Texas General Land Office Guidelines for Leasing

Agreement Designating Agent to Lease Mineral Interests

State:

Counties:

Owner (Name and Address):

Agent (Name and Address):

Effective Date:

Owner, named above, is the owner of undivided, unexplored, and undeveloped oil, gas, and mineral interests in lands located in the counties and state named above (the "Interests"). The lands and Owner's Interests are identified in Exhibit "A" to this Agreement.

Agent, named above, is in the business of acquiring oil, gas, and mineral leases on lands in the state of , which business and experience has provided Agent a knowledge and familiarity with the area in which Owner's Interests are located, the persons and companies engaged in exploration, development, and production in that area, and the terms on which interests, similar to Owner's, are being leased for oil, gas, and mineral exploration.

Owner's objective is to seek out and identify parties that may be interested in acquiring a lease or leases on Owner's Interests (a "Lease" or "Leases"), for the purposes of exploring for, developing, and producing oil, gas, and minerals from Owner's Interests. Owner desires to utilize the services of Agent to accomplish this objective, and Agent desires to provide those services to Owner.

For the consideration and benefits to be derived by both parties, Owner and Agent enter into this Agreement on the following terms and conditions:

1. Designation as Agent. Owner appoints Agent as its exclusive Agent and attorney-in-fact to represent Owner in all dealings with third parties in representing Owner in the leasing for oil, gas, and mineral exploration, development, and production purposes, all of Owner's Interests.

2. Services to be Provided by Agent. Agent shall provide the following services for Owner:

a. Agent shall evaluate the Interests to determine the present and prospective leasing activity in the areas of the Interests.

b. Agent shall actively seek out parties to acquire Leases on the Interests.

c. Agent shall represent Owner in the negotiation of the terms of Leases on the Interests, and on obtaining an offer to Lease, on terms equal to or better than those provided in Section 3. below, shall coordinate the preparation of the Leases, their delivery to Owner for signature, delivery of the executed Leases to the lessees, and the payment of the consideration for the Leases.

Owner acknowledges that Agent is engaged in other business activities and will not devote full time to representing Owner. However, Agent agrees to devote as much time as is reasonably necessary to perform the services provided for in this Agreement, on a timely basis.

3. Lease Terms. In representing Owner and soliciting offers to Lease Owner's Interests, Agent and Owner have agreed to minimum terms which, when contained in an offer to Lease, Owner will accept and grant a Lease on Owner's Interests. These terms are set out in Exhibit "B" to this Agreement.

Owner recognizes that the Leases which may be presented to Owner for consideration may not be standard in form. However, so long as a proposed Lease contains the applicable terms, as set out in Exhibit "B," the Lease will be deemed acceptable to Owner.

Also set out in Exhibit "B" are terms which Owner will not accept in any proposed Lease. If any Lease proposal submitted to Owner contains any of those unacceptable provisions, Owner is under no obligation to enter into the Lease.

4. Agent's Compensation. Owner acknowledges that by entering into this Agreement it is acquiring the benefit of Agent's knowledge and experience, and that Agent will devote considerable time, effort, and expense in seeking out, soliciting and obtaining offers to Lease Owner's Interests. As compensation for the services to be provided by Agent, Owner agrees to and shall compensate Agent for Agent's services, in the following manner:

a. From and after the Effective Date, on any Lease Owner enters into on its Interests, out of the bonus consideration paid for the Lease, Owner shall pay Agent an amount equal to of the bonus consideration paid for the Lease and of any delay rentals that may be paid during the primary term of the Lease.

b. From and after the Effective Date, on any Lease Owner enters into on its Interests, out of the royalty reserved in the Lease, Owner shall convey to Agent an interest, out of Owner's reserved royalty interest, equal to of the royalty reserved in the Lease. This of royalty was taken into consideration when establishing the minimum terms for a Lease on Owner's Interests, as set out in Exhibit "B." The percentage of royalty provided in this Section 4.b. shall entitle Agent to receive that percentage of any shut-in royalty that may be paid by a lessee.

5. Method of Delivering Agent's Compensation.

a. Within days following Owner's receipt of any bonus, delay rental, or shut-in royalty payments resulting from any Lease Owner enters into on its Interests, Owner shall pay Agent, by Owner's check or draft, the percentage of the amounts received by Owner, as provided for in Section 4. of this Agreement.

b. Within days of Owner executing a Lease on any of its Interests, Owner shall execute and deliver to Agent a term royalty deed, in the form attached to this Agreement as Exhibit "C," conveying to Agent the percentage of royalty Owner reserves in the Lease, as provided for in Section 4.b. of this Agreement. If Owner elects to reserve a royalty interest in a Lease, with the percentage interest to be conveyed to Agent being characterized in the Lease as an overriding royalty interest, Owner shall assign Agent the reserved overriding royalty interest within the same day period.

6. Term of Agreement. Subject to the further provisions of this Section, this Agreement shall be for a term of (the "Term"), during which time Agent shall be the exclusive Agent for Owner and shall be entitled to receive the compensation provided for in Section 4. for all Leases Owner entered into on its Interests.

