Nmer .til th entitl es the royalty ~n t o 1 royalty under t his lease .

9 . JtOYN..TY PAnt:Jn> NtU RIJ'mTS . All royalties ..tll ch are requ i M!<l to be paid to the Ccmnlssloner of the ~neral Li nd

Office under this l&ase s hall be dot and payabl e In t hr f o llowii"IQ ~r~a nner : Royalty on o\1 Is dur and rust be received In the

~nera l land Off let on or before the 5th ~Y of t he s Kood ronth succ ttd II"IQ t~ ~th or production. and royalty on oas Is dur and JUst be rue 1..-e:d In the General l1nd Off Ice on or before the 15th dly of the second ~th wcceed II"IQ the .:Jnth of produc t I on, a cc.C~~p~nled by the affldl vlt of the comer, ~MI"IIge r or ot~ authorlud ~nt, ~ltted In tM fo,... and •mer pr-Hcrl~ by t he ~1 Land Office and showing the grou 11100nt and dlsposltloo of all oil and gas produced and the • rket v1lue of the oil and

gas , ~tiler with 1 copy of all ~ts. records or reports coofl ,..l ng the gross production, dlsposltloo and • r\et ve lue

trcludlng ou ~ter r-Mdlrqs, pipeline rt<:t lpts, ou line N<elpts and other chtd. s or 1e10randa of -.:Jurrt produced and put In t o

pipe lines, U rb, or pooh and ou llne1 or gas stortQt , and 11"\Y other M!porH or records ,., lch the ~ral Land Offlc t M y

~lrt to vtrlfy the OTO'S production, dhposltlon and .erht Vllut. [ach royalty pa)'lllrnt shall bt ICC~nltd by I thtd Stub,

~le, ~ry or other r.~ltUnct tdv lce show lrq by the us lgned Central land Office 1 .. ~ rt.lllber, tht a.JVT~t of royalty

being paid on Mch lent . If Ltssee pay\ his royalty late but on or btfore thirty()()) ~after the royalty ~)ftnt "'' dut , t.hotn l~~ ~ 1 penalty of S\ of the royalty or $25 .00, .t\lthevtr Is oru ter. A royalty ~~t ,.,lch h owr t hirty (lO)

~ late shall accrue a penalty of 10\ of the royalty~ or t25.00, ,.,lcht~r h ~ater . In addition to 1 penalty , royalties shall accrue lnter~t at 1 ratt o1 1~ per ~ar: s.uch Interest will beQin accruing when thf royalty h sixty (60 ) dly1 owrdur . Affldlv lts and supporttno docu:nen ts ,.,l ch are not fll td .t\en ~ shall Incu r a penalty In an ..-oont '-t l by the wr.cr 1l l al'<! Office a!bl n iHratlve rule wtll ch Is tff~tl ve on the date ~en the affidav its or supportlrq doctJTCnts were dur . The ltHee lhall

1413 102 )

bf-ar ·ail N:Sproslblllt,y for ~lno or causlno royaltie-s to~ ~ld In the •mer prescrl~ In this ~raqraph. l'l)"'lll:nt of the · dell~ penalty lh&ll In no "'4.>' operate to prohibit the State's right of forfeltu~ u pro•llded by hw nor ect to postpone the date on ...-.lch royalties were originally~ . The a..boort penalty proo..tlsl ons W.ll not apply In c.a1e1 or title dispute u to the State's portion or the royalty or to that portion or the royalty In dispute u to hlr • rbt Vllue. ~naltlu due under tllh pengraph a~ wbject to~ In order to coofon1 to any fut.u~ ~lty stAtute-s . The StAte shall have a flnt lien vpon all o 11 and oa s produced f ro11 the ar11o1 covered by th Is 1 N u to s.ecure tile p.a ~ t or a 11 LW1>4I d roya 1t y and o ~ WillS of .:lOty

tNt Ey becolle rue to the State under this le.ue.

10. PDftiTS, IO'<JtTS, HI> JES[RY[S. lestee shall file all drllllno perwlts In the name of the "StAte" and~~~ e.ach ~ 11 ard./ or U re ~ ttuy on the 1 N U1:l pre. Is e:s to ~ de:s lgnolt~ by the tO"d "State • for I dent If' I c.a tl on l1ld report I 11Q to the ~llroad tt-hslon or&~'>' o~ ~tal eqency. Vrltten rotlce of ~atlom urder this le.au stall be s.ul:altted to the ec.nluloner of the ~al Land Office by Lessee rt~ (5) ~)'1 befort spud ~te , cuutlon of production, 1110rtover , rt -ent ry.

~lry a.blndonaent or a.blndonllent of lf"'Y ~11. and W.ll Include copies of ltlllr'06d u.ntBion forws fo r appllc.atlon to drill ,

•11 test~. ~letlon reporH a.nd p1U9Qing f"9COnjs. L.Hsee W.ll wpply the Wr.eral land Office with ~ roc:ords, ~B~Cranda,

accourrU, reporH, c:utt lngs and cores, or other lnfor-at I on "lit I~ to the operat ton of the above ducrlbe4 pn~~htl, .tllch My

••lie ~ted by the '-eneral Land Office, In addition to t.h<n.t h«-rtln up~uly provl~ for. uuee shall have an tle<tr lc.al • ••lJ'd/or nQI~ctlvlty ~Y •de on the bore -hole ~tlon, f'n. the but or the wrface c.aslng to totAl depth or ~11 , of all

.""f.l\.h crlll~ on the above described p~lus and lh&ll trlll$JIIt I true copy of the lOQ of e.ach ~on N th -e ll to the .. ~~ral land Offl~ within flft~n (15) day1 after -.aUno or uld wn1y. The Ccmnlnlooer of the ~~11 Lend Office re-s~ s

"the right to ~ulre Le-1s~ to annually furnish thr uld Carnlnloner with Its ~st poalb le estlllo3te of oil a nd gas ~~s

: -~~rlylng this lease or allocable to thh lea se. • • • • . . •. •.: 11. tltY fO..£ Cl.AUSL If, during the prl~~ary tenD hereof ard prior t o discovery ard production of oil or oas on uld hnd,

.Lrssee should drllle dry holt or holes the~n . or If, after discovery ard produc tion of oil or oas. tilt production thereof

• lhould cease frm a ny ~ust , this lease shall rot ten~IMte If, on or ~fore the rtntal paylno date next ensulno afte r the :.:e.Jl'Piratlon of sixty (60) day\ frt1111 date of c:onpletlon of uld dry holt or cuutlon of produc tion, Lra~ cCJTTrencu additional

dr llllno or re-ort I no oper atIons thereon, or cc:rm'l!nces or ~Sl.fT'eS the ~)'IT'Cnt of annua I de h y ~ta I In the SIIIT't ~~a nner as

p--Wided In Paragraph 3 of this lust . If a dry ho le be c~leted ard abardoned during t he last ~r of the priNry tenn.

lessee·~ rl~ts U\all N~Min In full force ard effect without further operations until the uplratlon of thf primary tenD.

