2015-12-09_PERMIT FILE - M2015030

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1 111111 11111 111111 11111 JIll ILII1111111IN 11111 lIIl IIII 3591169 11/21/2008 02:18P Weld County, CO 2 of 22 R 111.00 D 0.00 Steve Moreno Clerk & Recorder wells. All Wells will be limited to the Oil and Gas Operations Areas shown on Exhibit B, unless this Agreement is amended by consent of ASCI and KMG. Except for the Oil and Gas Operations Areas, and the Access Roads and Petroleum Pipeline Easements (as defined below) as provided in this Agreement, KMG shall not occupy the surface of the Property except in the event of an emergency or for reasonable incidental, temporary and non -damaging activities, for which KMG shall be strictly and solely responsible for any damages that may occur to the Property. KMG shall have the right to drill two Future Wells within the Oil and Gas Operations Areas shown on Exhibit B, including horizontal and directional wells that produce from and drain the Property and/or lands other than the Property. As part of the consideration for this Agreement, ASCI hereby waives its right to, and covenants that it shall not protest or object to any such exception location or application for same by KMG. KMG shall not otherwise have the right to drill new wells on the Property. The wellhead location for the Future Wells drilled from the Oil and Gas Operations Areas is depicted on Exhibit B and shall not be closer than 200' from the edge of the Oil and Gas Operations Area. In no event shall ASCI stockpile mined materials within a radius of 150 feet of any Existing Wells. 2. EXTRACTION IN VICINITY OF OIL AND GAS OPERATIONS AREAS; SETBACK REQUIREMENTS. ASCI reserves the option to mine the gravel within each of the Oil and Gas Operations Areas in accordance with the terms of this Agreement. In the event that ASCI elects to mine the gravel in an Oil and Gas Operations Area, ASCI shall notify KMG in writing 60 days prior to commencing mining operations within the Oil and Gas Operations Areas and shall first place temporary concrete barriers around the Existing Wells as directed by KMG prior to commencing any mining operations within the Oil and Gas Operations Areas on the Property. In the event ASCI elects to mine gravel in an Oil and Gas Operations Area that has an Existing Well, ASCI shall conduct it mining within the Oil and Gas Operations Area by excavating pie shaped wedges of gravel and aggregate and thereafter backfilling and compacting the area with overburden or other suitable material prior to excavating the next pie shaped area; provided, however, that in no event shall ASCI mine within 90 feet of any Existing Well or Production Facilities and provided further that in no event shall more than one quarter circle segment of the pie shape be excavated at any one time. Excavation in the Oil and Gas Operations Areas will be coordinated with KMG in a mutually acceptable manner so as to avoid conflict with KMG's oil and gas operations and to ensure there is an appropriate safety plan and interim emergency procedures. ASCI will bear all costs associated with the mining operation, including permanent or temporary rerouting and replacement of access roads, and flowlines and utility lines in order to prevent unnecessary interruption of production from any affected Well. In addition, ASCI and its successor and assigns shall indemnify and hold KMG harmless from any and all damage, loss and liability, including attorney's fees, incurred as a result of ASCI operations in an Oil and Gas Operations Area. KMG shall notify ASCI immediately upon its receipt of well permits from the COGCC for the Future Wells. ASCI will not locate any lot line, building, or any structure within any Oil and Gas Operations Area. ASCI understands and acknowledges that the COGCC has rules and regulations that apply to the distance between a wellhead and public roads, production facilities, 2 Surface Use Agreement