NY Paid-Up, Pooling(Rev. 8/99) OIL AND GAS LEASE This Oil and Gas Lease (the “Lease”) is dated _____ (the “Effective Date”). The parties
to this Lease are _____, as Lessor (whether one or more), whose address is _____, and _____, as
Lessee, whose address is _____.1.Lease Description. In consideration of Ten Dollars ($10.00) paid by Lessee, and other
good and valuable considerations, the receipt and sufficiency of which are acknowledged, and
for the covenants contained in this Lease, Lessor grants, leases, and lets exclusively to Lessee the
following described land (the “Land”) in the District/Township of _____, _____ County, New
York, and bound substantially by lands now or formerly owned as follows:
On the North by:On the East by:On the South by:On the West by: ; being the same land acquired by Lessor in that instrument recorded in Book/Volume _____, page
of _____, of the _____ Records of the county in which the Land is located. The Land is estimated to comprise _____ acres, whether the tract or tracts contain more
or less, which acreage figure may be relied on by Lessee in determining the amount of rentals or
other payments provided for in this Lease. In addition to the Land described above, this Lease
also covers all accretions and any strips or parcels of land now or later owned by Lessor which
are contiguous or adjacent to the Land, including any interest in the Land which Lessor may later
acquire by reversion, prescription, or otherwise, together with all oil, gas, and their constituents
underlying lakes, rivers, streams, roads, easements, and rights of way which traverse or adjoin
any of the Land. All of the Land and rights of Lessor that are covered by and the subject of this
Lease may be referred to as the “lease premises.” 2. Term of Lease . This Lease shall be in force for a primary term of _____ years from the
Effective Date, and as long thereafter as oil or gas or other substances covered by this Lease are
produced in paying quantities from the lease premises or from lands pooled with the lease
premises, or this Lease is maintained in force pursuant to any of its other provisions.
3. Lease Rights Granted. Lessee shall have and is granted by Lessor, during the term of
this Lease, the exclusive right to enter on the Land to conduct geological, geophysical and
seismic surveys and explorations, and to operate for, produce and save oil, gas, and sulfur
produced in connection with oil and gas; together with the right to drill wells, recondition
producing wells and re-drill and use abandoned well on the Land for all those purposes; together
with rights-of-way and servitudes on, over, and through the Land for roads, pipelines, telephone,
electric power lines, structures, plants, drips, tanks, stations, structures for machinery, gates,
meters, regulators, tools, appliances, materials and other equipment that may be used in
exploring for and producing oil, gas, and sulfur storage of gas and liquids, and all other rights
and privileges necessary, incident to and convenient for the operation of the Land for production
and transportation of oil, gas, and sulfur, and the injection of gas, air, water, or other fluids for
the enhanced recovery and production of oil, gas, and sulfur; together with the right to use oil,
gas, and water from the Land free of cost to Lessee for all such purposes, except water from
Lessor’s wells or ponds; to remove, either during or after the term of this Lease, any and all
property and improvements placed or located on the Land by Lessee, including the right to draw
and remove casing; together with the right of ingress, egress, and regress on, over, and through
the Land for any of the purposes of this Lease.
