5.003 Lease Extension and Delay Rental

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Requirement 5.003

Lease Extension and Delay Rental

 

 Lease Maintenance:  The table set out below shows the rental status and record expiration dates of the recorded leases covering the captioned property:

 

Lease

Status

Expiration

1 – Guadalupe Oil

$40.00

September 15, 2011 (extension option)

2 – Chisolm Trail Oil

Paid-up

July 14, 2012

3 – Dewitt Exploration

Paid-up

May 15, 2013

 

 By instrument dated May 15, 2008, and recorded in Deed Book 1, page 42 (Abstract, page 35), Sam Houston and Margaret Moffette Lea Houston granted Lease 1 to James Bowie.  Lease 1 covered the Houstons’ interests in the captioned property.  The primary term for Lease was three years.

 

 Guadalupe Oil, Inc., apparently subsequently acquired Lease 1 from Bowie, but the abstract did not show any assignment of the lease into Guadalupe Oil.  By June 15, 2008, amendment to the lease recorded in Deed Book 1, page 83 (Abstract, page 39), Sam Houston and Margaret Moffette Lea Houston granted Guadalupe Oil an option to extend the primary term of Lease 1 for an additional five years.  The operative language of the option is set out below:

 

For the same consideration expressed above, lessors hereby grant to lessee and lessee’s successors, heirs and assigns the option to extend the primary term of this lease as to all or any part of the acreage then covered hereby, for an additional five (5) years beyond the initial primary term.  Said option may be exercised by lessee and lessee’s successors, heirs and assigns at any time after the beginning of the final year of the initial primary term and prior to the expiration of the initial primary term of this lease; or if operations are being conducted on this lease or land pooled herewith at the expiration of the initial primary term in such a manner as to maintain this lease in force, said option may be exercised within thirty (30) days after the completion of a dry hole resulting from such operations.  Said option may be exercised by lessee and lessee's successors, heirs and assigns, within the time period above provided, by giving written notification of the exercise of the option of lessor or to lessor’s successor in interest as reflected by notice to lessee pursuant to Paragraph 8 hereof, and by making payment to lessor or to lessor's successor in interest as reflected by notice to lessee pursuant to Paragraph 8 hereof, or to the credit of lessor or such successor in interest in any depository bank named herein or in any amendatory instrument in the sum of $140.00, as an option bonus, for each net acre covered by this lease as to which said option is exercised by lessee or lessee's successors, heirs or assigns, the payment of the above option bonus shall be in lieu of any delay rental payable for the first year of the extended primary term of this lease.

 

 By ratification instrument dated December 15, 2011, and recorded in Deed Book 1, page 48 (Abstract, page 41), Sam Houston and Margaret Moffette Lea Houston granted ratified the original James Bowie lease.  The ratification document did not confirm that Guadalupe Oil, Inc., had exercised its option to extend the term of the lease according to the provisions in the option amendment.

 

 Lease No. 2, from Stephen F. Austin to Chisholm Oil Company, is dated May 18, 2008, and recorded in Deed Book 1, page 63 (Abstract, page 47).  Lease 2 covers the interests of Stephen F. Austin in the captioned property and other lands.   The lease contained a typewritten paragraph inserted into the printed form as paragraph 13, which provided as follows:

 

 13.        If operations are not conducted on said land on or before the second anniversary date hereof, this lease shall terminate as to both parties, unless lessee on or before said date shall, subject to the further provisions hereof, pay or tender to lessor or to lessor's credit or to such other party as may then be entitled thereto, in accordance with and in the manner provided for in paragraph 3. herein, the sum of $849.00 all lands retained hereunder.  Said payment shall be apportionable as to said land on an acreage basis, and a failure to make proper payment or tender of same as to any portion of said land or as to any interest therein shall not affect this lease as to any portion of said land or as to any interest therein as to which proper payment or tender is made.  Any payment or tender which is made in an attempt to make proper payment, but which is erroneous in whole or in part as to parties, amounts, or depository, shall nevertheless be sufficient to prevent termination of this lease in the same manner as though a proper payment had been made; provided, however, lessee shall correct such error within ninety (90) days after lessee has received written notice thereof from lessor.  If this lease or any portion thereof is released as provided for in paragraph 5. herein, as to all minerals and horizons under a portion of said land, the payment provided for herein shall thereupon be reduced in the proportion that the acreage released bears to the acreage which was covered by this lease immediately prior to such release.

 

         Requirement:

 

 (a)        Furnish proof that Guadalupe Oil, Inc., gave to Sam Houston and Margaret Moffette Lea Houston, notice of its exercise of the option to extend Lease 1 according to the terms of particular the option amendments, together with proof of payment of the additional bonus of $140.00 for each net mineral acre covered by the lessees.

 

 (b)        Furnish proof that operations were commenced on lands covered by Lease 2 on or before May 18, 2009, and continued as required by that lease. Alternatively, furnish proof that the sums provided in Paragraph 13 of that lease were paid to Stephen F. Austin on or before May 18, 2009.

Copyright 2011 by Edward G, Hawkins. All rights reserved.