Sho.Jld the first ~II or any subs~ent -ell dr illed on the above desert~ lard~ ~lettd as a shut-In oil or ~' -ell withi n

the priNry tenn he~f, Len~ 1111y res~JTe ~)'ftnt of an~a I rental In the U1rf •n~ as provlc:kd In Paragraph 3 In t hh luse

on or bef ort the rental ~ylno date next ensulrw;l af t er s ixty (60) d.ay1 from the date of c~let lon of s uch shut -In oil or oas

~II, and upon the failure to .a~e such amual ~ntal pa)'m!nt, this lease shall lp~ fac to ter~~ lnate. If at the uplratlon of the prlary ten~~ or at a ny t I~ thereafter a s hut-In oil or oas ~11 Is located on tnt IMU1:1 pr!nlses, payftnts aay ~ 11ede In

acc~nce with the provisions of Pa r agraph 14 of this least .

12 . IJUUJIIG N() ~l..C ~T OPIRATlCJI Cl' PI.UWn ~. If, at the uplratlon of the prllnary ten~, neither oil ror o.n

1s belllQ produc~ on uld land, but lessee Is then enoaged In ctrllllrw;l or ~rtlno oper ati ons the~n. this lease sha ll M!l!l51n

ln force so long as operations on uld ~II or fo r drllllrw;l or re.oonlng of any addl tl oMI-ell are prosecut~ In good filt h ard

In workmanlike manntr without Interruptions t otal iOQ ~ethan si xty (60) day1 durlrw;l a ny one such oper ation , a nd If they ~ult

In the product I on of o 11 and /or oa s, w 1009 therN f ter u o II and /or gas Is produced In ~ylno ~ant It I es f ran sa ld la nd, or payment of shut-In oil or oas: .ell royalties or cc:rrpenutory royaltlu h ~~edoe u provided In this leau.

13. ~nlll, tltiWJC; NCJ ~Ill(; . Jn the evfflt proO.Jctlon or oil or oas on the leased pn.ls~ afte r once obt1lned

wll c.u.se fra11 li\Y ~uu at the expiration of the prl•ry tel" heNof or at ai"'Y ti-e or tl~s the~after, tllh leur sha ll rot

UT'wlnate H Les~ coanences additional drilling or rw-oortlno ~atlom within si xty ( 60) d.ay1 ~rter , l1ld the lease w ll

n.ln In full force and •ffect so long as wch operations coot!~ In oood htth and In a -.or~nllke •nner without

1ntt'f'T"UPtlons tcrtAllng ll:)rf than sixty (60) day1 during~ one well oper1tlon: a rd If w ell drilling or ~rtlng operati ons rewlt In the production of oil or ou. the INse wll ,._In In full foru l1ld tffe.ct w long u oil or ou Is proO.Jcr-d ~fro11 In paying quantities or ~)'V'eflt of dlut-ln oil or ~s ~ltlt1 or c~nutory royaltlt1 Is •doe n tlt~lnaftr:r

provided or u provided elsewt.e~ In the statutes of ttlt State of Tuu. le-s~.« shall give written rotlce to the Gene ral Land

Office within fl~ (5) ~Y'\ of aey cesutlon of production.

H. SM1T Ill ltOYAl.TlES. If, at the uplratlon of the priN ry ttnD or at arzy tiii'C tt~t~afte r , 1 ~11 or ~lls capable o r

produclno oil or oas In ~YITlCJ ~~ntltlu Is located on th~ lea~ prmlse\ bvt oil or ~s Is not ~lno produced for h cl o r wlt&.blt produc tion fa c llltl~s or a sulta..blt llo!l r ltt, a nd ttlt le.aa Is not t:.tlno aa lnt a lned In forc e and effec t, Less~ aa y pay as

a ~t- In oil or gas ro)'lllty an lllfOUnt equal t o double ttlt a n~a l rental provl~ In Paraoraph 3 or this leaH bvt not less than

Sl , 200 a ~r for N th ~11 upable of produc lno oil or gu In p.aylno ~a ntltlrs. If Par a11r apl1 3 o r t hi s leue does not l P« Ify

1413 103

1 de}ay ntotai ~nt, then for tl-.e purpo\es of thl' paragraph, t1'le d.lly r.ntal ~nt Uall ~ oot dolllr ($1.00) J>eT" ac~. · ~ s.hut - ln oil or gu royalty a~st be paid on or befo~: (I) the uplratlon or tt-.t P'"l•ry t~. (2) 60 ~)'1 efter the Ius~ CNSH to product oil or~~ f~ tt-.t INsed ~hu, or (3) 60 dly1 after lnsfoe tOOOQitlH 1 drllllrlQ and ~rtlno ~atlon In acconianct with the le.u.e provhloru ; whl~er d.tte h llt«t. Such p&)'lllent shill~ .. de one-half {1/2) to the Comlnlootr of the ~al Lind Office lnd one-hllf (l/2) to the owner of the soli . If the lh.Jt- ln oil or gas royalty Is paid, tt-.t lease

11\111 be conslde~ to be 1 productno luse and the ~nt stall utwd the terw or the IN~ for a period of one (I) ~r fra~~

the end of the prl•ry ten~ or frca the flnt cUy of the .ooth nut wc:cwdlnQ t1'le .ooth tn .tilth production CM~ and after

that, tf no suitable procb:tloo facilities or suitable • .rtet for the oil or ou ulsts, l«~ • Y ut.end the lea~ for four(~) eddltlonal and wcaul~ periods of one ~r by ~lno t.he ~ ~rrt N ell ~ron or befON tlw expiration or the extended Una. Jf, ~tng the period the 1Nst h hpt In effect by p&~nt of t1'le s.hut - ln oil or gas royalty, oil or gu h sold and dlll\lel"'eed In paylnQ ~ntltlts fro~~ a ..,.11 lOCAted within 1,000 fMt of t.he IN~ pr.l~s and ~ltted tn tht saar produclnQ nurvotr or, In any uu In .tllch drtii\IOi! h ocOJTTinQ, t.he rl~t to coot I nut to utwd the INu by ~I no tht st.Jt-ln oil or ou royalty ~hall ceeu . The 1Nu shill r..sln effectlvt for the r.alndtr of the ~r for .tllch t.he roy~lty his bHn paid and for four (4) eddltlooal and wex:eul~ perlod1 of one yMr Nch by the ltsSH p&ylnQ c~utory roy~lty at the royalty rate

prnv I dec! 1 n t.he I ea ~ of the v a IIJt at the we 11 of prodvc; t I oo f rc- the ~ 11 thl t h c.au s I no the dr a lt"~~Qe or t.hl t h CO!tll et ed In • ··~~producing ~ervolr 1nd withi n 1,000 fMt of t.he IN.sed ~~~'- Tht ~tory royalty h to be paid ~thly. OC'lt ­

••'half (1/lr to the Canlnlooer of the ~ral Land Office and ooe- hllf (1 /2) to the owner of the soil, ~Imino on or ~fore tM .••!lilt day of the JOnth rlfJ.t w cce-ed lno t1'le klllth In which the oil or gu h s.old and dell~r9d frcJI tt-.t we ll. If the tOJVenU tory •• r-oYalty ~ld In any 12 -m nth period Is In an arrovnt Ius than th~ anrual shut-In oil or oas royalt y. Le-s~ l.hall pay an IIII"OUnt

• ~alto the dlffe~nce within 30 day1 frcn the ~nd of the 12-«>nth period. Mone of tMse provisions wil l ~~~e~ Less~ of the ! .Ob~loatlon of reasonable developnent or the oblloatlon to drill offset ~ lls as provided In lu.as llatur a l Rnourc es Code ···,Sl.l7J. . .

