Multi-State Lease Agreement

NONEXCLUSIVE SALT WATER DISPOSAL LEASE

(Between Surface Owner and Producer)

State:

County:

Lessor:

Lessee:

Effective Date:

Lessor, named above, grants, leases, and lets to Lessee, named above, the nonexclusive right to use the lands (the "Lands") described in Exhibit "A," for the purposes of disposing of and reproducing salt water ("Water") produced from oil and gas wells, provided such disposition is made in a manner and by means approved by (Name of State or Regulatory Agency) or other authorities that may exercise jurisdiction over disposal water.

Lessee is granted the right to drill a well or wells or to use any existing well bore on the Lands into which Water may be injected into subsurface formations or strata (other than fresh water sands) under the Lands, and to construct, repair, maintain, and operate a Water injection station or stations consisting of tanks, pumps, and other structures and equipment necessary or convenient to save, take care of, treat, collect, store, transport, and dispose of Water.

Lessee agrees to fence all Water injection station areas whenever requested to do so by Lessor, at Lessee's sole cost and expense. Fences erected by Lessee will be sufficient to turn cattle, including steers and bulls of ordinary disposition.

Any subsequent grant by Lessor to third parties of rights to use the Lands for the purpose of disposing of Water shall be made expressly subject to the terms of this Agreement and shall expressly provide that the exercise of rights by any third party shall not interfere with the rights of Lessee under this Agreement.

The location of all facilities, including the location of pipeline easements described below, shall be determined by the mutual agreement of Lessor and Lessee to minimize the inconvenience or damage to Lessor's use of the surface of the Lands, both present and prospective. Lessor reserves the right to use and enjoy all of the Lands on or through which this Lease and easement is granted for any purpose which will not interfere with Lessee's intended use.

Lessor grants Lessee an easement, right of way, and the right of ingress and egress to, from, and across all lands owned by Lessor, described below, as may be necessary for Lessee's enjoyment and use of the Lands that are the subject of this Lease:

The easement, right of way, and right of ingress and egress granted to Lessee includes the right to lay Water pipelines across the lands and all rights necessary for the purpose of construction, operation, and maintenance of those lines. Lessee agrees to bury and maintain each pipeline beneath the surface of the ground at a depth sufficient to insure that the top of the pipeline shall not be less than

inches beneath the surface of the soil at any point along each pipeline.

All ditches in which a pipeline is buried shall be back-filled to a smooth crown and the topsoil removed to bury the pipeline shall be replaced. Exposed rocks shall be removed by Lessee.

All easements for pipelines shall only be

feet in width, except for additional widths that may be temporarily needed for construction and removal of lines.

In consideration for this Lease and as payment for all resulting damages (other than those special damages described below), Lessee shall pay Lessor a minimum disposal royalty of

$ per barrel of: (a) Water disposed of, in, and under the Lands subject to this Lease; and, (b) Water reproduced from an injection well or wells located on the Lands, for drilling or secondary recovery operations.

This disposal royalty shall be paid monthly on or before the

day of each month for volumes disposed of or reproduced during the preceding month.

Payment shall be made by Lessee's check or draft delivered to Lessor, or to the credit of Lessor in the

Bank of , or its successors, which shall continue as a depository until Lessee receives written notice of a change of Lessor's depository.

Lessor and its agents shall have the right, at Lessor's sole cost and expense, to examine and audit, at reasonable times, the books and records of Lessee associated with and directly relating to the volumes of Water disposed of or reproduced in and under this Lease and the payment of all disposal royalty. All audits shall take place at Lessee's offices at the address set out above during regular business hours.

Beginning January 1 following the month in which the first disposal royalty payments become due, as provided above, and each following January 1 during the term of this Lease, disposal royalty shall be redetermined by multiplying the royalty rate per barrel then in use by the percentage increase or decrease in the weighted average monthly posted price for

grade of crude oil for the preceding calendar year, above or below the price of $ per barrel.

The adjusted rate for the disposal royalty shall be the rate currently in use, plus or minus the computed adjustment, but in no event shall the adjusted rate of royalty be less than the initial disposal royalty per barrel stated above.

In addition to the normal damages, of whatever nature incurred, for which the royalty is paid, as provided above, Lessee shall pay Lessor the following surface damage amounts:

(a) for each injection well location $

(b) for pipeline, electrical line, and other easements: $ per rod;

(c) a reasonable amount for damages to crops, livestock, surface improvements, or fresh water caused by any explosion, fire, spillage, or leakage and overflow of Water, or other accident, as are agreed upon by Lessor and Lessee.

This Lease shall be for a term of

years and as long thereafter as: (a) Water is injected through or reproduced from Water disposal wells on the Lands with no cessation of more than days duration; or, (b) drilling or reworking operations are conducted on the Lands for the drilling or reworking of a Water disposal well or wells, with no cessation of more than days duration.

Lessee, its successors and assigns, have the right at any time during or within

( ) months after the expiration of this Lease, but not later, to remove all property and fixtures placed by Lessee on the Lands, including the right to draw and remove all casing from wells drilled or reworked by Lessee. Any property and fixtures not timely removed shall be deemed abandoned to Lessor.

All payments due Lessor, which become delinquent shall accrue interest at the maximum rate of interest permitted by law.

Lessee shall furnish Lessor a surveyor's plat and metes and bounds description accurately reflecting the location of all disposal and injection wells and the location and size of all pipelines and other facilities constructed by Lessee on the Lands.

All pipeline and other facility easements granted by this Lease are subject to all prior and outstanding easements, rights of way, oil and gas leases, interests of record, or apparent from an inspection of the Lands. Lessor expressly reserves the right to grant other surface easements and rights of way on and over the Lands, over and across Lessee's pipeline easements, provided that any additional easements or rights of way granted will not interfere with the rights granted to Lessee in this Lease.

This Lease is binding on and shall inure to the benefit of Lessor and Lessee and their heirs, representatives, successors, and assigns.

This Lease is signed by Lessor and Lessee as of the date of the acknowledgment of their signatures below, but shall be effective for all purposes as of the Effective Date stated above.

[Exhibit "A": Description of Lands]