Fill and Sign the Producers 88 New Mexico Rentalpooling Form

Producers 88 - New Mexico Rental/Pooling _____________________________________________________________________________________________________________________________________ Page 1 of 3 OIL & GAS LEASE THIS LEASE (the “Lease”) is made this _____ day of _____ (the “Effective Date”) between _____ (the “Lessor”)(whether one or more), whose address is _____, and _____ (the “Lessee”), whose address is _____. 1. Lessor, in consideration of TEN AND OTHER DOLLARS, the receipt and sufficiency of which is acknowledged, and of the royalties and agreements of the Lessee contained in this Lease, grants, leases and lets exclusively to Lessee for the purpose of conducting seismic and geophysical surveys, investigating, exploring, prospecting, drilling, and operating for and producing oil and gas, injecting gas, waters, other fluids, and air into subsurface strata, laying pipelines, storing oil, building tanks, roadways, telephone lines, and other structures and things thereon to produce, save, take care of, treat, process, store and transport the minerals, the following described land in _____ County, New Mexico: (Description of Land) For the purpose of calculating the rental payments provided for in this Lease, the land is estimated to comprise _____ acres, whether it actually comprises more or less, and a re referred to as the “Land” or the “Leased Premises.” 2. Subject to its other provisions, this Lease shall remain in force for a term of _____ years from the Effective Date (the “Primary Term”) and as long thereafter as oil or gas is produced from the Land or from land with which the Land is pooled. 3. Lessor reserves as royalty, and Lessee agrees to pay Lessor as royalty on oil, other liquid hydrocarbons, and non-gaseous minerals produced and saved from the Leased Premises (the “oil”), _____ part of the net amount received by Lessee for the sale of the oil at the ti me it is run from the storage tanks, or into the pipeline to which the well or wells on the Le ased Premises are connected. In either case, Lessor’s interest shall bear the stated part of al l taxes, and costs of treating the oil to render it marketable. Lessee shall pay Lessor as royalty on gas and casinghead gas produced from the Leased Premises _____ of the net amount received by Lessee for the gas if sold at the wellhead, at a location on the Leased Premises, or on lands with whi ch the Leased Premises are pooled, with Lessor’s share of those proceeds to bear its proportionate share of a ll taxes and costs incurred by Lessee in delivering, processing, compressing, or otherwise making the gas merchantable or enhancing its marketability. On all other gas and casinghe ad gas, Lessee shall pay Lessor as royalty _____ of the net amount received by Lessee for the gas so sold, less its proportionate share of all taxes, costs of transportation, compression, processing, treating, and all other costs of marketing. For all gas sold, Lessor shall bear its proportionate share of a ll adjustments for heating content, shrinkage, and deductions for impurities. If, at the expirati on of the Primary Term or at any later time or times, there is a well or wells on the Land or on lands with which the Land or any portion of it are pooled, or unitized, capable of producing oil or gas, and all the wells are shut-in, this Lease shall, nevertheless, continue in force as though operations were being conducted on the Land for so long as the wells are shut-in, and Lessee pays the shut- in royalty provided below, and this Lease may be continued in force as if no shut-in had occurred. Lessee agrees to use reasonable diligence to produce, utilize, or market t he oil and gas capable of being produced from the wells, but in the exercise of diligence, Lessee shal l not be obligated to install or furnish facilities other than well facilities and ordinary lease facilities of flow lines, separator, and lease tank, shall not be required to settle labor trouble, or t o market oil or gas on terms unacceptable to Lessee. If, at any time after the expiration of t he Primary Term of this Lease, all the wells, oil or gas, on the Leased Premises, or lands pooled wi th it, are shut in and this Lease is not otherwise maintained in effect, Lessee may pay or tender, by its check or draft, as shut in royalty, an amount equal to One Dollar ($1.00) for each acre of land then covered by this Lease (the “shut-in royalty”) on or before the end of each 12 month period during which all wells on the Leased Premises, or lands pooled with it, are shut in and oil or gas is not being produced, sold, or used, and this Lease is not otherwise being maintained. Each payment or tender shall be made to the parties, who at the time of payment, would be entitled to receive the royalties which would be paid under this Lease if the wells were producing, and may be paid directly to each party entitled to a payment, or deposited in _____, or its successors, which shall continue as the depository bank for the parties, regardless of changes in the ownership of shut-in royalty. If at any time Lessee pays or tenders shut-in royalty, two or more parties are, or claim to be, entitled to receive payments, Lessee may, at its election, in lieu of any other method of payment, pay or tender the shut-in royalty, in the manner specified above, either Page 2 of 3 jointly to the parties, or separately to each in accordance with their respect ive ownership. Any payment may be made by Lessee’s check or draft, deposited in the mail or delivered to the party entitled to receive payment or to the depository bank provided for above, on or before the la st date for payment. Lessee’s failure to pay, or tender, or to properly pay or tender any sum due as shut in royalty shall render Lessee liable for the amount due, but shall not operate to terminate this Lease. Nothing shall impair Lessee’s right to deliver a release as provided in paragraph 10. below. In the event of an assignment of this Lease, in whole or in part, liability for any payments of any sums which may be due under this Lease, shall rest exclusively on the then owner or owners of this Lease, severally, as to the acreage owned by each , and the original Lessee, or an assignee will have no obligation for royalties payable on production after an assignment to a subsequent or successor lessee or assignee. 