Mineral Lease and Oil and Gas Law

SURFACE AND SALT WATER DISPOSAL LEASE

(Well to be Drilled by Lessee for Disposal of Water Produced by Others)

STATE:

COUNTY:

LESSOR: (Name and Address)

LESSEE: (Name and Address)

EFFECTIVE DATE:

For adequate consideration and the mutual agreements and obligations set out below, Lessor, named above, grants, leases, and lets to Lessee, named above, for the purposes provided for in this Lease, the surface estate of the following lands in the county and state named above (the “Lands”):

(Description of the Lands)

The terms of this Lease are as follows:

1. The primary term of this Lease is () years from the Effective Date stated above, and as long thereafter as Lessee continues to use a salt water disposal well (the “Well”) to be drilled on the Lands for the purposes set out below, with no cessation of use of more than days.

2. The uses and purposes for which the Lands are leased by Lessor to Lessee are as follows: drilling, maintaining, and operating a Well as a salt water disposal well; and, the operation of an input station located on the Lands in connection with Lessee's salt water disposal operations.

3. Lessee shall pay Lessor, as a bonus, an initial sum of $, plus additional sums of ¢ per barrel (the “Rentals”) for each barrel of fluid injected into or through the Well. All Rentals shall be paid monthly.

4. Rentals shall begin accruing on the date Lessee completes the drilling of a disposal Well on the Lands. Monthly Rentals shall be paid to Lessor at Lessor's address on or before the day of each month beginning in the calendar month following the first disposal of fluid into or through the Well. Each monthly payment of Rentals is to be an amount in payment for the fluid injected in the Well during the immediately preceding calendar month. Lessee shall provide Lessor, on written request, an accounting of the amount of fluid disposed of in the Well. In the event Lessee increases its disposal charge to third parties over its initial rate of ¢ per barrel, the per barrel Rentals paid to Lessee shall be increased proportionately.

5. Lessee shall conduct its operations on the Lands in compliance with all applicable laws, rules, and regulations of state agencies, regulatory commissions, and other governmental or regulatory authorities having jurisdiction over Lessee's operations. The Well to be drilled by Lessee is intended to be completed in the formation at a depth from the surface of the ground of no more than feet. Lessee shall hold Lessor harmless from any losses, damages, liabilities, or claims of any kind which may be suffered by or brought against Lessor as a consequence of, in connection with, or resulting from the existence and/or operations on this Lease, the Well, and Lessee's related facilities and operations.

6. Lessee shall have the use of the surface of the Lands during the primary term of this Lease, and any extensions or renewals of that term, for the purposes set out in this Lease.

7. Lessee has the right at any time prior to, and the duty and responsibility within days after the termination of this Lease, to remove any and all improvements and equipment owned or placed by Lessee on the Lands. Lessee has the right to surrender this Lease at any time by filing a release of record in the county named above, or by delivery of a release, in recordable form, to Lessor.

8. Lessee shall pay Lessor for any damages to Lessor's land or livestock which may be caused by or result from Lessee's operations on the Lands. Minimum damages shall be $ for livestock and land damage, with any additional surface damage to be negotiated at a reasonable rate. Lessee shall pay Lessor the sum of $ per rod for pipeline rights of way attributable to or associated with Lessee's operations. Lessee shall bury all disposal lines no less than inches below the surface of the ground. In the event of a spill, and in connection with damages and cleanup, Lessor may require Lessee, at Lessee's sole cost and expense, and as soon as reasonably practicable after Lessee becomes aware of a spill, to construct appropriate dikes around any spill.

9. Lessee has the right at any time to assign this Lease, in whole or in part, without the consent of Lessor. An assignment, if made, will not relieve Lessee of its obligations under this Lease unless Lessor expressly consents to the assignment, which consent will not be unreasonably withheld.

10. If Lessee fails to timely pay any Rentals when due, or comply with any of the obligations of this Lease, that failure shall not constitute a forfeiture or termination of this Lease unless written notice of the default, by certified or registered mail, is delivered to Lessee by Lessor at the last known address for Lessee, and Lessee fails to remedy the default within () days after receipt of the notice. If Lessee remains in default for more than days after receipt of the notice, this Lease shall then terminate automatically.

11. Lessor warrants title to the Lands and agrees that Lessee has the free right of ingress and egress on, over, and across the Lands, by a route mutually agreed on, on existing roads of Lessor, and the right at any time, to redeem for Lessor any mortgage, taxes, or other liens on the Lands in the event of default of payments by Lessor. In that event, Lessee will be subrogated to the rights of the holder of the mortgage, tax lien, or other liens, and Lessee shall have the right to deduct any sum paid from Rentals or other payments which may be due or become due to Lessor under the terms of this Lease.

This Lease and all of its terms and provisions shall extend to and be binding on Lessor and Lessee and their respective heirs, successors and assigns.

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

(Acknowledgments)

Acknowledged