4. Royalty Payments. The royalties reserved by Lessor, and which shall be paid by Lessee,
are: (a) on oil (including but not limited to distillate and condensate) ____ (_____) of that
produced and saved from the lease premises; the same to be delivered at the wells or to the credit
of Lessor in the pipeline to which the wells may be connected, provided; however, Lessee, at its
option, may from time to time purchase all royalty oil, paying not less than the price prevailing
in the pricing area for oil of like grade and gravity at the time of delivery; (b) on gas, including
casinghead gas and all other gaseous or vaporous substances, produced from the Land and sold
or used off the lease premises or in the manufacture of gasoline or in the extraction of sulfur or
any other product, the market value at the wells of _____ (_____) of the gas so sold or used, the
market value at the wells in no event to exceed the net proceeds received by Lessee calculated or
allocated back to the wells from which produced, making allowance and deduction for a fair and
reasonable charge for gathering, compressing, and making merchantable the gas, provided, that
on gas sold at the well, the royalty shall be _____ (_____) of the net proceeds received by Lessee
from the sale, after all allowances and deductions, and provided further that, if any sale of gas is
regulated as to price by any governmental agency having jurisdiction, the market value or net
proceeds shall in no event exceed the amount received by Lessee, not subject to refund,
calculated, or allocated back to the wells from which produced, making allowance and deduction
for a fair and reasonable charge for gathering, compressing, and making the gas merchantable,
and which amount may be further adjusted up or down prospectively or retrospectively when the
price or rate authorized by the governmental agency is finally determined; (c) on sulfur extracted
and marketed, One Dollar ($1.00) per long ton. Lessor agrees to pay any and all taxes levied or
assessed on the Lessor’s interest in the production of oil, gas, and sulfur from the lease premises
and Lessee is authorized to pay those taxes and assessments on behalf of Lessor and to deduct
the amount paid from any monies payable to Lessor. In the event any extraneous substance
(being any substance that is obtained from sources other than the lease premises or lands pooled
or unitized with the lease premises) is injected into subsurface strata in connection with
secondary, tertiary, or other enhanced recovery operations, any like substance then produced, or
contained in oil or gas produced from the strata, shall be deemed to be part of the extraneous
substance injected until the total volume equals the total volume of the extraneous substance
injected, and no royalty shall be payable on any extraneous substance. During any period
(whether before or after expiration of the primary term) where there is a gas well on the lease
premises or on a unit that includes all or a part of the lease premises, however designated,
capable of producing gas and gas is not being sold or used on or off the lease premises and the
well or wells are shut-in and there is no current production of oil or operations on any part of the
lease premises sufficient to keep this Lease in force, Lessee shall be obligated to pay or tender as
shut-in rental an amount (which shall be the same and shall be paid regardless of the number of
shut-in wells and regardless of whether the shut-in well or wells are located on the lease premises
or on other acreage embraced in the unit), for each twelve (12) month period, to Lessor, or to the
credit of Lessor in _____ Bank, or any successor depository, the sum of _____ Dollars ($_____),
which shall extend for twelve (12) months the provisions of this Lease. Thereafter, annually, in
like manner and on like payments or tenders, this Lease will be extended for periods of twelve
(12) months until gas well gas or oil from an oil well is marketed or this Lease is maintained by
some other provision, and it will be considered that gas or oil is produced, for all purposes of this
Lease, during any period that a well or wells are shut-in; such amount for the first twelve (12)
month period to be payable within ninety (90) days following shutting-in of the last well, and
payment for each subsequent twelve (12) month period shall be payable on or before the
beginning date of each subsequent twelve (12) month period. The amount of each rental
payment or tender may be paid by Lessee’s check or draft, and the payments may be commenced
and continued either during or beyond the primary term. Lessee’s failure to properly pay these
rental payments shall render Lessee liable for the amount due but shall not operate to terminate
this Lease. Lessee shall use reasonable diligence to market oil or gas capable of being produced
from the shut-in well or wells, but shall be under no obligation to market oil or gas under terms,
conditions, or circumstances which, in Lessee’s judgment, exercised in good faith, are
unsatisfactory.5.Operations. This is a PAID-UP LEASE. In consideration of the bonus consideration
paid by Lessee, Lessor agrees that Lessee shall not be obligated to commence or continue any
operations during the primary term. If at the expiration of the primary term, oil or gas is not
being produced on the lease premises or on acreage pooled with the lease premises, but Lessee is
then engaged in drilling, deepening, plugging back or reworking operations, or shall have
completed a dry hole within ninety (90) days prior to the end of the primary term, this Lease
shall remain in force so long as operations on the well, or for the drilling, deepening, plugging
back, or reworking of any additional well are prosecuted with no cessation of more than ninety
(90) consecutive days and, if that result in the production of oil or gas, so long thereafter as oil or
gas is produced from the lease premises, or on acreage pooled with the lease premises.