• • .. lS . l£V£1.~. Hotw1thstandlno a ny prQVIslon of thl' leas~ to tht contra ry, after a ~ 11 prodoclno . or upa.blt of

• ,oocfuclno . oil or gas hu ~n CCf!lllet~d on t~ le.ased prfJlllses, Leu~ shall u.ertlse t he dlliQence of a rus.onably pnrdent . . . ... ~ator In drllllno such addit ional ~11 or ~lh as ~~ay be ~asona.b ly flt<tHary for the proper de~lo~nt of tt-.t l&asfjj

prt~~~lsts and In .ark~t lnQ the ol 1 and gas producfjj. In tt-.t event this 1Nst h In forte end effect thrH (3) ~ar s afte r the

expiration dat~ of the prl~ry term, It shall then terminate as t o all of th~ leased premi ses , EXCEPT: 1 ) 40 ac~s surroundlog

tach produclno oil ~11 and 320 acres surroundlno ~ach produclno oas well (lnc ludlog a s~t-ln o\1 or oas well as prov l~ In

Paragraph 14 of this lf's~) . or a ~11 upon which less~ Is t hen eogaQtd In contlruous drllllog or reworking oper ations. or 2)

the rurber of acres Included In a produc ing pooled unit pursuant t o hus lla wral R~sources Code i 52. 151 - 152.153, or J) such

~ ter or less~r t"llnber of a cres IS ~~a y t~n ~ all ocated for produc t I on purposes to a Jl'"orat I on unIt for each such produc I no wel l undt r tt-.t n.rl~s and ~uhtlom of tt-.t R,llroad Corrmlnlon of Tu.as, or any succen or IQtncy, or other goverrJ~Je nta l

authority 1\avlno jurisdiction. "Productno" u u1ed In t hi s IUH ~~eam produc lnQ In pay ing quantities. The ac ~aQt ~talned

unde r thh provision IS to each ~ll shall, l.l nearly IS pr actiCAl. be In t he form or I squa~ with the 101f11 located In t1'le

~ter or In wch ott-.tr wpe as • Y be approved by the Com In lorltr of the ~nera l Land Off Ice. leuee shl 11 uecute and ~ord a "lust or relN'U contalnlno a utlsfactory description of tt-.t acrNQt ttnrlll"'lt~ unde r thh provl,lon, and tM ~

releas~. or 1 c~rtlfl~ copy of ~ame, l.hall be fi led In the ~neral Land Office , accompan ied by the prtscrlbed filing f~.

16 . IJTS(l \EllS. Melth~r tt-.t borus, delay ~ntals, nor royalti es p.ald, or to be paid, under this lease s hal l ~lleve

leuee of his obllgatloo to protect tt-.t oil a nd gas under tt'ot abo~- desc:r l~ land f reD ~lnQ drained. To preve nt dra ii"'IQt, leu~ Is oblloat~ to drill u ~~a ny ~1 h as t he fa cts ""Y just lfy and to the ~th or de pt hs flt<tsury for effect I~ protect lon

aoalnH u~ draii"'IQe . In eddltloo, If. dralnlno ~11 which h produclno In COII!Dertlal qv~ntltlt1 Is lOCAt~ withi n 1.000 r~t of the lbo~-~crlbed land , or In 1ny u~ .tlere the above d« crlbed land h belno dr ained , l«~ Is statutorily obligated to drill an ofh~t ""f11 oo th~ lNs~ prc!~~!lses within 100 days after the dr1lnlno ~11 ~Ins product ion In c:anertlal quantities.

Failure to utlsfy the stat!.ltory offset obligation • Y wbjec t this IN~ and the owner of t.he s.oll's aQency rlqhts to

forfeiture . Only upon tt-.t deterall"'lt loo of the Ccllnlu I~ of the ~•1 Lind Off l et llld with hh written 1pproval 11ay tM

~nt of ~utory royalty utlsfy ot>liQatlon to drill Ill offr.et ~11 or ~lls ~~~ ~ thll puaqra.ph.

17 . fmC£ "'-.UJt£ . If, aft~r I QOOd filth effort , ltH~ h ~nttd f~ ~lylog with l ey UprHS Of' hrrp lled COVel"'lnt of this leu~. fro~~ conducting dr llllno operatloru on t1'le lused p~l~s. or fro~~ produclnQ oil or gu fro~~ t1'le IN~ pNJnl ses by reu.on of "'r, ~lllon, riots, ltrlk.e-s , acu of '-ad, or any valid order, n.rle or N19Uhtloo of govtrTWent llJthorlty, then

.tllle s.o prewnted, L~nee's obligation to tallJly with such covtNnt shill be wspended and leuee ~hall not be ll&blt fo r damaQts for hllu~ t o ~ly with s uch cov~l"'lnts ; addltl~lly, this leut shill be utended while ltn~ Is preventfjj, by aey

wch uus~. frcu cooduct lno drilling and rewor klno operations or f rCXIl produc log oil or oas fn:JJ tt'ot leased Jl'"ert~lses. ~~r.

nothing In thh paragraph lhall s uspend t1'le paym!nt of delay ~ntah In order t o ~~a l ntaln this IN~ In effe<: t dur lno tM prl ~~ary

t.era In the abs.enc e of such drllllno or rewort lno opera t loos or product lon of oil or on .

5 1413 104

· l~ . . ~ Q .. AUS(. The owner of the s.oll -rranH and •or-~ to <Mrend title to the IN~ p~lus. If the OW'rle1" of ·the soli ~faults In pa)QenU ~on the lused prshH, then LH~ •Y ~ the rights of the o.tner or the s.oll In the

lused pre.ls~s by paying •"Y ~to-oe. taus or other liens on the lu.sed pre.lse1. If Le.ss.et •ku pa~nts on beha If of ~ cwner of the soil ul"oder this par~raph, Leuee Ny ~the cost of the~ pa}'Wients frtJI the nntal and roytltlts due~ o.mer of the 101 I .

19. N(J>(R n ~ rr R£nCTl (JI (LtoUS£ .. 1f the OotneT" of the 10 11 e-n 1 t:S s than the entl re u nd I vI 6ed surf. c t H tIt t In the

above ducrl~ land, .tlether or not ~nee's Interest Is ~lfltd hertln, then the roytltle.s and rentAl her91n prov ided to~

peld tD the awroer of tht soil shall be paid to hi• In the ~rtlon .tllch his ln~t bean to the entire llldlvlded surface eslltt and the 1"'0)111tles and rental herein provl6ed to be paid to the U..luloon of the '-neral Land Offlc.e of the State of Tu.u shall be llklwlu proportionately~. ~r. befON !Asset adjusts the roy~lty or fYilll etA to the tc.ahslooer of

the ~al Land Office, Luue or his authorized rt"prtSentatlw ~st I.Ubalt to the u-luloner of the '-oenl Land Office a

witten llltement .tllch eJ(plalns the dhcnp~ncy be~ the lntere.st purporte-dly le.ued &rder this le.ut and the actu.l lnt~t

CMled by the owner of the 10 11. The U..l n I ooer of the '-nl ral Land Of f I~ IN 11 be pa I d the ve I ue of the .00 It product I on

allOClblt to 11\Y undivided lnterut not covered by • l.ue, ltu tht proportionate de~l~nt and proQxtloo cost alloc.&blt to • •··~ undivided lnt~t. lboever, In no~ wll the U..lnlooer of the '-eneral Land Offl~ ~el~ u 1 roytlty on ~

... &ross ~ctloo allouble to the undivided Interest not INs..d an ~t len than the val~ of one- sixteenth (1/16) of w ch • • • : Qr.os s produc tl on .. .. .

