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tion by the lessee, who shall, within 30 days from receipt of such notice, execute said lease in triplicate, and pay to the receiver the balance of the bonus bid by him, together with the first year's rental, and also cause to be filed in the land office the bond required by section 2 (a) of the lease; in lieu of such bond, Liberty bonds will be taken at par in the amount of the bond, as provided in the act of February 24, 1919 (40 Stat., 1148). If the bid be rejected, the receiver will return, by his official check, the deposit made at the auction. In case of the award of a lease and failure on the part of the bidder to execute same, and otherwise comply with the applicable regulations, the deposit made will be considered forfeited and disposed of as other receipts under this act.

17. FORM OF LEASE.-The lease referred to in the preceding sections will be in form and substance, substantially as follows:

U. S. Land Office
Serial No.

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DEPARTMENT OF THE INTERIOR.

Lease of oil and gas lands under the act of February 25, 1920.

day

Date Parties.-This indenture of lease entered into, in triplicate, this A. D., 19, by and between the United States of America, acting in this behalf by the Secretary of the Interior, party of the first part, hereinafter called the lessor, and of -, party of the second part, hereinafter called the lessee, under, pursuant, and subject to the terms and provisions of the act of Congress approved February 25, 1920, Public No. 146, entitled "An act to promote the mining of coal, phosphate, oil, oil shale, gas, and sodium on the public domain," hereinafter referred to as the act, which is made a part hereof, witnesseth:

SECTION 1. Purposes.-That the lessor in consideration of rents and royalties to be paid, and the covenants to be observed as herein set forth, does hereby grant and lease to the lessee the exclusive right and privilege to drill for mine, extract, remove and dispose of all the oil and gas deposits in or under the following described tracts of land situated in the cointy of State of - and more par ticularly described as follows: containing acres, more or less, together with the right to construct and maintain thereupon all works, buildings, plants, waterways, roads, telegraph or telephone lines, pipe lines, reservoirs, tanks, pumping stations, or other structures necessary to the full enjoyment hereof, for a period of 20 years, with the preferential right in the lessee to renew this lease for successive periods of 10 years, upon such reasonable terms and conditions as may be prescribed by the lessor, unless otherwise provided by law at the time of the expiration of such periods. SEC. 2. In consideration of the foregoing, the lessee hereby agrees:

(a) Bond.-To furnish a bond with approved corporate surety in the penal sum of $5,000, conditioned upon compliance with the terms of the lease.

(b) Commence drilling.-The lessee agrees, within three months from delivery of executed lease, to proceed with reasonable diligence to install on the leased ground a standard or other efficient drilling outfit and equipment, and to commence drilling at least one well, and to continue such drilling with reasonable diligence to production, er to a point where the well is demonstrated unsuccessful, and thereafter to continue drilling with reasonable diligence at least one well at a time until the lessee shall have drilled wells equal in number to the number of forty-acre tracts embraced in the leased premises, unless the lessor shall, for any reason deemed sufficient, consent in writing to the drilling of a less number of wells; the lessee further agrees to drill all necessary wells fairly to offset the wells of others on adjoining land or deposits not the property of the United States.

(e) Royalty and rents.-To pay the lessor in advance, beginning with the date of the execution of this lease, a rental of one dollar per acre per annum during the continuance hereof, the rental so paid for any one year to be credited on the royalty for that year, and. In addition to such rental, a royalty of per cent of the value of oil or gas produced from the land leased herein (except oil or gas used for production purposes on mid lands or unavoidably lost), or, on demand of the lessor, per cent of the oil or gas produced (except oil or gas used for production purposes on said lands, or un-, truidably lost), in which case credit for rent shall be on the basis of the current field. price of oil, the royalty, when pald in value, to be due and payable monthly on the 15th of each month following the month in which produced, to the receiver of public moneys of the proper land district; and when paid in kind, to be delivered in the field where

produced at such times, and in such manner as may be required by the lessor; such royalties, whether in value or kind, shall be subject to reduction whenever the average daily production of any oil well shall not exceed ten barrels per day, if in the judgment of the lessor the wells can not be successfully operated upon the royalties fixed herein. (d) Sales contract.-Not to sell or otherwise dispose of any of the oil or gas produced hereunder, except for production purposes on the land leased, other than under and in accordance with a sales contract or other method, that shall first be approved by the Secretary of the Interior. (Amended. See p. 33.)

(e) Monthly statement.-To furnish monthly statements in detail in such form as may be prescribed by the lessor, showing the amount and value of all oil and gas produced and saved during the preceding calendar month as the basis for computing the royalty due the lessor. The leased premises and all wells, improvements, machinery, and fixtures thereon or connected therewith and all books and accounts of the lessee shall be open at all times for the inspection of any duly authorized officer of the Department. (f) Plats and reports. To furnish annually, and at such other time as the Secretary shall require, in the manner and form prescribed by the Secretary of the Interior, a plat showing all development work and improvements on the leased lands, and other related information, with a report as to all buildings, structures, or other works placed in or upon said leased lands, accompanied by a report in detail as to the stockholders, business transacted, investment, depreciation, cost of operation, assets, and liabilities of the lessee, together with a statement as to the amount and grade of oil and gas produced and sold, amount received therefor, and the amount in storage by operations hereunder. (Amended. See p. 33.)

(g) Log of wells. To keep a log in the form prescribed by the Secretary of all the wells drilled by the lessee, showing the strata and character of the ground passed through by the drill, which log, or copy thereof, shall be furnished to said lessor on demand.

(h) Diligence Prevention of waste-Health and safety of workmen.-To exercise reasonable diligence in drilling and operating wells for the oil and gas on the lands covered hereby, while such products can be secured in paying quantities, unless consent to suspend operations temporarily is granted by the Secretary of the Interior; to carry on all operations hereunder in a good and workmanlike manner in accordance with approved methods and practice, having due regard for the prevention of waste of oil or gas developed on the land, or the entrance of water through wells drilled by the lessee to the oil sands or oil-bearing strata to the destruction or injury of the oil deposits, the preservation and conservation of the property for future productive operations, and to the health and safety of workmen and employees; to plug securely any well before abandoning the same so as to effectually shut off all water from the oil or gas bearing strata; not to drill any well within 200 feet of any of the outer boundaries of the land covered hereby, unless the adjoining lands have been patented or the title thereto otherwise vested in private owners; to conduct all mining, drilling, and related productive operations subject to the inspection of the lessor; to carry out at expense of the lessee all reasonable orders and requirements of lessor relative to prevention of waste, and preservation of the property and the health and safety of workmen, and on failure so to do the lessor shall have the right to enter on the property to repair damage or prevent waste at the lessee's cost; to abide by and conform to regulations in force at the time the lease is granted covering the matters referred to in this paragraph.

(i) Taxes and wages-Freedom of purchase.-To pay when due, all taxes lawfully assessed and levied under the laws of the State upon improvements, oil, and gas produced from the lands hereunder, or other rights, property, or assets of the lessee; to accord all workmen and employees complete freedom of purchase, and to pay all wages due workmen and employees at least twice each month in the lawful money of the United States. (j) Reserved deposits.-To comply with all statutory requirements and regulations thereunder, if the lands embraced herein have been or shall hereafter be disposed of under laws reserving to the United States the deposits of oil and gas therein, subject to such conditions as are or may hereafter be provided by the laws reserving such oil or gas. (k) Excess holdings. To observe faithfully the provisions of section 27 of the act defining the interest or interests that may be taken, held, or exercised under leases authorized by said act.

(1) Assignment of lease.-Not to assign this lease or any interest therein, nor sublet any portion of the leased premises, except with the consent in writing of the Secretary of the Interior first had and obtained.

(m) Deliver premises in case of forfeiture.-To deliver up the premises leased, with all permanent improvements thereon, in good order and condition in case of forfeiture of this lease.

SEC. 3. The lessor expressly reserves:

(a) Rights reserved-Easements and rights of way.-The right to permit for joint or several use such easements or rights of way, including easements in tunnels upon, through,

or in the lands leased, occupied, or used as may be necessary or appropriate to the working of the same or of other lands containing the deposits described in said act, and the treatment and shipment of products thereof by or under authority of the Government, its lessees or permittees, and for other public purposes.

(b) Disposition of surface. The right to lease, sell, or otherwise dispose of the surface of the lands embraced within this lease under existing law or laws hereafter enacted in so far as said surface is not necessary for the use of the lessee in the extraction and removal of the oil and gas therein.

(c) Pipe lines to convey at reasonable rates.-The right to require the lessee, his assignee, or beneficiary, if owner, or operator, or owner of a controlling interest in any pipe line, or any company operating the same which may be operated accessible to the oil derived from lands under such lease, to accept and convey at reasonable rates and without discrimination the oil of the Government or of any citizen or company, not the owner of any pipe line, operating a lease or purchasing oil or gas under the provisions of this act.

(d) Monopoly and fair prices.-Full power and authority to carry out and enforce all the provisions of section 30 of the act, to insure the sale of the production of such leased lands to the United States and to the public at reasonable prices, to prevent monopoly, and to safeguard the public welfare.

(e) Helium.-Pursuant to section 1 of the act, the lessor reserves the right to take all helium from any gas produced under this lease, but the lessee shall not be required to extract and save the helium for the lessor; in case the lessor elects to take the helium, the lessee shall deliver all gas containing same, or portion thereof desired, to the lessor in the manner required by the lessor, for the extraction of the helium in such plant or reduction works for that purpose as the lessor may provide, whereupon the residue shall be returned to the lessee with no substantial delay in the delivery of gas produced from the well to the purchaser thereof; provided, that the lessee shall not, as a result of the operation in this section provided for, suffer a diminution in value of the gas from which the helium has been extracted, or loss otherwise, for which the lessee is not reasonably compensated, save for the value of the helium extracted; the lessor further reserves the right to erect, maintain, and operate any and all reduction works and other equipment necessary for the extraction of helium on the premises leased.

SEC. 4. Surrender and termination of lease. The lessee may, on consent of the Secretary of the Interior first had and obtained in writing, surrender and terminate this lease upon the payment of all rents, royalties, and other obligations due and payable to the lessor, and upon payment of all wages and moneys due and payable to the workmen employed by the lessee, and upon a satisfactory showing to the Secretary that the public interest will not be impaired; but in no case shall such termination be effective until the lessee shall have made full provision for conservation and protection of the property; upon like consent had and obtained the lessee may surrender any legal subdivisions of the area included herein.

SEC. 5. Purchase of materials, etc., on termination of lease.-Upon the expiration of this lease, or the earlier termination thereof pursuant to the last preceding section, the lessor or another lessee may, if the lessor shall so elect within six months from the termination of the lease, purchase all materials, tools, machinery, appliances, structures, and equipment placed in or upon the land by the lessee, on the payment to the lessee of such sum as may be fixed as a reasonable price therefor by a board of three appraisers, one of whom shall be chosen by the lessor, one by the lessee, and the other by the two so chosen; pending such election all equipment shall remain in normal position. If the Jessor, or another lessee, shall not, within six months, elect to purchase all of such materials, tools, machinery, appliances, structures, and equipment, or shall elect to purchase only a part thereof, the lessee shall have the right at any time within 90 days to remove from the premises herein all of the said materials, tools, machinery, appliances, structures, and equipment, or such part thereof as the lessor, or other lessee, may not have elected to purchase, save and except casing in wells and other equipment or apparatus necessary for the preservation of the well or wells.

SEC. 6. Judicial proceedings in case of default.-If the lessee shall fail to comply with the provisions of the act, or make default in the performance or observance of any of the terms, covenants, and stipulations hereof, or of the general regulations promulgated and in force at the date hereof, and such default shall continue after service of written notice thereof by the lessor, then the lessor may institute appropriate Judicial proceedings for the forfeiture and cancellation of this lease in accordance with the provisions of section 31 of said act; but this provision shall not be construed to prevent the exercise by the lessor of any legal or equitable remedy which the lessor might otherwise have. A waiver of any particular cause of forfeiture shall not prevent the cancellation and forfeiture of this lease for any other cause of forfeiture, or for the same cause securring at any other time.

SEC. 7. Heirs and successors in interest.-It is further covenanted and agreed that each obligation hereunder shall extend to and be binding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto.

SEC. 8. Unlawful interest.—It is also further agreed that no Member of, or Delegate to Congress, or Resident Commissioner, after his election or appointment, or either before or after he has qualified, and during his continuance in office, and that no officer, agent. or employee of the Department of the Interior shall be admitted to any share or part in this lease or derive any benefit that may arise therefrom, and the provisions of section 3741 of the Revised Statutes of the United States, and sections 114, 115, and 116 of the Codification of the Penal Laws of the United States approved March 4, 1909 (35 Stat., 1109), relating to contracts enter into and form a part of this lease so far as the same may be applicable.

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Sections 18, 19, and 22 of the act provide for the "relief," so-called, of certain defined claimants of oil and gas lands, who at date of the act had not perfected their claims under the preexisting mining laws, and are prevented from doing so by withdrawal of the land or by this act.

18. CONDITIONS FOR RELIEF UNDER SECTION 18:

(a) That the land claimed must have been included in the Executive order of withdrawal of September 27, 1909, and must have remained so withdrawn. (b) That the claim must have been initiated under the placer mining laws prior to July 3, 1910, and claimed and possessed continuously from that time. (c) That claimant's interest in the land must have been acquired prior to September 1, 1919, except lands acquired by exchanges made prior to the 1st day of January, 1920, which did not increase or reduce the acreage held or claimed in excess of the maximum by either party. (Substituted. See p. 33.) (d) That claimant or predecessors must have drilled an oil or gas well on the land to discovery.

(e) That all conflicting claims initiated prior to July 1, 1919, must have been disposed of, as provided in section 28 hereof or otherwise. (Amended. See p. 33.)

(f) That no claimant who has been guilty of any fraud or who had knowledge or reasonable grounds to know of any fraud, or who has not acted honestly and in good faith, shall be entitled to any of the benefits of this section.

(g) That all parties having an interest in the claim by stock ownership, stock holding or stock control, must be citizens of the United States, or of a country, the laws, customs, or regulations of which do not deny like or similar privileges to citizens or corporations of the United States. (Stricken out. See p. 33.)

(h) That claimant must, on or before August 25, 1920, file a relinquishment to the United States of all right, title, and interest in and to the land, together with an application for a lease. This relinquishment must be in the form of an unconditional quitclaim deed, duly executed and acknowledged, but not recorded, and when filed will be held for such action as the facts and the law in the case warrant and require.

(i) That claimant must pay for one-eighth of the value at the time of production of all oil and gas produced prior to date of filing relinquishment and application for relief, exclusive of oil and gas used on the land for production purposes, or unavoidably lost.

19. RELIEF THAT MAY BE GRANTED UNDER SECTION 18:

(a) Lands not in naval petroleum reserves.-A qualified claimant, upon complying with the provisions of the act and these regulations, will be entitled to a 20-year lease from the United States, commencing and effective as of the date of filing relinquishment and application for relief, substantially in the form prescribed in section 17 hereof, at a royalty to be fixed by the Secretary of the Interior, but not less than 12 per cent of all oil and gas produced exclusive of that used for production purposes on the claim, or unavoidably lost. There is, however, a limitation placed by the act upon the acreage that may be included in such lease. If the geologic oil or gas structure of the producing field in which the claim is situated does not exceed 640 acres in area the lease may include the entire area if covered by the claim; but if the area of such structure exceeds 640 acres the act provides that not more than one-half of the area, same to be selected by the claimant but in no case to exceed 3,200 acres, may be leased to any one claimant.

(b) Lands in naval petroleum reserves.-If the land claimed is within a naval petroleum reserve the claimant will be entitled to lease only the producing wells on the claim, together with an area of land sufficient for the operation of such wells, upon a royalty to be fixed by the Secretary of the Interior but not less than 12 per cent of the production except that used for production purposes on the claim or unavoidably lost. The act forbids the drilling of any wells in lands subject to this provision within 660 feet of the leased wells without the consent of the lessee. It further provides that the President may, in his discretion, lease the remainder or any part of the claim on which such wells have been drilled, and in the event of such leasing the claimant shall have a preference to such lease. The President may also permit the lessee of any well to drill additional wells within the limited area of 660 feet upon such terms and conditions as he may prescribe. These terms and conditions can not be prescribed here, but will be determined on the merits in each separate case. (c) Royalties.-The royalties payable under leases granted pursuant to section 18 of this act are hereby determined and prescribed as follows:

For all oil of 30 degrees Baumé or over, upon each claim on which the wells averaged 200 barrels or more per day per month, 33 per cent; upon each claim on which the wells averaged from 100 to 200 barrels per day per month, 25 per cent; upon each claim on which the wells average from 50 to 100 barrels per day per month, 20 per cent; upon each claim on which the wells average from 20 to 50 barrels per day per month, 16 per cent, and upon each claim on which the wells average less than 20 barrels per day per month, 12 per cent.

For all claims producing oil of less than 30 degrees Baumé, upon each claim on which the wells average 200 barrels or more per day per month, 25 per cent; on each claim on which the wells average 100 to 200 barrels per day per month, 20 per cent; upon each claim on which the wells average from 50 to 100 barrels per day per month, 163 per cent; upon each claim on which the wells average from 20 to 50 barrels per day per month, 14 per cent, and upon each claim on which the wells average less than 20 barrels per day per month, 12 per cent. The royalties on gas produced, if any, will be fixed and determined in each lease. (Amended. See p. 34.)

20. CONDITIONS FOR RELIEF UNDER SECTION 19:

A. For permit.-(a) That the land must not be in a naval petroleum reserve. (b) That applicant must have been an occupant or claimant of the land on October 1, 1919, under a claim initiated under the placer mining laws by him or his predecessor when the land was not withdrawn.

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