6.Pooling. Lessee is given and granted the right, at its option, at any time and from time to
time, within the primary term or at any time during which this Lease may be extended by any of
its provision, to pool, unitize, and reform, enlarge and/or reduce a unit or pool, and repool all or
any part or parts of the lease premises or rights, depths, strata, or formations, with any other land
in the vicinity of the Lease, or with any leasehold, operating, or other rights or interests in other
land to create units of such size and surface acreage as Lessee may desire but containing not
more than eighty (80) acres for an oil well and not more than six hundred forty (640) acres for a
gas well plus, in each case, a ten percent (10%) acreage tolerance. If at any time larger units are
specified or permitted under any then applicable law, rule, regulation, or order of any
governmental authority for the drilling, completion or operation of a well, or for obtaining
maximum allowable, any unit may be established or enlarged to conform to the size authorized
or permitted. Each unit or reformation of a unit may be created by governmental authority or by
recording in the appropriate county office a declaration containing a description of the pooled or
unitized acreage. Any well which is commenced, or is drilled, or is on any part of any lands
which have been or later pooled with the lease premises shall, except for the payment of
royalties, be considered a well commenced, drilled, and producing on the lease premises subject
to this Lease. There shall be allocated to the portion of the lease premises included in any unit,
pooling or repooling the proportion of the actual production from all lands unitized, pooled or
repooled as the portion of lease premises, computed on an acreage basis, bears to the entire
acreage of the lands unitized, pooled or repooled. The production so allocated shall be
considered for the purpose of payment or delivery of royalty to be the entire production from the
portion of the lease premises included in the unit, pooling or repooling in the same manner as
though produced from the portion of the lease premises under the terms of this Lease. A unit
established by the terms of this Lease shall be valid and effective for all purposes of this Lease
even though there may be land, oil, and gas rights, royalty, and/or leasehold interests in land
within the unit which are not pooled or unitized, or even though there may be a failure of the
leasehold title (in whole or in part) to any tract or interest included in a pooled unit.7. Warranty and Lesser Interest. Lessor warrants and agrees to defend the title to the
Land, covenants that Lessee will have quiet enjoyment under this Lease, covenants that Lessee
shall have the benefit of the doctrine of after-acquired title, and covenants that Lessee, at its
option, may discharge any tax, mortgage, or other lien on the Land in the event of default in
payment by Lessor, and be subrogated to the rights of the holder of a mortgage or lien with the
right to enforce same and apply royalties and payments accruing under this Lease toward
satisfying same. Without impairment of Lessee’s rights under this warranty in event of failure of
title, it is agreed that if Lessor owns an interest in the Land less than the entire oil and gas estate
covered by this Lease, then the rentals and royalties to be paid Lessor shall be reduced
proportionately.
8. Notices. Failure to pay or an error in paying any rental or other payment due Lessor shall
not constitute a ground for forfeiture of this Lease and shall not affect Lessee’s obligation to
make a payment, but Lessee shall not be considered in default on account of a failure or error
until Lessor has first given Lessee written notice of the non-payment and Lessee shall have failed
for a period of thirty (30) days after receipt of the notice to make the payment.