20 . USE or ~TER .. LH~e shall ha~ the right to use ~t~r produced on ~ld land ne<essary for oper ations unde r t his lease : .·~ept water from ~lls or ta~s of the a-mer of the soil: provided , ~ver, Lessee shall not use potable water or ~ttr ....

~IUble for llv~tock or lrrloation purposes for -atuflood o~ratlons wlthOoJ t the pri or coment of the owner of t he soi l. . . .. 21. AUTKJUirD [WW;[:S. leuee wall pay t~ owner of the soil for dalln!lges c.a us..t-d by Its operati ons t o all pers.onal

: • ~rty, hr~rov~nts, ll~stod and crops on said land. . . . . 22. P'IPUUI: lD'TH. When re~st~d by t~ owner of the wll , less~ shall b.Jry Its pl~llnu below plow depth.

23 . 'fll LOCATICJI li"IT. tlo well lhall ~ drille-d nearer than t~ h.lndred (200 ) f«t t o • llY house or bam row oo said

~lses without t~ written con~nt of the owner oft~ soli.

24. ~VATI(JI ClAUS£. Less« shall have the eAcluslve right t o bolld. o~rate and l!llll ntal n pits . ruervol rs , pickup

stations and plants for the purpose of pi cking up and conarvlng ~ste oil t hat f lows down the creeks , rav ines and ac ross t he leased preml~es , whether such ~~te oil Is prodvc td f~ t~ l&ased premises or from other lands . Royaltle~ . as prov l~ In this

lNse for re<Jularly produced oil , are also~ on all wch ... sa oil.

25. JU)(JYN_ or [QUlMJrT. Sub~t to llaltatlom In this pa ragra.ph, LessM wall have the rlgnt to NIIIOVt NChlnery and

fixtures placed by Lessee on t~ l&ased prmlses, Including th~ right to draw and r«<''OIe cuing, within one h.Jrdred tventy (120)

da~ after t~ expiration or the termination or this lease unlen the o.mer of the soil grant\ L~ssee an extensi on or this 120-

dls pe-riod . However, Less~ aaay not remo~ casing frm any well upa.ble of produc ing oil and oas In paying QUantities.

Additionally, lessee aaay not draw and remo~ cuing until after thi rty(~) d4~ WT"Itten notice to the Ccxnlnl oner of the

'-eneral land Of flee and to t~ a-mer of the so 11. The o.mer of the 1011 s.ha 11 be<:cne the o.mer of any •ch I nery, flxtu r t-S , or c.aslng wtllch art not thnely ~ved by lHsee under the tei"WIS of this puagraph .

26. (a) ~1Qf£nS .. Under the coodltloos et:)flUtntd In this pa ragraph and Paragraph 2'8 of thh Ieese, the rights and

estAtes of either party to this Ius~ •Y be au lgned, In whole or In part, and the provh Ions of this luse shall utend to and

be blndiOQIIPOfl their heln, ~lsees, 1~1 rt"Prt~nt&tlvt$, svcceuon 1nd anl9ns. ~.a chi~ or dlvlsloo In oomenh lp

of the land, f'tiltah, or 1"0)'1ltles will not tnll~ the ooliQAtlons of ln~ . d l•ln llh the rl~ts. prlvllf!9ts and estates or

lkuee, l~lr t~ eff~tlveness of any payaent -.de by lns.H or l~lr the effe<tlvenen of 1 1"0' act perf~ by l~ssee . Ard

no ch&llQf or division In ownership of the land , rtnuh, or 1"0)'1ltle1 wll bind Ln~ for lilY purpose until thi r ty (30) days

after the owner of the 1011 (or his heln, devhMS, let;~al ~tfltAti~s or aulgns ) fumls.M\ the Le.ssee with sa t isfactory written h'ldeflce of the charve In o.tnerWip, Including the orlgll\ll Neordtd IUT11eents of title (or a certified copy of w ch original) when the ownenhlp cl\anged bt<:aua of 1 coov~yance . A total or pa r tial aulg~nt of t hl' le.ue stlal l, to the extent

oft~ tntere~t uslgned , rtllev~ and dl"har1Je Lessee or all s ubstQVent obligati ons unde r this lease . lf thl~ lease Is au lgntd

In Its tntlrety as to only part of the ac~l!Qe, the right u-d option to pa y nn tah shall be apportione-d as be~r. t he uve ral

owners ratably, according to the area of •~ch, and failure by~ or IIIOrf or them to pay his '~re of tM rental &hall not affe<t

6 1413 105

.

ttlls . l.Ut on the part of the land~ which pro rata rtOtah art tl~~rly paid or t~: ~er, 1f the assignor or aulgnH lt>es not f llt 1 ctrt If led copy of wch au lgrwerrt In the ~a I Lard Office before the nut ~ntll paying !Ute, the ent 1~ luse shill t~ll\ltt for fallu~ to pay the eotlrt "'"tal c1Jt ITder Paragraph 3. [wry aulgnee wll s.uccHd to all rights ard be ~Ject to all obll~tloos , liabilities, and penalties owed to the State by the or lgl01l IHsee or &1\Y prior aulgnee of the IM.u, Inc ludlng 11\Y lllb \lit les to the State for Uf1)41d roy111t les.

(b) ASSIQKXT LOOTAnCII. lotvlthstandlno &1\Y provision In ~angraph U (a), If the owner of the lOll ~lrfl thh l•ue tn lllhllt or In pirt by aul~ wlthoot tht prior written ~al of U. U..lniOilt'T" of the '-ntnl Land Offlct. thh luse h wid a of the tl• of aulgfWiefrt and the eoency ~of the Ol«ler lilY be forfeited by the U..luloner. M aulgl17'ent will .. trNted u 1f It .,.rt ~to tJ .. ~of the t.oll If the uslgnee Is:

.... .... • •

(1) 1 nominee of the owner of the soli: (2) 1 C«'PQf"ltlon or Slbsldlary In .talc:h the 0110er of the soli Is a principal stodholder or han ~IO)'M of w ch 1

corpora tl on or ll.lbs ld Ia ry:

( 3) I part nenh I p In .ta I ch the owner of tht t.o 11 h 1 pert ntr or h an ~ 1 0)'9lt of wet. I piTt lWMh I p: (4) 1 principal stoctholder or ~1 0)'91t of the corporation .tllch Is the owner of the t.oll:

.(5) 1 pirtner or ~1~ In 1 pa~r-~hlp .tllch h the owner of the 10\1; (6) 1 fiduciary for the Oo«ler of the 1011: lncludlnQ but nat Halted to a ~1111 , trv1tM, u.cutor , adlllnlstrltor ,

• M!CeiV1!r. or c.ons~tor for the owner O'f the soli: or (7) a r-1 ly ~r or U\4! owner or U\4! soi l or ~lattd to U\4! owner of the sol i by •rrlttJt . blood. or adopt lon . . .