Following the end of the Term, this Agreement shall terminate as to all of Owner's Interests except on:

a. Those Interests on which Leases have been granted by Lessor. As to these Interests, this Agreement shall remain in full force and effect during the entire term of the Lease and any extensions or renewals of a Lease, or any new Lease granted by Owner on the Interests that were the subject of a prior Lease, within days of the termination or expiration of the prior Lease, when the new Lease is grantee to the lessee in the prior Lease or the prior lessee's agent, affiliate, partner, or co-owner.

b. Those Interests on which Agent has submitted to Lessor an offer to Lease, but which Owner has not acted on or accepted by the end of the Term of this Agreement. As to any such Interests, this Agreement shall remain in full force and effect so long as Agent or Owner is considering or negotiating a Lease with the offering party, parties, and/or their agents. If Owner rejects or refuses to Lease an Interest that is the subject of this Section 6.b., this Agreement shall remain in force and effect as to such Interest for a period of days following Owner's rejection or refusal to Lease such Interest.

c. Those Interests on which Agent has solicited offers to Lease, but as of the last day of the Term, a solicited prospective lessee has not yet made an offer to Lease such Interests. Within days prior to the end of the Term of this Agreement, Agent shall submit to Owner a schedule listing the names of parties from whom Agent has solicited offers to Lease Interests, identifying the Interests included in each solicitation. If within from the end of the Term of this Agreement any of those parties shall acquire a Lease from Owner, this Agreement shall be deemed to apply to such Interests, and Owner shall pay and deliver to Agent the compensation provided for in Section 4. of this Agreement.

7. Method of Communicating Offers by Agent and Acknowledgment of their being Accepted or Rejected by Owner.

(These logistics should be negotiated between Agent and Owner, agreed on, and those terms included in the Agreement.)

8. Miscellaneous.

a. This Agreement is personal to Agent insofar as it provides for the rendering of services to Owner. However, Agent, upon having earned the compensation, as to any Interest, may direct Owner to deliver the compensation to any third party of Agent's selection.

b. This Agreement and the obligations it creates shall be binding on Owner and its successors and assigns of the Interests and shall be deemed a covenant running with the lands in which Owner owns Interests.

c. The headings used in this Agreement are for convenience only, and shall not serve to limit any of the terms of this Agreement.

d. Owner represents and warrants to Agent that all necessary approvals have been obtained to enter into this Agreement with Agent, and upon its being executed by Owner shall create a binding obligation on Owner as to the Interests described in Exhibit "A."

e. All Leases Owner enters into on the Interests subsequent to the Effective Date of this Agreement, until the termination of this Agreement, shall be made subject to the terms of this Agreement.

f. Section 3. sets out the minimum terms on which Owner will accept an offer to Lease any of its Interests. If Agent desires to acquire a Lease from Owner on any of the Interests, upon offering to Lease an Interest or Interests, which offer meets the terms provided in Section 3., Owner shall Lease such Interests to Agent.

g. Notwithstanding the provisions of Section 3., if Owner and Agent mutually agree that it is advisable to grant a Lease on any Interest on terms less than or different than those provided in Exhibit "B," and a Lease is granted by Owner, Agent shall receive the compensation provided for in Section 4. as to such Interests.

h. This Agreement is deemed entered into in the state of and the laws of that state shall apply concerning the construction or interpretation of any of its terms.

If a dispute shall arise concerning this Agreement, or its terms, venue for such dispute shall be in County, .

This Agreement is executed by Agent and Owner as of the dates of their signatures below, but shall be deemed effective for all purposes as of the Effective Date stated above.

EXHIBIT "A"

This Exhibit contains the description of each tract of land in which Owner holds Interests, and states the amount of Owner's Interest in each tract.

EXHIBIT "B"

This Exhibit contains a description of the agreed upon minimum terms to be contained in a Lease, with the understanding any lease proposal which meets or exceeds these terms will be accepted by Owner.

This Exhibit should specify the minimum:

a. Bonus, delay rentals, and shut-in royalty Owner will accept, which amount will include Agent's percentage.

b. The minimum percentage of production to be retained by Owner as a royalty, which percentage will include the interest to be conveyed to Agent.

Additionally, the Exhibit should address the matters of:

a. length of primary term;

b. any horizontal severances or limitations;

c. any continuous drilling obligations, or the termination of undeveloped portions or depths under the leased lands at the end of the primary term;

d. pooling or unitization; and,

e. any other matters particular to the location of the Interests.

The Agreement contemplates there may be different terms for different Interests. Terms of leases on Interests in an area of known productivity may be different than for Interests in areas where there is no drilling or production activity.

EXHIBIT "C"

This Exhibit is to be a form of Deed or Assignment by which Owner conveys to Agent the percentage of royalty or overriding royalty interest as provided for in paragraph 5.b. of the Agreement. It will be a term deed, the exact language being subject to negotiation.