9.Ownership Changes. The rights of Lessor or Lessee may be assigned or transferred in
whole or in part, but no change or division in ownership of the lease premises, shut-in rentals,
storage rentals, or royalties, or in the status of Lessor or Lessee, however accomplished, shall
operate to enlarge the obligations or diminish the rights of Lessee. No change in ownership or
status of Lessor shall be binding on Lessee until thirty (30) days after Lessee shall have been
furnished by U.S. mail, at Lessee’s principal place of business, with a certified copy of the
recorded instrument or instruments satisfactory to the Lessee, evidencing the change in
ownership. In the event of the death of any person entitled to any payment provided for in this
Lease, Lessee may pay or tender the same to the credit of the deceased or to the estate of the
deceased until the time Lessee is furnished with proper evidence of the appointment and
qualification of an executor or administrator of the estate or, if there be none, evidence
satisfactory to Lessee as to the heirs or devisees of the deceased and that all debts of the estate
have been paid. If at any time two or more parties are entitled to or adversely claim all or any
part of any sums payable under the terms of this Lease, Lessee may pay or tender the sums either
jointly to the parties or separately to each in accordance with their respective ownership. If six
or more parties become entitled to royalty, Lessee may withhold payment unless and until
furnished with a recordable instrument executed by all parties designating an agent to receive
payment for all. In the event of assignments of this Lease as to a segregated portion of the lease
premises, shut-in rentals, and storage rentals payable under the terms of this Lease shall be
apportionable between the several leasehold owners ratably according to the surface area of each,
and the failure to pay shut-in rentals or storage rentals on a segregated portion of the lease
premises shall not affect the rights of the party holding any other segregated portion. In the
event of assignment, in whole or in part, liability for breach of any obligation of this Lease shall
rest exclusively on the owner of this Lease or of a portion of the Lease who commits the breach.10. Release of Lease . Lessee, at any time, and from time to time, may surrender this Lease
as to all or any part or parts of the lease premises by tendering an appropriate instrument of
surrender to the Lessor or filing for record a release or releases of this Lease as to any part or all
of the Land, and then this Lease and the rights and obligations of the parties shall terminate as to
the part or parts so surrendered. On each surrender as to any part or parts of the lease premises
all payments specified in this Lease shall be proportionately reduced on an acreage basis, and
Lessee shall maintain the rights to the surrendered portion as may be appropriate to its enjoyment
of the portion not surrendered. Lessee shall have the right at any time during or after the
expiration of this Lease to remove all machinery, equipment, fixtures, buildings, or other
structures placed on the lease premises by Lessee, including the right to pull and remove all
casing. If this Lease is ever terminated, forfeited, or expires, the Lessee (or Lessee’s successors
or assigns) shall execute a release or other form of document terminating or releasing the Lease,
and file it of record in the county or counties where the lease premises are located. If the Lessee
or Lessee’s successor or assigns fail to release or cancel the Lease, on its forfeiture, termination,
or expiration, the then current owner of the Land may compel a cancellation of the Lease
pursuant to any applicable or operable law or statute, in effect, in the state in which the Land is
located.
11. Adverse Claims. In case of notice of or an adverse claim to the lease premises, affecting
all or any part of the shut-in rentals, storage rentals or royalties, Lessee may withhold payment or
delivery of the same until the ownership is determined by compromise, or by final decree of a
court of competent jurisdiction, and to this end Lessee may file a petition for interpleader.
12.Surface Use. No well shall be drilled nearer than two hundred (200) feet of any house or
barn now on the lease premises without the written consent of Lessor. Lessee shall pay for
damages caused by Lessee’s operations to growing crops on the Land. When requested by
Lessor, prior to the laying of any pipeline, Lessee shall bury Lessee’s pipeline below plow depth
on cultivated lands.
13. Storage. Lessee shall have the exclusive right to use any stratum or strata underlying the
lease premises for the storage of gas or liquids and may, for such purpose, reopen and restore to
operation any and all abandoned wells on the lease premises and may drill new wells for the
purpose of injecting and storing gas or liquids in a stratum or strata and withdrawing the gas or
liquids. If Lessee intends to use the premises for such purpose, or determines that it is using the
premises, Lessee may deliver to Lessor or have recorded in the county or counties in which this
Lease is recorded a declaration that the premises are being used, or from a specified date will be
used, for gas or liquid storage, and thereafter Lessee shall have the exclusive right to use the
premises for gas or liquid storage until the time as Lessee delivers to Lessor or have recorded in
the county or counties a surrender of the right granted to Lessee by this section of the Lease or
until Lessee shall intentionally abandon the right to use the premises for storage. During the
period or periods that Lessee utilizes the lease premises for the storage of gas or liquids, the
royalties provided in this Lease to be paid to Lessor shall accrue and become payable only on the
gas and liquids that are taken from the lease premises by Lessee over and above the amount
which Lessee stores or has stored in the stratum or strata. For and during the period or periods
that Lessee uses the lease premises for storage, Lessee shall pay Lessor a minimum rental of One
Dollar ($1.00) per acre per year on the number of acres covered by this Lease, this payment to be
made not later than sixty (60) days from and after the end of each twelve (12) month period
during which the lease premises are utilized for storage. Lessee is expressly granted the right to
use so much of the surface of the premises as is reasonably necessary in the exercise of the rights
granted to Lessee by this section. The rights granted to Lessee by this section shall continue in
force for the period of time specified, but this Lease, insofar as it grants to Lessee the right to
prospect and explore for, and produce oil and gas from stratum or strata other than those
employed in storage, shall not be continued in force solely by the storage of gas or liquids as
provided in this section.