4. Lessee is granted the right and power, from time to time, to pool or combine t his Lease, the Land covered by it, or any part, subsurface depth, or horizon of the Land with all or any part of any other land, leases, or mineral estates, for the production of oil or gas. Units pooled by the terms of this Lease shall not exceed the standard proration unit fixed by law or by the Oil Conservation Division of the Energy and Minerals Department of the State of New Mexico or by any other lawful authority for the pool or area in which the Land is situate d, plus a tolerance of ten percent. Lessee shall file written unit designations in the count y in which the lease premises are located and the units may be designated from time to t ime and either before or after the completion of wells. Drilling operations on or production from any part of any unit shall be considered for all purposes, except the payment of royalty, as operations conducted on or production from the Land subject to this Lease. There shall be allocated to t he Land covered by this Lease included in any unit that portion of the total production of pooled mine rals from wells in the unit, after deducting any used in Lease or unit operations, which the net oil or gas acreage in the Land covered by this Lease included in the unit bears to the total number of surface acres in the unit. The production so allocated shall be considered for all purpose s, including the payment or delivery of royalty, to be the entire production of pooled mineral s from the portion of the Land covered by this Lease and included in the unit in the sa me manner as though produced from the Land under the terms of this Lease. Any pooled unit designated by Lessee, may be dissolved by Lessee by recording an appropriate instrument in the county where the Land is situated at any time. 5. If at the expiration of the Primary Term there is no well on the Land capable of producing oil or gas, but Lessee has commenced operations for drilling or reworking, this Lease shall remain in force so long as operations are prosecuted with no cessation of more tha n 90 consecutive days, whether the operations be on the same well or on a different or additiona l well or wells, and if they result in the production of oil or gas, so long thereafter as oil or gas is produced from the Land. If, after the expiration of the Primary Term, all wells on the L and should become incapable of producing for any cause, this Lease shall not terminate i f Lessee commences operations for additional drilling or reworking within 90 days. If any drilling, additional drilling, or reworking operations result in production, then this Lease shall rem ain in full force so long thereafter as oil or gas is produced. 6. Lessee shall have free use of oil, gas and water from said Land, except water from Lessor’s wells and tanks, for all operations under this Lease, and the royalty shall be computed after deducting any so used. Lessee shall have the right at any time during or afte r the expiration of this Lease to remove all property and fixtures placed by Lessee on the Land, inc luding the right to draw and remove all casing. When required by Lessor, Lessee will bury all pi pelines on cultivated lands below ordinary plow depth, and no well shall be drilled within two hundred fe et (200 ft.) of any residence or barn now on the Land without Lessor’s consent. 7. The rights of Lessor and Lessee may be assigned in whole or in part and the provisions of this Lease shall extend to their respective heirs, executors, administrators, successors and assigns; but no change in the ownership of the Land or in the ownership of, or rights to receive, royalties or shut in royalties, however accomplished shall operate to enlarge the obligations or diminish the rights of Lessee; and no change or division shall be binding on Lessee for any purpose until 30 days after Lessee has been furnished by certified mail at L essee’s principal place of business with acceptable instruments or certified copies of them c onstituting the chain of title from the original Lessor. If any change in ownership occurs through deat h of an owner, Lessee may, at its option, pay or tender any royalties or shut-in royalties i n the name of the deceased or to the deceased’s heirs, executor, or administrator until the time Lessee has been furnished with evidence satisfactory to Lessee as to the persons entitled to the sums. An assignment of this Lease in whole or in part shall, to the extent of the assignme nt, relieve and discharge Lessee of any obligations under this Lease and, if Lessee or an assignee of a part or parts of this Lease shall fail or make default in the payment of the proportionate part of royalty or Page 3 of 3 shut-in royalty due from the Lessee or assignee or fail to comply with any of the provisions of this Lease, the default shall not affect this Lease insofar as it covers a part of the Land on which Lessee or any assignee shall properly comply or make the payments. 8. Should Lessee be prevented from complying with any express or implied covenant of this Lease, or from conducting drilling or reworking operations on this Lease, or from producing oil or gas by reason of scarcity or inability to obtain or use equipment or material, or by operation of force majeure, or by Federal or state law or any order, rule or regulation of governmental authority, then while so prevented, Lessee’s duties under this Lease shall be suspended, and Lessee duly shall not be liable for failure to comply with the term s of this Lease; and, this Lease shall be extended while and so long as Lessee is prevented by any c ause from conducting drilling or reworking operations or from producing oil or gas; and the time while Lessee is so prevented shall not be counted against Lessee, anything in this L ease to the contrary notwithstanding. 9. Lessor warrants and agrees to defend the title to the Land and agrees that Lessee at its option may discharge any tax, mortgage or other lien on the Land. In the event Lessee does so, it shall be subrogated to the lien with the right to enforce same and to apply royalti es and shut-in royalties payable under the terms of this Lease toward satisfying same. Without impairm ent of Lessee’s rights under the warranty, if this Lease covers a lesser interest in the oil or gas in all or any part of the Land than the entire and undivided fee simple estate (whether Lessor’s i nterest is specified or not) then the royalties, shut-in royalty, and other payments, if any, accruing from any part as to which this Lease covers less than the full interest, shall be paid only in the proportion which the interest, if any, covered by this Lease, bears to the whole and undivide d fee simple estate in the Land. Should any one or more of the parties named above as Lessors fail to execute this Lease, it shall nevertheless be binding on the party or parties executing the Lease. 10. Lessee and Lessee’s successors, heirs and assigns, shall have the right at any time to surrender this Lease, in whole or in part, to Lessor or Lessor’s heirs, successors, and assigns by delivering or mailing a release to the Lessor, or by placing a release of record in t he county in which the Land is situated. Then Lessee shall be relieved from all obligations, expre ssed or implied of this Lease as to acreage surrendered, and then the shut-in royalty payable under the terms of this Lease shall be reduced in the proportion that the acreage covered by this Lease is reduced by the release or releases. This Lease is executed by the Lessor as of the date of the acknowledgment below, but shall be deemed effective as of the Effective Date stated above. Lessor (Acknowledgment)