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VIII 11%111110C KilitilIVOVICIlicr,01111111 ■I u
<br /> Reception#: 783697
<br /> 03/24/2010 11:52:32 RM Jean Alberico
<br /> 2 of 7 Rec Fee:$36.00 Doc Fee:0.00 GARFIELD COUNTY CO
<br /> One Dollar per year per net royalty acre retained hereunder, or One Hundred Dollars minimum per year,
<br /> whichever is more, such payment of tender to be made on or before the anniversary date of this lease
<br /> next ensuing after the expiration of 90 days from the date such well is shut in and thereafter on or before
<br /> the anniversary date of this lease during the period such well is shut in. If such payment or tender is
<br /> made, it will be considered that gas is being produced within the meaning of this Lease.
<br /> c. All payment checks, assignment of the lease and correspondence must
<br /> include the lease number,which is set forth on the face of this lease to assure proper credit.
<br /> 4. If operations for the drilling of a well for oil or gas are not commenced, or if there is no oil
<br /> or gas being produced from said land or on acreage pooled therewith as hereinafter provided on or before
<br /> one year from the date hereof, this Lease shall terminate as to both parties, unless the Lessee on or
<br /> before that date shall pay or tender to the Lessor at:
<br /> State of Colorado
<br /> Department of Natural Resources
<br /> Colorado Water Conservation Board
<br /> c/o Receipts and Deposits
<br /> 721 State Centennial Building,
<br /> 1313 Sherman Street
<br /> Denver, Colorado 80222,
<br /> or its successor, the sum of One Hundred dollars ($100.00), which shall operate as a rental and cover the
<br /> privilege of deferring the commencement of operations for twelve months from said date. In like manner,
<br /> and upon like payments or tenders, the commencement of operations may be further deferred for like
<br /> periods of the same number of months successively. All payments or tenders may be made by check of
<br /> Lessee or any assignee thereof, mailed or delivered on or before the rental paying date. It is understood
<br /> and agreed that the consideration first recited herein, the down payment, covers not only the privilege
<br /> granted to the date when said first rental is payable as aforesaid, but also the Lessee's right of extending
<br /> that period as aforesaid, and any and all other rights conferred.
<br /> 5. Lessee, at its option, is hereby given the right and power at any time and from time to
<br /> time as a recurring right, either before or after production, as to all or any part of the land described herein
<br /> and as to any one or more of the formations hereunder, to pool or unitize the leasehold estate and the
<br /> mineral estate covered by the lease with other land, lease or leases in the immediate vicinity, for the
<br /> production of oil and gas, or separately for the production of either, when in Lessee's judgment it is
<br /> necessary or advisable to do so, and irrespective of whether authority similar to this exists with respect to
<br /> such other land, lease, or leases. Likewise, units previously formed to include formations not producing
<br /> oil or gas, may be reformed to exclude such nonproducing formations. The forming or reforming of any
<br /> unit shall be accomplished by Lessee executing and filing of record a declaration of such unitization or
<br /> reformation, which declaration shall describe the unit. Any unit may include land upon which a well has
<br /> theretofore been completed or upon which operations for drilling have theretofore been commenced.
<br /> Production, drilling or reworking operations or a well shut in for want of a market anywhere on a unit
<br /> which includes all or a part of this lease shall be treated as if it were production, drilling, or reworking
<br /> operations or a well shut in for want of a market under this lease. In lieu of the royalties elsewhere herein
<br /> specified, including shut-in gas royalties, Lessor shall receive on production from the unit so pooled
<br /> royalties only on the portion of such production allocated to this lease; such allocation shall be that
<br /> proportion of the unit production that the total number of surface acres covered by this lease and included
<br /> in the unit bears to the total number of surface acres in such unit. In addition to the foregoing, Lessee
<br /> shall have the right to unitize, pool, or combine all or any part of the above described lands as to one or
<br /> more of the formations thereunder with other lands in the same general area by entering into a
<br /> cooperative or unit plan of development or operation approved by any governmental authority and, from
<br /> time to time,with like approval, to modify, change, or terminate any such plan or agreement and, in such
<br /> event, the terms, conditions, and provisions of this lease shall be deemed modified to conform to the
<br /> terms, conditions, and provisions of such approved cooperative or unit plan of development or operation
<br /> 2 of 7 Rev 03/06
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