••• • 27 . m.EASrS. Under the condltlom contained In this par1graph and P1ngraph 28, Les~ 11ay at any tl~ vecute and • • • &11V1! r to the owner of the soil and place of ~ord 1 rtluse or rtluses coV1!r lno • rtr portion or portions of t he IN~ •• •p..lses, and ttlereby surrtrder this l&a~ as t o w ch port ion or por ti ons, and be~~~~ of all subaqutnt obii Q.~ tlons as to

•• acruQt s~rtd. If any part of this lNse Is properly surre~red . t he delay ~ntal cilt under t hh ltue sNll bt rt&Jctd •• : J>)' tt'le pro port I on tM t ttle sur~ndtred ac~~ bun to t tle acreaoe wtilch we s cov~ by th I~ lease I~ I ate ly pr lor t o such

wrrtrder; ~er, such reiNs~ wil l not ~ll~e Len~ of I ll)' liabilities .tl lch ~Y N...e acc~ urder this luse prior to t he wrrender of w ch ac~age .

28. rJLllfC CT ASSJQitUCTS NU RU.f.AS[S. If all or l ilY part of this lute h aulgned or rtletstd , such aulgrwwent or n lust llllt bt recorded In tht county wflert the land h s1 tua ted, and ttle ~orded Ins trunent, or a copy of t he recorded lnstl"\.llent certified by t he County Cieri. of t he county In which the Instrument Is rtcor-Oed , ll.lst bt ftltd In tt'le ~nera l Land Office within 90 day\ of t he last u~utlon date acc~anled by t~ prt scrlbtd flllno fee. If any such uslgrment h not so fllrd , the rights acquired undtr this lease shall bt sub~c t to for feitur e It the opt ion of the Connlnloner oft~ w ner al Land Office .

?9 . liAS( fiLl~ . It Is n<0<;1T1Ized t~t ~ro~ thh lease Is eff~tl~ a ctrt lfl~ copy of this leue (..t!lch h •d~ end artlfltd by the County Cler\ fron~ his records) U\all ~ flied In t~ ~ntral Lind Of fi ce In accordanct with lt .. as l(at ural lte~rcts Code i 52. 18J . and this leone sha l l no t ~ blndlnQ upon the Stitt un less It recites t t.t ac tual and true conslder l!lon paid or prawlsed for execution of t his leue . The bonus due the Sta te 1nd ttle ~scr ibed flll og r~ shall accatpany such ~rt If ltd copy to tht ~neral Land Of flee.

)0 . DlSC..DSlJU: Q.ALISL All provisions ~lnlnQ t o the lu~ of the abovt~scrlbtd land hAl ve ~ Inc luded In t hi s tnstn.ent, lncludlog the stat.errt of tht true cons ldt'T'at lon to bt pa ld for the ~ITt I on of this lu~ and tt'le rl¢1ts and ctrtles of the pert ln. My collateral agreements conctmlno the dtV1!1C>pllr11t of oil and~~ fro~~ the lu~ p~lus which •~ 110t contained In thh luu render this le.ue lnvtlld .

.!l. Flln:"!Ml OOTY. The ~ of tht soil ~ the State a fiO-J c lary ciJty and ant fully dhc lose any fa cts aff~tlng tht

State's Interest In the lused prml~s. ~n the lnternts of tht owner of the lOll coofllct with those of the State, the owner of the l-Oll II obllg.ated to put the State's lnte~sts before hh pn-sooal lntensts .

32. RJtfUllltL Jf LH~ U\a 11 fa 11 or ~ru~ to •ke the p&~t of arcy ~within th l rt.y dlyl afttr It ~~s <Le . or tf LH~ or an 14lthorluld agoent should knowlnol y Jlll\e • 11Y hlu ~tum or hi~ rtpart coocern lno prrouctlon or drllllno . or If l~uee Will fall or refuse to dr ill any offs~t ~11 or ~lit In good faith u nqvlnld by law and the n.~lts and ~lations .oopt~ by U\4! Ccxmdnloner of the ~nenl l end Office. or If len~ should fa ll to flit ~tl In tt.t N nner r.qu l~ by 1 ... or fall to c~ly wit h rules a nd N9Uhtlons pn::uulglt ed by the ~ner a l L1 nd Offi ce, t~ School land Board, or tt.t Rallrotd Comlulon , or If lus~ 'hould refuse tht proper author ity ac cess to the ~onh ~ulnlno to operations , or If len~ or an llllthor\zed agoent 'hould knowlnoly fall or ~ru~ to gl~ COf'T'« t lnfDr*tlon to the proper author ity, or knowl noly fal l or rtfua

1413 106

.

· 14 fllrTll~ the '-nera l land OHice a c.ornct IOQ or aJtr ~11, or If ~uw 11\all knowlogly violate 1 1'\Y of the •terlal provisions CJf th _l~ leue ." or If t111s ~-~ h aulgned and the anlgl"'lent h not filed In the ~al Land Office a.s ~lnld by law, the

-rlg"lh a~lred under thl1 IM:s.e mall ~ wb~t to forfeiture by the U..tuloner, and he 11\all forfeit u. -'an suffltlffitly tnfo..--d of the facts ..t.lch authorize. forfeiture, and -'an forfeit~ the aru ma ll aoal n be wbje<t to lus.e unde r the lerllll CJf the bllrq.Jis.J.ent Act. ttc..wr, nothlog he-Nin mall be construed U .a lvlog the autONliC lenalnatlon of this laue by operation af law or by re.uon of ai'\Y special lt•ltatlon arhlog ~- forfelt.uru -.y be u.t a.stca and thh laue and all rllflts thereunder rtlnsllt.-' befort the rllflts of another lntervtne upon uthfact.ory wldence to the C.C.. Inlont"r of the ~ral

Land Office af fut.urt ~ltanc.e with the provhlons af the law and of this INn and the rulu and ~lations U\at •Y be ~ted r.lat 1¥'1 hereto.

lJ. WIJI{W) CIJtUSSJOII! ~~ 01 "'-5. ~ Nl&Iral ou or culnghead on . Including both anoclated and nonauoclated

on , produced fn:a the alneral estate subject to this I &au •Y be wid or contracted for u le to ·~ person for ult l•te use ouUide the Stitt of Tuu unltu the R.allro~d ea.tulon, after notice and t.lrlng as provlcied In Title 3 of the Tu . .u ~tural

~WUTUS Code , f lnds that:

(a) the ~oo. ~.or entity U\at txtOJted t.he lMu In ~tlon doH not req.Jire the natural ou or c.ulrv.-t-d gas to aeet Its o-n • •lstlno needs for fuel;

~b) .... no private or public hospital , I'IJ'nlog ~. or other sl•llar t.llth -c.art facility In this State ~Ires the nature! ou or c.asloght.ad gas to ~t Its ulstlog nt«ls for fuel;

•••• • .. .. .