14.Regulations and Delays. Lessee’s obligations under this Lease, whether express or
implied, shall be subject to all applicable laws, rules, regulations, and orders of any
governmental authority having jurisdiction, including restrictions on the drilling and production
of wells, and the price of oil, gas, and other substances. When drilling, reworking, production or
other operations are prevented or delayed by any laws, rules, regulations or orders, or by the
inability to obtain necessary permits, equipment, services, material, water, electricity, fuel,
access or easements, or by fire, flood, adverse weather conditions, war, sabotage, rebellion,
insurrection, riot, strike, or labor disputes, or by inability to obtain a satisfactory market for
production or failure of purchasers or carriers to take or transport production, or by any other
cause not reasonably within Lessee’s control, this Lease shall not terminate because of the
prevention or delay, and shall be maintained in force and effect for so long as the prevention or
delay continues, and for ninety (90) days thereafter, or so long as this Lease is maintained in
force by some other provisions, whichever is the later date. Lessee shall not be liable for the
breach of any express or implied covenants of this Lease when drilling, production, or other
operations are so prevented, delayed, or interrupted.
15.Breach or Default. In the event Lessor considers that Lessee has not complied with the
express or implied obligations of this Lease, Lessor shall notify Lessee in writing of the facts
relied on as constituting a breach of the obligations. Lessee shall then have sixty (60) days after
receipt of that notice within which to meet or commence to meet all or any part of the breaches
alleged by Lessor. The service of the notice shall be precedent to the bringing of any action by
Lessor for any cause, and no action shall be brought until the lapse of sixty (60) days after
service of the notice on Lessee. Neither the service of the notice nor the doing of any acts by
Lessee aimed to meet all or any of the alleged breaches shall be deemed an admission or
presumption that Lessee has failed to perform all of Lessee’s obligations. However, after
production of oil or gas has been obtained from the Land or land pooled with all or part of the
lease premises this Lease shall not be subject to forfeiture or loss, either in whole or part, for
failure to comply with the express or implied obligations of this Lease except after final judicial
ascertainment of the failure and after Lessee has been given a period of sixty (60) days after any
final ascertainment to prevent a loss or forfeiture by complying with and discharging the
obligations which the Lessee has been judicially determined to be in default.
16.Dower and Homestead. Lessor expressly relinquishes dower and releases and waives
all rights under and by virtue of the homestead exemption laws of the state in which the lease
premises are situated insofar as the same in any way affects the purposes for which this Lease is
made.
17.Title Curative. Lessor agrees to execute affidavits, ratifications, amendments, and other
instruments as may be necessary to carry out the purposes of this Lease.
18.Execution. Should any one or more of the parties named as Lessor fail to execute this
Lease, it shall nevertheless be binding on the party or parties who execute it, and additional
parties may execute this Lease as Lessor, and this Lease shall be binding on each party executing
it notwithstanding that such party is not named as Lessor; and all of the provisions of this Lease
shall inure to the benefit of and be binding on the parties and their respective heirs, legal
representatives, successors, and assigns.
This Lease is executed by Lessor as of the date of the acknowledgment below, but shall
be effective as of the Effective Date stated above. Lessor Individual AcknowledgmentState of ______________________County of ____________________
The foregoing instrument was acknowledged before me this __________ day of
____________________, __________, by ____________________. Notary Public in and for the State of Printed Name: Serial Number, if any:_______________Commission Expires:Corporate AcknowledgmentState of ______________________County of ____________________The foregoing instrument was acknowledged before me this __________ day of
____________________, __________, by ______________________________ of
______________________________ , a __________ corporation, on behalf of the corporation. Notary Public in and for the State of Printed Name: Serial Number, if any:_______________Commission Expires:This Lease was prepared by:Whose address is:After Recording Return to:Whose address is:
