be based upon the value of the crop actually destroyed or withheld from production by reason of Lessee's operations thereon. Upon the written request of Lessor, Lessee agrees to lay below plow depth all pipe lines, except lines for the gathering and transporting of steam, and discharge or other water lines, which it constructs through cultivated fields, and upon similar request, agrees to fence all sump holes or other excavations to safeguard livestock on said land. Upon completion or abandonment of any well drilled on the leased land, or upon the termination of this lease, Lessee shall level and fill all sump holes and excavations and shall remove all debris and shall leave the location of such well in a clean and sanitary condition. Lessee in its operations on the leased land shall at all times have due and proper regard for the rights and covenience, and the health, welfare and safety of Lessor and of all tenants and persons lawfully occupying the leased land. In any well drilled by Lessee hereunder sufficient casing shall be set and cemented in such well so as to seal off known surface waters occurring above a depth of one hundred feet from the surface to the extent that Lessee is reasonably able so to do under conditions encountered in such well. 14. In the event Lessee defaults under any of the provisions of this Lease and Agreement and fails to begin in good faith to remedy the same within sixty (60) days after written notice from Lessor so to do, specifying in said notice the nature of such default, then at the option of Lessor this lease shall forthwith cease and terminate and all rights of Lessee in and to the leased land shall be at an end, except that in the event of such termination Lessee shall have the right to remove from the leased land, as hereinafter provided, all surface facilities and improvements of whatsoever kind and character placed upon the leased land by Lessee. Lessee shall have the right at any time prior or after default hereunder, upon payment of the sum of Ten Dollars ($10.00) to Lessor, to quitclaim and surrender to Lessor all right, title and interest of Lessee in and to the leased land, or any part thereof, and thereupon all rights and obligations of the parties hereto one to the other shall cease and terminate as to the lands or area so quitclaimed and surrendered, save and except as to accrued monetary or royalty obligations of Lessee then payable as to which Lessee shall remain liable to Lessor; and provided that in the event of a partially quitclaim and surrender, any future rentals will be reduced proportionately to the number of acres in the area so quitclaimed and surrendered. 15. Lessee shall have the right at any time and from time to time to remove from the leased land any and all machinery, equipment, structures, installations and property of every kind and character placed upon said leased land by or pursuant to permission of Lessee, provided that such removal shall be completed within a reasonable time after termination of this lease in the event such removal shall occur after termination of this lease. In the event that any damages to Lessor's property may be occasioned by the removal of Lessee's property as above set forth then Lessee agrees to compensate Lessor for such damages. 16. Lessor hereby warrants and agrees to defend title to the leased land and agrees that Lessee, at its option, may pay and discharge any taxes, mortgages, trust deeds or other liens or encumbrances existing, levied or assessed on or against the leased land, as to which Lessor is in default, and in the event Lessee exercises such option, Lessee shall be subrogated to the rights of any holder or holders thereof, and shall have the right to reimburse itself by applying to the discharge of any such mortgage, tax or other lien or encumbrance any royalties or rentals accruing to Lessor hereunder. 17. (a) The term "power potential" as used in this lease with respect to any well or combination of wells producing steam, steam power or thermal energy shall mean the number of kilowatts of electric power capable of being generated by the steam, steam power or thermal energy produced from such well or wells by means of the introduction thereof into or the application thereof to or utilization thereof in connection with any power generating facility or equipment designed for use thereof which Lessee deems desirable to utilize with respect thereto. (b) The term "sufficient power potential" as used herein shall be deemed to mean that volume and character of steam, steam power, or thermal energy produced from a well or combination of wells drilled on the leased land, which, in the judgment of Lessee, shall be sufficient for the commercial sale thereof, or which, in Lessee's judgment, shall warrant the construction of facilities for the commercial use or sale thereof or for the utilization thereof for generation of electric power for commercial sale, or which, in the judgment of Lessee, warrants the drilling of additional wells on the leased land for the production of an additional quantity of steam, steam power or thermal energy therefrom. (c) The terms "steam", "steam power", and "thermal energy" shall mean natural geothermal steam, and shall also mean the natural heat of the earth and the energy present in, resulting from, or released from or created by, or which may be extracted from, the natural heat of the earth or the heat present below the surface of the earth, in whatever form such heat or energy occurs and by whatever method, methods, or processes (now or hereafter known) which may be utilized for the extraction or utilization of such heat or energy for electric power generating purposes. (d) The term "extractable minerals" shall mean any minerals in solution in the well effluence, and minerals or gasses produced from or by means of any well or wells on the leased land or by means of condensing steam or processing water produced from or the effluence from any such well or wells. (e) The word "commercial" used in connection with the phrases "commercial value", "commercial quantities", "commercial production", "commercial sale (or sales)" and "commercial use" shall be deemed to mean such quantities of such value produced, sold or used which, after deducting Lessee's normal operating costs (or extraction costs in case of extractable minerals) will provide to Lessee a net return over such costs sufficient to cause Lessee to continue production thereof or to elect to proceed with further development or exploratory operations on the leased land under this lease. 18. Any notice or other communication hereunder from Lessor to Lessee shall be given in writing by delivering same personally to Lessee or by sending same by registered or certified mail, postage prepaid, addressed to Lessee at and any notice or other communication hereunder from Lessee to Lessor shall be given in writing by delivering same personally to Lessor or by sending same by registered or certified mail, postage prepaid, addressed to Lessor at Any notice mailed, as aforesaid, shall be deemed given and received 72 hours after the deposit thereof in the United States mail within the State in which the leased land is situated, and if deposited in the United States mail outside of such State, shall be deemed given and received 96 hours after the deposit of same in the United States mail. The parties may upon written notice at any time and from time to time change their respective addresses for the purposes hereof. 19. Lessee may, at any time or from time to time for drilling, development, or operating purposes, combine all or any part of the leased land into an operating unit with any lands (whether held by Lessee or others and whether or not the surface of such lands may be used for development or operating purposes), whether or not adjacent or contiguous, situated in the district or natural stream field (in which the leased land is situated) which Lessee desires to develop or operate as a unit, provided that the total acreage to be embraced within any such drilling, development, or operating unit shall not exceed the acreage contained in three sections of land. Such a unit shall become in existence upon Lessee's filing in the office of the County Recorder of the County in which the leased land is situated, a notice of such unitization, describing said unit. Lessee shall also mail a copy of such notice to Lessor at its last known address. Any well (whether or not Lessee's well) commenced, drilled, drilling and/or producing in any part of such operating unit shall for all purposes of this lease be deemed a well commenced, drilled, drilling and/or producing on the leased land, and Lessee shall have the same rights and obligations with respect to drilling and producing operations upon the lands from time to time included within any such operating unit as Lessee would have if such lands constituted the leased land; provided, however, that notwithstanding this or any other provision or provisions of this lease to the contrary, (1) production as to which royalty is payable from any such well or wells drilled upon any such operating unit, whether located upon the leased land or other lands, shall be allocated to the leased land in proportion that the acreage of the leased land in such operating unit bears to the total acreage of such operating unit, and such allocated portion thereof shall for all purposes of this lease be considered as having been produced from the leased land, and the royalty payable under this lease with respect to the leased land included in such operating unit shall be payable only upon that proportion of such production so allocated thereto, and (2) if any taxes of any kind are levied or assessed (other than taxes on the land and on Lessor's improvements), any portion of which is chargeable to Lessor under paragraph 10 hereof, then the share of such taxes to be borne by Lessor as provided in this lease, shall be in proportion to the share of the production from such operating unit allocated to the leased land. As to each and any such operating unit, Lessee shall have the right to commingle, for the purpose of utilizing, selling or processing or causing to be processed, the steam or steam power and/or extractable minerals produced from such operating unit with the steam or steam power and/or extractable minerals produced from other lands or units, so long as the production from the unit which includes all or portions of the leased land is measured, metered or gauged as to such unit production; unit production so measured, metered or gauged shall then be allocated to the leased premises in accordance with (1) above. Allocation, as aforesaid, of production from any such operating unit, whether to the leased land or in like manner to other lands therein, shall continue notwithstanding any termination, either in whole or in part (by surrender, forfeiture or otherwise), of this or any other lease covering lands in such operating unit until such time as the owner of such lands shall enter into a lease or agreement to drill for or produce or shall drill for or produce or permit or cause the drilling for or producing of any natural steam or extractable minerals from any part of such lands, whereupon all such lands formerly included in such operating unit and as to which the lease covering the same shall have terminated, shall be excluded in determining the production to be allocated to the respective lands in such operating unit, and in the event of the failure of Lessor's, or any other owner's, title as to any portion of the land included in any such operating unit, such portion of such land shall likewise be excluded in allocating production from such operating unit; provided, however, Lessee shall not be held to account for any production allocated to any lands to be excluded as aforesaid, from any such operating unit unless and until Lessee has actual knowledge of the aforesaid circumstances requiring such exclusion. 20. In the event any part or portion or provision of this instrument shall be found or declared to be null, void or unenforceable for any reason whatsoever by any Court of competent jurisdiction or any governmental agency having authority thereover, then and in such event only such part, portion or provision shall be affected thereby, and such finding, ruling or decision shall not in any way affect the reminder of this instrument or any of the other terms or conditions hereof, or any lesser rights or obligations embraced within any provision so declared to be void or unenforceable which such lesser rights or obligations are not, or would not be so held to be, void or unenforceable, which said remaining terms and conditions and such lesser rights or obligations, as aforesaid, of this instrument shall remain binding, valid and subsisting and in full force and effect between the parties hereto, it being specifically understood and agreed that the provisions hereof, and the lesser rights or obligations embraced within such provisions, are severable for the purposes of the provisions of this clause. 21. This Lease and Agreement and all of the terms, convenants and conditions hereof shall extend to the benefit of and be binding upon the respective successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed as of the date hereinabove first written. MAGMA POWER COMPANY, a corporation, undersigned, a Notary Public in and for said County and State, personally appeared known to me to be the persons whose names are subscribed to the within Instrument, and acknowledged to me that they executed the same. WITNESS My hand and official seal. Notary Public in and for said known to me to be the Presi undersigned, a Notary Public in and for said County and State, personally appeared known to me to be the dent, and Secretary of MAGMA POWER COMPANY, the Corporation that executed the within Instrument, known to me to be the persons who executed the within Instrument, on behalf of the Corporation herein named, and acknowledged to me that such Corporation executed the within Instrument pursuant to its by-laws or a resolution of its board of directors. WITNESS My hand and official seal. Hon. ED EDMONDSON, Notary Public in and for said EARTH ENERGY, INC., Los Angeles, Calif., June 23, 1967. Chairman, Subcommittee on Mines and Mining, Committee on Interior and Insular Affairs, House of Representatives, Washington, D.C. DEAR MR. EDMONDSON: Please find enclosed a copy of a statement that we wish to submit for the Record of the Hearings held from June 12-16 on pending geothermal leasing legislation. With respect to the Hearings held regarding this legislation, please be advised that Earth Energy has an option agreement to take assignment of two oil and gas leases from a Mr. Fleet R. White. These oil and gas leases are situated in the Geysers Area of Northern California and cover a combined total of only 768 acres. We have requested Mr. White to provide the Committee with a description of these lands. As you know, last year Earth Energy submitted to the Committee on Interior and Insular Affairs information regarding our activities and expenditures for geothermal exploration in the Geysers Area which has been published in Part II of the transcript of last year's Hearings. If we took assignment of these leases prior to passage of legislation containing Grandfather rights we would want to convert these oil and gas leases. Respectfully yours, CAREL OTTE, Vice President. FLEET WHITE, Hon. ED EDMONDSON, Long Beach, Calif., June 24, 1967. Chairman, Subcommittee on Mines and Mining, Committee on Interior and Insular Affairs, House of Representatives, Washington, D.C. DEAR MR. EDMONDSON. I have been informed that during the Subcommittee Hearings on Geothermal Steam legislation, serious consideration was given to the inclusion of a Grandfather clause. I understand that the Committee wishes to make an inventory of the oil and gas leases, prospecting permits, and mining claims that may be converted as a result of such a clause, and the industry was requested to furnish the Committee with pertinent information. I am the holder of two oil and gas leases located near the Geysers Geothermal Area, in Lake, Mendocino and Sonoma Counties, California. The records in the Bureau of Land Management office in Sacramento will indicate that initially I had applied for substantially larger blocks of land in the summer of 1965, but because of previous applications these parcels were denied. Hereunder is the description of the lands these oil and gas leases cover— Serial No. SAC 078857, dated October 1, 1964, Description: Township 12 North, Range 8 West, M.D.M.; Section 30: Lots 2, 3, 4, E/2 SW/4; Section 31: Lot 1, NE/4 NW/4 Township 12 North, Range 9 West, M.D.M.; Section 25: SE/4 NE/4, S/2; Section 26: N/2 SE/4 (containing 736.94 acres, more or less). Serial No. SAC 079962, dated March 1, 1966, Description : Township 11 North, Range 8 West, M.D.B.&M.; Section 29: Lot 1 (containing 30.88 acres, more or less). Since issuance of the lease, developments in the area have demonstrated that the costs of exploring and exploiting geothermal steam is higher than an individual can bear, and for this reason, in January of this year I entered into an option agreement covering these leases with Union Oil Company of California, the parent of Earth Energy, Inc. Earth Energy is now the developer of geothermal resources in the Geysers Area on behalf of themselves and Magma Power Company and Thermal Power Company. Upon passage of appropriate legislation, it would be my intention to convert these oil and gas leases into a geothermal lease. They cover a total of 767.82 acres, far short of the acreage limitation of 12,800 acres that is being discussed as part of the Grandfather clause. Very truly yours, FLEET WHITE. Hon. WILLIAM L. SHAFER, GEOTHERMAL RESOURCES INTERNATIONAL, INC., House Interior Committee, DEAR SIR: Enclosed herewith is a map* of our Casa Diablo Area showing outlined in solid black line the Federal acreage we would select, if allowed to do so. This map is being furnished you at the request of Congressman Edmondson. If I may be of any further assistance in this matter, please advise. Very truly yours, Mr. WILLIAM SHAFER, Consultant on Mining and Minerals, JAMES M. FULLER, Land Department. R. A. ROWAN & Co., Los Angeles, Calif., June 22, 1967. House Committee on Interior and Insular Affairs, DEAR MR. SHAFER: Owen Olpin has suggested that I write to you in order to nominate as closely as possible at this time, the manner in which we would like to convert our Federal Potassium Claims into Geothermal steam leases, in accordance with pending legislation. I have therefore enclosed a map** of the Mono Lake Basin showing the location of our claims there, having numbered them 1 to 5 with black crayon. We hereby elect to convert all of our claims in areas 1, 2 and 3, amounting to a total of 4.968.97 acres. Because our total conversions privilege, I am told, will amount to 12,800 acres, this leaves us with a balance of a little over 7,800 acres with a conversion privilege. It is very difficult for me at this time to make a decision on just where to convert this balance of 7,800 acres. However, I can tell you that it will be either in the areas marked 4 and 5 on the enclosed map, or in a substantial block of potassium claims we hold in the Mammoth Basin to the south (not marked on the map). This is located in Twp. 3S, Range 28 E. I trust this information will suffice for the present. Yours sincerely, *Map on p. 204. **Map on p. 205. 82-458-67 -14 GEORGE D. ROWAN. |