(c) . (d)

no public or private school In this State that provldH tlt~~~tntary, ucoodlry, or higher tO.Jc.atlon ~lrn the

natural gas or casloghtad gas to ~~t Its e•lstl og ~s for fvel : no facilit y of the State or of eny county , MU nicipality, or ot~r politica l ~lvlslon In this State requires the

natu r a l gas or casloghtad gas t o reel Its e•lstl og ~s for fuel: ... . (e) no producer or food and fiber ~Ires tht natura l ou or cas loghtad oas necHury to ~t the uhttno ~s of Irrigation J'UTl)S and other -.achlntry directly ~hted to thl1 production ; and . • .. (f)

. .. • . . . . .

no penon who ~stdts In this Sta te and who relies on natunl on or culnohtad Q<!S to provide In ..t.olr or part

his ulstlng ~tds for furl or rh llatt rl al ~quires t he natur a l OH or caslnqh~d OH to ~t t hos e nee-ds: provl()td, ~vtr, after not let and ~rlno IS provided In TIt l r 3 of t he luiS ~tura l bsourcu C.oOe the Ra I I r oad Cc:mntu ton -.ay grant ucept tons to thtse provh Ions as ~et forth In Tu.u Ka tural Ruo..~r·cu Code

152.296.

~. This lease Is lssu~ under the provisi ons of Texas Katural Resources Code 152.171 through 152 . 188, commonly known as the RtllllQUislm!nt Act, and olhtr applicable s t atutes and ~nc)re nts thereto. and If a ny provlsloo In thh lMU does not confonD

to theu statutes, the statutes w\11 prevail ove r any nonconrormtno lease provisions.

Wll HlSS WH[R£(){. this lnst~nt Is utcuted on the datt f lrst above ltttn.

Sl ~ H ~ HAAS BY : ______________ _

Individually and as ~nt for the State of Texas

Sl A Tt: II' TOAS BY: _______________ ~L..._

Individually and as

S 1 A TI ::rrw BY:~~~-----------------------------­Ind (v tdo.ally and IS IQtnt for Ult State of Tu.u

B Y:--------------~~-------------­Indlvldually and

1413 107

e

.... . •••• •••• . . . .. . . ....

•

• • •

. . . • • ....

35. With regard to operations upon the leasehold estate, as a condition of this lease , Lessee further agrees to the following:

A. Lessee shall not i fy Lessor ' s ranch manager in advance before conducting surface operations.

B. A locati on shal l not exceed one (1) acre. Lessee may purchase water for drilling operations in lieu of drilling a water well from the Lessor at a price to be negotiated. Lessor shall have the right to designate t he wat er source from which Lessee may obtain such dri lling water .

C. No inside pasture fence wil l be cut without the prior written permission of Lessor or Lessor ' s representative . In the event that one or more fences need to be cut , or i n the event a gate needs to be pl aced in any fence , prior to such fence cutting or installation of gates, Lessee shall first brace the fence , according to Lessor ' s directions, on each side of the place to be cut so that the fence will not slack. Any gate i nsta l led shall be at l east a sixteen (16) foot gate and shall be braced in such a manner as is required by Lessor to insure that the fence on either side of the gate will not slack, nor will the gate sag with use. Jlt any point in a fence where it is necessary for Lessee to use an existing gate or to put a gap for ingress and egress, Lessee shall , at Lessor ' s election , either install a gate as stated above or shall install a cattle guard acceptable to Lessor .

D. It is expressl y agreed that Lessee will use entrances to the ranch des ignated by Lessor for oil field traffic and all surface installations shall be fenced a.nd labeled as called for in f below and that Lessee shal l use only so much of the surface as is absolutely necessary to its operations.

E. In the event exploratory operations are conducted under this lease, Lessee agrees that all operations shall be located a sufficient distance away from Lessor's water wells so as not to cause a ny damage to such water wells , and Lessee agrees to promptly fill in all such holes and restore the surface of the land to a condition suitable for farming and ranching operations. Lessee agrees to use a hi gh degree of care i n keeping bulldozer operati ons from making any unnecessary cuts into the turf of the grass or otherwise unnecessarily disturbing the surface of the land covered by this l ease.

f . Prior to maki ng a l ocation , Lessee shall remove and stockpile the topsoil and shall use same to restore the site as stated below. J\fter the cessation of each drilling or reworldng operations, Lessee shall promptly fence all pits , well sites, tank batteries or other surface installations , with a welded metal enclosure and shall be properly labeled . Lessee shall maintain the all-surface sites to the satisfaction of Lessor at all times. Jls soon as each pit no l onger needed in Lessee ' s operations has dried sufficiently so that it can be filled with ca liche used to make the drill site and covered with t opsoil so as not t o remain boggy, Lessor shall remove the metal enclosure and fi l l and level all such pits , level all dumps, remove all r elated debris and put the surface of the land in substantially the same condition as it was in prior to the commencement of the Lessee ' s operations. Each completed well shall be fenced off by a weldPd steel enclosure which shall enclose the Christmas tree on gas wells and the pumping unit on oil wel ls. Lessee shall attach to each well enclosure and maintain a durable sign with the lease name, operator and well nwnber.

G. It is understood Lessor raises pure bred cattle, and in the event any operat i on conducted by Lessee on the premises could result in injury to Lessor ' s livestock or be hazardous to same, Lessee agrees to promptly and properl y fence such operations so as to prevent any injury or hazard to livestock.

H. Lessee agrees to take all necessa ry steps to prevent his operati ons from causing the following damages or i njuri es to Lesso r ' s lands not used by Lessee for operations under this l ease :

(1) Causing or contributing to soil erosion or to the injury of terraces or other soil conserving structures on said premises;

(2) Polluting the waters of the reservoirs, springs, streams or wells upon the leased premises;

(3) Damaging crops, grasses or other foliage or trees whether natural or improved , cultivated or not , of whatsoever nature ; or

(4) Harming or injuring in any way the animals or livestock owned by Lessor or their tenants and kept or pastured on the premises, including the erecti on and maintenance o f fences, gates and cattle guards where necessary for such purposes .

1413 10 8 9

.... <0 •••

• ••• • • •• •

. .. • • ... .

• . . ••

• • • • • . . . .

I . Lessee shall be liable for and agrees to pay the person beneficially interes t ed in the damaged object for all damage caused by his operations to the growing crops , grasses, foliage or trees, whether natural or improved, and of whatsoever nature, and any o ther improvements on said premises . Lessee also agrees to pay Lessor for all damages to any personalty and lives t ock of Lessor as well as for all damages to fences , water wells, springs, reservoirs, and any other improvements or appurtenances of Lessor now or hereafter situated on the surface of this l easehold and any other damage , except surface damages, suffered by Lessor a s a r esult of Lessee ' s operations.

J . In order to minimize surface damages, the Lessee agrees and obligates himself to use existing r anch roads insofar as pract icable and never to construct more than one r oad to any locatJ.on without the written consent of Lessor. Any new roads constructed are to be , insofar as practicable, along fence lines and at locat ions that will no t interfere with the raising of crops on lands under cultivation. Lessee shall bury all pipelines as s ta t ed in 0 unless otherwise agreed in writing by lessor; any tankage and other s urface i nstallations are to be l ocated adjacent to fence lines and pasture l ands insofar as practicable and fenced and l abeled as stated in F'. Upon abandonment of any location, Lessee agrees and obligates i t self to commence operations t o clean up the location , remove all debris and r es t ore the surface of t he land to a condition suitable for farming and ranching operations within sixty (60) days and diligently complete same in a reasonable time •

K. If any fences be cut to ins tall a gate or ca ttle guard and if livestock be on the premises , Lessee agrees to maintain a watchman at the opening until the gate or cattle guard has been installed to prevent livestock from separate pastures from mixing or to prevent livestocJc from escaping. At such time as the gate or cattle guard is no l onger needed, Lessee shall notify Lessor that same is no longer needed and will r emove same and restore the fence to its original condition or leave the gate or cattle guard in place at Lessor's request. During the use of any existing gate or cattle guard or the use of one installed by Lessee, Lessee agrees to install appropriate l ocJcing devices on the gate or cattle guard if requested by Lessor , and to furnish Lessor with a Jcey to said l ock.

L. Lessee s hall not use water from any wate r zone for in jection purposes and s hall not permit any intermingling o f water zones .

M. If salt water i s produced, the same may be r einjected in a formation which i s be low all fres h water bearing formations , and in all events salt water and other deleterious substances shall be handled in a manner so as not to pollute fresh water or cause damage t o the sur face. No salt water shal l be returned i nto any well unless such salt water is a by-product of a well drilled on the acr eage covered by t his lease , without prior written consent of Lessor.

N. Lessee ' s operations on the l eased premi ses shall not interfere with Lessor ' s water facili ties and shal l be such as to minimize erosion and as to minimize interference with natu ral drainage.

0. Lessee shall bury any pipelines at l east 36 inches below the surface as the line i s l aid unless written permission is obtained from Lessor for a s urface line. Provided , however, Lessee i s aware Lessor is conducting root plowing operati ons on the l eased premises and Lessee accepts and it shall be Lessee' s sole r esponsibility to determine if any pipeline should be buried more than 36 i nches in order to prevent damage to the pipeline or hazard to root plowing equipment or operators . Each such pipeline right-of-way s hall be terraced to prevent eros i on and shall be maintained by Lessee to conserve the soil. Lessee shall dig, lay and backfill any ditch promptly to prevent i njury to livestoc k.

P. Except for r oyal ties which are due as prov i ded above , any mon i es due to Lessor from Lessee as a result of damages o r operations s hal l be due and payable at Lessor ' s above address in Uva lde County, Texas , within thirty (30) days of the date the obligation for payment is i ncurred and any sums , including royalties , not timely paid s hall bear interest at the maximum legal rate unt il paid .

Q. Lessee agrees to consult wi th Surfa ce Owner r egarding replacement of al l roads , pipelines , power lines and tank batteries to locate all such items and other structures whi ch it has a right under this lease t o locate upon said land at such l ocation as to reduce the interfe r ence with the surface use of said lands insofar as it i s reasonably pract i ca l to do so and in such a manner as to reduce the r i sk of s oil erosi on insofar as it is reasonably prac tical to do so but it i s understood that Lessee will not be prevented from exercising reasonabl e use o f the surface in order to accompli s h the purposes of this lease.

1413 109 10

.... • ....

•••• • • • • •

..

R. In the event of any spill of oil, chemicals or other substance on the premises which results in contamination of the soil, a hazard to livestock or other injury to Lessor, Lessee shall immediately take measures necessary to clean up and remove from the premises the hazardous substance and contaminated soi ls and restore the surface including reseeding as stated in paragraph 0 above or make arrangements with Lessor for deep burying on the leased premises.

S. Notwithstandi ng any other provision hereof, during hunting and lambing season from October 15 t hrough April 30 , Lessee shall not, without the written consent of Lessor , conduct or authorize any seismic surveys (including surveying, bulldozing, clearing or laying out lines, drilling shot hol es or discharging explosives) or other activities except the actual drilling of wells or the construction of production facil i ties on the ~escribed l and .

T. Lessee agrees to use reasonable diligence to keep all drill sites, well locations and other port ions of the surface of the land used or occupied by Lessee free and clear of bitterweed at all times and to maintain the same so as to prevent damage to adjoining lands .

36 . Notwithstanding the provisions of paragraph 15 above, (a) each oil well drilled hereun~er, as : • •• • classi fied by the Railr oad Commission of Texas and producing oil in paying quan titles or capable of • •• • producing oil in paying quantities, wil l perpetuate this lease beyond the primary term only as to a

• production tract of 40 acres down to a depth of 100 feet below the deepest producing horizon or the • •.: stratigraphic equivalent thereof , and (b) each gas well , as classified by the Railroad Commission of

Texas, drilled hereunder , e i ther producing or shut-in and capable of producing gas or gaseous substances in payi ng quantities, shall perpetuate this lease beyond the primary term only as to a production tract of 160 acr es, and down t o a depth of 100 feet bel ow the deepest producing horizon or t he stratigraphic equi val ent thereof .

• • •• • • ... .

37. If at t he expi ration of the primary term, any acreage leased herein has not been perpetuated by and ascribed to a production tract as stated above, and Lessee is then engaged in drilling operations on a well on such acreage, this lease shall remain in force and effect as to such acreage so long as Lessee shall commence the actual drilling of an additional well or wells within 180 days after the date Lessee reaches t otal depth on the preceding well and said lease shall remain in full force an~ effect as to all such acreage during such drilling operations, and as long thereafter as Lessee continues to drill additional wells spudding each new well within 180 days after the date of reaching total depth on the preceding wel l as provided above . If, during the drilling of any hole under this paragraph, Lessee loses or abandons the hole or well, then Lessee shall notify Lessor, and within 30 days after the abandonment of said operation, Lessee may commence the actua l drilling of a substitute well. If any such drilling , additional wel l or reworking operations on any well drilled hereunder being continued at the expiration of the primary term or thereafter in accordance with the terms of this paragraph results in production , then this lease shall remain in full force and effect as to the production tract ascribed t o each well herei n according to the appropriate acreage as set out above.

38 . Lessee agrees that it will pay, as additional bonus, the sum of $2 , 500.00 for each well drilled on the premises . Each such additional bonus shall be payable one-half to the State of Texas and one-half to the owner of the soil within thirty (30) days of spudding of each such wel l.

I N WITNESS ffiiEREOF , t his instrument is executed on the date first above written .

STATE OF TEXAS

By In~d7i-v7i~d-u-a~l~ly __ a_n_d~a-s __ a_g~e-n't~f~o-r ________________ __

the State of Texas

1413 110

11

•••• • •••• .... • • • • • •

• •• . . . ••• •

• • • ••

• •• • • • ... .

THE STATE OF TEXAS §

COONTY OF UVALDE §

This instrument was acknowledged before me this ~~ day of DOLPH BRISCOE, JR., Chairman of BRISCOE RANCH , INC., a corporation, on behalf

THE STATE OF TEXAS §

COUNTY OF §

My

This instrument was acknowledged before me this day of

Notary Public, State of Texas My Commission Expires: ________________ __

THE STATE OF TEXAS

COONTY OF

§

§

This instrument was acknowledged before me this day of

Notary Public, State of Texas My Commi ssion EXpires: __ .............................. --

THE STATE OF TEXAS §

COONTY OF §

This instrument was acknowledged before me this day of

Notary Public , State of Texas My Commission Expires: __________________ __

1413 111

12

by

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GENERAL LAND OFFICE GARRY MAURO COMMISSIONER

TO: Ga rry Mauro, Commissioner

MEMORANDUM

DATE:

FROM : Peter Boone, Pet roleum and Minerals

SUBJECT :

Consideration ~ Recommended ?a~ & -.3 -.9~ Not Recommended Comments:

Form

Recommende~

- --- ---

8-3-.90 j Not Recommended :

----:----:----:--::-Recommended , after t echnical changes : ___________________ _ Comments :

Legal Services Comments (if r equested )

Jack Giberson , Chief Clerk

Recommended: ~ Not Recommend~----------

Garry Mauro, Commissioner

Approved: ___ ~6i,~~,f\~L-------Approved, aft er technical changes:

Date --------------------

Date - -------------------Not Approved: _ _______ _

------------------------------

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PAY

PINON CORPORATION RT. 3, BOX 520- CB 512- 651- 6527

SAN ANTONIO, TX 78218

90048049

0214 90048049

--'MA:...=..::.:Y=---=1 __ 19_1Q_

6~6~~ OF __ ~G~ENERAL~~~IAND~~O:::!:FF...!...=.I.::::CE~O::.:.F---=.TEXAS=-=--------------'1 $ 4 , 000 . QQ._

PAY

4 000 00

PINON CORPORATION RT. 3, BOX 520- CB 512- 651 -6527

SAN ANTONIO, TX 78218

t,~J~~ o F GENERAL LAND OFFI CE OF TEXAS

MAY 1

90048050

0215 90048050

------19__2Q

I $ 25 . 00 :...__ __ 'IWENTY FIVE AND N0/100---- ------------------ - -------- D 0 L LA A S

Filinc Fees on the N-Basouez Sur.lc ;l46 A- 2891 Webb Co. Texas

,..,,.. ,.,,., -- vv

11' 00 0 2 • 511'

X ')oo . oo 90048051

PAY

~NON CORPORATION RT. 3, BOX 520-CB 512-651-6527

SAN ANTONIO, TX 78218

90048051 ° 2 2 4

MAY 11 19__2Q ------

"b~J~~ OF'_-=G=ENERAL:..:..=..:..:::._LAND=-:=-...:.0=-FF:..:I:..:CE=-....:...O_F_'IE_XAS ____________ __,I $ 200 . 00. __ _..

_'IWO.:.::::::_:HUND=.::=RED:.=::....:..:AND:.:=.._:NJ::.::.:./.::1..::...00:__-_-_-_ -- -_· -_ -_-- _- _- :._- _- _- _- _- _- _- _--_- _- _- _- :._- _- _- _·-_-:._- _--_- _·-_- :._- _-------- D 0 L LA AS

PR()("'1;'-"-C J:liK; FEES I I I A-2891 1413 10 ' . A- 2975 1413 oa7§99il00i ~ ~

11' 000 2 2 L, ll'

• • • •• • ... . • • • • • • • • • • .. • • • • • •• • • . • • • • • • • •• • ... •

Garry Mauro Commissioner General Land Office

August 22, 1990

Pinon Corpo ration Rt. 3, Box 520 CB San Antonio, TX 78218-0520

Re: Relinquishment Ac t Lease M-94129 Sec tion 1846 N. Basquez Webb County, Texas

Dear Sirs:

The certified copy of a Relinquishment Act lease covering the captioned tract has been approved and filed in our records under the captioned mineral file number. Please refer to this file number in all future correspondence concerning this lease .

Your remittance of $4025.00 has been applied as the state's portion of the cash bonus and required filing fee.

Sincerely,

Peter A. Boone Geologist Petroleum & Minerals Division 512 / 475-1501

. PB/11 Enclosure

Stephen F. Austin Building 1700 North Congress Avenue Austin, Texas 78701 (512) 46.).5256

,' ~ a

J

Lewis Petro Properties, Inc.

A Lewis Energy Gro up Co mpany 10101 Reunion Place, Suite 1000 San Antonio, Texas 782 16

tel 2 101384 -3200 fax 210/340-0267

•••• • • ..... •

•• • • , ... ... . . .. . • • • •

••• • • • . ~·

U.S. MAIL

Date: A ugust 25 , 2004

THE TEXAS GENERAL LAND OFFICE C/0 Drew Reid P. 0. Box 12873 Austin, TX 7871 1

Re: Drill Site Bonus/damage payment for the Blocker Ranch 1846 #2 Well , Webb County, Texas . M-94129 LPP Lease # 028-1230

Enclosed please find the following described check for payment of drill site bonus/damages on the above mentioned well:

Check No.: #052917

Amount: $2,500.00

E-mai I: j ohna@lewisenenrv .com

OR!GJ AL- PLEA E SIGN & RETURN

Received By: -------------------- -------

copy: Lease Files

• ••• • • • • • • • ~ • • w • • • • • • • 40 0

•

• .. • • • • • • • • •

.. • .... . • •

Fi le No. _________ _

Date Filed=----------­Jerry E. Patterson, Commissioner

Bv-------------------------

' r

,•

•'

Remittance Description Fiscal Register . Name Refer Type Mo Day Year Year Number J\rnount

LEWIS PETRO PROP 161 c 08 27 2004 2004 057054 2,500.00 (S)

File Number GLA Amount File Number GLA Amount

j]zj~O 'L JtZ.fiP~ I

J?J~

l '

I

Lewis P etro Properties, Inc.

A Lewis E11e rgy Group Compt111y 10101 Re1mion Place, Suite 1000 San Amonio, Texas 78216

tel 210/ 384 -3200 fax 210/ 340-0267

•••• • •••• •••• • • •••• •

• •• • • • ••• •

• •••• • • ••••

• •••••• • •

U.S. MA IL

Date: October 1, 2004

THE TEXA GENERAL LAND OFFICE C/0 Drew Reid P. 0. Box 12873 Austin, TX 7 71 1

Enclosed please find the fo llowing described check for payment of drill site bonus/damages on the above mentioned wells for $250.00 each to supplement the previous payments:

Check No.: #053553

Amount: $500.00

Please sign below evidencin!! your receipt of this payment and r eturn in the enclosed envelope. A copy is also enclosed for you to keep for your reco rds. Please be advised that this well is scheduled to be drilled on October 2, 2004 ..

O RIG l AL - PLEASE SIGN & RETURN

Received By:

copy: Lease Files

John W. Amold Landman 210-384-3206 E-mail: johna(lulewisenergy.com

LEWIS P£TRO PROPERTIES, INC. / SA~J ,A,~JTmHO. TEXAS 18216

CHECK DATE

TEXA65 10/01/04 053553

,. INVOICE INVOICE DISCOUNT AMOUNT NUMBER DATE TAKEN PAID

-~.-30-04 09/30/04 44252 $0.00 $ 5 00.00

LEASE #028-1230 & #028-1229

Total: $0.00 X $5oo. oo Lease 028-1 230 Supplemental $250.00 Drill Site Damage payment on Block Ranch 1846 #2 well & 028-1229 Supplemental $250.00 Drill Site Damage payment on Apache-Briscoe 1044 #2 well '\_Q \

•••• • .... .... • • ••••

• • •• • • • ••• •

• •• •• • • ••••

• ••• ••• • •

. ;

Dso osJ

)J

. c.;

Jerry E. Patter on, Commissioner

By ~u

••• • •• • • • • • • • • • • • • • • • • •• • • • • •• • • • • • •• • • • • • • • • ••• • •

•